4:15pm PT by Eriq Gardner
'Birdman' Credit Grab Was "Textbook Extortion," Says Worldview (Exclusive)
Birdman, starring Michael Keaton, took home the top prize at the 2015 SAG Awards on Sunday night, but a legal drama concerning the film continues to flap its wings.
As The Hollywood Reporter previously revealed, a New York judge has ordered a temporary freezing of some of the payouts to Birdman investors in the course of former Worldview Entertainment CFO Hoyt David Morgan's lawsuit against his former company.
Morgan is suing over his separation agreement, claiming that when he left Worldview — one of Birdman's main financiers — he was promised money as well as an executive producer credit on the film directed by Alejandro Gonzalez Inarritu. Morgan is seeking $2.7 million, which includes money he invested in the company as well as $1 million as the claimed value of the denied credit.
Now in advance of a Jan. 30 court hearing, Worldview has lashed back at what it calls Morgan's "sleight of hand," with references to the fact that the entertainment company is presently suing former CEO Christopher Woodrow for allegedly embezzling money from the company.
According to Worldview, Morgan was terminated with cause for misconduct and unprofessional behavior and faced with shame and embarrassment, the company's chief financial officer leveraged his knowledge that Woodrow "was embezzling hundreds of thousands (if not millions) of dollars from the Company to extort the purported Agreement."
Worldview believes the Morgan separation agreement is null and void because Woodrow had no authority to bind the company into it, that the board of directors never approved it and finally, that the agreement can't survive the statute of frauds because it does not contain all material terms.
The defendant also thinks Morgan's lawsuit doesn't makes much sense: If Worldview had cause to fire Morgan, but was concerned enough about its own legal liability to draw up a separation agreement with him, why wouldn't it just pay him instead of withholding the money and guaranteeing a lawsuit anyway? "The logical, and correct, answer is that Worldview, Inc. would not, and did not, do such a thing," says the company's legal papers.
For now, Worldview is vague about why Morgan was terminated. The legal papers (see here) reference "pervasive financial mismanagement and self-dealing," without going into specifics.
But whatever happened, Worldview says the deal that Woodrow made with Morgan didn't involve Partners VII, one of the investment vehicles set up for Birdman and the focus of the judge's restraining order last month.
According to Worldview, "The purported Agreement is all the more extraordinary in light of the fact that under Plaintiff’s interpretation of the Agreement, Partners VII, an entity in which Plaintiff did not invest, is allegedly bound to satisfy alleged obligations Morgan secured through a textbook and readily discernible act of extortion."
"Simply put, Partners VII is not an affiliate of Worldview," add the company's attorneys. "Partners VII is an entirely separate company with entirely distinct operations. Partners VII secured investments from various individuals to invest in and produce Birdman. Partners VII will then receive and disburse the returns on these investments, to the extent any returns are ever generated."
In an attempt to downplay any reason why the judge needs to keep assets frozen, Worldview says there haven't even been any payouts on Birdman yet. Fox Searchlight, the film's distributor, is charged with distributing net profits to Partners VII, but isn't scheduled to do so until at least March 1. The film is still being released internationally — there are some countries that won't see its premiere until April — and afterward, there are other, non-theatrical income streams. Worldview tells the judge that financial models for Birdman revenues assume a three- to five-year distribution of net profits.
Worldview also aims to undercut the allegation that Morgan is owed anything from Birdman.
"Plaintiff had no agreement for an executive producer credit on Birdman or for compensation therefore, and did not meet the Producers Guild of America’s requirements for an executive producer credit on Birdman." says the defendant. "Therefore, Plaintiff’s requested executive producer credit on Birdman has no monetary value."
Usher Winslett, Morgan's attorney, responds, "Needless to say, we don't agree," promising that a response that details a fuller explanation will be coming in court.