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Netflix Wins Dismissal of Two Claims in Relativity Case

A Santa Clara County judge has thrown out two claims in a lawsuit brought by Relativity Media, in which it alleged that Netflix had set out to destroy the mini-studio.

Relativity filed the lawsuit in October, seeking more than $1.5 billion from the streaming giant. The company claimed that Netflix’s move to stream two Relativity films — “The Disappointments Room” and “Masterminds” — before they had screened in theaters raised doubts about Relativity’s financial health and ultimately forced the company to put itself up for sale.

But in a ruling filed on Friday, Judge Theodore Zayner rejected Relativity’s claims that Netflix’s behavior amounted to “trade libel” and a breach of the covenant of good faith and fair dealing. In his ruling, the judge noted that questions about Relativity’s capacity to distribute its films had already been raised during the company’s bankruptcy proceedings. The judge found that neither claim raised claims that met the relevant legal thresholds.

The judge did allow a third claim, for breach of contract, to proceed, finding that Relativity’s allegations were not barred by California’s anti-SLAPP statute.

A Relativity spokesman said the company would have no comment.

A New York bankruptcy judge blocked Netflix from streaming the two films before their theatrical release last summer. Both films were released in September. “Masterminds” grossed $17.4 million while “The Disappointments Room” grossed $2.4 million. They are set to be released on Netflix later this year.

The judge’s ruling comes as a Relativity investor is seeking to liquidate the company’s assets. The investor notes that Relativity lacks capital, has piled up millions in unpaid debts, and may face eviction from its Beverly Boulevard office.

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