Burkhalter Kessler Clement & George recently helped plaintiffs win their contract dispute against film studio giant Universal City Studios. In this case the people behind the hit cop drama Columbo entered an agreement with Universal Studios. The agreement essentially stated Universal would pay a share of the popular crime drama Columbo’s profits.
The key to this dispute: how “profitable” was defined and calculated within the contract.
Universal grossly underpaid the plaintiffs. The plaintiffs fought back with contract dispute claim.
The agreement between Universal and those behind Columbo included a provision that stated Universal was not required to provide profit participation statement (PPSs) unless the series was profitable. For over four decades the studio claimed the series was not producing a profit. Evidence became available in 2016 that appeared to show the series had grossed over $700 million — money Universal had not shared with those behind the series.
If the series was making so much, how could the studio claim it was not profitable? Those behind Columbo found evidence Universal was using two accounting moves to reduce the amount of reportable profit. The first involved deduction of “studio” distribution fees from reported profits and the second a deduction imputed interest cost.
Based on this information, those responsible for Columbo sued Universal for breach of contract.
Complicated case broken down into phases. Plaintiffs secure big win.
The case moved forward in three phases:
- Phase I: The jury. In this portion of the trial the jury found Universal violated its contract when it deducted studio distribution fees.
- Phase II: The bench trial. Here, the Court stated Universal erred in reporting only 20% of the home video revenue and expenses. Instead, the Court stated Universal should have reported 100%.
- Phase III: Damages. The Court ordered three accounting referees to review the numbers and use the calculations provided within the contract to determine the appropriate award. A full breakdown of this process, along with additional information about this case, is available here.
Taking on a big name like Universal is intimidating. However, cases like this come down to the same thing: the language of the contract. Whether looking to put together a contract or enforce its terms, it is important to carefully review this language. A single misstep can make or break a case.