Friday, September 4, 2020
Chaney Says Studio Can’t Force Arbitration With Producer Over Spinoff Film
Above is a promotional graphic for a 2019 film. The Court of Appeal has held that a studio’s contracts with a producer containing arbitration clauses relating to “Fast & Furious” movies do not carry over to a spin-off movie.
By Sandra Hong, Staff Writer
An attempt by Universal City Studios to force arbitration with producer Neal Moritz in a dispute over a spinoff movie from the lucrative “Fast & Furious” franchise has been rebuffed by the Court of Appeal for this district, which affirmed an order denying the studio’s motion to arbitrate.
Justice Victoria Gerrard Chaney of Div. One wrote the decision filed Wednesday affirming the order by Los Angeles Superior Court Judge Craig D. Karlan.
Karlan concluded that the arbitration agreements claimed by the movie studio to be valid and binding only applied to disputes arising out of “Fast & Furious” sequels and remakes and not to a spinoff called “Fast & Furious Presents: Hobbs & Shaw,” from which Moritz was shut out at the start of filming.
In her decision, joined by Presiding Justice Frances Rothschild and Justice Helen I. Bendix, Chaney declared:
“We conclude not only is it not clear and unmistakable here that the parties agreed to delegate arbitrability questions concerning Hobbs & Shaw to an arbitrator, no reasonable person in their position would have understood the [Fast & Furious] arbitration provisions to require arbitration of any future claim of whatever nature or type, no matter how unrelated to the agreements nor how distant in the future the claim arose.”
‘Fast & Furious’ Contracts
Moritz produced eight “Fast & Furious” films released between 2001 and 2017, all but one under written contracts containing arbitration provisions. For the 2017 film, Moritz entered into a single producer contract that governs two additional films constituting a sequel or remake of any of the earlier “Fast & Furious” productions.
The multi-film contract does not include an arbitration agreement; however, it requires terms of the contract for the seventh film released in 2015 to be applied. That contract provides for any disputes arising out of, or related to, the agreement to arbitrated.
While Moritz worked on the eighth “Fast & Furious” film, he and Universal started discussing a spinoff based on characters in the franchise, which would eventually become “Hobbs & Shaw.”
Drafts of a producer contract for “Hobbs & Shaw” that included an arbitration agreement were exchanged between Moritz and Universal, but a final agreement was never signed.
‘Hobbs & Shaw’ Dispute
Universal informed Moritz he was being cut from “Hobbs & Shaw” shortly before filming began and that it was not obligated to compensate him for any work related to the film. Moritz sued Universal as well as its president, Jimmy Horowitz, seeking damages and enforcement of the oral agreement.
The studio moved to compel arbitration based on the agreements spanning Moritz’s 16 years of work on the “Fast & Furious” franchise.
In his June 2019 complaint, Moritz described the practice of forming “fully negotiated and agreed upon” oral producer agreements at Universal and that he typically began working on production before any writings were formally reduced to writing and signed.
His complaint references key financial provisions and compensation terms of previous “Fast & Furious” contracts.
Universal argued that the delegation clause in previous arbitration provisions extended to its dispute with Moritz as being “related to” previous “Fast & Furious” agreements.
“The argument is without merit,” Chaney said, declaring “the Hobbs & Shaw dispute neither arises from nor relates to the [Fast & Furious] agreements.”
“Although Moritz referenced the agreement in his complaint when explaining the historical background of the Hobbs & Shaw film, the mere mention of a contract does not mean the dispute relates to it in any substantive sense. If it did, a party could make any contract relate to a dispute simply by mentioning it.”
Universal argued that only the arbitrator can determine whether the arbitration clause should be enforced, relying on the 2019 U.S. Supreme Court decision Henry Schein, Inc. v. Archer & White Sales, Inc.
“We disagree,” Chaney said, noting that Schein presupposes “some minimal connection between the contract and the dispute.”
“The [Federal Arbitration Act] requires no enforcement of an arbitration provision with respect to disputes unrelated to the contract in which the provision appears. Appellants’ argument that an arbitration provision creates a perpetual obligation to arbitrate any conceivable claim that Moritz might ever have against them is plainly inconsistent with the FAA’s explicit relatedness requirement.”
The case is Moritz v. Universal City Studios, 2020 S.O.S. 4338.
Counsel for Moritz were Dale F. Kinsella, Suann C. MacIsaac, and Zachary T. Elsea of Kinsella Weitzman Iser Kump & Aldisert in Santa Monica. Counsel on behalf of Universal were Bruce E. Van Dalsem, Daniel C. Posner, and M. Alex Bergjans of Quinn Emanuel Urquhart & Sullivan in Los Angeles.
Copyright 2020, Metropolitan News Company