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Judge Wades $128M Arbitration Award in ‘Bones’ Dispute

A federal judge will decide whether an arbitrator overstepped his authority by finding the TV arm of 21st Century Fox owes the stars and creator of the TV series “Bones” over $100 million in licensing revenue.

LOS ANGELES (CN) – A California judge will decide whether an arbitrator overstepped his authority by finding the TV arm of 21st Century Fox owes the stars and creator of the TV series “Bones” over $100 million in licensing revenue.

“Bones,” which starred Emily Deschanel and David Boreanaz and was inspired by the fiction written by forensic anthropologist Kathy Reichs, aired for 12 seasons on Fox. The three sued Fox in 2015, claiming the studio cheated them out of more than $100 million in gross licensing revenue while overcharging millions of dollars in alleged expenses.

Fox claimed “Bones” was not profitable despite generating large sums of money, according to the claim.

The case went before arbitrator Peter Lichtman, who after two years of litigation found Fox executives did cheat millions of dollars from the series. Lichtman awarded the actors and Reichs $128 million in punitive damages and over $50 million in fees, damages and interest.

But Fox argued an arbitrator does not have that type of power and asked Los Angeles County Superior Court Judge Richard Rico to vacate the punitive damages.

On Monday, attorneys for the actors told Rico that Fox initially sought arbitration. But when the ruling did not go in its favor, the studio claimed the arbitrator did not have the authority to decide damages.

“We’re not here to defend Judge Lichtman’s findings that punitive damages were warranted because defense can’t challenge that,” said plaintiffs' attorney Daniel Saunders. “This was an arbitration. Defendants compelled this case to arbitration. They then stipulated to the issues that were for the arbitrator to decide. Once that all happened, defendants locked themselves in to having to live with the outcome.”

He added: “Now that that gamble hasn’t paid off for them, they don’t get to come into court before your honor and complain that the arbitrator exceeded his authority by deciding issues that they themselves approved for arbitration.”

The issue of Lichtman’s authority was brought up numerous times during litigation, according to Fox attorney Daniel Petrocelli. He said objections were brought up before, during and after arbitration. For his part, Lichtman wrote in a footnote to his 66-page ruling that Fox only raised the objection that some matters were outside his purview in the final hour of closing arguments.

“Not one word of arbitrability was ever mentioned or addressed in any pretrial hearings on Fox’s opening briefs,” wrote Lichtman.

Fox claims the plaintiffs are barred from the arbitrator’s award because their contracts do not allow for any type of relief through arbitration. The plaintiffs meanwhile say Rico can only vacate punitive damages awarded by Lichtman through information outside of the contract.

Rico will decide the arbitrator’s authority as it relates to distribution and licensing with Fox affiliates.

That includes what plaintiffs called a “sweetheart” deal the studio cut with other parts of the Fox family and with Hulu, of which Fox had a 30 percent stake at the time the complaint was filed. Fox is now owned by Disney, which took over partial ownership of Hulu.

Fox purchased Reichs’ literary property and life story rights, as “Bones” is loosely based on her work as a forensic anthropologist. She was promised a 5% share of the profits from the series, while Deschanel and Boreanaz were entitled to 3% shares per their contracts. They’re also entitled to periodic accounting statements showing how Fox calculates their profits. 

They claim Fox breached its contract in multiple licensing transactions – domestic broadcasting, international licensing and streaming.

Fox says it saved the show’s future and enhanced the remuneration paid to the plaintiffs. But while Fox called the show “a middling show with middling ratings” not worthy of exercising a full cost of production option for Season 5 or licensing fees of that magnitude, the show went on for several more seasons and was one of Fox’s longest running hourlong dramas when it ended in 2017.

Rico took the arguments under submission and did not say when he would rule.

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