Paramount has asked for California District Judge P. Casey Pitts to be recused from the company’s litigation with a group of 12 state attorneys general due to an “appearance of bias”
In a Wednesday court filing, lawyers for the media giant noted that Pitts was previously in private practice for Altshuler Berzon LLP and served as “long standing labor counsel” for the WGA, which has expressed public support for the AGs’ lawsuit and filed its own separate lawsuit seeking to block the $110 billion deal.
“WGA is not merely an interested observer in this action; it is an active litigant whose interests are directly aligned with those of the Plaintiffs in this litigation and directly adverse to Paramount’s interests,” attorney Jeffrey Kessler wrote. “Judge Pitts’ prior long-standing representation of WGA — a vocal opponent of the proposed merger that has publicly committed to working with regulators to block it — creates precisely the type of appearance of impropriety that Section 455(a) seeks to prevent.”
Paramount’s lawyers asked that the case be reassigned to Judge Araceli Martínez-Olguín, who is overseeing a separate consumer lawsuit brought against the company in April. They also requested that the motion be resolved as soon as possible and prior to any ruling on the pending motion for a temporary restraining order to avoid any appearance of partiality.
The state AGs argue that the Paramount-Warner Bros. merger would create an entertainment giant that would control 27% of the wide-release theatrical distribution market, 30% of the submarket comprising “anticipated blockbuster films” and 27% of the basic cable bundle.
They warn the deal’s approval could give the combined company increased leverage over movie theaters and cable distributors, lead to an increase in consumer prices and reduce content output.
A hearing on Paramount’s motion is currently scheduled for Aug. 20, while the hearing on the state AGs’ request for a TRO is set for Friday morning.
Paramount has said the Warner Bros. deal remains on track to close by the end of the third quarter. It has already received approval from the U.S. Department of Justice and Warner Bros. shareholders.
Other countries where the deal has received clearance or where relevant waiting periods have expired include Australia, Austria, Canada, China, Kuwait, Saudi Arabia, Serbia, South Africa, Ukraine, Montenegro, New Zealand and North Macedonia. Foreign direct investment authorities in Spain, Germany, Slovenia, Belgium, Czechia, Italy, France and Romania have also signed off.
Meanwhile, the European Commission’s review period on the foreign investment in the Paramount-Warner Bros. deal expired on Tuesday. However, the EC is still examining the deal’s impact on competition and will decide whether to clear it or refer it for a more in-depth Phase 2 investigation by July 22.
The United Kingdom’s Secretary of Culture, Media and Sport Lisa Nandy has also informed Paramount and WBD that she feels “minded to intervene,” with a decision on whether the regulator will clear the merger or move to a Phase 2 investigation expected by Aug. 7.
In the event the transaction does not close by Sept. 30, WBD shareholders will receive a 25 cent per share “ticking fee” for each quarter until closing. In the event that the deal does not close at all due to regulatory matters, Paramount will pay WBD a $7 billion termination fee.
