Four Studios Targeted in Class-Action Suit Over Home Video Royalties

The Hollywood Reporter

Jan. 16, 2013

By Matthew Belloni

Fox, Paramount, Universal and Sony are alleged to have withheld millions of dollars in revenue from movies made in the 1970s

Four Hollywood studios have been hit with class-action lawsuits alleging they systematically underpay profit participants on movies distributed via home video.

20th Century Fox, Paramount Pictures, Universal Pictures and Sony Pictures were sued Wednesday in Los Angeles Superior Court by talent whose decades-old contracts allow them to share in the revenue from hit films. The suit against Fox was filed by filmmaker Stanley Donen over his 1975 movie Lucky Lady; the suit against Sony was filed by Larry Martindale, trustee of the estate of late actor Charles Bronson, over the 1975 film Hard Times; the suits against Paramount and Universal were filed by filmmaker Colin Higgins over the films Foul Play and The Best Little Whorehouse in Texas, respectively.

The suits seek to challenge a studio practice of accounting to profit participants based on only 20 percent of home video revenue. During the rise of the VCR in the early 1980s, studios began paying talent based on a 20 percent royalty. That rate soon became an industry standard (despite protests from talent unions and lawyers) and has been written into many contracts for film and television.

But the plaintiffs' contracts predate the 1980s, so they argue that they should be entitled to share in 100 percent of home video revenue. The plaintiffs cite language in their contracts to support the claim.

“Rather than include 100 percent of the money earned from home video distribution when accounting to profit participants, [Sony] only includes 20 percent of the earnings and, on information and belief, wrongfully retains the balance,” the Bronson lawsuit alleges, mirroring language in the other suits.

Exact damages are not alleged, but the claims could total in the millions of dollars.

For instance, the Bronson suit alleges that his Hard Times contract contains a profit-participation definition that allows the late actor to share in 10 percent of “all” gross receipts that the studio collects. But the studio has been paying him based only on 20 percent of revenue. “As a result, 80 percent of the income derived from the home video distribution is not being credited as income to Plaintiff and the Class when [Sony] accounts to profit participants,” the suit alleges.

The four lawsuits were filed on behalf of other potential class members who might be added later, meaning the lawyers for the plaintiffs likely are talking to other film stars and directors who made movies before the 1980s who might be added to the suit.

The four lawsuits, filed by teams from L.A.'s Johnson & Johnson, Kiesel & Larson, Pearson Simon Warshaw & Penny, allege causes of action for breach of contract, breach of implied covenant, money had and received, declaratory judgment, open book account, conversion and a violation of California's business and professionals code.

The Hollywood Reporter has reached out to the studios for comment and will update with a response.