Corporate Litigation in the News

Via yesterday's NYT, we learned a bit more about the lawsuit brought by Peter Jackson (of Lord of the Rings fame) against New Line Entertainment (of Time Warner fame).  The suit's gist is  that New Line, by selling certain distribution and licensing rights to TW sister companies instead of selling on the open market, engaged in self-dealing that lowered the gross movie revenue that Jackson was to share in.  Jackson apparently seeks around $100M in damages.   (For law geeks out there, a well-regarded California boutique, Alschuler Grossman Stein & Kahan, represents the Hobbits, while Sauron (er, the Studio) is represented by O'Melveny & Myers.)

As the Times noted, this would be a really interesting case to see resolved on the merits (either on the papers or before a factfinder) because it really strikes at the heart of the synergistic rationale that was said to generate lots of entertainment corp. mergers in the late 1990s.  If TW (or Sony, etc.) can't self-deal, then it would seem to make quite a bit less sense to stick all of those disparate corporate entities under the same banner.

I checked the docket.   New Line filed an answer on June 3.  It was pretty surprising that New Line didn't move to dismiss (must have been a well drafted complaint!).  They parties are now in discovery. Undoubtedly the case will settle.

In other news, I really recommend Christine Hurt's response to David Zaring's post here earlier this week.   I agree with basically everything she says (except seeing myself as Lisa Simpson).