Walking Dead co-creator Frank Darabont has agreed to back away for now from something that disrupted his five-year-old case over profits to the mega-hit zombie drama. On Thursday, his attorney told a New York judge of a deal with AMC whereby he’ll hold off litigating the claim that he deserves the same kind of accounting treatment provided to Robert Kirkman, who created the Walking Dead graphic novel.
The primary contention of Darabont and Creative Artists Agency is that AMC Network must pay a fair market fee for the show from the company’s studio arm. Estimating $270 million in damages, Darabont insists he has self-dealing protection in his contract that mandates that the imputed license fee that AMC uses should reflect an arms’ length transactions between the company’s affiliates.
Darabont’s lawyers say they discovered something astonishing: Kirkman’s deal also had self-dealing protection, they say, but with the difference that AMC was required to use an actual license fee rather than an imputed license fee.
Darabont had a “most favored nations” provision in his contract, however, so a second lawsuit was lodged in January and sought a declaratory judgment that he was entitled to the better of the two deals. In other words, if the judge rules that the imputed license fee doesn’t have to be fair market, Darabont and CAA wanted a second bite at the apple with an alternative theory.
AMC raised quite a stink about this.
In its eyes, the new claim was undermining the old ones by seeking to enforce the very deal with the provision for imputed license fee. Darbabont’s lawyers framed the argument as terribly misleading, but with a summary judgment decision still pending, it led to a new round of briefing and a hearing where AMC teased its trial strategy.
Both sides continue to wait for New York Supreme Court Justice Eileen Bransten to issue her big decision. But now in that second case, Darabont’s attorney wrote Bransten on Thursday to inform her of the new development.
“The parties have agreed not to litigate the Kirkman MFN Claims in this action, and have entered into a tolling agreement to preserve the status quo as to Plaintiffs’ Kirkman MFN Claims,” wrote Jerry Bernstein.
That means that Darabont could eventually revive the claim depending on what happens on summary judgment in his first case and how Kirkman’s own lawsuit goes. It may lighten the immediate load on discovery, although it still is notable that after months of delay wrought by the MFN claim in the second lawsuit (which had other claims related to accounting practices), the plaintiffs are at this moment backing away in court from at least one key theory. Although it won’t substantively impact Bransten’s analysis about the imputed license fee, perhaps she’ll have one less thing to think about and finally issue her highly awaited decision in the landmark Hollywood profits case.