December 9, 2010 / 5:10 AM / in 8 years

Disney's "Millionaire" appeal faces setback

LOS ANGELES (Hollywood Reporter) - A federal judge has issued a tentative ruling shutting down the Walt Disney Co.’s bid to overturn a $319 million jury verdict over profits from “Who Wants to Be a Millionaire.”

The decision is not final, and lawyers for Disney and British “Millionaire” producer Celador Intl. were in the Riverside, Calif., courtroom of Judge Virginia A. Phillips on Monday arguing for more than two-and-a-half hours. But Phillips issued a 43-page tentative ruling saying she will likely deny Disney’s request to throw out the July verdict and order a new trial. A final judgment is expected later this week.

If the tentative ruling is upheld, Disney will almost certainly appeal the case to the Ninth Circuit Court of Appeals, setting up another high-profile showdown in the closely-watched 6-year old litigation.

The “Millionaire” trial made headlines this summer because it shone a rare public light on complex studio accounting procedures and dealmaking in the early days of the reality TV boom. Celador claimed Disney, ABC and their affiliated entities operated a “shell game” when they brought the show to America in 1999, hiding millions of dollars in revenue owed to Celador under a profit-sharing arrangement. The trial featured testimony from Disney CEO Robert Iger and Celador’s Paul Smith, as well as former William Morris agents Greg Lipstone and Ben Silverman, who helped broker deals to bring the show to the United States.

After a month-long trial, the jury ruled July 8 that Disney failed to “perform the obligations of the rights agreement” with Celador and ordered the studio to pay $269 million in damages. Phillips later added $50 million to that figure in pre-judgment interest. The damages ordered were the largest ever in a so-called “Hollywood accounting” lawsuit.

Disney then moved for either a judgment notwithstanding the verdict or a new trial, claiming that there were numerous errors in the jury’s decision and its damages calculation.

Judge Phillips considered court papers filed on behalf of both sides before arriving at her tentative ruling, copies of which were given to lawyers on Monday. The attorneys then argued their cases, after which Phillips collected the copies of the ruling to keep them private until she issues a final ruling, likely later this week. Courtroom sources who have seen the ruling say it is a full denial of Disney’s efforts to overturn the verdict.

Both Disney lead lawyer Marty Katz and Celador attorney Roman Silberfeld declined to comment on the case until the judge issues a final ruling.

After the verdict in July, Disney released a statement saying, “We believe this verdict is fundamentally wrong and will aggressively seek to have it reversed.”

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