Miles Millar and Alfred Gough, co-creators of the long-running Smallville, filed a suit against Warner Bros. in March of this year. They claimed that the company had signed distribution and syndication agreements with other companies that unfairly devalued the show, costing the producers and their production company millions. The two cited a breach of contract and breach of fiduciary duty, and sued to recover some of the profits they claimed had been lost.
Their case took a major blow this week: an LA judge has accepted Warner Bros.’ position that they do not owe a fiduciary duty, which makes it very unlikely that the claimants will get all the damages they seek.
There are a lot of parties and insider talk in this suit, but the premise is pretty simple: Millar, Gough and Tollin/Robbins Productions allege that Time Warner (and by extension Warner Bros. Television and The CW) made distribution deals for Smallville to its partners and foreign customers at discount rates, failing to maximize the potential profits for the show and its creators.
The plaintiffs filed this as a breach of fiduciary duty and breach of contract, a tactic often seen in stockholder class-action lawsuits. Warner Bros. filed a motion to dismiss the fiduciary claims, citing that it didn’t owe a duty to the creators, due to the nature of the contract and their payment – the producers were payed a flat fee plus dividends from profits, but they would never have been penalized if the show hadn’t been profitable.
Warner Bros. claimed this made the deal a venture agreement (not a joint venture as the plaintiffs claim), and since the producers never shared any financial risk, no fiduciary duty exists. Judge Michael Johnson agreed, and the claims have been dismissed.
This doesn’t mean that the suit is over; Millar and Gough intend to appeal the judge’s decision, and the breach of contract claims will continue unabated. But the prospects for the producers are not good after the initial ruling. Even assuming that they won a suit based on a violated contract, they’d be awarded a fraction of the damages they asked for initially. With appeals and counter-filings from both sides, the suit is likely to stretch on for months at the very least.
Smallville airs Friday at 8 PM on The CW.
Source: The Hollywood Reporter