Way Cleared for Stanfill Suit Against Fox

On the eve of trial, a judge refused Wednesday to throw out a $50-million lawsuit against 20th Century Fox Film Corp. and its former owner, Denver oilman Marvin Davis, that was filed nearly five years ago by the studio’s former chairman, Dennis Stanfill.

The ruling by Los Angeles County Superior Court Judge Eli Chernow paved the way for a jury trial to open next week, barring any last-minute settlement.

Although many breach-of-contract suits in the higher realms of the movie industry never reach public trial stage because of out-of-court settlements, attorneys said afterward that they know of nothing to prevent this one from going to trial.

The trial promises to add a chapter to the lore of the Hollywood movie industry by disclosing in detail the behind-the-scenes disputes with the new owner that led to Stanfill’s departure.

In particular, the case will focus a new spotlight on Stanfill’s thwarted move to oust Harris Katleman as Fox’s television division chief over alleged irregularities in his expense accounts.

Stanfill tried to fire Katleman in June, 1981, shortly after Davis took over ownership. Davis ordered that Katleman be retained, and Stanfill abruptly resigned on June 29 after 12 years at 20th Century Fox.

In September, 1981, Stanfill filed the civil suit. He alleged that in trying to force Katleman’s reinstatement, the studio and Davis conspired to force him out by trying to make him act in “an illegal, immoral and unethical manner.”

In addition to breach-of-contract and wrongful termination of employment, Stanfill’s suit accuses the studio of defaming him in a statement July 15, 1981, saying no company action against Katleman was warranted. Katleman still holds his high position under new Fox owner Rupert Murdoch.

The defense denies all of Stanfill’s charges and itself has alleged that Stanfill himself breached his employment contract by walking off the job in 1981.

Among other things, Stanfill’s attorney is expected to put on testimony about Katleman’s reporting of business expenses, including meals in Paris restaurants. Davis and Katleman, as well as Stanfill, could be called to the witness stand early in the trial.

The studio dispute in 1981 was the subject of an investigation of Katleman’s expense vouchers by the then Los Angeles County district attorney and now California attorney general, John Van de Kamp. The district attorney closed his investigation in February, 1982, dropping the case for insufficient evidence for any prosecution.

Marshall Grossman, Stanfill’s attorney, commenting Wednesday that he expects the case to go to trial, said it involves important matters of business ethics that “should be aired in public and tried.”

Howard Squadron, an attorney whose New York firm represents Murdoch’s widespread communications empire, said he knew of nothing that stood in the way of the case going to trial.

He represented Fox in arguments on the defense motion for a summary judgment.

The proceedings were conducted most of the day behind closed doors, at the specific request of the defense. Judge Chernow, however, announced his ruling in open court. He indicated that he will not rule until early next week on many pretrial motions filed by the parties in recent days.

A jury will not be selected until after such matters are disposed of.

All court papers filed by the parties in recent times have been sealed by the court, which granted Fox and Davis a protective order guarding the files from disclosure before trial.

After ending his 12-year tenure at Fox, while it was a public corporation, Stanfill went into the venture capital business, opening his own firm.

Davis first sold half, then his entire interest in the Fox studio last year to Murdoch. Davis recently made a $3.75-billion cash bid to buy all of the stock of CBS Inc., but the company’s management rebuffed his offer.