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IP/Entertainment Case Law Updates

Moritz v. Universal City Studios, LLC

California trial court finds dispute between producer and film studio for spinoff film to Fast and the Furious franchise is not arbitrable despite arbitration provisions contained in previous contracts for franchise.

Neal Moritz, a producer of the Fast and the Furious films, sued Universal City Studios and others for breach of an oral agreement between them after his removal from the production of Hobbs and Shaw, a spinoff of the Furious franchise. Moritz claimed that Universal had promised him a $2 million fee and first-dollar gross for the film, much like his agreements for the previous films in the $5 billion franchise, but that he had been improperly fired after a year and a half of working on the project. A draft contract had been prepared for Moritz’s work on the Hobbs film, but the parties had not executed it. Despite the lack of an enforceable written agreement, Universal moved to compel arbitration of the dispute, arguing that Moritz had agreed to arbitration by virtue of his prior seven written agreements with them relating to each of the Fast and the Furious films.

The court denied Universal’s motion. The court rejected Universal’s arguments that Moritz’s prior written agreements with Universal for the Furious films, which each contained arbitration provisions, encompassed claims arising out of the production of Hobbs. The court found that those prior provisions limited the scope of arbitration to disputes “arising out of or relating to” each particular agreement. In addition, though certain of the Furious contracts extended the obligation to arbitrate to “Qualified Subsequent [Furious] Pictures,” the parties agreed that Hobbs constituted a spinoff rather than a remake or sequel in the Furious franchise and therefore did not constitute a Qualified Subsequent film subject to arbitration. Finally, the court rejected Universal’s argument that because Moritz referred to the prior Furious agreements in his complaint, the terms contained within them, particularly the arbitration provisions, were applicable. In addressing this point, both parties cited the California Court of Appeal case Marsch v. Williams, which assessed whether separate agreements could be so “closely connected in purpose” that an arbitration provision contained in one agreement could be extended to another agreement lacking an arbitration provision. The court found that the Furious agreements and any Hobbs agreement were not so closely connected. Specifically, the court relied on the industry custom that a producer’s relationship with a studio was determined on a film-by-film basis. In this case, each Furious agreement applied to a different feature film, none incorporated the terms of any other and none were executed at the same time. As a result, the arbitration provisions in the other agreements could not be extended to cover claims arising out of the production of Hobbs.

The court also rejected Universal’s claim that the question of arbitrability of the dispute should be submitted to an arbitrator, finding that the parties had not “clearly and unmistakably” agreed for an arbitrator to make that assessment. As a result of its conclusion that the litigation should remain before it, the court also lifted the stay it had imposed on the case.

Summary prepared by Linna Chen and Sarah Levitan Perry

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