Time and Date: Tuesday November 16th, 2010. 10:00 AM
Location: Seoul District Courts
Counsel: JYJ (Sejong), SM (YulChon / JiPyungJiSeong)
Content of Lawsuit:
▼JYJ’s new lawsuit begun after their objection to SM’s lawsuit
Before the review of the hearing
- I, who wrote this review of the hearing, am a fan of JYJ. I have written this review in the perspective of a JYJ fan.
- Everything that has occurred between JYJ and SM is because of an unlawful 13-year contract, SM’s unfair exploitation of their authority by putting all responsibility of compensation on JYJ if the contract is terminated, and an unfair income distribution.
- Bringing in Crebeau Cosmetics as the main reason for the lawsuit is nothing more than one of SM’s dirty tricks.
- I originally had no plans of writing a review. I have always believed in and respected the decisions made by the members of JYJ. However, the reason I have decided to change my mind is because I believe this is the least I can do against the unprincipled actions of those who control the media with their lies and falsities.
- This review can only be re-posted in sites that support and believe in JYJ.
1. SM’s Stance
※SM was unable to submit a portion of their evidence during the hearing. Though they complete all evidence submission beforehand, they had to resubmit a portion of their documents due to a change in the number code on the documents. If evidence is submitted the day before the hearing, it is impossible for it to be delivered to the presiding judge on the day of the hearing. Therefore, some of the points SM makes are points with content, but no evidence.
(1) Background of the Case
- The problem arose when JYJ submitted their injunction and left TVXQ in July, 2009. This was when SM’s years of efforts began to return in the form of profit.
- Before May, 2009, JYJ never raised an issue regarding the contract to SM.
- SM was the one who approached JYJ first in February, 2009 to better income distribution for JYJ’s profit from domestic and overseas activities. JYJ agreed to all the points presented at the time.
- JYJ has never raised an issue regarding the contract other than those pertaining to income, and none of the other artistes of SM have raised a complaint regarding the current contract.
- Therefore, the root of the problem is JYJ’s cosmetic company.
(2) The Progress of the Case
- Problems between SM and JYJ began in May, 2009.
- At the time, JYJ was participating in the Tohoshinki Concert Tour (4TH The Secret Code) in Japan. During this time, SM received a request from AVEX. The content of the request is as so:
- A great amount of reports were sent to AVEX by Japanese fans that stated, ‘It is being said that if Crebeau cosmetics are bought, you will get a chance to meet TVXQ. Also, the parents of TVXQ members are selling Crebeau cosmetics in the regions where the Japanese Tour is being held.’ AVEX sent a request to SM to verify these reports.
- SM met with JYJ, and set forth to verify the validity of the reports.
- JYJ were told by SM that a problem would arise if the members exploited the name of TVXQ instead of treating the cosmetic company as a mere financial investment. In order to confirm that there were no legal issues, SM asked JYJ to reveal the details of their investments, but JYJ did not do so. A deposition has been submitted as evidence.
- JYJ turned down a commercial with a domestic cosmetics brand (Speculated as MISSHA), and filed an injunction against SM.
(3) Crebeau and JYJ have a close relation with each other
- January 8th, 2009. JYJ attended the investment briefing session that was held in China.
- At said investment briefing session, people advised JYJ to invest.
- Fans recorded the event, and this video evidence has been submitted in the form of a CD.
- JYJ were the CEOs of Crebeau.
- JYJ advertised to fans that they were involved with Crebeau.
(4) JYJ filed an injunction against SM because of the cosmetics company.
- JYJ attempted to exploit the fame of TVXQ to develop an unknown cosmetics brand into one known widely across Asia, and to be rewarded greatly through their investments. JYJ decided that they could not partake in the cosmetic company’s business if they continued to stay under their exclusive contract with SM. Therefore, they filed an injunction, stating the unlawfulness of the exclusive contract as a reason, in order to partake in the cosmetics company.
- If the cosmetics company wasn’t the reason why JYJ filed the injunction, then why did JYJ not have any objections against the contract until after their involvement in the cosmetics industry began?
(5) Even after the injunction was filed, SM continually tried to change the clauses of the exclusive contract with JYJ. However, JYJ did not accept these changes.
(6) Problems regarding the length of the contract period
- Both sides agreed to the length of the contract period for financial motives.
- SM has not held back in giving JYJ as much support as possible during the contract period.
- JYJ must carry out what they have agreed to in their contract.
- A long-term contract is essential for stable overseas activities. When BoA and SES entered the Japanese market, BoA succeeded but SES failed. SES failed because they did not have a long-term contract. Therefore, even AVEX asked TVXQ for a long-term contract.
- Also, a long-term contract is essential to overcome the consuming limits of idol stars and develop into artistes. If a contract period is set for 3 or 4 years, the agency can’t help but work to maximize profit in a short period of time. Therefore, a contract period of 10 years or more is necessary so that the artiste can raise his value and work in a larger market.
- SM is currently supporting trainees with ten years of know-how under their belt. In order to construct and run the system, billions of Won are needed as the annual budget. SM is the only agency with such a system.
- SM receive consent from JYJ’s parents.
- SM has followed the rules of the Fair Trade Commission.
(7) Problems regarding income distribution
- The income distribution system is actually in JYJ’s favor.
- Compared to the income distribution clauses of other agencies, JYJ is receiving the best treatment that can be found in the industry.
- SM has given JYJ more money than what is agreed upon for income distribution for album sales.
- There are many instances where SM covered expenses that JYJ were supposed to pay for.
- As SM is a listed company, it has released all contents of its financial affairs and no problems that have found.
- Despite this, JYJ stated that is was a problem with the income distribution, and SM actively worked to collect all data regarding the accounts. Though SM gave JYJ permission to view and verify the accounts, JYJ did not do so.
- Also, JYJ has never raised an issue to SM regarding income distribution and their tax adjustments until the filed their injunction.
(8) Problems regarding JYJ’s supposed deprivation of freedom
- There has not been a single instance in which SM deprived JYJ of their freedom.
- This can be accounted for by staff members who have worked with JYJ.
(9) The immense damages the 2 members of TVXQ (Yunho, Changmin) have incurred because of JYJ
- JYJ turned down a commercial contract for TVXQ with a domestic cosmetics brand that had a down payment of 450 million Won.
- One third of TVXQ’s Asia Tour (4TH MIROTIC ASIA TOUR) was not carried out. The evidence for this is the cancellation of the Shenzhen concert.
- Until the end of the year in 2009, JYJ participated in activities of their choice, and ignored the opinions of the 2 members of TVXQ.
- Though JYJ made it seem like they were working to carry out activities as TVXQ on the outside, this is not true.
- JYJ interfered with the Japanese activities of the 2 members of TVXQ by requesting that AVEX end their business relationship with SM and sign a contract with CJES.
JYJ’s stance
(1) In the contract between SM and JYJ, there are many unfair and unlawful clauses.
- 13-year long-term contract
- Exploitation of authority regarding compensation of damages
- Unfair income distribution
- The point of this lawsuit is to make the entire contract with such clauses completely invalid.
(2) There have been previous instances of an unlawful contract between an agency and a celebrity.
(3) Even if the contract is not nullified, JYJ cannot be charged for non-fulfillment of their obligations. They have always carried out the schedules give to them.
(4) Crebeau is nothing more than an investment.
- There exists no clause in the contract that prohibits the celebrity from investing in other businesses.
- There has never been an instance where JYJ’s activities were hindered by their investment in Crebeau.
3. Question and Answer Session with the Judge
(1) Income Distribution
Judge: Did SM give JYJ more money and conditions better than those originally stated in the contract?
SM: Yes. In reality, SM distributed the income to JYJ more favorably than what the contract states.
Judge: Doesn’t that imply that SM has acknowledged that the clause in the contract is unfit to be carried out?
SM: That is not so. Compared to the clauses of other agencies, SM provided JYJ with the best possible income distribution percentages. There were instances where SM covered expenses that JYJ were supposed to pay. However, this does mean that SM’s clause is unreasonable.
Judge: We have to know the exact details of such adjustments. But right now, SM is stating that ‘Though we had nothing more to give, we gave them more than we intended to.’
SM: Though the contract was created on the basis of an ordinary celebrity, it can be changed to fit the unique aspects of each celebrity. We are not saying that we gave them more money because the contract was unfair.
Judge: Are you not saying that according to your account adjustments, you ‘Gave them more when there was no more to give’? Is it not normal for there to be no money left over to give to JYJ after all the money has been distributed?
SM: That is not so.
Judge: So are you saying that there is money that is left over?
SM: Yes.
(T/N: What the judge is trying to ask is, if SM is paying for all these extra expenses and such, which add up to quite an enormous amount which doesn’t give room for profit to be left over, should they have any profit left to give JYJ extra money? The money doesn’t add up if SM was really able to pay for all these expenses while paying JYJ more than what they should have been given.)
(2) TVXQ’s activities
Judge: Are the two members performing activities as TVXQ?
SM: In reality, they have not been able to do so.
Judge: Didn’t the 2 members participate in overseas activities as TVXQ? (T/N: He’s referring to the SM Town Live ’10 performances)
SM: That was their first official activity as TVXQ since this case began.
Judge: Have the three members moved to a new agency?
JYJ: No.
SM: This is contrary to what we now. CJES is currently supporting JYJ’s activities. This is a fact widely known and accepted in the industry.
(3) Applying for witnesses
Judge: Are there any witnesses for this hearing?
SM:
- SM employee Kang Jung Ah : Witness to testify that the exclusive contract is not unlawful
*Kang Jung Ah is a staff member who was there when the contract was signed between JYJ and SM - Head of SM’s Finance Team Yoon Sung Hee : Witness to testify that the income distribution is fair
JYJ: SM employee Kang Jung Ah is unfit to be a witness. At the time when the contract was signed, JYJ were minors. We are asking for the contract to be nullified because the content of the contract is unlawful, not because the contract wasn’t signed to begin with.
SM: It is important to know what the atmosphere and situation was like, and what was explained to JYJ when the contract was signed.
Judge: A interrogation of witnesses is necessary to judge the general content of the case. Therefore, Kang Jung Ah and Yoon Sung Hee will be noted down as witnesses. Are there any other witnesses?
SM: SM Japan Director Nam So Young
Judge: How are Crebeau and Japan related?
SM: The problem regarding Crebeau was first brought up in Japan. Japanese fans reported that JYJ were promoting Crebeau cosmetics during their Japanese tour.
- SM Japan Director Nam So Young : Witness to testify that cosmetics were sold during the Japanese tour
Judge: Has SM not already submitted evidence regarding that problem? I happen to know that SM has even had media coverage done on the issue. And even if Director Nam So Young testifies, she is not the person who can present exact information regarding the content of JYJ’s investment in Crebeau.
SM: AVEX representative (not chosen yet) : Witness to testify the importance of a long-term contract
- The witness will testify that when AVEX and SM first signed the contract together, it was decided that a 13-year contract was necessary.
- The witness will testify what JYJ did after the injunction to sever the ties between AVEX and SM.
JYJ: Why is SM trying to talk about what happened after the injunction?
SM: The reason SM is talking about what happened after the injunction is because CJES attempted to sever the ties between SM and AVEX and inflict financial losses.
JYJ: The case that SM has presented wishes to verify the validity of the contract and charge JYJ for non-fulfillment of their obligations. SM also calls for compensation of losses from JYJ regarding this.
- Then what exactly did JYJ do to SM to justify this charge of non-fulfillment of their obligations? Please be specific.
- The problem will be difficult to assess if SM states that everything JYJ did was a problem.
- Fans have been showing much attention to this case and JYJ. The fans’ attention is a great asset to JYJ. SM is doing nothing but purely attacking and criticizing JYJ in an open court. That will benefit neither side.
SM: We admit that SM hasn’t been able to explain in detail JYJ’s non-fulfillment of their obligations. The reason SM needs AVEX’s testimony is because it is proof that a 13-year contract is valid and necessary in the current Japanese music market.
Judge: Kang Jung Ah and Yoon Sung Hee will be noted down as witnesses. Will JYJ be calling in any witnesses?
JYJ: No.
(T/N: I’m not sure where (4) went but I can’t find it anywhere. The author of this review may have omitted it and forgotten to change the numbers or it may not have been added when being moved from the original site)
(5) The formal objection filed by SM to the verdict of the injunction
JYJ:
- After the verdict was made on the injunction, JYJ was planning on filing a lawsuit requesting the nullification of their contract with SM.
- However, as JYJ are celebrities, their activities come before their disputes. Therefore, they chose to partake in activities in the entertainment industry before filing the nullification lawsuit.
- That is when SM filed a lawsuit to verify the continued validity of the contract between SM and JYJ.
- As SM filed a lawsuit verifying the continued validity of the contract before JYJ filed their lawsuit nullifying the contract between SM and JYJ, we did not file a lawsuit pertaining to this issue. As two lawsuits may have ensued with repeated content.
- JYJ requested materials pertaining to their activities from SM. However, there are documents that JYJ have not received.
- SM states that JYJ did not come to retrieve the documents themselves, but that is not true. SM manages all its celebrities together. Therefore, there is no separate section where the TVXQ-related documents are located. SM basically told us that everything’s in their office, so we must find all the information ourselves. However, this is an issue that requires the hiring of an accountant to solve and is very costly. That is why we wish for SM to sort through and hand over the files.
- We have done an investigation into whether the income was distributed correctly according to the files given to JYJ by SM. There were additional files that we required from SM. However, the date of the lawsuit was changed. And SM filed a formal objection to the verdict of the injunction. Even though JYJ and Baek Chang Joo have not signed an exclusive contract, SM began a dispute solely based on their belief that an exclusive contract does exist between the two parties. Due to all these happening, which complicated matters, JYJ have not been able to carry out their investigation calmly.
- The verdict of the injunction nullified this contract. However, SM continues to claim that the contract is still valid. As SM has great influence in the entertainment industry, JYJ is unable to actively perform under an independent name.
- JYJ released their 1st album, but SM filed an injunction against it. Then they canceled their injunction.
(6) Request during the hearing
JYJ:
- We ask that the Courts make a verdict on the validity of the contract as soon as possible due to the nature of JYJ’s careers as celebrities.
- Also, SM has stated that SM has give more money to JYJ than the contract dictates, but this is not true. Even just from looking at the documents we have received, this is not true.
- In fact, SM has actually given JYJ less money than the contract dictates. SM has to give JYJ 22.3 billion Won more. We feel further investigate this part and submit documents.
Judge: This has been noted.
(7) Request by SM’s lawyer for JYJ’s attendance in court
SM: We have never met JYJ till now. We request that JYJ make an appearance in court.
Judge: You want JYJ to appear in court? Are you stating that you wish to interrogate JYJ?
SM: We don’t need all three of them. We want to interrogate at least one of them. We have many questions for JYJ.
Judge: What are you going to interrogate them on?
SM:
- JYJ’s claim that they signed the contract under extremely poor conditions
- JYJ’s claim that SM deprived JYJ of their freedom
- JYJ’s claim that they have never heard anything about the process of their income distribution
- JYJ’s claim that the were under extremely bad conditions when they entered the Japanese market
We want to know if JYJ can look us in the eye and talk about these four claims in court.
JYJ: We do not know if this is reasonable. However, if SM wants this interrogation, we can try to convince JYJ to appear in court.
Judge: This matter will be discussed by the department of justice.
The reason JYJ’s stance is short and concise
The main issue here is the unlawful contract but SM’s lawyers have brought up the cosmetics company to change the subject of controversy and dull the judge’s judgment. JYJ’s lawyer concisely stated his main points so the judge didn’t have doubts or attacks on what was stated. SM’s lawyer kept trying to ruin JYJ’s reputation by touching upon this and that, and in the end, he was interrogated by the judge, which is why their conversations are longer^^ And in a trial, the giving and receiving of evidence and documents is most important. Because they lacked in that area, SM tried to turn the tide in their favor by saying provocative statements. -The JYJ 싹여사
Translation credits: jeeelim5@tohosomnia.net
Shared by: tohosomnia.net
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