September 01, 2011 11:20am PT by Eriq Gardner
'Napoleon Dynamite' Producers Sue Fox Searchlight for $10 Million in Profits
The production company behind Napoleon Dynamite is suing Fox Searchlight for $10 million for allegedly underreporting royalties and taking improper revenue deductions from the hit 2004 indie comedy.
Napoleon Pictures filed the lawsuit Aug. 30 in Los Angeles Superior Court. The plaintiff claims that at the Sundance Film Festival in 2004, the breakout comedy directed by Jared Hess and starring Jon Heder had its choice of several distributors. But producers went with Fox Searchlight not just because of the $4.75 million up-front fee but because of promised high royalties for home video sales.
In its term sheet, a copy of which is attached to the complaint, Searchlight agreed to pay 31.66 percent of net profits on home video. But the lawsuit says that a 2008 audit revealed that Fox was only paying net royalties on home videos at a 9.66 percent rate, and there were underreported royalties and improper deductions.
Napoleon Pictures also alleges breach of contract and negligent misrepresentation with respect to other income from the film, which grossed nearly $45 million at the domestic box office in 2004 and has remained wildly popular on home video ever since.
The complaint, filed by Marty Singer and Allison Hart of LA's Lavely & Singer and obtained by THR, says:
"In addition to understating Napoleon's home video royalties, the audit also revealed that Fox has breached the agreement in multiple other respects, including without limitation by underreporting pay television license fees, failing to report electronic sell-through revenue, charging residuals on home video sales, as well as overcharging residuals on home video sales, deducting a number of costs and charges it has no right to deduct and/or for which there is no supporting documentation."
We've reached out to Searchlight for comment and will update with a response.