Judge Orders Netflix to Pay Relativity $800K in Attorney’s Fees

Litigation grew out of licensing agreement between two parties

A bankruptcy judge ordered Netflix to pay more than $800,000 in attorney’s fees to Ryan Kavanaugh’s embattled studio Relativity Media after a legal battle the studio fought with the streaming giant over much of the past year relating to the latter’s plan to stream Relativity films “Masterminds” and “The Disappointments Room” without waiting for their theatrical release.

U.S. bankruptcy judge Michael Wiles ruled that Netflix was obligated to pay Relativity a total of $818,547.48, consisting of $795,732.50 in reasonable attorneys’ fees and $22,814.98 in litigation expenses. However, the judge did not order the streaming giant to pay for fees and expenses incurred by Kavanaugh’s personal attorneys.

Relativity inked a lucrative licensing agreement with Netflix in 2010, but when the studio began to hit financial troubles and eventually declared bankruptcy, Wiles assigned Netflix’ fees for “Masterminds” and “Disappointments Room” to Relativity and its secured creditors. Last spring, Netflix claimed that because it paid the fees on those movies in full, it had the right to put them on its streaming service in June. Wiles disagreed, and Relativity eventually released both films theatrically in the fall.

Relativity sued Netflix in October saying that a “bad faith scheme” by the streaming giant cost the company $1.5 billion. A different judge tossed two of the three claims Relativity made in that suit, but said the studio could go forward with its breach of contract allegations.

Pamela Chelin contributed reporting to this story.