Singer Olivia Newton-John has filed a legal action claiming she is owed more than $1m (£507,000) which was made from the Grease soundtrack album.
Olivia Newton-John played Sandy in the 1978 film Grease
Newton-John, 58, who played Sandy in the 1978 hit film, claims Universal did not pay her enough royalties.
Her lawyer, John Mason, has said the company failed to make other contractual payments.
Universal has said "the lawsuit is without merit", and expects the case to be dismissed from court.
The breach-of-contract legal action was filed at the Los Angeles County Superior Court.
Last year, Grease topped a poll of the UK's favourite musicals, beating Cats, Les Miserables and West Side Story.
Newton-John last hit the headlines following the disappearance of her boyfriend Patrick McDermott in 2005.
It was later suggested he may have staged his disappearance as he was facing debts and bankruptcy. He was last seen on a fishing boat at the end of June last year.