JUDGE MICHAEL JOHNSON
DEPARTMENT 56
Hearing Date:
Case Name:
Case No.:
Matters:
Moving Parties:
Opposing Party:
August 28, 2012
Killara Productions et al. v. Time Warner Entertainment et al.
BC434445
Motions for Summary Judgment/Adjudication
Defendants
Plaintiffs
Rulings: Motions for summary judgment/adjudication are denied.
Plaintiffs Killara Productions Inc., Leonardtown Productions Inc., and Tollin/Robbins
Productions LLC filed this action against various Defendants relating to the television series
Smallville (“Series”) that aired on Defendants’ networks. Plaintiffs’ remaining causes of action
are for (3) breach of contract, (4) breach of the covenant of good faith and fair dealing, (5)
inducing breach of contract, (6) intentional interference with contract, (7) declaratory relief, and
(8) accounting.
Defendants Warner Bros. Television (“WBTV”), WB Communications Inc., Warner Bros.
Entertainment Inc., and Time Warner Inc. (collectively “WB Defendants”) move for summary
judgment/adjudication. Defendant The CW Network (“The CW”) also moves for summary
judgment/adjudication and joins in the defense objections.
Motions to Seal –
Both parties have moved to seal certain documents filed in conjunction with the motions. The
documents contain financial information and financial agreements. Pursuant to CRC 2.550, the
documents are confidential; disclosure will cause competitive harm; the proposed sealing is
narrowly tailored; and no less restrictive means exist to protect them. The motions are granted.
Judicial Notice –
Plaintiffs request judicial notice of complaints filed in other actions, by WBTV and against the
WB Defendants. The RJN is granted only as to the fact of their filing.
Objections –
Plaintiffs object to portions of Defendants’ declarations; Objections 2-3, 6, 9 and 71 are
sustained, and all others are overruled. Plaintiffs object to Defendants’ responsive separate
statements and their prefatory “general objections”; all objections are overruled.
Defendants object to portions of the Simon declaration; all objections are overruled. Defendants
object to portions of the Marks declaration; Objections 4-5, 13-19, 68-70 are sustained, and all
others are overruled. Defendants object to portions of the Goldstein declaration; all objections
are overruled. Defendants object to exhibits attached to the Kinsella declaration; all objections
are overruled.
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Facts –
Tollin/Robbins Productions LLC (“Producers”) and Killara Productions Inc. and Leonardtown
Productions Inc. (collectively “Writers”) entered into agreements in which they were to receive
guaranteed fixed per-episode compensation and contingent compensation in the form of a
percentage of the Series’ “Modified Adjusted Gross Receipts” (“MAGR”), calculated pursuant to
a “Modified Adjusted Gross Definition” (“MAGD”).
The Series was developed for WBTV by the Producers. On 9/13/00, WBTV pitched the Series
to the Fox network (“Fox”); later that day, WBTV also pitched the Series to The WB network.
WBTV licensed the Series to The WB in September 2000; the Series began airing in October
2001. The WB agreed to pay a license fee for the first season of the Series that was higher than
the license fees The WB paid for the first season of 21 out of 23 other one-hour dramas that
premiered on The WB between August 1996 and December 2003 (“23 WB Dramas”). The two
series of the 23 WB Dramas that had the same license fee as the Series were cancelled after their
first season. In 2006, The WB merged with another network to form The CW, on which the
Series continued to air. The Series aired for ten seasons on television for a total of 218 episodes.
The Writers served as “showrunners” for the Series through the seventh season. The Producers’
role is to best complete episodes through a series’ budget, which is initially determined based on
what the network is willing to pay and what the studio is willing to deficit.
CCP §437c(f) –
Plaintiffs argue that Defendants’ present motions violate CCP §437c(f)(2) because they are
renewed motions on the same issues asserted in their prior motion for summary adjudication.
Defendants’ present motions are not identical to the prior motion and instead raise significantly
different issues than the narrow damages issue previously asserted. See Patterson v. Sacramento
City Unified School Dist. (2007) 155 Cal.App.4th 821, 827. Additionally, the prior motion was
denied on procedural grounds and the merits were not addressed. The present motions do not
violate §437c(f)(2).
Plaintiffs argue that Defendants’ present motions violate CCP §437c(f)(1) because they do not
dispose of an entire cause of action. Plaintiffs’ action asserts two theories of liability, selfdealing and accounting. Although Plaintiffs have attempted to blur the distinction between the
two theories in their allegations, this cannot defeat an appropriately directed motion for summary
adjudication. See Lilienthal & Fowler v. Superior Court (1993) 12 Cal.App.4th 1848, 1854-55.
Defendants’ motions do not violate §437c(f)(1).
Breach of Contract Causes of Action –
1.
Affiliate Provision
WBTV argues that it did not breach any of its express or implied contractual duties with
Plaintiffs because it had the absolute discretion to determine the terms of its license agreements
and to do business with its affiliates. It is undisputed, however, that the Writers’ MAGD
contained a provision that stated “[a]ll agreements between Warner and its parent, subsidiary,
and affiliated companies shall be made in good faith and on the substantial equivalent of an
arms-length basis.”
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Plaintiffs have demonstrated triable issues regarding these provisions: whether WBTV complied
with its arms-length obligations, whether a provision which proposed to add that the agreements
be “for fair market rates consistent with licenses granted by Warner to non-affiliates” was
included in the Producers’ MAGD; whether the absolute discretion clause applies to the
Producers without limit; and whether the Producers’ MAGD inherently included the equivalent
of an affiliate, arms-length provision. These triable issues prevent summary adjudication of both
the express and implied contractual claims.
2.
Damages
WBTV argues that Plaintiffs’ damages are speculative because they cannot establish greater
profits if the Series had been licensed to Fox or another network or if the Series’ license
agreements had contained more favorable terms. Plaintiffs need only establish reasonable
certainty regarding the fact of their damage or harm, not regarding the monetary value of the
damages they have suffered. Even as to this issue, the parties’ arguments and evidence shows
that the fact of Plaintiffs’ damage is an inherently factual determination that cannot be summarily
adjudicated.
Plaintiffs have demonstrated the following triable issues: whether Plaintiffs received terms
comparable to other WBTV licensing deals; whether Plaintiffs’ received terms that met the
customs and practices of the industry; whether Plaintiffs would have obtained greater
compensation if the Series’ license agreements had higher licensing fees or more favorable
terms; whether Plaintiffs would have received greater compensation from The WB and CW if the
Series’ license agreements were negotiated and renegotiated in good faith and at arms-length;
and whether other series cited by WBTV are in fact comparable to the Series.
3.
Remaining WB Defendants
The WB Defendants (excluding WBTV) assert that Plaintiffs cannot establish that they
intentionally interfered with the contracts or induced WBTV to do so. These WB Defendants
primarily argue that Plaintiffs cannot recover on their breach of contract claims, and for this
ground they have failed to cite to either their separate statement or to supporting evidence. For
that reason they have failed to carry their initial burden on summary judgment.
And in all events, Plaintiffs have submitted evidence that executives from these remaining WB
Defendants (particularly the president of WBE) intervened in the decision to license the Series to
The WB and in renegotiations of the license agreements. This raises triable issues of fact for the
interference claims against these WB Defendants.
Statute of Limitations –
The WB Defendants argue that Plaintiffs’ action is barred by the statute of limitations, because
Plaintiffs knew all relevant facts through the Series’ initial licensing in 2000 and subsequent
renewals, but did not file this action until 3/10. They contend this violates the 4 year statute of
limitations on the breach of contract causes of action and the 2 year statute on the interference
causes of action. There are triable issues regarding this defense.
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First of all, it is not clear as to precisely when the statute of limitations accrued under the
circumstances of this case. The WB Defendants cite to Ladd v. Warner Bros. Entertainment, Inc.
(2010) 184 Cal.App.4th 1298, in support of their argument that each licensing agreement triggers
a separate statute of limitations. But Ladd did not consider the statute of limitations with respect
to multiple license agreements and only noted, without discussion, that the trial court determined
the applicable statute of limitations based on a profit participation claim of a license agreement;
184 Cal.App.4th at 1309 n.7.
In all events, Plaintiffs have raised triable issues as to whether the tolling agreements only cover
routine audits and not Plaintiffs’ breach of contract and interference claims, by showing that the
language of the tolling agreements is broad (“any legal, equitable bars or limitations” on
Plaintiffs’ rights), and that the audits addressed under-market network license fees.
Plaintiffs have also raised triable issues as to whether the WB Defendants other than WBTV are
not bound by the tolling agreements, by showing that WBE signed some of the agreements, and
that it would be illogical to require filing claims against affiliates while tolling claims against the
principal party.
Finally, Plaintiffs have raised triable issues as to whether they are entitled to delayed accrual
based on the discovery rule under cases such as April Enter. v. KTTV (1983) 147 Cal.App.3d
805, 826.
Punitive Damages –
The WB Defendants (excluding WBTV) move for summary adjudication of Plaintiffs’ claims for
punitive damages. They contend punitive damages are not available in actions arising out of
contract, including interference claims; see PM Group, Inc. v. Stewart (2007) 154 Cal.App.4th
55, 69. Plaintiffs have raised triable issues on this question, because their punitive damage
claims are directed against non-parties to the relevant contracts; see Ramona Manor v. Care
Enter. (1986) 177 Cal.App.3d 1120, 1142.
These WB Defendants also contend that Plaintiffs cannot meet their evidentiary burden of
proving oppression, fraud or malice by clear and convincing evidence. But Plaintiffs have raised
triable issues on this question, because weighing the evidence regarding entitlement to punitive
damages is a matter for the jury.
The CW’s Motion –
The CW separately moves for summary judgment or adjudication on the causes of action for
interference with contract. It relies on the same grounds as the WB Defendants (no breach of
contract, no damages, the statute of limitations, and punitive damages), and for the reasons
discussed in the ruling on their motion there are triable issues of fact for these grounds.
Independently, The CW argues that it did not engage in intentional acts designed to interfere
with Plaintiffs’ contracts, because it determined and approved the license fees for the Series and
was entitled to ask for and pay a lower fee than Plaintiffs would have preferred. But Plaintiffs
have raised triable issues with evidence that The CW’s license fees were predetermined before
any negotiations took place between The CW and WBTV, resulting in fees that were lower than
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if The CW and WBTV had negotiated in good faith and at arms-length. This supports an
interference claim. See Woods v. Fox Broadcasting Sub., Inc. (2005) 129 Cal.App.4th 344, 356.
The CW also argues that its actions were not the proximate cause of any damages to Plaintiffs,
because it is a new entity created in 2006 and simply followed the process that had been created
under The WB’s regime. Plaintiffs have submitted evidence which establishes triable issues for
this argument: whether there is an exception to successor liability, see Fisher v. Allis-Chalmers
Corp. Product Liability Trust (2002) 95 Cal.App.4th 1182, 1188, and whether The CW’s conduct
was a knowing continuation of the tortious conduct of The WB.
Disposition –
The motions for summary judgment and summary adjudication by all Defendants are denied.
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