(1982) Tags: Warner Bros.
Ladd v. Warner Bros. Entertainment, Inc.
This action arises out of Ladd’s claim that Warner undervalued and underpaid the license fees attributable to the following 12 motion pictures: Blade Runner, Body Heat, Night Shift, Tequila Sunrise, Outland, Chariots of Fire and the Police Academy franchise, consisting of the original and sequels 2, 3, 4, 5 and 6.
In 1993, Ladd conducted a profit participation audit of the motion pictures for the period from October 1, 1988, through September 30, 1992. The audit did not cover Blade Runner because Warner represented to Ladd said movie was unprofitable and was “so far in the red it was not worthwhile to issue [profit] statements.” (In Mar. 1992, Warner provided Ladd with a one-page statement indicating Blade Runner had lost $19.5 million as of Dec. 31, 1991.)
In 2001, Ladd learned another Blade Runner investor, Empress Investments, was receiving payments from Warner even though Warner told Ladd the movie was unprofitable. Ladd retained James Perry to audit Warner’s records (the second audit). Warner limited Perry’s audit to the four-year period from April 1, 1997, through March 31, 2001, for all films except Blade Runner and Outland, which Warner allowed Perry to audit back to their inception. Following the second audit, Ladd filed the instant lawsuit.
The audit determined Warner should have allocated an additional $97 million in licensing fees to Ladd’s films. Ladd was entitled to 5 percent of gross revenues on all films once Warner recouped its costs, except for Chariots of Fire, on which Ladd was entitled to 2.5 percent. Thus, on the $97 million in underallocated licensing fees, Ladd’s profit participation should have been $3,190,625.