Delivering a blow to Warner Bros., a federal judge on Wednesday ruled that the creators and producers of “Smallville” can amend their 2010 lawsuit accusing the company of licensing the series to its co-owned WB and CW networks “for unreasonably low” fees, thereby cutting the plaintiffs out of tens of millions of dollars.
According to Hollywood, Esq., a California judge permitted creators and executive producers Miles Millar and Alfred Gough and series producers Tollin/Robbins Productions to add a new allegation: that Warner Bros. Television’s sister company DC Comics was brought into the profit pool without the contractually required approval, reducing the plaintiffs’ profit participation to the tune of $13.4 million. In short, they say, “WBE is in effect paying itself for the Superman rights and then reducing Tollin/Robbins’ profit participation by that payment to itself.”
They originally sued for breach of contract, breach of good faith and fair dealing, and breach of fiduciary duty, but the latter claim was dismissed in 2010 after a judge agreed with Warner Bros. that profit-sharing doesn’t equal a joint venture.
During the discovery process, the plaintiffs found that Warner Bros. Television gave 5 percent of gross receipts from Smallville to DC Comics, listed by Warner Bros. as an “approved third party participant” whose involvement would reduce Tollin/Robbins’ share of the profits. However, DC isn’t a third party, but rather is a wholly owned subsidiary of Warner Bros., which the plaintiffs say makes the deal an “egregious act of self-dealing.” The studio claims the plaintiffs had known about the arrangement for nine years.
The trial had been set to begin Oct. 9, but it’s unclear whether the amended complaint will cause a delay.
“Smallville” aired for 10 seasons, from 2001 to 2011. Gough and Millar left the series in 2008 after seven seasons.
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