It's a wrap for Ladd-Kanter case

Warners' lawyer to finish closing arguments today

Closing arguments began Monday in Alan Ladd Jr. and Jay Kanter's trial challenging Warner Bros.' accounting for film package license fees, with the plaintiffs' attorney telling jurors that the studio has a practice of holding back revenue due profit participants until it is forced to pay.

"They want to keep a bigger share of it," attorney John Gatti said. "End of story."

Warner Bros. attorney Michael Bergman later told jurors that it is not a studio practice to act in bad faith or to apply different accounting standards from one picture to another. "The business of Warner Bros. in licensing films is to get the most money you can for each film," Bergman told the jury.

Bergman was set to continue closing arguments today.

The Los Angeles case is one of the first to reach a trial over the common studio practice of accounting for lump-sum license fees for film packages. Ladd and Kanter claim that Warner Bros. directs revenue away from films for which it owes a portion to third-party profit participants.

The duo also allege that they were damaged when the studio omitted the Ladd Co. credit from various packaging and end-credit sequences, but Superior Court Judge Ricardo Torres threw out those claims last week because the damages were too speculative. Torres also dismissed the plaintiffs' profit-participation claim on the film "Blade Runner" because it breached a prior settlement agreement with the studio, and he limited the damages to four years before the filing of the lawsuit on statute of limitations grounds.

The judge, however, is allowing the jury to decide claims that the studio owes Ladd and Kanter millions of dollars for breach of contract and negligent misrepresentation based on the studio's licensing activities.

Gatti told jurors Monday that evidence presented by his clients during the three-week trial, which began July 11, outweighs Warners' evidence.

Experts for the plaintiffs testified that the studio underallocated by more than $97 million the license fees for 12 movies produced by the duo and their Ladd Co. producing arm that were included in packages sold to TV and cable. Those films include "Blade Runner," "Night Shift," "Chariots of Fire" and six "Police Academy" films.

Of that amount, Ladd and Kanter are owed at least $3.2 million, Gatti said, not including several thousand dollars allegedly underallocated for "Tequila Sunrise," "Outland" and "Police Academy 6."

Ladd and Kanter's contract called for a 5% profit participation, except for "Chariots of Fire," for which they received 2.5%, Gatti said.

Bergman's closing arguments centered on the question, "Why?"

"It's a ridiculous concept plaintiffs have built their case on: that Warner Bros. would deprive itself out of 95 cents of every dollar just to not pay plaintiff a nickel," Bergman said.

Gatti, Bergman said, "completely ignored the buyers' role" in the licensing process throughout the trial. Bergman walked jurors through testimony given Friday by an expert buyer, Bob Levy, who negotiates for TNT, TNN and TCM.

Levy testified that Warner Bros. set a "gold standard" at pricing films and was the most aggressive of all studios at getting the most money for each.

"You don't earn more than $300 million by acting in bad faith," Bergman said, adding there was no evidence that Warner Bros. had any grudge against Ladd and Kanter or would discriminate against the two men. "They've earned $21 million," he said. "That's not bad faith."

Leslie Simmons is senior staff writer for The Hollywood Reporter, ESQ.
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