Fox Slapped With $179 Million Judgment in Battle Over ‘Bones’ Profits

Arbitrator says Fox execs Peter Rice, Dana Walden and Gary Newman “appear to have given false testimony in an attempt to conceal their wrongful acts”

Last Updated: February 28, 2019 @ 4:30 PM

Fox has been hit with a $179 million judgment — one of the largest rulings of its kind in television history — in a legal battle dating back to 2015, over profit participation on the long-running series “Bones,” with stars David Boreanaz and Emily Deschanel, executive producer Barry Josephson and Kathy Reichs, the forensic anthropologist whose books inspired the show.

In a 66-page summary of his ruling issued earlier this month but made public on Wednesday, arbitrator Peter Lichtman found that Fox had committed “breach of contract, fraud, and tortious interference with contract” regarding profit participation on the mystery procedural, which ran on the Fox broadcast network from 2005 and 2017 and was also produced by the company’s in-house TV studio, 20th Century Fox.

Lichtman further called out 21st Century Fox president Peter Rice, current Fox TV CEO and soon-to-be ABC exec Dana Walden, and Fox TV chairman Gary Newman (who will be leaving the network soon himself), whom Lichtman said “appear to have given false testimony in an attempt to conceal their wrongful acts.”

“Merely describing the testimony as false is far too generous,” he added. “The Arbitrator is convinced that perjury was committed by the Fox witnesses. Accordingly, if perjury is not reprehensible then reprehensibility has taken on a new meaning.”

The dispute centered on the license fees that the Fox network, Fox’s foreign affiliates and the streaming service Hulu — in which 21st Century Fox has a stake — paid to 20th Century Fox for the rights to air or stream the series.

Lichtman found that the show would have earned almost $114 million more if the broadcast rights had been offered on the open market, resulting in $15.5 million in additional profit payments to the quartet of executive producers and stars. In the case of the Hulu deal, he ruled, the four would have collected an additional $10 million in payments.

In addition to a finding of actual damages, the arbitrator awarded $128 million in punitive damages, which he wrote “is reasonable and necessary to punish Fox for its reprehensible conduct and deter it from future wrongful conduct.” (The $178.7 million total also includes lost payments from European deals, pre-judgment interest, and fees from attorneys and the arbitrator.)

Fox is seeking to void the ruling, arguing that the arbitration agreement did not allow for the arbitrator to award punitive damages. 21st Century Fox has hired top defense attorney Daniel Petrocelli and filed a motion today in Los Angeles to dispute that point of Lichtman’s ruling.

“The ruling by this private arbitrator is categorically wrong on the merits and exceeded his arbitration powers,” a spokesperson for 21st Century Fox said in a statement. “Fox will not allow this flagrant injustice, riddled with errors and gratuitous character attacks, to stand and will vigorously challenge the ruling in a court of law.”

Dale Kinsella, an attorney for Josephson, filed a petition Wednesday to confirm the arbitration award, as did John Berlinski and Daniel Saunders, who represent Boreanaz, Deschanel, and Reichs.

“We are extremely pleased by the arbitrator’s thoughtful and well-reasoned ruling,” Berlinski said in a statement. “As he said, the facts are clear — as is the extent of Fox’s duplicity. What we have exposed in this case is going to profoundly change the way Hollywood does business for many years to come. Our clients’ creativity and hard work brought Fox its longest-running and most profitable drama ever. Now Fox needs to – at long last – do the right thing and pay them what they are owed.”

“We are so proud of the hard work we did on ‘Bones’ for 12 seasons and only ever wanted Fox to live up to its promises and contractual obligations,” Deschanel added. “I am grateful that such a well-respected arbitrator reviewed the facts so thoroughly before ruling the way he did. I look forward to the legal system continuing to hold Fox accountable so that we can all move forward.”

“I loved working on ‘Bones’ with such an incredible cast and crew — and I will not allow this legal process to sour those wonderful memories,” Boreanaz said. “But as you look at the ruling, it’s clear that what we were saying all along was true: we were owed additional compensation for our work. Now I can only hope that Fox is made to settle its obligations to us without further delay.”

“This is a tremendous victory for the ‘Bones’ profit participants who created and starred in the longest-running drama series to air on the FOX network,” Kinsella added. “Fox’s fraudulent conduct toward the series’ creators and stars, perpetrated over many years, has finally been brought to light, and Fox has been held accountable for its actions. After extensive testimony, the arbitrator found that Fox manifests ‘a company-wide and accepted climate that envelops an aversion for the truth.’ The punitive damages assessed by the arbitrator reflect the severity and reprehensibility of Fox’s conduct and that of many senior Fox executives. This award–exposing Fox’s self-dealing and the harm it visits on profit participants–represents a victory for not only the ‘Bones’ profit participants, but for all creative talent in the television industry.”

Walt Disney Company Chairman and CEO Bob Iger — and Rice and Walden’s future boss — backed his new TV executives while distancing himself from the actual case: “Peter Rice and Dana Walden are highly respected leaders in this industry, and we have complete confidence in their character and integrity,” he said in a statement. “Disney had no involvement in the arbitration, and we understand the decision is being challenged and will leave it to the courts to decide the matter.”

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