Warner Bros. lawsuit claims $10 million loss in brazen DVD theft

By Matthew Belloni

The home video arm of Warner Bros. has filed a $10 million lawsuit against a company the studio says agreed to destroy 2 million surplus DVDs but instead turned around and sold them on the cheap. 

The complaint, filed Tuesday in Los Angeles Superior Court, alleges that Agoura Hills-based IWMB, Inc. and its president, Cal Jones, were subcontracted to dispose of the excess Warner Home Video DVDs and Blu-Rays but intead hawked them to a third party who put them on the market at discount prices that significantly undercut legit retailers. At least 750,000 of the stolen units were sold and 250,000 remain unaccounted for, according to the lawsuit. 

Studios periodically destroy excess DVD product, which consists of unsold discs returned from vendors and defective goods. Here, WHV says it entrusted the product to Cinram Distribution, which has a deal with Warners to handle excess inventory (and which, surprisingly, is not a defendant). Cinram subcontracted with IWMB, which is alleged to have shown Warners a "fraudulent certificate of destruction" before going out and selling the DVDs and Blu-Rays on its own.  

"The resale of the Warner Product at prices that undercut the prevailing wholesale and retail prices resulted in a substantial loss of revenue to WHV, believed to exceed $10 million," the complaint says. WHV alleges fraud, conversion and violation of California's business code. It seeks punitive damages as well as an injunction against further sale of the stolen product.

Neither IWMB nor Jones could be reached for comment.

Warners is repped in the case by White O'Connor partners Andrew White and David Fink and associate Hajir Ardebili.  

The Duke wants $3 million from CBS

By Eriq Gardner

Not even death can keep rugged John Wayne away from the spoils of his successful film career.

Batjac Prods, a motion picture company founded in 1952 by the actor, is suing CBS Broadcasting for not living up to its agreement on the 1971 film, "Big Jake." Batjac alleges at least $3 million in damages.

According to the complaint filed yesterday in Los Angeles Superior Court, CBS agreed to pay gross proceeds to Batjac, consult the company with respect to advertising and distribution of the film, and make its best efforts to obtain maximum gross receipts from distribution. Batjac claims that CBS has failed to do these things, as well as improperly deducting distribution fees, failing to allocate a fair and reasonable amount of license fees when the film has been licensed for TV, and not providing Batjac with accurate accounting records.

The plaintiff is represented by Brian Wolf at Lavely & Singer. Here's the complaint.

Coincidentally, "Big Jake" was about an aging gunfighter estranged from his family figuring out a way to deal with a gang of outlaws who had kidnapped his grandson for ransom. Strained relationships, fights, and money factor into the plot. Nearly forty years later, the film may still be relevant.

Which entertainment law firms will be next to merge?

By Eriq Gardner

In the wake of this year's consolidation of  the William Morris and Endeavor agencies, are entertainment law boutiques next?

Yesterday, New York-based Frankfurt Kurnit Klein & Selz announced it is merging with music business firm Serling Rooks Ferrara McKoy & Wrob. 

Both firms come into their marriage with a stellar client roster. Frankfurt Kurnit represents the Tribeca Film Festival, Aaron Sorkin, Dean Koontz, John Goldman, among many others. Serling Rooks represents Lady Gaga, Fallout Boy, John Mayer, Ozzy Osbourne, and Moby.

The deal may be a sign of things to come.

Last week, the National Law Journal published an article bemoaning the state of the entertainment industry, highlighting how fees and other compensation have declined as studios clamp down on costs. We've covered this chilling environment before, so we're not surprised.

Craig Emanuel, chairman of Loeb & Loeb’s Los Angeles entertainment department and talent practice group, thinks that small firms have a challenging road ahead of them to stay independent.

“I do think that in the next 24 months you are going to see more consolidation of law firms, whether it’s in the form of boutiques getting together or individuals from boutiques joining larger firms,” said Emanuel in the NLJ article. "Like in any business in a depressed time, finding a way to share overhead with somebody else becomes a critical factor."

Power Lawyers 2009 -- the slideshow

By Matthew Belloni

Thanks to all who made our 3rd annual Power Lawyers issue and breakfast a success. Here's the list, the coverage of the event and a slideshow of photos. 

Warner Bros.' John Schulman to head USC entertainment law program

By Matthew Belloni

Warner Bros.' longtime top lawyer John Schulman is joining USC Law School to spearhead a new entertainment law program.

Schulman, who retired from his position as Warners’ executive vp and general counsel in December after a 25-year run, will start Saturday at USC with an eye toward launching the program in fall 2010.

“There is no more accomplished lawyer in the entertainment industry,” USC Law dean Robert Rasmussen said. “I am confident that with John’s vision, we will have a program that is second to none.”

Despite its location in Los Angeles and a long list of alumni in Hollywood, USC Law currently does not offer a dedicated entertainment specialty like some other law schools, including crosstown rival UCLA.

But under Rasmussen, who joined the school two years ago, USC is attempting to raise its industry profile. At a breakfast with Hollywood alumni in May, the dean said enhancing the school's entertainment curriculum was a top priority. The new program will increase the showbiz-focused courses at the law school, as well as allow students to take classes at USC’s vaunted film school and its Marshall School of Business.

The school has not indicated whether it will hire additional faculty, but bringing aboard Schulman — who developed a thick Rolodex during his career atop the largest studio legal department — should help attract legal talent to the school.

“This is part of my next adventure,” Schulman said. “I am very excited about joining USC Law School and creating one of the nation’s best entertainment law programs.”

Paradigm sues Lauren Holly for 'NCIS' commissions

By Eriq Gardner

"NCIS" actress Lauren Holly has been sued by her former talent agency for failing to transmit at least $83,790 in commissions.

Paradigm filed the lawsuit last week in California Superior Court. The agency claims to have represented Holly in a 2005 deal with CBS Paramount to star in "NCIS." The following year, Pardigm and Holly split, and the parties agreed that Holly would continue to pay her 10 percent commission on her "NCIS" deal to the agency.

Paradigm, represented by Joseph Costa at Costa Abrams & Coate, is now demanding that money. Here's the complaint.

Inside the Octomom reality show contract

By Eriq Gardner

Last week, "Octo-Mom" Nadya Suleman signed a deal with Eyeworks, a British production company, to begin work on a TV show that will feature her 14 children. Because the children are minors, the parties took the contract on Friday to the Los Angeles Superior Court for approval.

The papers reveal that the kids will collectively earn nearly $250,000 over the next three years, including $125,000 for 36 days of shooting in the first year, $75,000 for 21 days of shooting in the second year, and $50,000 for 14 days of shooting in the third year. Of course, the money will be split among the 14 children, which adds up to less than $18,000 per kid or about $250 per kid per day of shooting. 

SAG doesn't hold jurisdiction on reality performers, but for perspective, the union scale minimum was reportedly set at $800 per day in its last deal with AMPTP. 

Suleman's contract for her kids is raising the eyebrows of some child performer monitors. One group is asking the Superior Court to appoint a guardian to oversee the financial interests of Suleman's 14 children.

This isn't only a question of money. Reality shows like "Jon & Kate Plus 8" that feature children have been investigated by authorities to see whether working conditions violate child labor laws. 

Plus, reality TV contracts have been known to be incredibly generous towards producers. For example, the contract signed by the women in "Real Housewives of New Jersey" gave producers among many other jaw-dropping clauses the right to film the ladies in everything except bathing, urination/defecation, and sex and gave producers 10 percent of income of "any and all gross income...unrelated to the Series" the women earned up to four years after the last episode of the series.

Hopefully, the judge will make sure that Suleman's children made out better.

Google suggests defamation

By Eriq Gardner

A lot of folks think the British are crazy when it comes to defamation, but never insult someone in French.

Two companies, Direct Energie and CNFDI, sued Google because when users entered the company name in the search browser, the Google Suggest feature automatically completed their query with the French word for "scam." Google works by algorithm, based on the most common searches, but that hasn't stopped those companies for suing Google for defamation.

Now comes stunning news from TechDirt that Direct Energie won their lawsuit! The French judge there declared that no algorithm could justify the prejudice caused by Google and ordered Google to change the results. Another French judge in the CNFDI case declared that Google could be found liable because the company had informed Google of the situation and so Google had no safe harbors from liability. The judge, though, backed away from ordering Google to make changes, citing free speech and citizens' rights.

Alas, we decided to check on all of the major film studios in Hollywood. It seems that Google Suggest believes that most people searching 20th Century Fox, Warner Bros., Paramount, Disney, etc. want jobs. Hell, that might be true. Don't sue. 

Destiny's Child heads to trial in song theft case

By Eriq Gardner

One wonders at times whether social media platforms were invented to let fans compare notes on songs and speculate on who is ripping off whom. Witness the controversy last year when rock guitarist Joe Satriani and an army of YouTube supporters alleged that Coldplay's "Viva La Vida" sounded just like Satriani's "If I Could Fly."

Coldplay now has company.

Destiny's Child is facing allegations that they stole another musician's song. And this one is headed towards trial.

Illinois District Court Judge James Holderman has ruled that a jury will need to hear testimony from Destiny's Child and their recording team to determine whether they stole Rickey Allen's 1994 song "Cater 2 U" to craft a song with the same name that came out in 2004 and had the same "three note theme."

Holderman quotes an "expert" who says that the songs "do not sound, at first listen, very much alike." The judge adds that the phrase "cater 2 u" is too general to be protected, but that the law requires him at the summary judgment phase to view the evidence in a light most favorable to the plaintiff and determine whether there was a reasonable possibility that Destiny's Child had access to the song. Holderman says this one is a close call, and so, "the resolution of which hinges entirely on the credibility of the witnesses."

Therefore, Beyonce may be appearing in Illinois soon to explain why she isn't a song thief.

Power Lawyers 2009

By Matthew Belloni

It's Lawyer Christmas in Hollywood today. Our annual look at the 100 most influential attorneys in entertainment is out. Check out the list here (which includes Jake Bloom, Bert Fields and Patty Glaser, pictured above as the most expensive tractor drivers in history), as well as a Q&A with Warner Bros. president of worldwide business affairs Steve Spira, who is getting THR's Raising the Bar Studio Lawyer Award at today's Power Lawyers breakfast. And we also included a look at some of Hollywood's top mediators, as well as two attorneys who put their skills to use winning CBS's "The Amazing Race."