6:43 PM PDT 3/21/2014 by Alex Ben Block
This is the latest lawsuit over the distributors’ practice of only paying profit participants based on 20 percent of what they receive instead of 100 percent of their sales.
Metro-Goldwyn-Mayer Inc. is the latest studio to be hit with a class action lawsuit challenging the way home video profits are parceled out.
In a suit filed Friday in Los Angeles Superior Court, Joan J. Buck challenges the industry policy of taking just 20 percent of the receipts from the home video release of a movie as the basis for determining the payments to profit participants. Buck’s suit says the residuals should be paid on 100 percent of what the studio receives from all post-theatrical release markets.
Buck is seeking additional residual payments from the 1965 comedy What’s New Pussycat?, which her late father, Jules Buck, produced.
“When home video distribution was in its infancy, and studios such as MGM had not yet established in-house home video departments or subsidiaries,” says the suit, “the large, independent home video distributors paid a flat 20 percent royalty to the studios from home video sales. The studios, including MGM, then paid profit participants based on the 20 percent royalty received by the studios.”
“However,” continues the suit, “after the studios established their own home video divisions, they continued the practice of only reporting 20 percent of actual receipts to profit participants, as if the profits earned by these divisions were not their own and not subject to eventual disbursement to the profit participants as well.”
In other words, what became standard practice in the early days of home video — paying royalties on 20 percent of total revenues — has continued.
Buck is suing for breach of contract and other items relating to money she says is due that has been improperly withheld.
At least three similar suits were filed in early 2013 over the same issue. The estate of director Colin Higgins (Foul Play) sued Paramount Pictures; the estate of director Stanley Donen (Singing in the Rain, Lucky Lady) sued Twentieth Century Fox; and the estate of actor Charles Bronson (Death Wish, Hard Times) sued Sony Pictures Entertainment. All three suits continue winding their way through the legal system.
The suit by Buck says that anyone who is a gross profit participant in a movie may join in the class action, which seeks revenues from all domestic and international distribution of their movies.
Buck’s suit claims she was in the dark about what the studio was doing until recently because she had relied on the reports regularly sent by the studio to represent the full amount due.
“MGM’s accounting practices,” says the suit, “have allowed MGM to wrongfully withhold a substantial amount of money it receives from home video distribution at the expense of the plaintiff and the class.”
There was no immediate response to a request for comment from a spokesperson for MGM.