Just over two months after Bones stars Emily Deschanel and David Boreanaz and executive producers Barry Josephson and Kathy Reichs were awarded $179 million in their long-standing profit participation fight with 21st Century Fox, a California judge today heard arguments on the arbitrator’s hefty decision.
The now Disney-owned Fox TV studio wasn’t happy with any of the huge sum in the self-dealing dispute. However, Fox isn’t contesting the non-punitive damages of $50,240,048 that arbitrator Peter Lichtman awarded the Bones actors and EPs. At issue specifically this morning was the $128 million in punitive damages he handed the plaintiffs as part of the final award.
With attorney Daniel Petrocelli of O’Melveny & Myers taking the lead for Fox’s appeal of the condemning arbitration decision, the Fox team is kicking back with the aggressive POV that Lichtman overstepped the bounds of his brief in awarding “punitive damages in the face of a contractual provision explicitly denying him that power.” Looking to vacate the award, the defendants filed their response on February 27 within minutes of the arbitration order being made public on the Los Angeles Superior Court docket.
At the beginning of the more than one-hour hearing this morning, Los Angeles Superior Court Judge Richard Rico told those assembled that he had read the documents related to the case and would take that and their oral arguments under submission. “Give me your best shot, both sides,” Rico said to a panel of some of Hollywood’s most expensive and adroit attorneys.
A ruling is expected “shortly” in what is one of the biggest, if not the biggest, such award in Hollywood history.
“The award must be confirmed,” Josephson’s main lawyer Dale Kinsella said to Rico, stressing there is no ambiguity in the arbitrator’s decision and the law surrounding it.
“They are trying to sell the court that you do not have any power at all,“ Petrocelli, the defendants’ relatively newly hired attorney, countered as Rico sat at the bench head in hand. “This court must be the ultimate judge of whether an arbitrator exceed his authority or not.”
Uncharacteristically declining to issue a tentative before the hearing formally began today, Rico’s actions hit the pause button on the contentious case, at least for a few days. One thing for sure during this morning’s hearing was that the temperature and tone taken by Lichtman has simmered by technicalities. Lichtman, a former judge, lambasted the Fox defendants in his final order with accusations of giving “false testimony” and a “company-wide culture and an accepted climate that enveloped an aversion for the truth.”
In that context, the cooperating legal teams representing Deschanel, Boreanaz, author Reichs and Josephson are holding strong that they want every penny of the $178,695,778.90 that Lichtman declared they should get, sources tell me. The Fox TV studio side is equally set in its belief to fight the potentially industry-changing award of almost $128 million for as many appeals or reviews as they can get.
Deschanel and Josephson were both in the downtown courtroom this morning as were their own pricey Hollywood heavyweight team fronted by Kinsella of Kinsella Weitzman Iser Kump & Aldisert and John Berlinski of NYC-based Kasowitz Benson Torres LLP. However, it was Daniel Saunders of the latter firm who handled most of the matter in front of the judge Monday.
Saunders started off the often-heated oral arguments, citing previous cases and precedent. He tore into Fox for essentially stamping its feet in his opinion because the arbitration they themselves sought in the nearly four-year-long case went against them.
“Now that that gamble hasn’t paid off for them,” Saunders told the judge, Fox isn’t now deserving of a re-do. “They would be arguing that plaintiffs couldn’t be in here if the decision went the other way,” he added, noting the documents of arbitration both sides drafted and agreed to before the matter was moved out of the public eye in 2016 included punitive damages.
“They have a right to argue all of it, before the arbitrator,” he said.
“The proof is in the pudding, your honor,” Petrocelli said being called on by Rico once the other side tried to shut down Fox’s desire to toss the award in their opening salvo.
“This is an afterthought to somehow shield this award from post-hearing review,” the O’Melveny & Myers lawyer said as he took a swipe at the plaintiffs and Lichtman’s “industrial brand of justice/”
“They are making the argument that we have waived our right to seek judicial review,” ex-Donald Trump and AT&T attorney added, “because we somehow agreed the arbitrator would have conclusive authority over this matter.”
“Everyone knew this was going to end up in the Superior Court on a motion if the arbitrator found” for Deschanel, Boreanaz, Josephson and Reichs, Petrocelli said in closing his first round of remarks.
Saunders said “The question here isn’t did the arbitrator interpret the provision correctly, but did he interpret it at all,” while accusing the other side of cherry-picking their reading of the agreements between the parties and the power of Lichtman, a former judge.
“Their entire argument hinges on the fact that somehow your honor must divine that Fox threw in the term “in connection with” to include other entities,” Kinsella told the court in what he said was a deliberate attempt by the TV studio to sweep up in one net the connected and now past-connected corporate cousins. “That is preposterous!” the Kinsella Weitzman Iser Kump & Aldisert lawyer said of the possibly ambiguous language in the Bones deals.
Almost a year and a half before Bones concluded its 12-season run on March 28, 2017, EP Josephson filed his wide-ranging breach of contract and fraudulent inducement complaint ripping the “unrelenting” Fox with “underreporting” the finances of the Hart Hanson-created series to the tune of millions and millions back on November 25, 2015.
Less than a week later, actors and fellow Bones producers Deschanel and Boreanaz filed their own lawsuit, claiming they and Reichs had been “cheated out of more than $100 million in gross revenues and being overcharged many additional millions of dollars in alleged expenses.”
On April 8, 2016, the consolidated cases saw Josephson, Reich and the actors take a hit as Rico agreed with Fox and moved most of the case behind closed doors to arbitration. As the self-dealing issues were being handled in private, the rest of the case was stayed.
The big-bucks loss and damning of Fox execs — including Dana Walden and Peter Rice, both now at Disney — came down just as the final pieces were being assembled for the completion of Disney’s $71.3 billion acquisition of most of Fox’s assets. That kicked the matter onto Bob Iger’s desk.
Even though the controversy adverse CEO tweeted out on February 27 that he had “complete confidence” in Walden’s and Rice’s “character and integrity,” Iger likely wouldn’t make any bones about being displeased with the situation in which he finds Disney.
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