[00:00:01] Speaker 04:
And we'll move on to our final case of McLeod versus zero gravity management.

[00:00:39] Speaker 03:
And council when you're ready to proceed Devin McCrae I represent an appellant Kurt McLeod I'd like to reserve three minutes for sure So I really think there's only four

[00:01:05] Speaker 03:
documents or items for the court to focus on in Reviewing this case.

[00:01:12] Speaker 02:
So could you try to speak up a little more move the mic closer?

[00:01:15] Speaker 02:
Thank you very much.

[00:01:16] Speaker 03:
I'm sorry about that No, no problem.

[00:01:17] Speaker 03:
The first thing is that the hearing transcript for the summary judgment motion There's been argument about waiver what was argued.

[00:01:27] Speaker 03:
It's always been our primary theory of the case it's the first claim for relief breach of contract and it's always been that a

[00:01:34] Speaker 03:
There was a subsequent oral agreement between the three parties and that there are implied terms by custom and usage.

[00:01:42] Speaker 03:
And that is not a new argument and it was flushed out at the summary judgment hearing.

[00:01:46] Speaker 03:
And not only that, the defense counsel at the hearing acknowledged the argument.

[00:01:52] Speaker 03:
They had a different theory, but it's not supported by the law.

[00:01:56] Speaker 03:
So if the court, and I'd like to go over some of these provisions if I may.

[00:02:01] Speaker 03:
Sure.

[00:02:01] Speaker 03:
First at 3ER535.

[00:02:03] Speaker 03:
This is defense counsel speaking to the court at lines 16 through 22.

[00:02:09] Speaker 03:
The last kind of agreement is the oral agreement.

[00:02:12] Speaker 03:
When the written representation agreement expired in 2013, both parties agree that the representation continued pursuant to an oral agreement.

[00:02:21] Speaker 03:
What's missing are the terms.

[00:02:23] Speaker 03:
According to plaintiff,

[00:02:25] Speaker 03:
He did not view himself for zero gravity as bound by the terms of the written agreement after expired.

[00:02:30] Speaker 03:
So ultimately, there is no breach."

[00:02:32] Speaker 03:
That was the defense's theory, that they hadn't expressed the terms of the oral agreement with respect to the managerial relationship.

[00:02:41] Speaker 03:
And what we responded with was said, look at our expert report, there are implied terms pursuant to custom and usage.

[00:02:50] Speaker 03:
And on the very next page, well it's not the very next page,

[00:02:53] Speaker 03:
at 3 er 538 plaintiff's council my colleague Mr.. Gray argued and The point of our expert report your honor is that there has very specific?

[00:03:09] Speaker 03:
Obligations when you take on to become someone's manager and those include according to our expert who describes them is accurate and timely communication zealous representation of your client's interest and

[00:03:21] Speaker 03:
and giving advice regarding the various choices to your client's benefit and to avoid conflicts of interest.

[00:03:27] Speaker 03:
Those are the custom and practices in the entertainment industry.

[00:03:34] Speaker 03:
So it gets better.

[00:03:37] Speaker 03:
Mr. Goldberg later then says, 3ER543, again this is defense counsel, this is their motion, so I think they're stuck with these comments.

[00:03:50] Speaker 03:
And he says, inasmuch as the evidence is going to be construed in plaintiff's favor on this motion, plaintiff testified, Kurt McLeod testified that he did not view himself or Zero Gravity as bound by the terms of the written representation agreement after it lapsed in 2013.

[00:04:08] Speaker 03:
What he said was the terms of the subsequent oral agreement were that Zero Gravity would remain his manager and he would remain Zero Gravity's client.

[00:04:16] Speaker 03:
So we defer to the plaintiff's understanding of the agreement that succeeded or survived beyond the written representation agreement.

[00:04:28] Speaker 03:
Well, the plaintiff, Kurt McLeod, gave a lot of testimony about what his understanding of the agreement was.

[00:04:35] Speaker 03:
And he testified very clearly that he believed that his managers, both of them,

[00:04:43] Speaker 03:
Eric Williams and Mark Williams were bound by the custom and usage that he had learned.

[00:04:48] Speaker 04:
So let me jump in here for a second, just so I understand your argument, because your argument is that there's his testimony, your client's testimony established, at least for summary judgment purposes, that a contract, an oral contract, existed post-termination of the written contract, correct?

[00:05:02] Speaker 03:
Yes, and in fact, defense counsel agreed at the hearing.

[00:05:06] Speaker 04:
All right, so is there any other evidence, in reading the district court's order,

[00:05:11] Speaker 04:
The district court seemed to think there was really no evidence.

[00:05:13] Speaker 04:
And so I want to make sure that I understand your arguments as to what evidence exists.

[00:05:17] Speaker 04:
We have the testimony of your client.

[00:05:20] Speaker 04:
But I did not see in the record any contemporaneous written text messages or emails or anything like that.

[00:05:27] Speaker 04:
So is this a he said case, or is it a he said plus some there's a text message saying, yo, manager, I'm ready to write another movie, or anything like that?

[00:05:37] Speaker 03:
The documents that exist, you know, that are out there between, there's not a document that says, I'm your manager, we're confirming.

[00:05:46] Speaker 03:
That's why it's an oral agreement.

[00:05:48] Speaker 03:
But there are communications that would reflect Mark Williams acting as a manager.

[00:05:57] Speaker 03:
And I can point one to you in the record.

[00:05:58] Speaker 03:
Sure.

[00:06:19] Speaker 00:
Sorry.

[00:06:29] Speaker 03:
That would be

[00:06:50] Speaker 03:
There is an email, and I will cite for the court.

[00:06:57] Speaker 03:
But the nature of the email is Mark Williams getting involved in the negotiation when Sculptor, the new financier, came in.

[00:07:06] Speaker 03:
Eric said, Mark's going to get involved too.

[00:07:09] Speaker 03:
And so that was outside Mark Williams' capacity as a producer.

[00:07:15] Speaker 03:
He was getting involved to advance McCloud's interest.

[00:07:18] Speaker 03:
And I will give you that set of hat if you're with me.

[00:07:20] Speaker 02:
Are you in any way relying, I find this page or at least what I printed out hard to read, but this ERA 24, the WGA directory listing Mark Williams as manager, is that part of your evidence or am I misviewing this?

[00:07:37] Speaker 03:
Well, yes, I think it's evidence, and we're not relying solely on that, but it's outward facing, as our expert talked about during his deficit.

[00:07:46] Speaker 02:
I mean, this is something people in the industry would be looking at.

[00:07:49] Speaker 03:
Yes, and particularly those who are looking for managerial representation.

[00:07:55] Speaker 04:
All right, so we have the document that Judge Bennett just referenced.

[00:07:59] Speaker 04:
You have an email that you'll get us during your rebuttal.

[00:08:04] Speaker 04:
The reason I'm asking this question is because I read the district court's order to say, look, there was just nothing to support that no jury could possibly find that Mr. Williams was a manager.

[00:08:14] Speaker 04:
So I'm just trying to get your best case while we've got you here is why that was wrong.

[00:08:20] Speaker 04:
So we have the testimony.

[00:08:23] Speaker 04:
We have a few other things.

[00:08:24] Speaker 03:
I think that certain testimony was overlooked, and I think the best testimony, and I would like to read it to you.

[00:08:31] Speaker 03:
It's a page answer, but the question is directly put to the plaintiff.

[00:08:36] Speaker 03:
OK.

[00:08:36] Speaker 03:
What page?

[00:08:38] Speaker 03:
ER 1439.

[00:08:39] Speaker 03:
That's 7, volume 7, 1439.

[00:08:41] Speaker 03:
He said, OK, did Mark Williams ever refer to himself as your manager?

[00:08:46] Speaker 03:
Answer, yes, he did explicitly.

[00:08:49] Speaker 03:
Question, over what time period?

[00:08:50] Speaker 03:
Here's the long answer.

[00:08:52] Speaker 03:
Okay.

[00:08:53] Speaker 03:
So I mean in addition to him being a signatory on my management representation agreement, I remember the conversation.

[00:08:58] Speaker 03:
It was just after we discussed that there had been a bunch of revisions that I was making for a director named, I'm going to leave the director's name out just for his privacy.

[00:09:08] Speaker 03:
Okay.

[00:09:09] Speaker 03:
And there had been some conflict between me and Mark because I was getting confused.

[00:09:14] Speaker 03:
The way he was acting, he was making these unilateral decisions without me, like without checking with me.

[00:09:19] Speaker 03:
I believe he had me do all those revisions and really urged me to do all those revisions all summer to get the script to a place the director had wanted.

[00:09:26] Speaker 03:
And then, and then he fired or released the director without talking to me.

[00:09:31] Speaker 03:
And I was getting stressed.

[00:09:32] Speaker 03:
So the reason I remember this is I, we had a call, and I was, and I made clear, I said, Mark, you're acting as though you own this screenplay, and you don't.

[00:09:41] Speaker 03:
This is my screenplay.

[00:09:42] Speaker 03:
I control what happens.

[00:09:44] Speaker 03:
And something to the effect of, you need to tell me if you're going to do something like that.

[00:09:48] Speaker 03:
And I remember him, I remember him asking, I remember, sorry.

[00:09:52] Speaker 03:
And I remember asking him, how does this work?

[00:09:56] Speaker 03:
Like if you're taking the role of producing the movie and Eric's my manager and you guys talk to each other and are obviously brothers, like isn't there like too much overlap here?

[00:10:06] Speaker 03:
And how do I decide, for instance, if I wasn't happy with the job you were doing as a producer, how do I decide, okay, Eric's going to manage me and I won't do it with you?

[00:10:15] Speaker 03:
And that's when he explicitly stated to me, and I will never forget it,

[00:10:19] Speaker 03:
I am your manager and the comments stuck with me because it sort of queued into me like, oh, there's management teams and Mark may be taking this producer role, but he's still my manager.

[00:10:30] Speaker 01:
Is this happening before or after the written representation agreement expires, sort of where in the course of

[00:10:39] Speaker 02:
The relationship is after this is after and he said that in his deck, right?

[00:10:44] Speaker 02:
I mean, yes, he said after the written agreement expired.

[00:10:47] Speaker 03:
Mark expressly said I am your manager and this is the testimonial expansion of his declaration and it's under cross examination.

[00:10:55] Speaker 03:
And he continues, and he told me that, you know, I'm your manager.

[00:10:58] Speaker 03:
I'm doing this.

[00:10:59] Speaker 03:
The reason why I'm firing the director or going a different route is in your best interest.

[00:11:04] Speaker 03:
So he's telling him he's acting as a manager in his best interest by making the decision to terminate the director.

[00:11:10] Speaker 02:
So on this point, though, at page 1129, when he's asked to sort of place at least one of these conversations,

[00:11:21] Speaker 02:
where Mark says I am your manager.

[00:11:23] Speaker 02:
He says it could have been within the two-year term or it could have been after.

[00:11:29] Speaker 02:
So how do we deal with that?

[00:11:33] Speaker 03:
Well, the point is he said throughout his testimony, and I'll give additional sites to that, Mark was saying that all the time.

[00:11:42] Speaker 03:
They were saying it to each other, and that was the oral agreement.

[00:11:44] Speaker 03:
Like, yeah, I'll be your talent.

[00:11:47] Speaker 03:
You will be the managers.

[00:11:48] Speaker 03:
And they would hold themselves out to third parties, as such.

[00:11:51] Speaker 03:
So he said it a lot.

[00:11:52] Speaker 03:
So in that answer, he's talking about one occasion.

[00:11:55] Speaker 03:
This one was after.

[00:11:57] Speaker 03:
And there were multiple expressions by heart.

[00:12:00] Speaker 01:
So the portion that you just read, that was after?

[00:12:04] Speaker 03:
Yes.

[00:12:06] Speaker 03:
OK.

[00:12:07] Speaker 03:
And so there's only really one case that the court needs to look at.

[00:12:11] Speaker 03:
And that's Howard Entertainment v. Kudrow.

[00:12:14] Speaker 03:
Because the defense, in that case, it was the talent that was making the argument, well, yeah, we have an oral agreement.

[00:12:20] Speaker 03:
But we didn't discuss the terms.

[00:12:21] Speaker 03:
And therefore, there's no breach of terms not discussed.

[00:12:25] Speaker 03:
And in that case,

[00:12:27] Speaker 03:
The manager had been terminated.

[00:12:30] Speaker 03:
They had an oral agreement for 10% of the talent's income.

[00:12:33] Speaker 03:
But the talent, Lisa Kudrow, terminated the manager.

[00:12:37] Speaker 03:
They didn't discuss whether there would be any post-termination commissions.

[00:12:40] Speaker 03:
She didn't pay him.

[00:12:41] Speaker 03:
He sued.

[00:12:42] Speaker 03:
And he says, hey, I get post-termination commissions pursuant to custom and usage in the industry.

[00:12:48] Speaker 03:
And the trial court granted summary judgment for the manager saying no discussion, no contract, no breach.

[00:12:55] Speaker 03:
Court of Appeals said no.

[00:12:57] Speaker 03:
Custom and usage can supply evidence of implied terms pursuant to an oral agreement.

[00:13:04] Speaker 03:
And that's always been our primary theory here.

[00:13:06] Speaker 03:
It's our first claim for relief.

[00:13:08] Speaker 03:
It's a breach of contract.

[00:13:10] Speaker 03:
And we talked about the various breaches in connection with the fiduciary duty claim, because the custom and usage of the managerial capacity is that of a fiduciary, because you're taking responsibility for the talent's career.

[00:13:25] Speaker 03:
And the managers have more power over talent than just about anybody else.

[00:13:29] Speaker 03:
And they're interfacing with all of the other representatives on top of it.

[00:13:32] Speaker 03:
And routinely, they're the ones that are directing counsel for the talent with respect to any engagement by the talent.

[00:13:42] Speaker 03:
And it's usually done through the manager.

[00:13:44] Speaker 03:
And all of that stuff is outlined in the expert report of Mr. Ginsburg.

[00:13:50] Speaker 03:
And he goes through it quite well.

[00:13:52] Speaker 03:
There are no pending evidentiary objections to Ginsburg's report.

[00:13:58] Speaker 03:
There are no objections to that.

[00:14:00] Speaker 03:
And he goes through each of the facts that occurred, which, and these facts, these things that occurred, they're not disputed, and says how they depart from custom and usage in the motion picture industry.

[00:14:14] Speaker 01:
Could we go to the question of damages for a moment, and could you tell me what evidence there is that Sculptor Media would have been willing to increase McCloud's compensation?

[00:14:24] Speaker 01:
I mean, because I saw that at one point they attempted to

[00:14:27] Speaker 01:
reduce his compensation.

[00:14:31] Speaker 03:
The record shows, and this is in McLeod's testimony, this is in Ginsburg's report that

[00:14:41] Speaker 03:
This type of conflict of interest is not by itself the problem.

[00:14:47] Speaker 03:
The problem was the managers acting against the best interests of their client and acting solely for themselves.

[00:14:56] Speaker 03:
These types of things come up, and Mr. Ginsburg mentions in his report,

[00:15:00] Speaker 03:
It's not uncommon for the manager, if you're taking money as a producer, to shift a little bit of that money back to your client because that's the fair and the right thing to do.

[00:15:14] Speaker 03:
Here, the producing line in the budget was $8 million and Mark Williams got over a million.

[00:15:22] Speaker 03:
So you have Ginsburg saying, hey, look, a fair price on this would have been $500k to $750k.

[00:15:29] Speaker 03:
What should have happened is Mark Williams should have took his million and given a couple hundred thousand to McLeod.

[00:15:36] Speaker 02:
To follow up, though, on Judge Thomas's question, let's assume hypothetically we were to find that there was an oral agreement and hypothetically that

[00:15:48] Speaker 02:
Your client was never informed of the increased budget and should have been Your the description you just gave as to how that translates into not into a Damage number that a court could award That sounds pretty speculative to me.

[00:16:10] Speaker 02:
I mean, what is your best evidence to

[00:16:12] Speaker 02:
that a number, a particular number, whatever it would be, isn't speculative because it sounds like you're saying, well, you know, we could have asked for more.

[00:16:25] Speaker 03:
Well, I'll tell you, the best evidence is Ginsburg's expert opinion that that would have been a fair price.

[00:16:31] Speaker 03:
And I'll add that Gassmer, the defense expert, agreed.

[00:16:36] Speaker 03:
Ultimately, he came to the point, like, this deal was not equitable, and he should have got more money.

[00:16:42] Speaker 03:
And so... But why is should have equal to had to?

[00:16:49] Speaker 03:
It doesn't have to come from Sculptor.

[00:16:52] Speaker 03:
The money didn't have to come from the financer.

[00:16:55] Speaker 03:
Mark Williams should have paid the money to MacLeod, or they should have had that discussion.

[00:17:01] Speaker 03:
So it's not speculative, because he could have.

[00:17:04] Speaker 03:
He got a million dollars.

[00:17:05] Speaker 03:
There's an $8 million line in the budget.

[00:17:08] Speaker 03:
So it's easy for the producer to kick in a little bit of their own money to the talent.

[00:17:15] Speaker 03:
And he didn't.

[00:17:16] Speaker 03:
And this raises something I wanted to.

[00:17:21] Speaker 02:
Well, let's say, again, we have these hypothetical, we hypothetically are agreeing with you up to a certain point.

[00:17:30] Speaker 02:
And we hypothetically agree that your client should have been informed that the budget was now in the 40s.

[00:17:39] Speaker 02:
And hypothetically, he would have said, I want more money.

[00:17:44] Speaker 02:
What legal obligation would the defendants have had at that point to say, okay, we're going to give you more money?

[00:17:54] Speaker 03:
Well, they needed a document in order to commence principal photography that would have cleared the chain of title, which was a whole facade anyway.

[00:18:04] Speaker 03:
But they weren't going to be able to go over.

[00:18:06] Speaker 03:
So everybody agrees there was an extreme amount of leverage that McLeod had at that moment.

[00:18:12] Speaker 02:
So he could have said, I'm not going to sign unless you give me more money, go away.

[00:18:17] Speaker 03:
Yes.

[00:18:18] Speaker 03:
OK.

[00:18:18] Speaker 03:
Exactly.

[00:18:19] Speaker 03:
And I would again say, so much of this case is about what the record says or what it doesn't.

[00:18:25] Speaker 03:
And if the court were to just carefully review the transcript of the plaintiff, all of these things are answered.

[00:18:32] Speaker 03:
At the end of his deposition, the defense counsel took him through each claim.

[00:18:37] Speaker 03:
Well, what do you claim the implied oral terms were?

[00:18:40] Speaker 03:
What were the breaches of fiduciary duty?

[00:18:42] Speaker 03:
What was the fraud?

[00:18:44] Speaker 03:
He walked it through and hid it out of the park.

[00:18:47] Speaker 03:
And he even discusses damages.

[00:18:49] Speaker 03:
And I'll point, you know, Ginsburg reported the one I was referring to.

[00:18:53] Speaker 03:
I should note that in the context where a commissioning representative is receiving his or her own pool of compensation, as here regarding defendants producing fee, a portion of that pool is a potential source to go toward closing the gap and renegotiation.

[00:19:07] Speaker 03:
And the plaintiff testified that if my managers had been acting in my best interest, that's what they would have done.

[00:19:14] Speaker 03:
And they didn't.

[00:19:17] Speaker 03:
Mark Williams decided he wanted to take story by credit at the last minute after signing five or six successive contracts indicating on its face that it was an original screenplay by Kurt McCloud.

[00:19:33] Speaker 04:
You're getting close to the end of your time.

[00:19:35] Speaker 04:
Do you want to reserve the remaining time you have?

[00:19:37] Speaker 04:
I do.

[00:19:38] Speaker 04:
All right.

[00:19:39] Speaker 04:
And because we did ask him a few number of questions, we'll give him the three minutes he requested.

[00:19:49] Speaker 00:
Good morning, Your Honors.

[00:19:50] Speaker 00:
It may please the Court.

[00:19:51] Speaker 00:
Jocelyn Sperling for Defendants and Appellees, Zero Gravity Management, and Mark and Eric Williams.

[00:19:58] Speaker 00:
I'd like to focus on damages because it's dispositive of all of the claims.

[00:20:03] Speaker 00:
So there's no triable issue of fact on the two categories of damages at issue.

[00:20:09] Speaker 00:
And the courts already asked some questions about the first.

[00:20:12] Speaker 00:
The first relates to the theory that McLeod could have obtained a higher price for the film had he known about the increased budget.

[00:20:19] Speaker 00:
And the second relates to the contingent compensation fraud theory.

[00:20:24] Speaker 00:
So starting with the first one, it is speculative to assume that Mr. McCloud would have tried to renegotiate a higher price had he known about the increased film budget.

[00:20:33] Speaker 00:
And there's no evidence that Sculptor Media would have paid more had he tried.

[00:20:37] Speaker 00:
So the price cap in all of the option agreements was tied to a budget of $5 million.

[00:20:42] Speaker 00:
And Mr. McCloud had known that the budget could be up to $10 million, and yet he didn't ask his attorney to negotiate a higher cap in any of the option agreements.

[00:20:54] Speaker 00:
His attorney also did not try to negotiate a higher price, even though he knew that there was financing up to $20 million.

[00:21:01] Speaker 00:
So four times the $5 million cap.

[00:21:04] Speaker 02:
Is there any evidence in the record that your clients informed Mr. McCloud that the budget had gone up to 30, I may have the numbers slightly wrong, had gone up to 32 and then 43?

[00:21:18] Speaker 00:
There is conflicting evidence.

[00:21:21] Speaker 02:
All right.

[00:21:21] Speaker 02:
So there's a disputed issue of fact, at least.

[00:21:24] Speaker 02:
Exactly on the the 42 and whether Mr.. McLeod was was informed about that so if we were to find that there were an oral agreement and Were and a jury or trier effect were to find that this wasn't disclosed and shouldn't have and should have been and

[00:21:45] Speaker 02:
Isn't the fact that there was significant leverage there that that was a breach that that provided leverage?

[00:21:54] Speaker 02:
Isn't that enough to allow a jury or other trier of fact to conclude that some amount of money that

[00:22:01] Speaker 02:
could have come to him from this because he would have been able to do this, he would have been able to do this and he would have been able to say to his managers, you breached, I found this out and I'm entitled to more.

[00:22:19] Speaker 02:
And that's the industry practice, isn't that enough to get to a trier effect?

[00:22:26] Speaker 00:
There isn't evidence that there was significant leverage.

[00:22:30] Speaker 00:
So his attorney testified that for the 2020 option agreement, getting Sculptor Media to agree to the amount in the 2018 option agreement was the best he could do.

[00:22:43] Speaker 00:
And his attorney didn't try to renegotiate the price, even though he said there were lots of things in this deal that were below market.

[00:22:52] Speaker 00:
The opening brief says that his attorney was not involved in negotiating the price, but the evidence is to the contrary.

[00:22:58] Speaker 02:
This is Sugarman?

[00:22:59] Speaker 00:
Sugarman, exactly.

[00:23:00] Speaker 00:
So in 2019, in November, before the 2020 option agreement, McLeod asked for Sculptor Media to send the offer, quote, directly to Mount Sugarman, and I will take direction from him.

[00:23:15] Speaker 00:
So it's important to note that he made it clear he wanted his attorney

[00:23:20] Speaker 00:
to be involved in the negotiations, and his attorney did handle it.

[00:23:25] Speaker 00:
So his attorney never advised him that the purchase price was unfair, even though he knew about financing up to $20 million.

[00:23:33] Speaker 00:
Again, he said, there are lots of things in this deal that are below market for my client.

[00:23:39] Speaker 00:
He still didn't try to renegotiate.

[00:23:41] Speaker 00:
speculative that his attorney, knowing that the budget increased more, would have tried to renegotiate.

[00:23:48] Speaker 00:
Because again, $20 million in financing is four times the $5 million cap that the $125,000 was tied to.

[00:23:55] Speaker 00:
So there's the speculation about whether his attorney would have even tried to renegotiate.

[00:24:02] Speaker 00:
It's also speculative to assume that Sculptor Media would have paid him more.

[00:24:06] Speaker 00:
So he had agreed to the same cap.

[00:24:08] Speaker 00:
in four option agreements including the 2020 option agreement that was still in effect when the purchase agreement was signed at the end of that year.

[00:24:16] Speaker 00:
A different term, you know, they re-signed a new agreement to deal with a different term, the story by issue.

[00:24:22] Speaker 00:
So, you know, the cap was already in effect and Sculptor Media had tried, I think as Judge Thomas mentioned, had tried to reduce the purchase price in the option agreement.

[00:24:33] Speaker 00:
And, you know, as the district court explained, there was no evidence in the record that an increased budget meant that there were more funds to go to Mr. McCloud.

[00:24:42] Speaker 00:
Mr. McCloud could have asked in deposition to Sculptor Media, when the budget increased, where did those funds go to?

[00:24:48] Speaker 00:
Were there extra funds that could be distributed to Mr. McCloud?

[00:24:53] Speaker 00:
Has Sculptor Media ever renegotiated the price when a budget has increased?

[00:24:58] Speaker 00:
There's no testimony to that effect.

[00:25:01] Speaker 00:
And again, another point is that a partner at Sculptor Media testified that the producer fee paid to Zero Gravity didn't affect the amount paid to Mr. McCloud, and it would not have paid Mr. McCloud more had the producer fee

[00:25:17] Speaker 00:
been lower.

[00:25:18] Speaker 00:
So that is the testimony about the fact that the producer fee and the payment to McLeod weren't related and it's just speculation to assume that Sculpture Media would have paid more had the producer fee

[00:25:34] Speaker 00:
And in fact, like I just said, it's contrary to the evidence and the record.

[00:25:39] Speaker 00:
And the backdrop is that there was no other interested buyer over the course of a decade.

[00:25:44] Speaker 00:
And this is the first screenplay that Mr. McCloud had ever sold, and he wasn't in the Writers Guild.

[00:25:50] Speaker 00:
So with all that evidence, we have Mr. McCloud's expert report stating that

[00:25:58] Speaker 00:
He could have renegotiated a higher price had he known about the increased budget.

[00:26:03] Speaker 00:
But the report really speaks in generalities and it relies on unsupported assumptions, for example, that there were available funds to pay more.

[00:26:13] Speaker 00:
But again, there's no evidence in the record that there were any available funds when the budget increased.

[00:26:17] Speaker 00:
It could have gone to actors or we don't know because there's no evidence in the record.

[00:26:22] Speaker 00:
And it's Mr. McCloud's burden on summary judgment to raise, you know, specific facts

[00:26:26] Speaker 00:
showing a tribal issue on damages.

[00:26:33] Speaker 00:
And, you know, again we point to cases under California law that reverse damages a word that were speculative even though there was expert testimony.

[00:26:45] Speaker 00:
So some of the cases talk about the fact of damages or the right to damages or even causation, but the point is that has to be shown with

[00:26:52] Speaker 00:
reasonable certainty, and the reply brief really doesn't address the heart of those cases, which is we're not talking about the amount of damages, we're talking about the fact of damages, and I've kind of walked through all of the evidence that shows that damages were speculative.

[00:27:08] Speaker 00:
So in terms of the leverage question, that's just very speculative that he could have obtained

[00:27:14] Speaker 00:
more had he asked.

[00:27:16] Speaker 00:
And again we don't even know if his attorney would have asked because when the financing went up to 20 million dollars he did not say the purchase price was unfair, the purchase price of $120,000 and so again it's speculative.

[00:27:32] Speaker 00:
So I wanted to just quickly mention the other

[00:27:38] Speaker 00:
damages theory if the court doesn't have further questions about that theory.

[00:27:43] Speaker 00:
For the contingent compensation fraud theory, assuming Eric made this comment that Mr. McCloud's contingent compensation or net profits would not be reduced if there was a shared story by credit, there's no triable issue on damages because Mr. McCloud didn't receive any contingent compensation, so without any contingent compensation,

[00:28:05] Speaker 00:
It doesn't matter whether his share was reduced, there's no damages there.

[00:28:12] Speaker 00:
So just briefly on the oral agreement issue, you know, as we discussed in our brief and in our motion to strike that

[00:28:22] Speaker 00:
The theory in the summary judgment papers, the opposition really was focused on the fact that Mark and Eric were parties to the written agreement, and we explained why they weren't parties to the written agreement, and then kind of went on to say that they, quote, continued to be the managers.

[00:28:39] Speaker 00:
So I don't know what the word continued means other than a continuation of the written agreement.

[00:28:45] Speaker 00:
And again, our position is that that was just between Mr. McCloud,

[00:28:49] Speaker 00:
and zero gravity.

[00:28:54] Speaker 00:
And in terms of Mark's role, you know, again, I think there's no dispute he acted as a producer and producers don't owe fiduciary duties.

[00:29:03] Speaker 00:
And just some kind of quick facts about, you know, the role of manager versus producer.

[00:29:09] Speaker 00:
So Eric is a talent manager.

[00:29:12] Speaker 00:
And he was the one who reached out to Mr. McCloud in 2011, recruited him, not Mark.

[00:29:20] Speaker 00:
Eric was the one who shared the ideas for movies, not Mark.

[00:29:23] Speaker 00:
He said, let's find something for you to develop.

[00:29:25] Speaker 02:
But isn't there a tribal issue of whether, during the relevant time, Mark said, I'm your manager?

[00:29:31] Speaker 00:
Yes, I think the question is whether if Mark made that statement, if that's sufficient, because as the district court explained, there's no evidence that he actually acted as a manager, given that Eric was the one who kind of had all the conversations about developing the film.

[00:29:46] Speaker 00:
And then, you know, when Mark worked for about a decade on the film, everything he did was tied to recruiting actors and getting Sculptor Media to get involved to co-produce.

[00:29:57] Speaker 00:
bring in financing and involvement with directors, that's all the role of a producer.

[00:30:02] Speaker 00:
So I guess the question is whether that one statement, I am your manager, is sufficient to raise a tribal issue.

[00:30:07] Speaker 00:
And our position would be that a reasonable jury would not conclude that that sentence alone would be sufficient.

[00:30:14] Speaker 00:
But again, as I noted, I think that the court can just focus on damages because that is dispositive of all of the issues in the case.

[00:30:27] Speaker 00:
in terms of, you know, I'm not going to sign if you don't give me more.

[00:30:31] Speaker 00:
I've kind of pointed out all of the evidence in the record why that's just speculative that he could receive more.

[00:30:37] Speaker 00:
So if there are no further questions from the court, I'll submit no.

[00:30:41] Speaker 04:
Nope.

[00:30:41] Speaker 03:
Thank you.

[00:30:50] Speaker 03:
Firstly, the citation I promised your honors is AER 1745.

[00:30:58] Speaker 03:
Mr. McLeod did receive residuals.

[00:31:01] Speaker 04:
I'm sorry, you said 8ER17.

[00:31:03] Speaker 03:
Sorry, 8ER1745.

[00:31:06] Speaker 03:
Okay, thank you.

[00:31:09] Speaker 04:
Give us a second because I think we're all probably going to want to track that down.

[00:31:13] Speaker 04:
We've all got it here electronically.

[00:31:15] Speaker 01:
Almost all.

[00:31:16] Speaker 04:
Some of us have electronically.

[00:31:18] Speaker 04:
So he can actually find it faster with paper than we can with the iPads.

[00:31:22] Speaker 04:
So just give us a second here.

[00:31:26] Speaker 04:
He said...

[00:31:29] Speaker 03:
1745 that's one that one downside of the iPad is that it actually is when to find a particular page is actually slower, but we're getting there I Think Judge Thomas right there It's like I said, it's where Eric says Mark's going to get involved in discussion about your purchase price and

[00:31:59] Speaker 01:
When he says Mark is going to call her boss too.

[00:32:01] Speaker 03:
Yes.

[00:32:03] Speaker 03:
But I have also some testimony from a cloud as well to the question of services of a manager.

[00:32:11] Speaker 03:
And at the beginning of McLeod's deposition, he gave what would be the marathon, the blasey definition of what a manager does.

[00:32:19] Speaker 03:
He said, this is what these guys were doing for me all along.

[00:32:23] Speaker 03:
And at one point in McLeod's deposition at ER 1491,

[00:32:31] Speaker 03:
Line 11, question, okay, so when you were emailing back and forth with Mark, was he giving the type of advice necessary to develop you as a writer in your career, or was he sharing information with you that was more customary for a producer on a film?

[00:32:49] Speaker 03:
Answer, I think I would say both.

[00:32:54] Speaker 03:
And just, there is a legion of evidence, of record evidence of whether Mark actually performed services as a manager on behalf of McCloud.

[00:33:05] Speaker 03:
There's, all from McCloud's deposition, 6ER12791280.

[00:33:11] Speaker 03:
6ER1293, some of this is like that one would be where he's speaking of the representation agreement producer provision.

[00:33:19] Speaker 03:
And he's saying that's subject to their obligation to me as my manager.

[00:33:23] Speaker 03:
And I will say it is our contention from day one that under that written agreement, the managers, it's a personal relationship that those individual managers were bound by that written representation agreement.

[00:33:36] Speaker 03:
And whereas we do not contend that all of the terms carried over, some of them did, particularly those that would be supported by custom and usage.

[00:33:45] Speaker 03:
And one of those written terms is that the producer's fees will be negotiated in good faith.

[00:33:52] Speaker 03:
And the defense argued, well, doesn't that just mean they need to negotiate their producer fees with third parties?

[00:33:57] Speaker 03:
Like, why would that be in the contract?

[00:33:59] Speaker 03:
And if you're identifying this potential conflict of interest,

[00:34:02] Speaker 03:
And you're telling me you're going to take producers fees.

[00:34:05] Speaker 03:
Doesn't that provision mean you're going to talk to me about what the producers fees were?

[00:34:09] Speaker 03:
And you know they didn't.

[00:34:11] Speaker 03:
They didn't do that.

[00:34:12] Speaker 03:
And that was a breach of that agreement.

[00:34:14] Speaker 03:
And we say that term did carry over.

[00:34:16] Speaker 03:
And the fact of that matter is that goes directly to the damages because had they said, hey, well, we're getting a million bucks on it.

[00:34:24] Speaker 03:
and the budget's 43 million, McCloud certainly would have said, well, hey, that's not fair.

[00:34:30] Speaker 03:
And after the fact, when McCloud found out, and this is in the expert report, it's also in McCloud's deposition, after the fact, when he found out the budget, he went to Mark and Eric, he wrote, what the hell, the budget's 40 million dollars?

[00:34:44] Speaker 03:
And they said, well, maybe more like 30.

[00:34:47] Speaker 03:
And then he said, well, what'd you guys get?

[00:34:50] Speaker 03:
No response.

[00:34:50] Speaker 03:
That was the last communication between these folks.

[00:34:53] Speaker 03:
Now, on that issue of the $20 million thing, there's an email in there where, yes, Eric Williams writes to Sugarman saying, hey, you know, the budget's almost approximately $20 million now.

[00:35:07] Speaker 03:
When they produced the document, when they were talking about the document at first, they didn't include the reply.

[00:35:11] Speaker 03:
The reply from Sugarman was, oh, hey, that's great.

[00:35:14] Speaker 03:
Have you told Kurt?

[00:35:15] Speaker 03:
Because he told Eric, have you told Kurt?

[00:35:17] Speaker 03:
And of course, Eric didn't.

[00:35:18] Speaker 03:
And when Eric, when I deposed Eric at his deposition, his response was, well, you know, that wasn't really a real number.

[00:35:24] Speaker 03:
It wasn't really a real number.

[00:35:26] Speaker 03:
So I didn't tell him.

[00:35:27] Speaker 03:
And that's also identified in the record.

[00:35:30] Speaker 03:
It's in Kurt McCloud's testimony.

[00:35:32] Speaker 03:
And it's also in the expert report of Ginsburg.

[00:35:36] Speaker 03:
And again, another impact of damages is the residuals.

[00:35:41] Speaker 03:
You should probably be wrapping up, because you're well over time now.

[00:35:44] Speaker 03:
Thank you, Your Honor.

[00:35:45] Speaker 03:
Just the last thing.

[00:35:46] Speaker 03:
Last thing.

[00:35:46] Speaker 03:
There were residuals.

[00:35:47] Speaker 03:
He got over $100,000 in residuals.

[00:35:50] Speaker 03:
The story by credit, the sharing of that, affected his residuals.

[00:35:54] Speaker 03:
Gasmer agreed.

[00:35:55] Speaker 03:
And Gasmer said, when the whole story by credit said, he said, I don't understand why he didn't object.

[00:36:01] Speaker 03:
Well, why didn't he object?

[00:36:02] Speaker 03:
Because his managers were telling him he had to do it.

[00:36:04] Speaker 03:
Thank you.

[00:36:05] Speaker 04:
Thank you very much, counsel.

[00:36:06] Speaker 04:
Thank you to both of you for your briefing and argument in this interesting case.

[00:36:10] Speaker 04:
Hollywood is always interesting.

[00:36:12] Speaker 04:
I'll just leave it at that.

[00:36:13] Speaker 04:
Thank you, your honor.

[00:36:14] Speaker 04:
With that, this case is submitted and we are done for the day.

[00:36:17] Speaker 04:
And again, apologize for the delay.