Sylvester Stallone files lawsuit against Warner Bros over 'Demolition Man' profits

Los Angeles: Sylvester Stallone is one up against Warner Bros. in the lawsuit over profits from the 1993 science-fiction film 'Demolition Man'.

According to The Hollywood Reporter, a Los Angeles Superior Court judge rejected the studio's bid to throw out breach of contract and fraud claims.

The actor is also being permitted to bring a potentially big claim that Warner's accounting practices are likely to deceive the public including others in Hollywood with profit participation agreements.

Through his loan-out company Rogue Marble, Stallone filed his lawsuit in April.

The complaint noted, "The motion picture studios are notoriously greedy. This one involves outright and obviously intentional dishonesty perpetrated against an international iconic talent. Here, WB decided it just wasn't going to account to Rogue Marble on the film. WB just sat on the money owed to Rogue Marble for years and told itself, without any justification, that Rogue Marble was not owed any profits."

According to the lawsuit, Warner Bros. initially asserted that nearly 67 million USD was unrecouped on 'Demolition Man' and therefore, nothing was owed to Stallone, who was to get 15 to 20 per cent of defined profits on the film.

After being challenged, the studio sent Stallone a check for 2.82 million USD, but the actor wasn't satisfied.

What makes Stallone's case provocative besides an A-list actor suing the same studio that distributed 2015's 'Creed,' which earned Stallone an Oscar nomination, is a claim of unfair business practices.

The lawsuit characterises Warner Bros.' conduct as "unscrupulous, unethical and offensive," causing injury to consumers and threatening to harm competition, because other studios have their own agreements with profit participants.

Stallone demanded injunctive relief in the form of "a full accounting, an explanation of how this practice came to be, interest, damages, and an end to this practice for all talent who expect to be paid by WB for the fruits of their labour."

In response to the lawsuit, Warner Bros. challenged the sufficiency of the pleading with a demurrer motion.

At a court hearing on Thursday morning, the judge adopted a tentative ruling.

The judge wrote, "The Court finds that Plaintiff's allegations as to general fraudulent accounting practices are sufficient to state a claim properly encompassing the general public, or at least competitors who stand to be injured by such practices."

Warner Bros. also can't use the statute of limitations at this juncture to beat a breach of contract claim. The studio pointed to the 1992 contract and argued that any violations dated to the 1990s and were time-barred.

The judge disagrees, factoring a complaint alleging breaches over the past few years.

Over the objection of Warner Bros. here, the judge is allowing Stallone's fraud claim to survive as well.

The whole ruling stated, "(1) Warner concealed the profits earned by the subject film, (2) there was a duty to communicate such facts as Warner had exclusive knowledge of such facts or alternatively the subject contract required payment of certain monies given such profits, (3) the concealment was intentional as Warner wished to retain the profits of the subject film for itself, (4) Plaintiff was unaware of the film's profits and would not have idly sat by for years without inquiring into the fees that should have been tendered as a matter of right, and (5) such concealment damaged Plaintiff in that it did not receive the profits due to it contractually. This is sufficient, at the pleadings stage, to state a claim for fraud."