Paramount Pictures Achieves Major Trial Victory

As reported in The Wall Street Journal, The Hollywood Reporter and other media outlets, Paul, Weiss obtained a major trial victory for client Paramount Pictures. At the close of the plaintiffs' case on liability, Judge Katherine B. Forrest of the U.S. District Court for the Southern District of New York granted judgment dismissing all of the claims brought against Paramount Pictures by four investors - two insurance companies and two hedge funds - in a slate of Paramount films. The investors had purchased interests in a special purpose vehicle, Melrose Investors, that entered into a contract with Paramount to fund 25 Paramount films. The films, which included Mean Girls, The Stepford Wives and Mission Impossible 3, did not perform as well as the parties had hoped, and the plaintiffs, all of whom invested in either mezzanine level debt or equity issued by Melrose, suffered losses on their investments. The investors claimed that Paramount had misrepresented its intentions as to certain "risk mitigation" techniques, specifically "territorial pre-sales," where rights to distribute a film may be licensed for a fixed amount. After two weeks of trial, Judge Forrest granted - in a lengthy oral decision, read from the bench - Paramount's motion for a decision holding that plaintiffs had failed to prove liability. Judge Forrest found that Paramount made no false statements or actionable omissions and that plaintiffs failed to prove every single element of their claims.

The Paul, Weiss team included litigation partners Leslie Fagen, Allan Arffa and Andrew Ehrlich.