Film Profits the Target of a New Lawsuit

The Daily Journal

March 8, 2011

By Jean-Luc Renault

LOS ANGELES – The Burt Reynolds caper “Smokey and the Bandit” and its sequel were box-office hits that still generate cash today, but the films' producer claims in a new lawsuit that two studios are blocking his efforts to see exactly how much revenue is rolling in.

The complaint, filed in Los Angeles County Superior Court on Friday, is the latest of several recent profit disputes over movies and television shows. These battles have been waged over productions for which revenue-sharing agreements were drawn up before it became standard for Hollywood contracts to include arbitration clauses.

Producer Mort Engelberg claims in his complaint that he is entitled to split half of the profits from the films, released in 1977 and 1980, with production company Rastar Features.

Rastar, a subsidiary of Columbia Pictures, was sold to Sony Pictures Entertainment in 1989.

The complaint claims that Sony has refused to audit Universal City Studios, the films' distributor, since 1989, preventing Engelberg from seeing if he is owed additional profits from the films' television and home-video distribution. The complaint claims that since 1989, Universal has refused Engelberg's attempts to audit the films' finances.

Filed by Neville Johnson of Johnson & Johnson LLP in Beverly Hills, the complaint accuses Sony, Universal and Rastar of breach of contract and unjust enrichment and seeks an accounting of the film's profits. The suit also seeks unspecified damages.

Although bookkeeping disputes are nothing new to Hollywood, where Byzantine accounting methods can minimize or erase money owed to profit participants, filings of profit-sharing lawsuits have increased since a production company last July won a $319 million verdict over revenues from the show “Who Wants to be a Millionaire.” In that case, Celador International prevailed against three of the Walt Disney Co.'s television companies when a jury ruled that the studio did not negotiate Celador's revenue-sharing agreement in good faith.

Filmmaker Michael Moore recently accused producer brothers Bob and Harvey Weinstein in a lawsuit of stiffing him of at least $2.7 million in unpaid profits from the 2004 documentary “Fahrenheit 9/11.”

Warner Bros. Entertainment is currently attempting to fend off pending federal claims that it owes money to the writer for 1973's “The Exorcist.” The studio is also a defendant in a profit-participation lawsuit filed by a producer for the television show “Smallville.”