Vivendi Demands Spinal Tap Members Be Ousted From Lawsuit "Absurdly" Claiming $400M in Damages

The conglomerate offers a "reality check" to Harry Shearer's claim over contingent profits and also states he has no termination rights because his co-written material was a work-for-hire.
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Forget an 11. This one is now up to at least 18.

Earlier this month, This Is Spinal Tap co-creators Christopher Guest and Michael McKean, along with the 1984 film's director Rob Reiner, joined Harry Shearer in a lawsuit that alleges they've been denied as much as $400 million in contingent compensation from Vivendi and StudioCanal.

On Tuesday, the defendants filed a scathing motion to dismiss, presenting an issue — standing — we highlighted in our earlier story.

Vivendi's court papers open nice enough, stating "genuine admiration for the talents of Harry Shearer, Christopher Guest, Michael McKean, and Rob Reiner," before launching an attempted grenade on the litigation.

According to defendants, it's customary for profit participants to request that a qualified accountant review the distributor’s records to determine whether participation statements comply with a contract. If results are disagreeable, a lawsuit gets filed.

"Here, however, plaintiffs never even got to the starting point," states a motion to dismiss (read in full). "Plaintiffs never requested, much less conducted, any audit. Thus, they lack the information they would need to assert that Studiocanal rendered erroneous or improper Spinal Tap participation statements, if that had happened. However, it did not. Had plaintiffs investigated their lawsuit before filing it — a duty that at least the plaintiffs’ lawyers bear under Rule 11 of the Federal Rules of Civil Procedure — they would have learned that they have no basis on which to assert any claims concerning the calculation and payment of the Spinal Tap participation. That is because Studiocanal has accounted and paid STP’s participation in accordance with the Agreement."

Spinal Tap Productions is a co-defendant in the lawsuit, but so are Shearer, Guest, McKean, Reiner and their associated companies. The dismissal motion argues that they don't have any standing to pursue contract claims, and that ownership of a contracting party does not confer third-party beneficiary status either. It's also argued that the Spinal Tap members signed inducement letters looking to STP to collect payments, and thus, they waived the right to sue.

"Plaintiffs may not like the fact that they have not received anything close to the $400 million in contingent compensation that their complaint absurdly claims they should have received," continues the motion. "But that is only because the movie they made has not generated anywhere near the revenue necessary to pay them anything close to that sum. As a reality check on this lawsuit, even though Spinal Tap has garnered affection in the United States, it has generated U.S. theatrical revenue of under $5 million. Revenue from other sources and territories has been similarly modest."

In the lawsuit, Shearer and his cohorts allege they are to get 40 percent of net receipts and that Vivendi isn't doing an honest job managing the flow of payments through its subsidiaries. For example, there's the issue of soundtrack music rights owned by Vivendi subsidiary Universal Music Group, and the allegation that "the accounting between the Vivendi subsidiaries is not at arm's-length, is anti-competitive, and deprives the TIST creators of a fair reward for their services."

Shearer's lawsuit also pins blame on Ron Halpern at Canal for mismanagement of the exploitation of Spinal Tap, including allegedly abandoning trademark rights and preventing band members from performing or selling merchandise.

But in the motion to dismiss, Vivendi brings the argument that the fraud claim is derived from the same allegations that comprise the contract claim and that plaintiffs may not tortify their allegations. Separately, the defendant says that the plaintiffs have failed to allege fraud with requisite specificity. Plus, regarding claims directed at a re-release of the film in 2000, Vivendi says it's outside the statute of limitations.

Nevertheless, Vivendi, represented by Robert Schwartz at Irell & Manella, does say there's one area where the court will need to get involved.

As revealed in the lawsuit, Shearer has filed notices of copyright termination for publishing and recording rights in Spinal Tap songs he co-wrote and co-recorded as well as in the film itself. He looks to exploit changes in copyright law in 1976 that allowed authors or their heirs to reclaim a grant of rights after 35 years. But there's all sorts of guidelines over how termination notices are rendered plus further restrictions. For example, if someone contributes material as a work-made-for-hire, then it's the employer who is seen as the true statutory author with no possibility of rights termination.

The defendants say today in court papers that Shearer's "notice threatens Studiocanal’s ability to distribute Spinal Tap and to otherwise enjoy its lawful rights to the movie. To clear the cloud that Mr. Shearer has improperly placed on the movie and music copyrights, once the Court resolves Studiocanal’s challenges to the complaint, Studiocanal will file a counterclaim for declaratory relief to confirm that Mr. Shearer has no termination rights. Mr. Shearer has attempted to act beyond the scope of his rights because the movie and its music were created as works for hire. The rights to such works are not eligible for termination under Section 203. Because these issues arise under the Copyright Act, Studiocanal also will seek to recover from Mr. Shearer the attorney’s fees and costs it incurs to vindicate its rights. For now, however, Studiocanal will focus the Court’s attention on the incurable defects of the amended complaint."

Plaintiffs' attorney Peter Haviland sent THR a statement Tuesday evening. “Vivendi’s motion to dismiss is a sadly predictable response," he says. "Their motion does not dispute that Vivendi has paid virtually nothing to Harry Shearer, Rob Reiner, Christopher Guest, and Michael McKean for This Is Spinal Tap. Yet it asserts these co-creators have no legal right, or standing, to challenge this absurdity. We disagree. Shearer, Reiner, Guest, and McKean formed the group Spinal Tap Productions (STP). There's no dispute that STP, also a plaintiff, has standing to proceed. Further the creators' claims to intellectual property rights to the film and its music – both trademark and copyright – cannot be dismissed through this legal standing challenge from Vivendi."

Feb. 28, 5:45 p.m. Updated with a response from attorney Peter Haviland.

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