P-P-P-Please End it! Disney's 'Roger Rabbit' Profits Case Remanded Again

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P-P-P-Please End it! Disney's 'Roger Rabbit' Profits Case Remanded Again

Wed May 14, 2008 @ 01:24AM PST

Posted by Eriq Gardner



The seven-year fight over royalties from "Who Framed Roger Rabbit?" is going to continue. In a case that has already spun off a couple significant rulings for studio profit participation cases, a California appeals ruled Friday that "Roger Rabbit" creator Gary Wolf's case against Disney over merchandising profits is remanded to the trial court for determination of a few factual issues. Here's the decision.

We'll spare you the details, but like most participation cases, this dispute stems from the vagueness of the language of Wolf's deal. When Disney originally licensed Wolf's book for the screen, the parties inadequately defined "gross receipts." Wolf later contended the term included both monetary considerations and the value of licensing agreements with biggies like McDonalds and Coca-Cola, as well as nonmonetary considerations like the use of Roger Rabbit characters at Disney's themeparks. In turn, Disney believed that the term “gross receipts” was intended to include only monies actually received and nonmonetary payments that could be “monetized." Wolf claimed the differences could be worth as much as a $120 million.

The case produced a pretty important decision back in 2003 when a California Court of Appeal ruled that studios don't owe a fiduciary duty to profit participants based solely on a participant's right to contingent compensation (like back-end royalties). That ruling makes it harder for talent to sue studios on accounting claims and recover damages beyond what might be owed on the contract. 


The Wolf case then went to trial, where a jury ruled Disney must pay Wolf at least $180,000 in underreported royalties. But considering Wolf was seeking millions and the verdict excluded the value of promotional deals from "gross receipts," Disney was considered the victor.

Flash forward to the most recent ruling, which came after both sides appealed. The appeals court upheld the $180K verdict. But Wolf had included in his damage claim money that Disney withheld because it said it had overpaid Wolf, and the appeals court agreed with Disney on that issue, so it's not clear what, if anything, Wolf is owed (or even if he might owe Disney money).

Confused yet? There's more.   

A further dispute had erupted over whether the term "purchaser" referred only to Walt Disney Prods or whether it referred to its successor and subsidiaries.

In its ruling, the court took the broader reading and remanded the case to the trial court to determine whether the misinterpretation makes any difference to the damages awarded.

Wolf is represented by LA litigator Larson Jaenicke. Disney is repped by a team from Sheppard Mullin headed by Marty Katz.

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The Hollywood Reporter, Esq. blog focuses on how the entertainment and media industries are impacted and influenced by the law. It is edited by Matthew Belloni with contributions from veteran legal reporter Eriq Gardner and others. Before joining The Hollywood Reporter, Belloni was a lawyer at an entertainment litigation firm in Los Angeles. He writes a column for THR devoted to entertainment law. Gardner is a New York-based writer and legal journalist. Send tips or comments to [email protected]

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