|
 Lawyers delivered opening statements before U.S. District
Judge Katherine Forrest in Manhattan, who is presiding over the
trial without a jury.
The investors, including a unit of Allianz SE, are asking for
$16 million as well as punitive damages for what they said
amounted to fraud. Paramount, which is owned by Viacom Inc, says
the claims are baseless.
The dispute revolves around $40 million of the $231 million that
Paramount raised through a private placement for a slate of 25
films that also included "Mean Girls."
The films were released from 2004 to 2006, and there is no
dispute that as a group they performed poorly at the box office.
Institutional investors sued in 2008, saying the studio
misrepresented its planned use of certain risk-mitigation
techniques.
Paramount failed to disclose that it had reduced its plans to
sell international distribution rights, favoring instead
increased self-distribution, the investors said.
The distribution decision meant there was less revenue to offset
losses when the movies failed to deliver financially, according
to the lawsuit.
"There was a change in strategy," James Janowitz, a lawyer for
the investors, said during opening statements. "It was not a
change in strategy my clients knew about."
Paramount's lawyer, Richard Kendall, called the investors'
theory an "after-the-fact concoction." The studio made no
promises about its use of so-called pre-sales, a strategy it
rarely used, he said.
"They did the deal, they took the risk, and they have to live
with that risk," he said.
[to top of second column]
|
The plaintiffs include Allianz Risk Transfer, Marathon Structured
Finance Fund, Newstar Financial and Munich Re Capital Markets. They
were junior investors in Melrose Investors LLC, a special-purpose
vehicle that in turn invested in the film slate.
Other films in the slate were "The Stepford Wives," "Collateral,"
"Coach Carter," "War of the Worlds," and "Mission Impossible 3."
Some films succeeded. With a budget the plaintiffs said was $22.7
million, "Mean Girls" has grossed $129 million worldwide since its
release in 2004, according to Box Office Mojo.
Overall, the movies lost money, both sides in the lawsuit said. In
court, Paramount's Kendall displayed a slide that said films in the
slate had an average production cost of $67.4 million but earned
$22.2 million domestically.
The judge, Forrest, took the case on Monday after it was transferred
from another judge on her court, Thomas Griesa. It was not
immediately clear why the change was made.
The case is Allianz Risk Transfer, Inc. et al v. Paramount Pictures
Corporation, U.S. District Court, Southern District of New York, No.
08-10420.
(Reporting by Nate Raymond in New York; Editing by Davd Ingram and
Jonathan Oatis)
[© 2014 Thomson Reuters. All rights
reserved.] Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed. |
