Despite a second shot at summary judgement, AMC still can’t avoid a trial over Frank Darabont’s share of profits from The Walking Dead, though a New York judge has found the network doesn’t owe the co-creator a share of product integration revenue.
Darabont and CAA first sued back in 2013 and claim they are owed $280 million from the artificially low license fees that AMC studio division has allegedly imputed from AMC’s cable network. In 2018, they filed a second suit specifically targeting other revenue items such as home video and merchandise. AMC says its calculation is governed by how it defines the modified adjusted gross receipts (MAGR).
The parties dispute whether a season two amendment to his original deal, which had a different MAGR definition, was triggered because they disagree on whether Darabont rendered “executive producer/showrunner services for all episodes in Season 2.”
After a big win in a parallel fight against comic book creator Robert Kirkman and four other stakeholders, AMC asked for another shot at arguing its summary judgment motion against Darabont in his second suit.
While Darabont argued that case — in which L.A. Superior Court Judge Daniel Buckley held AMC’s MAGR definition used to calculate profit participation was final and binding — isn’t relevant to this one, Judge Joel M. Cohen isn’t convinced.
“Indeed, it would be odd — and more than a little arrogant — for this Court not to consider the detailed analysis of another judge with respect to AMC’s MAGR definition for the same television series at issue in this case, albeit with a different set of contracts,” writes Cohen in his order granting AMC’s motion to reargue its motion for summary judgement. He finds it’s now clear that Darabont doesn’t dispute “that AMC’s MAGR definition is binding and enforceable, without regard to subsequent negotiation, subject to express limitations contained in the agreements;” isn’t pursuing a claim based on AMC’s failure to negotiate the MAGR definition; and it’s not necessary for the court to reach at this stage the question of whether their deals “require post-contractual negotiation of AMC’s MAGR definition.”
Cohen on Thursday granted in part AMC’s motion for summary judgment, replacing his April 10 decision, and dismissed Darabont’s breach of contract claim in relation to product integration revenue. He found there is no reasonable reading of their agreements to suggest Darabont is entitled to a share of that money. The rest of Darabont’s claims survive.
The court notes that now-retired judge Eileen Bransten previously held that whether or not Darabont satisfied the conditions necessary to trigger the terms of the second season deal is a question of fact not appropriate for summary judgment, and Cohen sees no reason to deviate from that decision. He also finds there are triable issues of fact regarding “the precise contours of AMC’s MAGR Definition” and that Darabont’s implied covenant claim isn’t redundant.
Writes Cohen in the opinion, which is posted below, “The determination of whether AMC acted arbitrarily, irrationally, or in bad faith in defining and applying MAGR so as to breach the implied covenant of good faith and fair dealing presents disputed questions of fact for trial.”
A key issue to watch at trial, which Cohen nodded to but didn’t address, will be whether the Affiliate Transaction Provision in their agreement applies to the imputed license fee. It requires AMC to base its license fee on comparable deals with unrelated third-party distributors, and AMC argues it doesn’t apply because the imputed license fee is controlled by its MAGR definition.
AMC’s lawyer Orin Snyder of Gibson Dunn on Tuesday sent The Hollywood Reporter this statement in response to the ruling: “We are pleased by Judge Cohen’s ruling, which knocks out a number of the claims made by CAA and Frank Darabont, helpfully clarifies legal issues in our favor and sets the stage for trial. We are confident we will prevail at trial, just as we did in the Kirkman case in Los Angeles several months ago.”
Darabont’s attorney Dale Kinsella of Kinsella Weitzman also sent THR a statement. “Justice Cohen has put the final nail in the coffin of AMC’s seemingly endless attempts to avoid trial,” he said. “He denied AMC’s renewed motion for summary judgment and reaffirmed that this case will proceed to a jury trial in April. Any effort to otherwise spin the court’s ruling is outright false and misleading, which is sadly typical of AMC’s entire approach to this case.”
