AMC recently paid $200 million to escape legal wrath over The Walking Dead, but if you think that’s enough for the company to just walk away without fearing any more blood-thirsty creatives, guess again. On Tuesday, a Los Angeles judge decided to allow the creator of the zombie franchise and several executive producers to pursue new legal theories and punitive damages.
That $200 million settlement came with Frank Darabont and the Creative Artists Agency and said a lot about the future of television.
But Darabont wasn’t the only one pursuing AMC for allegedly shortchanging profit participants. Initially using some of the same legal claims, Robert Kirkman, Gale Anne Hurd, David Alpert, Charles Eglee and Glen Mazzara challenged the revenue that AMC received from licensing the hit drama to its affiliate cable network.
Related Stories
About a year ago, AMC looked to have scored a huge win in that latter case when after a trial, Los Angeles Superior Court Judge Daniel Buckley ruled that it was clear AMC “shall” have the authority to define how modified adjusted gross receipts (MAGR) are collected from the exhibition of Walking Dead, and accordingly, the “plaintiffs’ fairness arguments are foreclosed by the express terms of the parties’ contracts.”
The loss was so devastating that Kirkman replaced his legal team. Out went Ron Nessim. In came Sheldon Eisenberg.
Now comes word from Buckley that he is allowing the plaintiffs to pursue two amended claims. The first is alleged breach of the implied covenant of good faith and fair dealing. According to this latest theory, AMC knew it had a unilateral right to craft the MAGR term, waited until success of the series, and then specifically crafted defined profits to ensure plaintiffs would not recover under the circumstances. And the other is alleged tortious interference. This theory (one that may soon be imitated by others in the entertainment world) is that AMC Network — which didn’t have direct contractual relations with the show’s producers — had knowledge of its sister company’s dealings and intentionally induced a breach for its own advantage.
AMC argued that the first claim negated an express term of the contract while the latter claim wasn’t governed by more plaintiff-advantageous New York law (we’ll save a fuller explanation), but Buckley rejects those contentions.
Kirkman’s side will still need to prove the elements of their claims, and AMC will have more shots to defeat the suit. But importantly the judge also rules that the amended complaint adequately pleads malice to support a claim for punitive damages.
Orin Snyder, the Gibson Dunn litigator representing AMC, downplayed the development as “just an early ruling that a new claim can proceed to discovery. It is not a ruling on the merits of that claim, on which the Judge said Plaintiffs have ‘a steep uphill battle.’ This new claim is Plaintiffs’ latest effort to re-write the contracts they signed years ago. It is just as meritless as the 7 out of 7 claims we beat at trial last year, and we are confident we will defeat this new claim as well.”
See the full ruling below. The Walking Dead litigation survives.
