Producer Wins ‘Pay or Play’ Legal Case

A Los Angeles Superior Court jury this week awarded a producer nearly $1.6 million in damages after he claimed that Warner Bros. fraudulently squeezed him out of a science-fiction movie project he brought to the studio in 1977.

The verdict, if upheld, could provide a new legal avenue for producers, directors and actors to challenge studios that remove them from film projects under widely used “pay-or-play” contract clauses. These types of agreements bind a studio to “pay” the person in full an agreed-upon salary--even if the studio chooses to drop him or her from the production. In effect, this means the studio has the right to fire someone from a project as long as the person is paid.

Typically, studios invoke the pay-or-play clause as a last resort: An actor develops health problems or a director turns out to be incompetent, for example. But occasionally studios invoke the clause--particularly during the production phase of movie-making--for less compelling reasons.

The 12-0 jury vote found Warners guilty of fraud and breach of contract and awarded the producer, John Mantley, $1,595,500 as reimbursement for the value of his project, plus interest. The judgment also covers the estimated cost to his career of losing control of the project. “I am very pleased,” said Mantley, a longtime TV producer.

Mantley’s attorney, Daniel C. Rosenberg of Stein & Kahan, said he has filed an appeal, seeking to recover an additional $25 million in punitive damages from Warners.

A Warners spokesman said Friday that his studio also will appeal the decision. “Warners believes that the jury’s verdict is contrary to the overwhelming weight of the evidence and that it will not withstand judicial review,” the studio said in a prepared statement.

Mantley, who produced the hit TV show “Gunsmoke” for 11 years, brought suit against Warners in 1984, alleging he was cut out of the development stage of a film project based on a series of Isaac Asimov short stories that appeared in two books, “I, Robot” and “The Rest of the Robots.”

Mantley optioned the rights to those popular science-fiction stories in 1968 and turned them over to Warners in 1977. In return, according to Mantley, he secured an oral agreement from producer Edward Lewis and Warners that he would serve as producer on the project. Lewis, along with his associate Lee Savin, would jointly develop the project, according to Mantley’s suit. Lewis would serve as executive producer, according to Mantley.

By 1977, Mantley, whose shows also included “How the West Was Won,” was a successful TV producer and the author of two novels--”The 27th Day” and “The Snow Birds”--that were later made into movies. But he was anxious to produce feature films himself.

Between 1968 and 1977, Mantley spent more than $67,000, including legal fees, to renew the options on Asimov’s stories, according to Mantley. By 1977, with “Star Wars” doing blockbuster business at the box office, it looked like an ideal time to produce a science-fiction film, Mantley said.

But Mantley’s involvement with the project ended shortly after his verbal agreement with Lewis and Warners. During script-writing and other activities central to developing a movie, Mantley said, he was cut out of the process. Instead, Lewis assumed the role of hands-on producer.

“Once I came on board, they stopped talking to me,” Mantley said in an interview Friday. “All they had to do was pick up the phone. They didn’t even have that courtesy.”

In his suit, Mantley charged that Warners committed fraud and breach of contract by leading him to believe he would serve as producer and then cutting him out of the project.

A 1983 written contract on the project refers to Mantley as the film’s producer, but it also includes the standard pay-or-play provision giving Warners the right to drop Mantley’s services. (Mantley was not to receive a fee during development, so the pay provision was involved.)

During a two-week trial, Mantley’s attorney argued that, despite the pay-or-play clause, Warners acted fraudulently because studio executives had made up their minds from the outset that they weren’t going to use Mantley as producer. All the while, Mantley’s attorneys argued, Lewis and Warners executives had led Mantley to believe otherwise.

In its prepared statement, Warners noted that two of its witnesses, Lewis and Savin, testified “that Mantley was not to be involved in the development stage, that Warners had fully consulted with the team, and had otherwise done everything required of it under the development agreement.”

Mantley’s claims, the Warners statement added, “were unfounded. . . . Warners believes that testimony (by Lewis and Savin), the signed agreement and other evidence introduced at the trial, clearly demonstrates that it was without fault in connection with the ‘I, Robot’ project.”

Since Mantley’s lawsuit was filed, Warners’ rights to make a movie based on the Asimov stories have expired. As a result, the film rights reverted back to Asimov and his publisher, Doubleday.

Mantley, meanwhile, is at work producing a two-hour version of “Gunsmoke” for CBS. “I don’t expect to see any money for a long time (because of the appeals),” Mantley said. “But I feel I was vindicated.”