When some of Hollywood’s biggest players hunker down, strap on their legal tool belts and negotiate a deal that, court documents show, will be worth somewhere between $1 billion and $1.5 billion, it’s safe to assume that no comma in the contract will go without extra scrutiny and every why and wherefore in any document will be tussled over and clear as a bell, right? Well, after a protracted battle over who was owed what from the 1990s hit television show Home Improvement, a Superior Court in California has found it clear that Wind Dancer Production Group was a savvy party that knew exactly what it was getting into in its deal with Walt Disney Pictures. And gone with the breeze went Wind Dancer’s suit, in a grant of summary judgment that might give many an Entertainment lawyer pause to think even harder about their tool kits of negotiations and contracts.
Superior Court Judge William F. Highberger in Los Angeles granted summary judgment in part for Disney in early January, in a suit that brought against it by Wind Dancer over the sitcom contracts (a tip of the hat to the Hollywood Reporter for posting his honor’s rulings online.) Disney had licensed the show for syndication in various territories for less than the market value and did not consult with the show’s creators. While Wind Dancer received financial summaries because it was a profit participant, it did not sue Disney until years after the fact.
As first-year law students get drilled into them about contracts, the statute of limitations for errors begins upon discovery of said error. Wind Dancer asserted errors of pricing for Home Improvement were “hidden,” and so the statute of limitations did not begin until they were discovered. That argument might prevail if Wind Dancer were not so “sophisticated” a legal party, the judge ruled. Besides reaching a pact that brought heart-throb Jonathon Taylor Thomas into millions of preteen girls’ living rooms — thank you, for that, by the way, then and now — Wind Dancer made an agreement as to the statute of limitations in its own accord. It was twenty-four months. This was stated in the contract that both parties agreed to, the court found.
The judge said that, contrary to the manner that Wind Dancer sought to interpret it in its suit, the contract with Disney was not written with and agreed upon to have two time frames — one for obvious errors and another for those hidden; it called for twenty-four months in which parties could contest errors, arguably by lawsuit, once Wind Dancer received financial statements showing profits shared.
The parties entering into the agreement both were sophisticated, are big players in the Entertainment industry, and had sound legal representation, the court found, looking to CCP §360.5, and case law both from in and out of California to support the parties’ ability to contract for a different statute of limitations. Parties should be allowed to contract and agree to their own terms, especially when they are sophisticated and have just reason for entering into every agreement they enter into, the judge noted.
While for policy reasons this ruling makes sense — if you are no longer sitting at the kid’s table and you strike an agreement as knowledgeable parties, the courts should hold you to it — but will this case make the Davids dealing with Hollywood Goliaths even more trepidatious? And might it make an industry that’s already keeping counsel in more than full employ even more Entertainment lawyer keen?