The big cases came to naught but some made an impact
Was the past year more fraught than usual with legal disputes? It’s hard to say, but many of 2010’s juiciest battles seemed to either end with a whimper or drag into next year.
Roman Polanski never had to return to the U.S. Carl Icahn’s bid for Lionsgate sputtered. And while creditors began their legal action against David Bergstein in earnest, it may be months or years before any of the winners recoup their losses. But here are some of the issues and verdicts that had real impact:
Profit participation In one of the year’s largest awards, Celador Intl. won a $319 million judgment vs. Disney over “Who Wants to Be a Millionaire.” The British production company sued the Mouse House in 2004, claiming that the studio, through sibling units Buena Vista Entertainment TV production-distribution and ABC, had self-dealt its way out of paying profit-participation fees. While the studio appealed the ruling, Judge Virginia Phillips issued a 54-page opinion Tuesday upholding the July verdict.
Verdict is unlikely to have a large effect on present-day dealmaking but may influence contractually mandated arbitration for disputes. Studios have already begun including mandatory arbitration clauses in pacts, with no option to appeal, in an increasing number of talent contracts. Celador’s nine-figure winnings could encourage studios to further the practice.
The amount of money Alan Ladd Jr. won from Warner Bros. may have paled in comparison to Celador’s in size, but not in impact. Ladd, who claimed the studio had undervalued several movies he produced, is one of the few plaintiffs to get his breach of contract case against a studio through trial, win, and then win again on appeal. Ladd maintained that the studio had often packaged several of his films, including “Blade Runner,” “Chariots of Fire” and “Body Heat,” with lesser-profitable ones, reducing each pic’s value when the package was sold.
“There’s a right way to do the allocations and the licensing activities and there’s a wrong way,” said Ladd’s attorney John Gatti, a partner at Stroock & Stroock & Lavan who heads the firm’s entertainment litigation department. “And in our case, we established Warner Bros.’ way was wrong.”
Gatti, who has also repped studios in profit participation and producer agreements, said the case has made talent and studios more aware of how to handle similar negotiations.
Superhero rights After losing an acrimonious suit to the heirs of Superman creators Joe Shuster and Jerry Siegel in 2008, Warner Bros. amped up its efforts to retain rights to the superhero by going after plaintiffs’ attorney Marc Toberoff. To avoid losing all rights to the Man of Steel after 2013, the studio, in a suit filed in May, claims Toberoff improperly advised his clients in an effort to personally gain from the lucrative property.
Toberoff called the suit as a “smear campaign” in a New York Times interview. Warner maintains that Toberoff angled to give himself a 47.5% share of any recovered rights. The studio is ramping up its latest untitled “Superman” pic, to be directed by Zack Snyder and produced by Christopher Nolan, for a release before 2013 in case it loses its latest court battle.
Internet rules of the road Just as the FCC was poised to pass strict Net neutrality rules earlier this year, a Washington appellate court threw a wrench into the effort. The April decision in favor of Comcast raised doubts that the agency had authority over broadband, triggering a months-long process as chairman Julius Genachowski worked to find firmer legal footing. Tuesday, the FCC passed sweeping legislation for broadband providers, prohibiting favoritism for some websites. Regs also distinguish between wired and wireless service, allowing some flexibility for the latter as the platform develops.
Indecency The FCC’s regulatory power suffered another blow when it lost its indecency case against Fox this summer. The commission fined Fox in 2004 after the net aired Nicole Richie and Cher using “fleeting expletives” during the Billboard Music Awards. The 2nd Circuit Court of Appeals decision raises questions on the FCC’s next move.
Agency could appeal to the Supreme Court, revise its policies or ask for a rehearing at the appellate level. In trying the case before the Supreme Court, the FCC would risk an even broader decision limiting its regulatory powers. But with pressure from various watchdog and parenting groups, the FCC is likely to take the case to the next level, observers say.