A Los Angeles judge overturned a massive $128.5-million punitive damages award to the stars and two producers of Fox’s longtime hit show “Bones,” handing a big victory to the 20th Century Fox Television production studio.
Los Angeles County Superior Court Judge Richard Rico ruled Thursday that the four plaintiffs, including actors Emily Deschanel and David Boreanaz, were not entitled to punitive damages in the high-profile profit participation dispute.
However, the judge left in place a $50-million actual damages judgment against Fox, which produced the crime drama that ran from 2005 to 2017. Fox did not contest that aspect of the verdict.
“We are pleased with the court’s decision to strike punitive damages from the award and vindicating our position. We look forward to concluding the litigation,” Fox said in a statement.
In February, the arbitrator who presided over the case, Peter Lichtman, slapped Fox with a $178.7-million judgment that sent shock waves through the television industry. Lichtman excoriated top Fox television executives, including two high-ranking executives who have since joined Walt Disney Co. as part of the Burbank company’s takeover of Fox. The judge said he found the executives’ testimony unconvincing.
Fox challenged the punitive-damages award of $128.5 million, arguing that the arbitrator overstepped his powers and that the plaintiffs weren’t entitled to punitive damages. Fox quickly brought in prominent litigator Daniel Petrocelli to make its case to Rico.
The litigation began in 2015 when Deschanel, Boreanaz, executive producer Barry Josephson and crime writer Kathy Reichs, who also was a producer because her novels provided inspiration for the popular series. The group sued Fox, accusing the television studio of cheating them out of millions of dollars in residual payments. They alleged that the studio charged licensing fees below market rates to its related divisions, the Fox Broadcasting network and Hulu, which also distributed the show. The alleged scheme resulted in lower payments to the profit participants.
The “Bones” award was among the largest of its kind and was the latest legal battle to shine a light on the accounting practices of major studios and whether they shortchange talent. The largest award came in 2011 when a jury ordered Disney to pay $319 million in a profit participation case over the popular game show “Who Wants to Be a Millionaire.”
Lichtman wrote in his February decision that Fox had engaged in “reprehensible conduct” and that top executives, including former 21st Century Fox President Peter Rice, who is now chairman of Walt Disney Television, and senior Fox TV executives Dana Walden and Gary Newman gave unconvincing testimony. Walden now is chairwoman of Disney Television Studios and ABC Entertainment.
“The more these individuals testified,” Lichtman wrote, “the more incredulous their testimony appeared.” He criticized Fox for taking a “cavalier attitude toward its wrongdoing.”
The attorney for three of the plaintiffs — Deschanel, Boreanaz and Reichs — vowed to appeal.
“Today's decision in no way impacts the arbitrator’s findings that our clients are owed more than $50 million for Fox’s fraudulent and deceitful accounting,” said Daniel A. Saunders of the Kasowitz Benson Torres law firm. “It deals only with the technical issue of whether our clients waived their right to receive punitive damages. As the arbitrator concluded, they did not — and we look forward to showing the Court of Appeal why it should reverse today’s ruling.”
Analysts have predicted an upswing in profit participation disputes now that major media companies, including Disney and WarnerMedia, plan to build streaming services stocked with shows they produce. These companies will have an incentive to keep programs in the same corporate family rather than spark bidding wars by shopping shows to various networks -- a tactic that has long yielded windfalls for the most successful TV show producers.
For example, as part of its March takeover of much of 21st Century Fox, Disney now owns 60% of the Santa Monica-based streaming service Hulu.