Fraud in the Bones

March 8, 2019

Back in 2015 Bones stars Emily Deschanel, David Boreanaz and author and executive producer Kathy Reichs (collectively “Plaintiffs”) filed a lawsuit against their show’s network Fox for self-dealing regarding money owed per a profit sharing agreement they had with the network. Their suit followed a similar lawsuit first filed by Barry Josephson (“Plaintiffs”) who is another executive producer on the show. Collectively, the plaintiffs brought eight causes of action: (1) breach of contract; (2) breach of implied covenant of good faith and fair dealing; (3) fraudulent inducement; (4) fraudulent concealment; (5) inducing breach of contract; (6) intentional interference with contract; (7) accounting; and (8) declaratory relief.

Bones is a one-hour scripted television series that is based on the best-selling Temperance Brennan novels written by Kathy Reichs. It features a forensic anthropologist by the name of Dr. Temperance Brennan, played by Emily Deschanel, and a FBI Special Agent Seeley Booth, portrayed by David Boreanaz, and their team solving murders. It aired on the Fox network from 2005 to 2017.

The Plaintiffs state that Bones is the “longest running primetime drama in the history of the [network].” In addition, the Plaintiffs argue that Fox has earned “hundreds of millions of dollars” in advertisement in connection with the Series. It also reached a milestone of reaching over 200 episodes for only which few dramas have reached. In addition, the show is distributed in over 150 territories.

At the core of the lawsuits is the profit sharing arrangement the Plaintiffs had with Fox. Fox had agreed to provide Plaintiff Reichs 5% share of the series profit and 3% share with Plaintiffs Deschanel and Boreanaz and a certain percentage share with Plaintiff Josephson as well. Plaintiffs claim that Fox “cheated them” out of millions of dollars by engaging in self-dealing where they worked with their affiliates and distributors to “charge below market rates” and over-charged Plaintiffs expenses that resulted in a loss in the share of profits.

As an example, Plaintiffs highlight Fox’s licensing agreement with Hulu. Plaintiffs state Fox owns a 33% interest in Hulu, among several other companies, and entered into a below market rate agreement. They also discuss how under-cutting licensing agreements with their distributors lowered the market value on third-party service providers as well. Adding further, Plaintiffs go through several factual assertions as to indicate that Bones was a profitable show for the series and outline how Fox engaged in self-dealing to reduce their over-all profit shares in their respective complaints to “cheat them” out of profits owed.

The lawsuits headed to arbitration where an arbitrator found for the plaintiffs in the amount of $178.7 million. The arbitrator ordered Fox to pay the Plaintiffs $50 million in non-punitive damages and another $128 million in punitive damages. This is one of the largest monetary damages awarded in the entertainment world in regards to profit sharing. Fox has appealed the decision.

In a world of entertainment where there is mergers and vertical integrations, issues involving self-dealing and profit sharing may seem to get more traction as companies become more intertwined across various market channels. While, the arbitrator’s award and ruling are being appealed, this decision may become more frequent as media companies begin to vertically align their business model to include all the various aspects of the entertainment world such as production, distribution, and streaming.

Complaint Filed by Emily Deschanel, David Boreanaz, and Kathy Reichs: 2015 WL 7731694

Complaint Filed by Barry Josephson: 2015 WL 7736879

Image Source: REUTERS/Joshua Lott

Not a Westlaw subscriber? Sign-up for a free trial today.