April 20, 2011 3:03pm PT by Matthew Belloni
Warner Bros. Settles Alan Ladd, Jr. Profits Lawsuit (Exclusive)
Producer Alan Ladd, Jr.is ending his long-running legal war with Warner Bros. over profits from a string of hit films in the 1980s and ‘90s.
Terms of the settlement are not being made public. Sources tell THR that attorneys are putting the final touches on a global deal, and a request to dismiss the case will be filed shortly with the court.
Ladd, the former studio executive (he famously greenlit Star Wars at Fox) turned successful producer, has been a thorn in Warners’ side since 2004, when he and Jay Kanter’s The Ladd Co. filed a bold lawsuit claiming the studio had underpaid it millions of dollars in profits from a slate of films including Blade Runner, Chariots of Fire and the lucrative Police Academy movies.
In 2007, a jury awarded Ladd $3.2 million in profits after Warners was found to have underallocated license fees for Ladd Co. movies by about $97 million when including them in large packages sold overseas and to TV outlets. The verdict was among the first to challenge the studio practice of "straight-lining," or allocating the same share of a blanket license fee to every movie in a package, regardless of whether the movie is an Oscar-winning hit or a stinker.
Warners appealed the case, arguing that Ladd had failed to prove a breach of contract and that the damages calculations weren't supported by the evidence or the testimony of Ladd's expert. But in December the court of appeals disagreed in a 25-page opinion.
"The record supports the jury's determination that Warner's straight-lining method of allocating license fees to profit participants breached the implied covenant of good faith and fair dealing," the three judge panel ruled, also upholding the damages.
The appeals panel sent the case back to the lower court for a trial on certain issues, such as Ladd’s claim that his company’s screen credits on home video versions of Blade Runner, Chariots of Fire and Once Upon a Time in America had been deleted.
A trial on those issues was set to begin next month, giving the parties an incentive to settle the case.
Warner Bros. and Ladd attorney John Gatti declined to comment.
(Full disclosure: I worked on this case as a litigator for Ladd before joining THR but wasn't involved in the trial or the appeal.)