Facts

Writer Kathleen Reichs and actors Emily Deschanel and David Boreanaz filed suit against Twentieth Century Fox Film Corp. in relation to the television show, "Bones." The series was produced by the television studio and production arm of Fox Broadcasting Co. Reichs wrote the novels on which the series was based and Deschanel and Boreanaz are the lead actors on the series.

Series producer Barry Josephson filed a similar complaint.

Fox filed a demand for arbitration with JAMS. The next day, Fox moved to compel arbitration of certain plaintiffs' claims in the Los Angeles Superior Court, which the court granted.

PLAINTIFF'S CONTENTIONS: Reichs, Deschanel and Boreanaz contended that they each had contracts with Twentieth Century Fox that entitled them to a share of receipts (or profit participation) from the distribution of "Bones." To protect themselves against improper self-dealing by Twentieth Century Fox with its affiliates, their agreements also included promises that Twentieth Century Fox's transactions with affiliates would be on monetary terms comparable to the terms on which the affiliated company enters into similar transactions with unrelated third party distributors for comparable programs. As an end-run around the parties' agreements, plaintiffs contended, Twentieth Century Fox licensed the show to its domestic and international Fox affiliates, as well as to the Fox joint venture streaming service Hulu, for below-market license fees. Plaintiffs contended Twentieth Century Fox thereby shifted money away from the studio and towards its affiliates, depriving the profit participants of their rightful share of the receipts of the studio.

Plaintiffs claimed Fox cheated them out of their share of profits from the distribution of "Bones." Plaintiffs claimed that Fox engaged in self-dealing and deprived them of tens of millions of dollars in profit participation by licensing the show for artificially low fees to its affiliates, including the streaming platform Hulu. Reichs and Josephson further claimed that Fox had fraudulently obtained their signatures on a purported release of claims in connection with the license fees for Seasons 5 and 6 of the show by falsely threatening to cancel the series. Plaintiffs asserted causes of action for breach of contract, fraud, tortious interference with contract, and inducing breach of contract.

DEFENDANT'S CONTENTIONS: Fox argued that the license fees paid for the show were comparable to those that its affiliates paid for other comparable series and that no third parties would have paid higher license fees. In addition, Fox claimed that Reichs and Josephson signed a release that prohibited them from challenging the domestic network license fees for Seasons 5 and 6.

Result

The arbitrator found for the plaintiffs and awarded them $178,695,779, including $50 million in compensatory damages and over $128 million in punitive damages. Punitive damages were based on the arbitrator's findings that Fox engaged in self-dealing and deceitful conduct in the licensing of the show for artificially low fees to its affiliates. The arbitrator found that this deprived plaintiffs of tens of millions of dollars they were owed under the profit participation clauses of their contracts with Fox. The arbitrator also found that the Fox witnesses lacked credibility. With respect to the licensing to Hulu, the arbitrator noted that Dan Fawcett, President of Digital Media at Fox, signed the agreement for both parties in his representative capacity for both sides.

Length

20 days