Village Roadshow rolled the dice when it took its case against Warner Bros. over the allegedly botched release of The Matrix Resurrections out of arbitration to file a lawsuit.
That gambit went up in flames Tuesday when its bid to pursue its breach of contract case was rejected. Just a day after Village Roadshow moved to fast track the litigation, a judge refused to allow the company to file a motion for a preliminary injunction, lift the stay on the litigation and get expedited discovery — at least for now.
The case will remain paused until a hearing on March 11 when a judge will further consider the issues.
Village Roadshow had claimed Warners’ day-and-date release of Matrix Resurrections wrecked the potential of the franchise by ruining its box office gains in favor of promoting its parent company’s streamer, HBO Max. It has refused to pay the studio more than $100 million that it owes for its share of co-financing the movie.
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In its Monday filing, Village Roadshow argued it will suffer irreparable harm if it isn’t allowed to move for an injunction and lift the stay on litigation. It alleged that it’s being excluded from co-financing or co-owning sequels or remakes to key franchises that are currently being developed based on movies it shares the rights to with Warner Bros., including Wonka, Edge of Tomorrow, Sherlock Holmes, the Ocean’s series, Ready Player One, I Am Legend, Where the Wild Things Are and Yes Man.
“WB has made clear that it believes it can continue doing exactly what it has been doing,” wrote Village Roadshow, represented by attorney Mark Holscher. “Indeed, given WB’s current position with respect both to releasing these films on HBO Max and refusing to proceed with projects unless Village Roadshow relinquishes its rights, there is an imminent threat that Village Roadshow’s rights on all of these projects are at risk of being eliminated or at least significantly and irreparably impaired.”
The order denying Village Roadshow’s bid for the court to step in swung on whether there’s an emergency requiring the court’s intervention. Warner Bros. argued that emergency relief is not only unnecessary but that sanctions should be issued against Village Roadshow for taking their dispute out of two arbitrations that it initiated prior to the filing of the lawsuit.
“To begin, Village’s alleged problems are of its own creation,” wrote Warners attorney Daniel Petrocelli. “Village chose to do nothing for months, with full knowledge of its putative claims. If Village thought the claims it now brings were remotely emergencies, it should have filed its claims more than a year ago and at least two or three months ago in the case of Matrix IV.”
Warner Bros. also pointed to language in its contract with Village Roadshow requiring that any disputes relating to the agreement be settled by arbitration, where the studio moved to return the case.
While there’s a carveout in the provision for claims seeking injunctive and nonmonetary relief, Village Roadshow waived its right to seek relief that would block the “production, distribution, exhibition or other exploitation of any Picture by WB or any of its Affiliates [or] the exercise of WB’s Derivative Rights in any Picture,” according to Warners in a court filing.
Village Roadshow sought an order that would require Warner Bros. to release its films exclusively in theaters.
Chad Fitzgerald, a partner at Kinsella Weitzman who’s not involved in the litigation, said Village Roadshow faces an uphill battle in keeping the case in court. “Courts give arbitration clauses so much deference,” Fitzgerald said. “Yes, they have a carve-out, but the public policy supporting arbitration is so strong in the case law.”
Regarding the breach of contract allegations, Warner Bros. offered a peek at language in the agreement supporting its defense that it followed the agreed-upon distribution plan.
The studio challenged claims that it didn’t abide by a commitment to release the movie exclusively in theaters. It said that the distribution agreement doesn’t preclude a simultaneous theatrical and streaming release as long as it secures a “wide release” of Matrix Resurrections on at least 1,000 screens.
“By November 2020, the possibility –– and potential necessity –– of streaming releases was no secret; many major studios were shifting how their motion pictures were being released, including by releasing motions pictures directly to streaming platforms,” Warner Bros. stated. “Yet, Village did not negotiate for an ‘exclusive’ theatrical release or any further restrictions on Warner’s distribution rights.”
Warner Bros. also refuted allegations that it licensed Matrix Resurrections to HBO Max for free. It didn’t touch on allegations that it was licensed below market value.
