Ladd's the Victor in $3.2M 'Blade Runner' Suit (updated)

A state appeals court on Tuesday upheld producer Alan Ladd Jr.’s 2007 victory against Warner Bros. in a lawsuit involving sales of movie packages to television.

“After 11 years,” Ladd told TheWrap, with relief in his voice, “I’m thrilled it’s coming to an end.”

The case involved a practice called "straight-lining," in which Warner Bros. would sell a package of films to a TV or cable network and share the profits from the entire package equally among the producers of the films involved. That practice didn’t reflect the quality or desirability of any given film in the package, and that’s why Ladd sued.

(Read Tuesday’s ruling here.) Laddie filing

The studio’s “underpayment,” as the court decision calls it, of license fees owed to Ladd began on Aug. 1, 1999.

“I thought many years ago that they would want to settle this, but it was just pure arrogance on their part to keep going and going,” Ladd said. “They thought that we were just a little gnat screwing around with a multi-billion corporation and we should get out of their way.”

Though it might in fact, not be over … yet. "We respectfully disagree with the Court’s ruling,” a Warner spokesman told TheWrap, “and will be considering our options with respect to further review."

In 2007, the Ladd Co., run by Ladd and producer Jay Kanter, won a $3.2 million jury verdict against Warner Bros. for shorting the license fees for Ladd Co. movies included in large packages.

On Tuesday, the Second District Court of Appeal ruled that "Warner had an obligation, as conceded by a Warner executive, to ‘fairly and accurately allocate license fees to each of the films based on their comparative value as part of a package.’ Therefore, the record supports the jury‟s determination that Warner’s straight-lining method of allocating licensing fees to profit participants breached the implied covenant of good faith and fair dealing."

Ladd claimed that Warner undervalued and underpaid the license fees attributable to "Blade Runner," "Body Heat," "Night Shift," "Tequila Sunrise," "Outland," Oscar winner "Chariots of Fire" and all six films in the "Police Academy" franchise.

“I never had a lawsuit about allocation when I ran Fox because we cared about films and making films,” Ladd told TheWrap Tuesday after the court’s ruling. “Now we are dealing with corporations, and it’s all about how to we make money and screw people.”

During the 2007 jury trial, Eric Frankel, president of Warner Bros.’ domestic cable distribution division, was called by Ladd as an adverse witness. He testified that Warner had an obligation to act in good faith toward profit participants in the licensing process and “fairly and accurately allocate license fees to each of the films based on their comparative value as part of a package.”

Ladd’s expert, David Simon, determined Warner should have allocated an additional $97 million in licensing fees to Ladd’s films. With Ladd entitled to 5 percent of gross revenues on all films once Warner recouped its costs (except for 2.5 percent on "Chariots of Fire"), Ladd’s profit participation should have been $3,190,625.

In its ruling Tuesday, the court also denied Warner’s claim that the statute of limitations applied to a portion of the fees due. It said the burden of providing the breakdown of fees owed before and after the statute of limitations rested with Warner Bros., and said the studio had failed to provide an accounting breakdown; therefore, it awarded the full sum to Ladd.

How the math is done and where the full sums are going could become questions to other studios and outlets with today’s decision and the “new precedent that has now been established,” says Ladd.

“Blockbusters and Netflix are going to come into the new equation,” he said. "You might find more people asking them and other studios ‘Where is the money coming from and where is it going?”

Sabrina Carpenter in "A Nonsense Christmas" (Credit: Alfredo Flores/Netflix)

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