(CN) - Warner Brothers Entertainment undersold 12 movies to broadcast and cable networks, so the producers are entitled to more than $3.1 million in damages, a California appeals court ruled.
Alan Ladd and four other producers sued Warner over its "straight-lining" practice of selling packages of movies to networks. Ladd argued that some of his movies were more valuable than others in the package, so he is entitled to a greater portion of licensing fees.
The dozen movies named in the suit are "Blade Runner," "Night Shift," "Body Heat," "Outland Tequila Sunrise," "Chariots of Fire," and "Police Academy" and its five sequels.
A jury sided with the producers, and the Los Angeles-based Second District Court of Appeal upheld the verdict.
"Warner was bound to act in good faith toward profit participants," Justice Joan Klein wrote. "Warner had an obligation, as conceded by a Warner executive, to 'fairly and accurately allocate license fees to each of the films based on their comparative value as part of the package.' Therefore the record supports the jury's determination that Warner's straight-lining methods of allocating licensing fees to profit participants breached the implied covenant of good faith and fair dealing."
The court also cleared the path for a trial on Ladd's demand for "Blade Runner" profits and his claim that Warner improperly deleted screen credits or company logos from the films "Chariots of Fire" and "Once Upon a Time in America."
"Ladd presented substantial evidence of fraud by Warner relating to the extreme unprofitability of 'Blade Runner,' inducing him to refrain from auditing that film," Klein wrote.
She also firmly rejected the trial court's holding that there was "no evidence of any lost opportunities or any ascertainable loss due to loss of screen credit."
"The trial court's ruling is clearly erroneous," she wrote, adding that the exact amount of damages should be determined by a jury.
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