Fox Ordered to Pay $179 Million to ‘Bones’ Profit Participants
February 27, 2019 2:22 PM Subscribe
An arbitrator has ordered Fox to pay $179 million to profit participants in the long-running drama series “Bones,” finding that top executives lowballed revenue from the show and gave false testimony.
The case is the latest in a long line of self-dealing lawsuits in which profit participants assert that the network did not pay market rates to license the show because it was produced by a corporate sibling, 20th Century Fox Television.
In his ruling, arbitrator Peter Lichtman blasted several Fox executives by name, including Dana Walden, Gary Newman and Peter Rice, saying they gave “false testimony in an attempt to conceal their wrongful acts.” Lichtman held that Fox engaged “intentional acts of fraud and malice,” and showed a “cavalier attitude” toward the company’s wrongdoing.
In a statement, 21st Century Fox strongly denied the allegations leveled against its executives by Lichtman and said it would appeal the decision.
In his ruling, arbitrator Peter Lichtman blasted several Fox executives by name, including Dana Walden, Gary Newman and Peter Rice, saying they gave “false testimony in an attempt to conceal their wrongful acts.” Lichtman held that Fox engaged “intentional acts of fraud and malice,” and showed a “cavalier attitude” toward the company’s wrongdoing.
In a statement, 21st Century Fox strongly denied the allegations leveled against its executives by Lichtman and said it would appeal the decision.
They also don't appear to be claiming any legal error, apart from a nebulous assertion that Lichtman "exceeded his arbitration powers"
Under the FAA, legal error is not a basis for appeal, except in very narrow cases of jurisdiction and scope. There are only a handful of grounds to oppose entry of an arbitral award, and "arbitrator exceeded his/her powers" is one of them.
posted by praemunire at 2:56 PM on February 27, 2019 [8 favorites]
Under the FAA, legal error is not a basis for appeal, except in very narrow cases of jurisdiction and scope. There are only a handful of grounds to oppose entry of an arbitral award, and "arbitrator exceeded his/her powers" is one of them.
posted by praemunire at 2:56 PM on February 27, 2019 [8 favorites]
In a statement, 21st Century Fox strongly denied the allegations is cancelling their contract with the arbitration provider for material breach, to wit: issuing a finding against the company in a more than trivial/symbolic way.
posted by tclark at 3:54 PM on February 27, 2019 [12 favorites]
posted by tclark at 3:54 PM on February 27, 2019 [12 favorites]
Which is just a reminder that corporations generally have binding arbitration clauses because they know that arbitrators know which side of the bread the butter is on.
Reducing litigation costs is a happy side-effect.
posted by darkstar at 4:08 PM on February 27, 2019 [14 favorites]
Reducing litigation costs is a happy side-effect.
posted by darkstar at 4:08 PM on February 27, 2019 [14 favorites]
Businesses absolutely use arbitration agreements and jury and class waivers to screw little guys, but as among sophisticated parties arbitration agreements play an entirely different role. The arbitrators are predictably far more expert and experienced in the relevant commercial law and industry practice than you would get in a random draw of California judges who by dockets’ demand are primarily expert in criminal law, immigration and family law. It’s pretty unusual for an arbitrators’ award to get so far and publicly into the weeds as this one seems to have ... but there is 0% chance that Disney will start deleting arbitration clauses from its commercial agreements.
posted by MattD at 5:12 PM on February 27, 2019 [5 favorites]
posted by MattD at 5:12 PM on February 27, 2019 [5 favorites]
Yeah this changes nothing about how fundamentally stacked in favor of big corporations arbitration clauses are. The reason this is newsworthy is specifically because an arbitrator issued an award so out of step with expectations. The thing is, this doesn't really change anything. As far as I know there's no case law in arbitration, future disputes can't necessarily cite this result as precedent, arbitrators will continue to issue awards based on the text of the contract and the actions of the signatories to the contract. The only thing that may change is big corporations may alter how their contracts are written to make it less likely for arbitrators to issue an award like this in the future.
posted by Mr.Encyclopedia at 5:23 PM on February 27, 2019 [6 favorites]
posted by Mr.Encyclopedia at 5:23 PM on February 27, 2019 [6 favorites]
In his decision, Lichtman then addresses what he considers “perhaps the most shocking piece of evidence related to the Hulu issues. … Fox actually signed both sides of this agreement. Mr. Dan Fawcett signed the Fox Content License Agreement on behalf of both FEG [Fox Entertainment Group] and Hulu.”Pretty hard to argue that there's not some self-dealing going on when the same guy signs the agreement on behalf of two different parties.
posted by zachlipton at 5:52 PM on February 27, 2019 [4 favorites]
future disputes can't necessarily cite this result as precedent
More like they necessarily can't. This is not a judicial opinion. It's just an outcome of arbitration.
FWIW, the holdings of California's Superior (trial) courts have no precedential weight either — or most appellate decisions, unless explicitly certified for publication. So it wouldn't be any more citable as the result of litigation short of the appellate level.
The decisions of selected Federal trial courts as compiled and made available by commercial publishers are citable by custom, but are not 'official reports' and the citation signal tells you what they're worth -- "F.Supp." (All Federal appellate court decisions are part of the official reports at the Federal level and are citable authority barring complications, unlike in CA.)
posted by snuffleupagus at 6:12 PM on February 27, 2019 [2 favorites]
More like they necessarily can't. This is not a judicial opinion. It's just an outcome of arbitration.
FWIW, the holdings of California's Superior (trial) courts have no precedential weight either — or most appellate decisions, unless explicitly certified for publication. So it wouldn't be any more citable as the result of litigation short of the appellate level.
The decisions of selected Federal trial courts as compiled and made available by commercial publishers are citable by custom, but are not 'official reports' and the citation signal tells you what they're worth -- "F.Supp." (All Federal appellate court decisions are part of the official reports at the Federal level and are citable authority barring complications, unlike in CA.)
posted by snuffleupagus at 6:12 PM on February 27, 2019 [2 favorites]
ALSO YAAAAY EMILY D
posted by snuffleupagus at 6:16 PM on February 27, 2019 [2 favorites]
posted by snuffleupagus at 6:16 PM on February 27, 2019 [2 favorites]
The arbitrators are predictably far more expert and experienced in the relevant commercial law and industry practice than you would get in a random draw of California judges who by dockets’ demand are primarily expert in criminal law, immigration and family law.
They're largely retired litigators or judges (or first A then B, then arbitration).
Cases aren't venued in some abstract quantatitive "random draw" before actual judges, who sit in particular departments within the criminal or civil divisions of their courts, let alone privately selected arbitrators. And immigration court is both Federal and administrative (i.e. not part of the USDC system).
posted by snuffleupagus at 6:21 PM on February 27, 2019 [1 favorite]
They're largely retired litigators or judges (or first A then B, then arbitration).
Cases aren't venued in some abstract quantatitive "random draw" before actual judges, who sit in particular departments within the criminal or civil divisions of their courts, let alone privately selected arbitrators. And immigration court is both Federal and administrative (i.e. not part of the USDC system).
posted by snuffleupagus at 6:21 PM on February 27, 2019 [1 favorite]
So, my company (I am a minority stockholder) recently won arbitration against a local government agency. They wrote the contract (which we signed knowing they wrote the contract), and their lawyer was provided at no cost to the agency by the state AG. They had several highly-paid outside consultants. The arbitration panel awarded every single one of my company’s claims and denied every single claim of theirs — to the tune of multi-million dollars, plus interest, plus lawyers fees, plus expenses. In short, they got rolled, using their own contract.
Arbitration is not the right venue for many cases — especially when there is a significant resource differential between the parties. But for situations where you have two equally sophisticated parties, it makes a lot of sense. At least, it did for my company.
posted by Big Al 8000 at 7:26 PM on February 27, 2019 [3 favorites]
Arbitration is not the right venue for many cases — especially when there is a significant resource differential between the parties. But for situations where you have two equally sophisticated parties, it makes a lot of sense. At least, it did for my company.
posted by Big Al 8000 at 7:26 PM on February 27, 2019 [3 favorites]
Cases aren't venued in some abstract quantatitive "random draw" before actual judges, who sit in particular departments within the criminal or civil divisions of their courts, let alone privately selected arbitrators.
Hm? State systems can vary widely, so I don't want to be too dogmatic, but, in general, judges are randomly assigned to most cases, and judges in courts of general jurisdiction will hear both civil and criminal cases. In NY Supreme (trial court level), for instance, if you're in the regular division, your judges will hear all manner of cases, primarily excepting family court (which is not all family disputes), small claims, and housing. They are really not specialized. If your matter is worth a sufficient amount of money and involves particular kinds of commercial dispute, you can request to be assigned to the "commercial division." This is an attempt to provide specialists to hear complex commercial disputes--but, while some of those judges are very good, I think, everything else being equal (as it never is), I'd rather have a high-quality arbitrator I can help pick myself. It looks as if the California superior courts have similar general-jurisdiction-with-exceptions.
posted by praemunire at 8:53 PM on February 27, 2019
Hm? State systems can vary widely, so I don't want to be too dogmatic, but, in general, judges are randomly assigned to most cases, and judges in courts of general jurisdiction will hear both civil and criminal cases. In NY Supreme (trial court level), for instance, if you're in the regular division, your judges will hear all manner of cases, primarily excepting family court (which is not all family disputes), small claims, and housing. They are really not specialized. If your matter is worth a sufficient amount of money and involves particular kinds of commercial dispute, you can request to be assigned to the "commercial division." This is an attempt to provide specialists to hear complex commercial disputes--but, while some of those judges are very good, I think, everything else being equal (as it never is), I'd rather have a high-quality arbitrator I can help pick myself. It looks as if the California superior courts have similar general-jurisdiction-with-exceptions.
posted by praemunire at 8:53 PM on February 27, 2019
Yes — that's all I meant. Going by pure case volume is misleading. You don't get an actual family court judge or an immigration judge in a general civil department — or a criminal judge in a civil department. (Although some judges do move from criminal to civil as they rise in seniority. Less often the other way.)
So the idea (as it was phrased above) that sophisticated litigants need arbitrators to avoid having their case heard before a judge that mostly presides over criminal trials, immigration proceedings or divorces and custody battles is misled. Less universally, the large court systems out here often have "complex litigation" departments as well (so the issue is both recognized, and addressed to a certain extent).
I definitely agree that arbitration, when selected by two sophisticated parties contracting on a (mostly) level playing field, can be a better alternative to the court process. Both in terms of the expertise of the arbitrator if its a specialized field, and in the all the additional cost and time involved in regular litigation. It doesn't have the same stink there that it does in the consumer or employment context.
posted by snuffleupagus at 5:30 AM on February 28, 2019 [2 favorites]
So the idea (as it was phrased above) that sophisticated litigants need arbitrators to avoid having their case heard before a judge that mostly presides over criminal trials, immigration proceedings or divorces and custody battles is misled. Less universally, the large court systems out here often have "complex litigation" departments as well (so the issue is both recognized, and addressed to a certain extent).
I definitely agree that arbitration, when selected by two sophisticated parties contracting on a (mostly) level playing field, can be a better alternative to the court process. Both in terms of the expertise of the arbitrator if its a specialized field, and in the all the additional cost and time involved in regular litigation. It doesn't have the same stink there that it does in the consumer or employment context.
posted by snuffleupagus at 5:30 AM on February 28, 2019 [2 favorites]
Or, in other words, a privately selected arbitrator can definitely provide more expertise than Hon. Random in general civil Department __, but if the alternative is LASC that's as measured against the general civil docket — not the entire judicial universe, including crim, family and immigration.
(Especially immigration. I guess some smaller local CA courts likely have judges hearing everything, but immigration is both Federal and administrative.)
posted by snuffleupagus at 5:41 AM on February 28, 2019
(Especially immigration. I guess some smaller local CA courts likely have judges hearing everything, but immigration is both Federal and administrative.)
posted by snuffleupagus at 5:41 AM on February 28, 2019
As it happens, Lichtman helped create LASC's Complex Litigation program and used to sit there.
posted by snuffleupagus at 5:56 AM on February 28, 2019
posted by snuffleupagus at 5:56 AM on February 28, 2019
Fox Rocked by $179M 'Bones' Ruling: Lying, Cheating and "Reprehensible" Studio Fraud (Eriq Gardner, Hollywood Reporter)
This is also about how Fox saw and exploited new "Hollywood Accounting" opportunities with Hulu, and with being both a creator/seller and buyer of the same content.
This is also about how Fox saw and exploited new "Hollywood Accounting" opportunities with Hulu, and with being both a creator/seller and buyer of the same content.
Fox’s side — handled in arbitration by Munger Tolles & Olson, but now being led by O'Melveny's Petrocelli — is seeking a vacatur of the punitive damages aspect of the award in its own petition. In other words, Fox doesn't intend to contest the $50.2 million in actual damages award, only the $128.5 million tacked on [in punitive damages].posted by ZeusHumms at 10:13 AM on February 28, 2019
In other words, Fox is shocked that there might be a punishment more severe than "return precisely the money you stole in this one case when we all know you've done this a hundred times over".
posted by tocts at 10:57 AM on February 28, 2019 [4 favorites]
posted by tocts at 10:57 AM on February 28, 2019 [4 favorites]
« Older DeepSqueak | Rembrandt in the Blood Newer »
This thread has been archived and is closed to new comments
Fucking pricks.
posted by howfar at 2:43 PM on February 27, 2019 [14 favorites]