'Spinal Tap' creators may pursue fraud claim in $400 million U.S. lawsuit

[August 30, 2018]   By Jonathan Stempel

(Reuters) - A U.S. judge said the creators of "This Is Spinal Tap" may pursue the fraud claim underlying their $400 million lawsuit against Vivendi SA over the 1984 cult film.

The decision on Tuesday by U.S. District Judge Dolly Gee in Los Angeles is a victory for Christopher Guest, Michael McKean, Rob Reiner and Harry Shearer, who accused Vivendi of depriving them of a "fair return" from the film, its music and related merchandise.

Gee said the plaintiffs could try to show that Vivendi's StudioCanal unit breached a 1982 agreement to finance and produce the film through self-dealing, failing to provide required accounting statements, nonpayment of royalties, and "nefarious accounting" to hide profits.

"This alleged misconduct amounts to more than mere false assurances that defendants were complying with the 1982 Agreement," Gee wrote.

Vivendi, through spokeswoman Solange Maulini, declined to comment on Wednesday. The Paris-based company has controlled "Spinal Tap" rights for nearly three decades.

"This Is Spinal Tap" is a pioneering example of the mock documentary, and is part of the U.S. National Film Registry.

Its scenes include the band getting lost backstage before a concert; the deaths of drummers by spontaneous combustion, a bizarre gardening accident and other hazards; and amplifiers that "go to 11" rather than the normal maximum volume of 10.

According to the complaint, Vivendi had estimated that the plaintiffs' share of "Spinal Tap" income was just $81 from merchandising between 1984 and 2016, and $98 from music sales between 1989 and 2016.

Shearer, who played bassist Derek Smalls, had sued for $125 million in October 2016. His Spinal Tap bandmates Guest and McKean and the film's director Reiner joined the lawsuit four months later.

"We are entitled to ownership and control over our film, music, and the Spinal Tap brand," Shearer said in a statement on Wednesday. "We look forward to finally getting our day in court, at a trial, with the evidence that to date Vivendi has tried to hide from us."

Gee also dismissed a fraud claim against Vivendi's Universal Music Group unit, finding a lack of intent to commit fraud through the alleged underreporting of music-related profits.

She said the plaintiffs could pursue a copyright claim to reclaim music rights.

Gee gave the plaintiffs 21 days to amend their complaint to address the UMG claims. Shearer said they plan to do so.

The case is Century of Progress Productions et al v Vivendi SA et al, U.S. District Court, Central District of California, No. 16-07733.

(Reporting by Jonathan Stempel in New York; Editing by David Gregorio)

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