Netflix Sees $1.5B Lawsuit From Relativity Slimmed Down By Judge


Netflix didn’t get the $1.5 billion lawsuit from the struggling Relativity tossed out as it desired, but the streaming service certainly saw the matter slimmed down late last week.

In a February 24 hearing, Santa Clara County Judge Theodore Zayner cut the Ryan Kavanaugh-founded company’s claims that the consequences of Netflix’s actions in a dispute over the streaming of two movies amounted to “trade libel” and a breach of the covenant of good faith. “While statements disparaging Plaintiff’s ability to produce its products might theoretically support a claim for libel or defamation of Plaintiff itself or a claim for intentional interference with prospective economic relations, they simply do not constitute Trade Libel,” Zayner wrote.

The much leaner case for those big-bucks damages still sees a claim of breach of contract in the mix from Relativity against Netflix. Neither Netflix nor Relativity responded to requests for comment on the matter and its latest turn.

Spilling over from Relativity’s Bankruptcy Court efforts, the bicoastal, multiple-case battle between the two companies originated over a year ago over Relativity’s intent for big-screen distribution of The Disappointments Room and Masterminds. Relativity has said that Netflix’s legally expressed doubts about the capacity of the company — which then was trying to get back on its feet — to make a success of the flicks forced them to sell a big stake to Singapore-based YuuZoo.

The two had very different opinions on a 2010 agreement that would have enabled Netflix to run the two films last June, ahead of their ultimately unsuccessful theatrical releases — releases that Relativity was hoping would save its now-seemingly cooked bottom line bacon. The NYC-based judge leaned toward Relativity and in May last year gave them an opportunity to put the pics starring Kate Beckinsale and Zach Galifianakis in theaters before they went online.

The studio then went after Netflix in October for the big bucks with declarations that Netflix’s now-proved doubts about the company’s ability to make a go of the two flicks were extremely damaging to their reputation — which is saying something if you’ve been following the Relativity saga the past couple of years.

In December, Netflix hit back with its attempt to get the matter thrown out. Which brings us to the two-down, one-to-go place we are now.

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