Ladd jury deals studio setback

WB must pay up over profits

After a civil trial closely watched in Hollywood, a jury Thursday ordered Warner Bros. to pay producers Alan Ladd Jr. and Jay Kanter $3.2 million in revenue from a series of movies licensed in packages to TV and cable stations.

The case is one of the first to reach a verdict in challenging studio allocations of lucrative package fees collected for film licenses. Ladd and Kanter sued the studio in 2003, claiming that Warners improperly directed revenue away from packaged films on which the duo were owed profit participations.

"I'm thrilled," Ladd said of the verdict. "I hope it makes a difference in the accounting process in this business. The studios should stop being corrupt. When they start being honest, this business will change."

Said a Warners spokesperson: "While we are disappointed by the jury's verdict, we understand their confusion over damages. We will now look at this entire proceeding and hope to rectify this erroneous decision at this level or on appeal."

The Superior Court jury delivered a unanimous verdict in finding that the studio breached its duties to the producers. The 12-juror panel then ruled 10-2 to adopt the plaintiffs' suggested damage calculations for 12 films produced by the Ladd Co., including "Blade Runner," "Chariots of Fire" and the "Police Academy" movies.

Damages were based on an auditor's report prepared at the request of Ladd and Kanter.

The producers also alleged that they were harmed when the studio omitted the Ladd Co. credit from various packaging and end-credit sequences, but Judge Ricardo Torres threw out those claims last week and limited damages to four years before the filing of the lawsuit, significantly reducing any potential award.

Ladd and Kanter had sought $9 million in opening statements in the three-week trial, which began July 11.

Warners outside counsel Michael Bergman, of Weissmann Wolff Bergman Coleman Grodin & Evall in Beverly Hills, said "without question" he would file a motion asking the court to mull the evidence and either affirm the jury's verdict or dismiss it.

"There's no basis for the jury to determine what the post-1999 damages were, other than the little guy against the big studio," Bergman said.

After the verdict, several jurors told a reporter that the studio clearly breached its contract with the producers and its duty to act in good faith. Deliberations focused only on assigning a fair amount of damages, they said.

"Most definitely, there was some manipulation going on," juror Don Prudhomme said.

He added that the studio's experts failed to convince the panel that the revenue allocations among the various films were justified. "They control all the money and the paperwork, and they say, 'We'll keep all the money and allocate it however we like,' " he said.

Juror Mark Spearin said the studio accounting process seemed "slipshod" and "arbitrary."

"It seems to be a bottom-line process," Spearin said. "Divide the money in whatever way to make the (film) buyer happy and close the deal. The participant suffers, of course."

The two producers' attorney, John Gatti of Greenberg Traurig, praised the verdict and the jury.

"The jury did a wonderful job in considering all the evidence," Gatti said outside the courtroom. "Mr. Ladd and Mr. Kanter deserve this verdict. They generated millions of dollars for Warner Bros. and were owed this money. And the jury correctly concluded they were owed for their contributions."

Editor's note: THR, ESQ., editor Matthew Belloni worked on this case in 2004-05 as an attorney for the plaintiffs. Leslie Simmons is a senior staff writer for THR, ESQ.