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The legal battle waged by Village Roadshow against Warner Bros. over the allegedly botched release of The Matrix Resurrections may still be sent to arbitration, but an L.A. judge allowed the case to proceed while the issue remains undecided.
The order gives Village Roadshow an incremental win in a case that’s since expanded to include claims that the major studio is shutting it out from being a co-owner and financial partner on dozens of projects that are being developed based on movies it shares the rights to.
In a testy Friday afternoon hearing before Judge David Cunningham, attorneys for Warner Bros. and Village Roadshow sparred over arguments that the case should be sent to arbitration before consideration of whether the major studio should be blocked from excluding its partner of 25 years from current projects, including Wonka and Edge of Tomorrow.
Diana Torres, representing Village Roadshow, argued that the case belongs in court and that an injunction is necessary to keep Warner Bros. from continuing to violate its contractual obligations. “It’s not like nothing is happening,” she said. “There’s active development on 15 of our films right now that we’re being shut out of. That’s what we’re seeking to remedy.”
Warner Bros.’ attorney Daniel Petrocelli responded that an order forcing them to challenge an injunction “eviscerates our contractual right to arbitrate.”
Heading into the hearing, both sides have been quarreling over whether it was appropriate for Village Roadshow to take its case out of arbitration to sue in Los Angeles Superior Court. Village Roadshow argues it will suffer irreparable harm if it isn’t allowed to move for an injunction. It claims 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 Sherlock Holmes, the Ocean’s series, Ready Player One, I Am Legend, Where the Wild Things Are and Yes Man.
Petrocelli, however, pointed to language in the agreements between Village Roadshow and Warner Bros. dictating their relationship holding that any disputes arising out of their contract will be sent to arbitration. He argued that the issue of arbitrability should be decided before Cunningham considers whether to issue an injunction.
Asked whether Village Roadshow’s case is covered by the parties’ arbitration provision, Petrocelli answered that the question should be decided by an arbitrator and not the court.
“The court’s only function on the motion is to determine the validity of the arbitration contract, which neither party is disputing,” he said.
After Warner Bros. insisted that its motion to take the case out of court should be heard first, Torres replied that the studio neglected to mention that the parties’ contract has a carveout for claims seeking injunctive and nonmonetary relief. She claimed that the major studio is violating its contractual obligations to allow her client to participate in projects in which it has rights.
Torres said, “For years, Wonka was on the parties’ mutual list of films to which Village Roadshow had finance and derivative rights. It was on for years. We were involved in the creative and budgeting process. We got the script. We were giving input. And then we get a lawyer letter saying ‘Oh, it’s not one of our films.'”
Matt Kline, also representing Warner Bros., responded that it’s too late for Village Roadshow to move for an injunction because it received the letter informing it that it’s no longer a part of Wonka in June 2021.
“If they were really worried about preserving status quo, if they really needed injunctive relief, the time to file was nine months ago,” he said.
Kline added that Village Roadshow is now being excluded from projects because it improperly disclosed the script for the movie Wonka by suing in court.
Ultimately, Cunningham sided with Village Roadshow by allowing it to file a motion for preliminary injunction at the same time Warner Bros. files its motion to compel arbitration. A hearing was set for May 17.
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