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Discovery appears to have won the latest round in a big legal fight over 7 Little Johnstons, now that a magistrate judge has changed his opinion on who currently should possess disputed materials from the series.
LMNO Productions sued Discovery in June, claiming that it took advantage of a crooked accountant to steal content. The network fired back with counterclaims that it was being systematically defrauded by LMNO.
The issue at hand now is who keeps footage and other material from the second season of 7 Little Johnstons while the litigation is pending.
A master agreement between the two parties dictates that Discovery can terminate any program at will and, as long as the network reimburses LMNO for out-of-pocket costs, it will retain all of the relevant program materials.
An unsigned document sets the contract price for the season at $2.64 million, and, prior to terminating their deal in July, Discovery had paid LMNO just over $2 million in reimbursements. LMNO refused to turn over footage, and the suit followed.
After U.S. District Judge John Kronstadt preliminarily denied Discovery’s request to have the materials transferred to its possession until the lawsuit plays out, he requested a report and recommendation on the issue.
A writ of possession allows a party to temporarily recover disputed property. Here, Discovery has asked the court to order a transfer, including all source material delivered on drives, masters, rough cuts, fine cuts and locked cuts completed through July 2, graphics masters, tape logs and music cue sheets.
U.S. Magistrate Judge Steve Kim on Friday issued a recommendation that Kronstadt order a writ of possession in Discovery’s favor and suggested he could also “issue an order ‘directing the defendant to transfer possession of the property to the plaintiff’ or be held in contempt of court.”
Kim previously had denied the request from Discovery in October, finding at that time it would be premature to rule on the merits of the claims. But, now, Kim finds “it is more likely than not that Discovery will obtain a judgment establishing its right to possess the Program Materials.”
Even if the draft and unexecuted agreement for season two were deemed the governing contract, Kim found that it would not affect Discovery’s claim to possession because, like all the agreements that preceded it, it incorporated the standard terms and conditions of the master agreement.
“In short, no matter how the agreement between Discovery and LMNO is satisfied — whether voluntarily or by a judgment enforcing its terms — LMNO’s interest under the agreement is, and will always remain, getting paid for the production of 7 Little Johnstons; it has no ultimate interest in retaining exclusive, physical possession of the show as embodied in the Program Materials. Whatever LMNO may be owed and possibly awarded at judgment for its production of Season Two of 7 Little Johnstons, the end result will be the transfer of possession of the Program Materials to Discovery.”
LMNO Productions sent The Hollywood Reporter a statement in response to the decision: “We respectfully disagree with the Magistrate Judge’s recommendation to the District Court Judge – who will be making the final ruling on this issue. LMNO will file its response and objection next week, and we look forward to the District Judge’s final order. LMNO has consistently maintained that it very much wants this show to be aired, and the entire dispute is over whether Discovery has to pay the agreed price. Therefore, LMNO is heartened that the Magistrate recognizes that the question of who possesses the materials is irrelevant to LMNO’s ultimate right to recover the amounts due.”
Dec. 12, 10:15 a.m. Updated with a statement from LMNO.
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