19 August 2008

Venom Warning

I am really getting pissed off at the intellectual — bordering on actual — dishonesty that seems to be the editorial standard at Reed Business Information, publisher of Variety (and, not incidentally, Publisher's [sic] Weekly, and a future/potential interest in its "competitor" The Hollywood Reporter). I can no longer excuse the usual idiocy of articles from RBI publications concerning legal issues in the publishing and entertainment industries as anything less than dishonesty; even a first-year law student would not have made the errors that have pissed me off this time, and Reed-Elsevier — which also coowns Lexis — does not have the excuse that "we don't have any lawyers in-house, so we can't so a sanity check before publishing."

This time, the legal fuckup concerns the lawsuit over which studio actually has the development and distribution rights for Watchmen, a forthcoming film based on the Alan Moore-penned graphic novel originally published by DC Comics. Variety, in its relentless effort to make "news" out of nothing, proclaimed yesterday that "Fox's 'Watchmen' Lawsuit Heats Up: Judge Denies WB's Motion to Dismiss" (capitalization in title corrected to CMS standard). Mr McNary and Ms Siegel display their astounding ignorance of how a lawsuit works with this breathless (and ungrammatical) description:

A judge has denied a Warner Bros. motion to dismiss 20th Century Fox's lawsuit over Warners' right to make a film based on the graphic novel Watchmen.

Ruling is potentially a huge victory for Fox, which could wind up as a profit participant in the film, and could cost Warners millions considering the film's box office prospects. However, Fox's legal team says it isn't looking for monetary compensation and instead wants to prevent the big-budget film from being released altogether.

Project, which has been in development for two decades, finally began lensing in September with Zack Snyder at the helm. Warners was set to release the film, which stars Patrick Wilson and Jackie Earle Haley, on March 6 in the same slot in which 300 opened.

At the heart of Fox's suit, filed in February, is the contention that it never ceded rights to the property. And according to the federal Judge Gary Allen Feess, Fox retained distribution rights to the graphic novel penned by Alan Moore and illustrated by Dave Gibbons through a 1991 claim. Furthermore, Feess appears to agree that under a 1994 turnaround deal with producer Larry Gordon, Gordon acquired an option to acquire Fox's remaining interest in Watchmen, which was never exercised, thereby leaving Fox with its rights under the 1994 agreement.

Id. (fake paragraphing left in place for a change; typography corrected to CMS standard). In the next paragraph, though, the story starts to crumble, although McNary and Siegel try to shore it up by merely directly quoting a PR flack... who seems to have a much better grasp of civil procedure than they do.

"It is our company’s policy not to comment on pending litigation and thus will not comment on the specifics of this case," Warners said in statement. "That said, the court’s ruling simply means that the parties will engage in discovery and proceed with the litigation. The judge did not opine at all on the merits other than to conclude that Fox satisfied the pleading requirements. We respectfully disagree with Fox’s position and do not believe they have any rights in and to this project."


Even a first-year law student knows that a motion to dismiss has virtually nothing to do with the merits of the suit, and that virtually every defendant on the face of the planet — particularly big studios with their big insurance policies and big law firms — files a motion to dismiss against virtually every largish complaint filed against it. It's a no-lose proposition for the defendant, particularly in this kind of context.

  • The legal fees involved are a cost of doing business and getting insurance. In some sense, they're almost a sunk cost to the studio, as the studio has been paying pretty significant retainers and insurance premiums for years just in case something like this happens.
  • During consideration of the motion to dismiss, there isn't any discovery going on. That means that everyone involved in the suit can quietly continue behind-the-scenes discussions — the existence of which will be denied by everyone — to find a way out of the dispute while still saving face. Watching suits like this almost makes me think I'm in 1930s Tokyo watching government officials try to save face.
  • It's been six months since the lawsuit was filed. That's six months closer to completing and releasing the film. Thus, tactically, the motion to dismiss has substantially changed the position of the parties by altering the potential "balance of the equities" that the judge will have to engage in while considering the inevitable motion to enjoin release of the film... in the defendant's favor. It's not a definitive advantage, but it is a significant one.
  • All that the judge's ruling says is that if — and only if — Fox can come up with both factual support during discovery and a tenable legal theory consistent with the complaint, it is possible (not probable, not certain) that Fox would win the lawsuit at trial. Ordinarily, even a first-year law student understands the standard against dismissal: that there might exist "any possible set of facts not inconsistent with the complaint's allegations." A recent Supreme Court decision (Twombly) may have slightly toughened this standard... but probably in comparison to the difference between striking a wet facial tissue or dry one with a ten-pound sledgehammer, and maybe not in this context (since there is no allegation of concerted action).

In short, this is the normal process of a lawsuit. One glance at the initial pleadings demonstrates that there is no possible motion to dismiss that could have succeeded, because there do exist sets of facts consistent with the complaint, and tenable legal theories, that could lead to Fox winning at trial. What I find interesting is that it took six months to get this far... which indicates to me that there's a bit more going on in the underlying papers than one might otherwise expect.

So, then, what's next?

  • Warner could file a motion for reconsideration, although I think that's silly on a motion to dismiss and will only piss off the judge.
  • Warner will have until the middle of September to file its formal answer to Fox's complaint. In other words, another month will pass.
  • Discovery will then commence; both sides will seek to bolster their position by harassing each others' executives with depositions taken by overpaid, snarky big-firm lawyers.
  • Fox will undoubtedly file a motion for an injunction of some kind in the near future, possibly before Warner even answers. Fox would have been better off filing for a temporary restraining order to shut down production, if its real interest is to prevent release of the film. That it appears not to have done so indicates that there are perhaps more problems with Fox's position than Variety seems to understand... or that the stated position ("Fox said it would rather see the film killed") is yet more negotiating-posture bullshit.

In short, the motion to dismiss was a win-win position for defendant Warner. The worst case was that they'd get a six- to eight-month delay out of it; the best case (not to be anticipated) is that they could make it go away. A ruling against the motion to dismiss did nothing to harm Warner's position. Nothing, contrary to what ignoramuses from Variety (or, for that matter, the NYT) claim in trying to make a mountain out of a mosquito bite.

This bullshit is in-fucking-excusable, particularly from a corporate entity that is an oligopolist in providing precedential legal documents. It's one thing to cover stories that will help sell papers; it's another entirely, for a paper that does not depend on nonhabitual sales, to knowingly distort a nonevent into a "story."