Tolkien Estate Sues New Line, The Hobbit Not Yet Threatened

[ArathornJax]

Is what I am thinking correct, that the lawsuit will be over what the Tolkien Estate feels they are owed from the breach of contract? If that is the case does it become easier now for New Line and the Estate to reach an out of court settlement? Voronwë thanks for the input!

Edit: Also, would taking the rights to do The Hobbit and Film 2 be seen as punitive damages?

[Primula Baggins]

You're in my thoughts, too, ArathornJax, and I hope you're feeling better soon.

I look forward to hearing more whenever you know it, Voronwë!

[Voronwë the Faithful]

So is what I am thinking correct, that the lawsuit will be over what the Tolkien Estate feels they are owed from the breach of contract?

Yes, that is exactly correct.

If that is the case does it become easier now for New Line and the Estate to reach an out of court settlement?

It might, because it limits the amount of potential damages that are possible. That might make the plaintiffs more willing to consider a compromise.

Also, would taking the rights to do The Hobbit and Film 2 be seen as punitive damages?

No, that is separate. Punitive damages consist of extra monetary compensation to punish a defendant for malice, oppression, or fraud. The request to be given the right to terminate New Line's rights to make the Hobbit films is tied to the breach of contract cause of action. But this decision does show that the judge might not be very amenable to the plaintiff's more over the top claims. It is, however, very tricky to try to predict what a judge will do on one issue based on what she does on a different issue.

[ArathornJax]

Interesting then. Really it just comes down like you said to the first round of a long fight . . .

Perhaps Gollum had some wisdom with his poem to Bilbo about the lawsuit:

This thing all things devours;
Birds, beasts, trees, flowers (films?);
Gnaws iron, bites steel;
Grinds hard stones to meal;
Slays kings, ruins towns,
And beats high mountains down.

It will only be the answer to that riddle that will determine what happens. Thanks for your response.

[Voronwë the Faithful]

Here's a pretty good article from the Los Angeles Times about the lawsuit (thanks to Elven at TORN):

Tolkien's children fight for 'Lord of the Rings' gold

Among other things, it confirms that Warner Brothers is standing in for New Line, and that Tolkien family profits are split 50/50 between the charitable trust and the private trust. The comments of the Warner's spokesperson are pretty encouraging, so far as they go. I must say, the idea of both sides claiming victory after the demurrer was sustained is pretty ludicrous, however. The lawyer that the Tolkiens hired sure does have a lot of chutzpah.

[solicitr]

Two interesting quotes from the article:

New Line has said to us that, based on their reading of the contract, it doesn't matter how much money the films make, they'll never have to pay us anything, which is impossible.

Talk about chutzpah!!!!


and, much more conciliatory from Time Warner:

"The Tolkien estate is currently auditing New Line's books and records for the 'Lord of the Rings' films and we are working closely with the estate's accountants and lawyers to facilitate and expedite this process. While we respectfully disagree with some of the estate's positions, we are hopeful that the dispute can be amicably resolved once the audit has been completed."

[Voronwë the Faithful]

Two interesting quotes from the article:

New Line has said to us that, based on their reading of the contract, it doesn't matter how much money the films make, they'll never have to pay us anything, which is impossible.

Talk about chutzpah!!!!

Needless to say, I take what the plaintiff's attorney says New Line told them with more than a grain of salt. Particularly given her record so far in this litigation. Both the Complaint and the Opposition to the Demurrer that she filed have been so full of over-the-top, irrelevant and misleading rhetoric and inapplicable legal theories and argument that I don't think anything that she says is trustworthy.

[Voronwë the Faithful]

Okay, the latest update. The plaintiffs filed a First Amended Complaint last Monday (which I believe was the last day for them to do so). They have dropped the fiduciary duty cause of action (as expected), but they have asserted new allegations to support the fraud cause of action. They added more specific claims as to how they contend that New Line misrepresented the amount of expenses that it had in order to avoid paying the royalties due. And they somewhat clarified their contention as to how they relied on these misrepresentations to their detriment.

Undoubtably New Line will again file a demurrer to the fraud cause of action. I would say it is about a 50/50 chance that the judge will sustain it this time. Meanwhile, the liklihood of a settlement continues to slip away.

[sauronsfinger]

Is this a case about money owed to the Estate... or is it actually about something else much more?

[Voronwë the Faithful]

There is now a stipulation and order on file giving New Line until August 4 to respond to the First Amended Complaint.

[vison]

This is very discouraging. I recall reading interviews with both Sean Connery and Micheal Caine regarding the dispute they had with the studio that made "The Man Who Would Be King". The movie was a pretty big hit and made buckets of money, but it took years for Connery and Caine to see one nickel of profit - since the studio asserted there really was no "profit". Very creative accounting.

You'd think these things would be more open and above board. One reason they aren't, so I've been told, is that some investors go into these things hoping for a tax loss.

[Frelga]

You'd think these things would be more open and above board. One reason they aren't, so I've been told, is that some investors go into these things hoping for a tax loss.

What, kind of like Springtime for Hitler type deal?

[vison]

You'd think these things would be more open and above board. One reason they aren't, so I've been told, is that some investors go into these things hoping for a tax loss.

What, kind of like Springtime for Hitler type deal?

So I've been told.

[Voronwë the Faithful]

As I predicted, New Line has filed a new demurrer to the First Amended Complaint, challenging the revamped Fraud cause of action, along with a Motion to Strike punitive damages. No hearing date has been posted on the web site yet, but I'm sure that it will be soon.

[Voronwë the Faithful]

Okay, some more information. First of all, the hearing date is September 22, a rather auspicious date. And I think New Line still makes a compelling case on the fraud cause of action. They included the relevant portion of the hearing on the first demurrer, so I got to read the judge's thoughts on the case, and I don't think the plaintiffs have sufficiently met the standards that she set. She basically said that they would have allege completely fabricated costs, not just overstated costs, or costs that are disputed based on the interpretation of the contract. The example that she used was that they would need to allege something like someone bought a Mazerati and charged it to this project. New Line makes a compelling argument that none of the new allegations are comparable to this. Of course, we'll see what the plaintiff's attorneys say, but I am betting that there is good chance that the demurrer will be sustained as to the fraud allegation again.

Also, New Line has added a new allegation that the cause of action for reformation of the contract (regarding the bizarre issue of the different percentage applying to The Two Towers) should be barred by the statute of limitations. Unless there is something I am missing, they should prevail on this argument, too.

[Alatar]

No offense V, but this sort of thing shows why Lawyers have a bad name. Its obvious to a blind man that New Line screwed over the Estate, yet all these stupid legal games are played to find excuses why its not what its described as. Its sickening.

[Voronwë the Faithful]

Actually that's not at all what is happening, Al. If anything, it has been the lawyers for the Estate that have been playing "legal games" to try to make it seem as if it is something that it is not, and the lawyers for New Line that have been playing it straight (at least in my professional opinion). At this point they are not even arguing over whether New Line "screwed over" the Estate and the other plaintiffs, but rather how those claims should be defined in a legal sense. It may be "sickening" to you, but it is an important part of the legal system to protect parties from facing liability for claims they should not be held liable for. Who knows, maybe some day you are someone you love will need that protection. I don't you will find it it "sickening" then.

In any event, I thought that I was providing a service by giving an update on the situation with the lawsuit, but perhaps it would be best if I just left it be.

[Alatar]

V, that was not intended as any reflection on you, merely an example of why people feel that Lawyers do more obfuscating of the facts than clarification of them. In fact what you're saying now is that its the Estates lawyers who are being dishonest?

Either way, it looks like whoever can buy the best lawyer will get the result they want. Is that an unfair assessment when this much money is at stake?

And please, don't make this personal. I made it clear that I was not casting aspersions on you personally, and in fact I was trying to say that this is the sort of thing that gives honest laywers a bad name, whover it is thats being dishonest.

Please continue to provide the updates. Perhaps you'd prefer that I keep my opinions to myself though?

[Voronwë the Faithful]

Al, feel free to express your opinions. And I'll continue to tell you where I think you are wrong.

[Primula Baggins]

I confess that I'm boggled by the complexity of all this. And I can see why people like me might start to wonder if it weren't all some kind of game worked out to maximize cost and frustration for anyone trying to get anything done legally. I know that this is not really the case because when people like Voronwë have explained particular situations clearly enough, or when I've seen for myself how the system can work, I understand why the system needs to be complex: so everyone's interests are protected, so one side can respond to anything the other side does, so decisions aren't made until it's clear what needs to be decided and what information should be used in the decision.

But I think it's natural to wonder about something as ramified and long-drawn-out as this case, with so many attorneys working long hours over weeks and months. I'm watching some close friends battle through probably the most complicated lawsuit I've ever seen up close and personally (a builder put up their dream house on what was reported to be stable soil and turned out to be a clay slope; the question is who is liable for the incorrect report on the soil, but in the meantime the entire two-story house has had to be propped ten feet in the air for eight months while stable soil was put in under it and a new foundation built—and my friends are paying for it all up front and hoping to win, because their only other choice was to abandon the house). I've been in on events throughout and have understood why each back-and-forth was necessary, and it's still excruciating.