Animal Logic Evades Most Claims in 'Peter Rabbit' Fight

PETER RABBIT Still_2 - Publicity - H 2018
Courtesy of Sony Pictures

Jason Lust sued Animal Logic in 2016 claiming the Australian VFX house turned production company convinced him to hand over his intellectual property rights to Peter Rabbit and then shut him out of working on the project. Nearly three years later, a California federal judge has tossed much of his case.

Animal Logic countersued Lust, arguing their relationship was "at will" and their agreement dictated he would have to sign over any copyrights or other IP he owned in connection with projects he worked on for the company. It also asked the court to toss Lust's claims in a March 2018 motion for summary judgment that argued, "Only in Hollywood would someone who has received compensation and credit sue because no one asked him to do any actual work."

U.S. District Judge John Kronstadt on Wednesday granted the motion in part, allowing only one of Lust's claims to survive.

In a redacted order, Kronstadt finds the shortform agreement between the parties to be binding, even though it contemplated a longform agreement that was never signed. That SFA contained ambiguity surrounding the term "attached" and whether it meant Lust was contracted on a pay-or-play basis or he was guaranteed to be involved with the production.

"Lust declares that at the time he executed the SFA he believed that a long-form agreement would later be executed that would 'clarify' his attachment rights and 'comport with the industry standard for attachment rights' by ensuring he would actively work on certain projects," writes Kronstadt. "This statement suggests Lust did not believe that the SFA as drafted provided him with the right to work actively on all such projects."

Ultimately, the court found "the SFA requires that Lust either be paid, consistent with its terms, for each project to which he is 'entitled to be attached,' or be permitted to provide active producing services on each project." It's undisputed that Lust was paid under the SFA, so Kronstadt granted the motion with regard to Lust's claim for breach of contract. He also tossed Lust's claims for breach of fiduciary duty, fraud and declaratory relief. The judge also denied Lust's motion for summary judgment on Animal Logic's breach of contract counterclaim. (Read the decision below.)

However, it wasn't a total win for Animal Logic. Kronstadt denied the motion with respect to Lust's claims for breach of implied covenant of good faith and fair dealing. While the SFA didn't guarantee Lust's involvement, the court finds that at the time it was executed it was "generally understood" that Lust would be actively involved with some of the projects he'd been pursuing with Animal Logic. Kronstadt also found there is evidence that Animal Logic communicated with Columbia Pictures about Lust's involvement with Peter Rabbit without his knowledge, and changes were requested that would make it easier to exclude him.

"Although such an action may not have been a breach of any express terms in the SFA, it may have constituted a breach of its implied covenant of good faith and fair dealing," finds Kronstadt. "There is no evidence Lust was aware of these proposed changes to the producer agreement at the time he executed the Peter Rabbit COE and assigned his rights in the film."