TransactionsCassels Brock Wins International Arbitration For Breach of Film Distribution AgreementPublished: 07/21/2009 In a decision released July 17, 2009 by the International Arbitration Tribunal of the Independent Film & Television Alliance (IFTA), the producers of the motion picture, "10th & Wolf", were awarded $640,000 US plus interest and costs against ThinkFilm LLC, an independent film distributor, as a consequence of ThinkFilms' breach of its contractual distribution and promotional obligations for the film. By way of background, "10th & Wolf" was a Hollywood quality motion picture with a "hit man turned informant" genre. The film was based on a true story involving the Scarfo, Bruno and Gambino crime families, who were living and carrying on mob activities in Philadelphia in the early 1990's. The cast for the film included James Marsden, Giovanni Ribisi, Dennis Hopper, Lesley Ann Warren, Brian Dennehy and Val Kilmer. The film was directed by Bobby Moresco (the writer for the film CRASH and co-producer of Million Dollar Baby, starring Clint Eastwood and Hilary Swank). Unfortuately, the film did not get strong traction in the US theaters and was released in the DVD market weeks after its theatrical release, all to the detriment of the producers. In this case, the tribunal found that ThinkFilm breached its contractual obligations to the producers and that ThinkFilm was therefore liable for the consequential loss in terms of reduced net receipts. In particular, the tribunal found that ThinkFilm had failed to meet its miminum print and advertising obligations in connection with the theatrical release of the film as well as its duties to use "commercially reasonable best efforts" to distribute and exploit the film in North America. In coming to this decision, evidence was uncovered in internal emails at ThinkFilm confirming that ThinkFilm only intended to promote the film for a "token theatrical release on its way to video heaven" and that ThinkFilm executed its distribution and promotion strategy for the film accordingly, causing the producers to lose significant net receipts throughout the world. The decision has significance in the film distribution industry as it highlights the ability of film distributors to be held liable for breach of contract despite the common contractual clause giving the distributor "final and conclusive" discretion in the marketing and distribution of major motion pictures. As well, the decision confirms that the theatrical release of a film is the "locomotive" that drives all of the revenue streams for a motion picture (eg. revenues from pay per view, DVD, cable TV and other media), and a distributor in a North American market may also be liable for losses suffered internationally due to the foreseeable ripple effect that poor promotion and distribution in North American markets may have on markets abroad. Robert B. Cohen of Cassels Brock & Blackwell LLP (Toronto) acted as co-counsel with Hunter Eley of the law firm of Doll Amir Eley LLP (Los Angeles) for the successful producer. Please click the link to review a full copy of the decision. |