Warner Bros. fights back in 'Smallville' profits lawsuitTue Jun 01, 2010 @ 06:07AM PST
By Matthew Belloni
But in court papers dated Friday, the Warners entities argue that the claims for breach of fiduciary duty, breach of the implied covenant of good faith and fair dealing and declaratory relief must fail because sufficient facts aren't alleged to support them. (A separate motion to strike takes aim at Tollin/Robbins' self-dealing claim, which the defendants say fails because certain "arms-length" language was absent from that deal.)
Warners is trying to kill the breach of fiduciary duty claim by arguing that no joint venture exists between the producers and the studio. That's a common tactic in Hollywood accounting litigation: A profit participant sues for both breach of contract and breach of fiduciary duty because damages can be higher, and the studio will try to eliminate the fiduciary duty claim on demurrer by arguing, as Warners does here, that it doesn't actually owe any fiduciary duties because the profit-sharing relationship doesn't amount to a partnership or joint venture.
Here there's a wrinkle, though, because Tollin/Robbins claims in the complaint that its "producers agreement" with Warners actually does explicitly define a joint venture. To this argument, Warners has an interesting response. "In fact, the producers agreement is denominated a 'venture agreement,' not a 'joint venture agreement,' and a 'venture' is not the same thing as a 'joint venture,'' the demurrer reads. The studio then helpfully provides definitions of the two terms from Black's Law Dictionary.
Is a "venture" the same as a "joint venture"? Warners says no, especially since a partnership was specifically disavowed elsewhere in the deal. The answer could be important in determining the stakes in this litigation, and it could be instructive for all future profits cases. The next hearing is scheduled for July 16 before Jane Lueke Johnson.
Warners is repped by Scott Edelman, Jessica Lund and Amelia Collins at LA's Gibson Dunn & Crutcher. The producers are repped by Michael Kump and Chad Fitzgerald at Santa Monica's Kinsella Weitzman firm.