UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW … · 2016-12-06 · some English. Neither is a lawyer. 31. Leclerc stated at the outset that he would rely on AETN's lawyers

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

----------------------------------------------------------------X

Docket No._______

PLANÈTE BLEUE TÉLÉVISION, INC., andPLANÈTE BLEUE TÉLÉVISION II, INC.

Plaintiffs,COMPLAINT

Trial by Jury Demanded

-against-

A&E TELEVISION NETWORKS, LLC., andAON CORPORATION, and AON d/b/a ALBERT G. RUBENINSURANCE SERVICE, INC.

Defendants.----------------------------------------------------------------X

Plaintiffs, PLANÈTE BLEUE TÉLÉVISION, INC. and PLANÈTE BLEUE

TÉLÉVISION II, INC. by their attorney, Michael J. Doyle, allege as follows:

Nature of the Action

1. This action seeks legal and equitable remedies for damages resulting from a

scheme by the A&E Television Network, working with producer 44 Blue Productions, Inc., and

defendant AON Corporation d/b/a Albert G. Ruben Insurance Service, Inc., to defraud a small

foreign producer of its television series, a process cloaked in a cluster of documents, including a

defective “deal memo” and a subsequent “production agreement,” plus modifications and

proposed modifications, all designed to achieve by underhanded means and corporate

administrative fiat the very result plaintiff offered and defendant television network refused: A

compete buyout of the television series “Killer Kids.”

Case 1:16-cv-09317 Document 1 Filed 12/02/16 Page 1 of 34

2. This is also an action at law for breach of contract, breach of the covenant of good

faith and fair dealing implied in law and applicable to all New York contracts, specific

performance or damages in lieu, and breach of fiduciary duty.

3. This action seeks in the alternate, reformation of a written version of the

agreement between plaintiff and defendant AETN to conform the document to the true agreement

of the parties, based upon unilateral mistake on the part of plaintiff, combined with fraudulent

misrepresentation by defendant AETN. It seeks punitive damages to compensate plaintiffs for the

willful and deceptive methods defendants utilized, acting in concert.

4. Defendant A&E TELEVISION NETWORKS, LLC, (hereinafter, “AETN”)

seduced defendant PLANÈTE BLEUE TÉLÉVISION, INC., and its successor corporation,

PLANÈTE BLEUE TÉLÉVISION II, INC. (hereinafter, interchangeably “PBTV”), into an

agreement to produce its television series Killer Kids for the United States market, but set to

work utilizing 44 BLUE PRODUCTIONS, INC. (“44 Blue”) to produce the television series and,

as of date of filing, has aired at least 52 episodes, only a handful of which have been purchased

from or produced by PBTV, with more unauthorized episodes believed pending and produced in

breach of the agreement.

5. Production by non-party 44 Blue at the behest of AETN started five months

before a formal contract with PBTV was even executed. AETN trademarked Killer Kids two

months before a formal contract, and aired at least three episodes produced by 44 Blue without

securing a formal contract with PBTV granting AETN those rights and without giving PBTV

agreed artistic credits.

6. Once the ink was dry on a formal contract, and PBTV was nominally the primary

producer, AETN engaged in a series of bureaucratic delays, misrepresentations and similar

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manipulation designed to frustrate efforts by PBTV to produce its allocated episodes, speeding

up 44 Blue’s approvals, resulting in AETN’S obtaining complete control of the entire series.

Parties and Jurisdiction

7. At all material times herein, plaintiffs PLANÈTE BLEUE TÉLÉVISION, INC.

and its successor PLANÈTE BLEUE TÉLÉVISION II, INC. are and were citizens and residents

Canada and engaged or engage in television production, including documentaries aimed at the

world market.

8. Defendant A&E TELEVISION NETWORKS, LLC. is and was at all material

times herein, a Delaware legal entity registered in New York as a foreign domestic limited

liability corporation with an address for the purposes of service of process at CT Corporation,

111 Eighth Ave., New York, NY 10011, and operates multiple cable television channels.

9. Non-party 44 BLUE PRODUCTIONS, INC. is and was, at all material times

herein a California corporation, which engages in production of television shows, with offices at

3900 W. Alameda Ave., Suite 700, Burbank, CA 91505.

10. Defendant AON Corporation is a Delaware corporation with New York offices at

199 Water Street New York, NY 10004. Defendant AON/Albert G. Ruben Insurance Service,

Inc. is upon information and belief a unit of defendant AON Corporation, with offices at 171

Madison Avenue, Suite 401, New York, NY 10016.

11. Complete diversity of citizenship per 28 U.S.C. 1332 and 28 U.S.C. 1441 exists

between plaintiffs and each defendant and the amount in issue is greater than $75,000.00.

12. Defendant AON engages New York "long-arm" jurisdiction insofar as it has

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substantial contacts with the State of New York including the Southern District of New York and

carries on substantial business within the State of New York; contracted to transact business to

supply goods and services in the State of New York; committed tortious acts within the State of

New York, causing damage to plaintiffs within the State of New York; solicits business and/or

engages in other persistent conduct within the State of New York, or derives substantial revenue

from goods used or consumed, or services rendered, within the State of New York; expects or

should have expected its acts to have consequences in the State of New York; derives or derived

substantial revenue from interstate and international commerce, or owned, used or possessed real

property situate in the State of New York.

13. Defendant Albert G. Ruben Insurance Service, Inc. (“Ruben”) is a New York

corporation or legal entity. Defendant AON does business in New York via defendant Albert G.

Ruben Insurance Service, Inc.

The Facts

14. PBTV produced at all material times herein a television series called "Killer Kids"

which originally aired in Canada, France and elsewhere, consisting of a series of documentary

and re-enactment episodes featuring juveniles or teens who become killers or murderers for

various reasons or psychopathic urges, covering single to serial killings by individuals, duos or

groups.

15. Defendant AETN acknowledged PBTV’s intellectual property rights to the Killer

Kids series when it purchased eight 60-minute episodes produced by PBTV via PBTV’s agent in

Los Angeles and aired them to great success in the United States for the 2011-2012 television

season. Those segments are not the subject of this litigation.

16. So successful was the series, that AETN approached PBTV directly to

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commission production of further Killer Kids (“KK”) documentaries.

17. PBTV was tied up with existing commitments and unwilling to produce a series

for the fall 2012 season, but was prepared to produce future series, including the fall 2013

season.

18. PBTV advised in response to AETN’s supplications that it would accept either of

two scenarios:

a. AETN could buy outright PBTV's worldwide rights to KK, and use a

different producer; or

b. AETN could engage PBTV to produce the KK series.

19. If the latter option were accepted, PBTV would allow AETN to use local

producers in the U.S. to produce the 2012-2013 series and possibly further episodes, subject to a

requirement that PBTV retain a right of first refusal for each episode in six series of 10-26

episodes (hereinafter, “the six rights of first refusal”).

20. AETN was not prepared to commit to an outright purchase, but was anxious to get

the series into its 2012-2013 fall season lineup, as well as to run the KK series in subsequent

years.

21. The purpose of the provision for U.S. producers was to allow production to go

forward when PBTV was overloaded with work as was the case for the fall of 2012 television

season, while reserving to PBTV the right to produce the remainder at its option, or allow AETN

to use an alternate producer if PBTV rejected a first refusal offer for episodes in a given series.

22. In discussions and emails, AETN and PBTV negotiated a deal whereby PBTV

would produce a fall 2013 season of Killer Kids, and AETN would use a U.S. producer for its

fall 2012 season. Crucial to the deal, PBTV would have a right of first refusal for each episode in

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six series of 10-26 episodes, the six rights of first refusal, to be produced at the option of AETN

after the first series of 10 episodes, produced by PBTV, subsequently amended to 9 episodes,

with a 10th ordered separately, set out more fully, infra.

23. Each episode of Killer Kids was worth $200,000 to PBTV, excluding a 3%

cumulative contractual escalation clause.

24. PBTV would also receive 4% royalties on production by the U.S. producer AETN

chose for work not produced by PBTV, plus artistic credits on each show produced by the U.S.

producer, whose name was undisclosed to plaintiffs by AETN.

25. Before a formal written contract between PBTV and AETN was executed,

defendant AETN engaged defendant 44 BLUE to produce the fall 2012/spring 2013 series, as

plaintiff later discovered.

26. At least three 44 BLUE episodes were on the air before November 12, 2012, the

date AETN signed off on the formal contract, designated a “production agreement” between

PBTV and AETN, granting AETN the right to use a local producers, such as 44 BLUE. The

contract had been signed off on by PBTV on November 7, 2016.

27. On September 24, 2012, also before the production agreement was executed by

either side, defendant AETN filed a trade mark application for Killer Kids.

28. The episodes that were produced and aired before the contract was executed, as

well as most subsequent 44 BLUE episodes, did not include creative credits for PBTV, before or

after signature of the formal contract, which required those credits.

29. PBTV's executives included Roberto Luca, its president, and Jean Leclerc, its

vice-president, the former being the financial person and the latter the creative person and chief

negotiator.

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30. Luca speaks and reads Italian and French. Leclerc speaks and reads French and

some English. Neither is a lawyer.

31. Leclerc stated at the outset that he would rely on AETN's lawyers to draft the

necessary legal language based on what he agreed with AETN representatives should be in the

contract documents.

32. Leclerc also told them that he prefers to operate on a basis of trust, even with a co-

contracting party.

33. According to the entertainment industry tracking site, IMDb, a total 61 episodes

of Killer Kids have been aired since 2012 by defendant AETN with more pending

(http://www.imdb.com/title/tt2189874/). Of those, only 52 of those have so far been confirmed

by PBTV as known to have been produce, and are annexed hereto as Exhibit “A” with attribution

as to which producer was used.

34. All but 18 of those 52-61 episodes exist because AETN and 44 BLUE pushed

PBTV to the sidelines in a complex and concerted series of corporate bureaucratic maneuvers,

delays, purported mistakes and outright deceptive acts and statements designed to favor 44 Blue

over PBTV and at the same time delay, stymie and block production by PBTV.

35. PBTV advised AETN’s in-house counsel that it required certain contract

modifications and that it would rely upon AETN to draft the legal language in AETN’S long-

form contract document, the production agreement, reflecting agreed modifications.

36. AETN's in-house counsel and non-attorney executives orally and repeatedly

assured PBTV’s negotiator, Jean Leclerc, that PBTV had secured its rights of first refusal to the

six television series, a series being 10 to 26 episodes, and that those rights of first refusal were

enshrined in the contract language drafted by AETN.

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37. AETN’s misrepresentations as to then-present facts occurred with full knowledge

that Leclerc was not proficient in the English language, that Leclerc had stated he would rely

upon defendant's attorneys to transfer into English legal language the points agreed upon, and

that Leclerc had stated up front that he makes deals based upon good faith and expected same in

return.

38. That good faith reliance on misrepresentations leading to misunderstanding of the

legal document plaintiff signed allowed defendant AETN to obtain the very result originally

discussed, but rejected at the time, because the price was too high: De facto acquisition of

worldwide rights to Killer Kids.

39. Under the long-form contract, or production agreement, the first series is worth a

minimum $2 million, or $200,000 per episode in a 10-episode series, with a contractual

escalation clause raising the value of subsequent series productions. Six series of 26 episodes

would value PBTV’s first refusal rights at $31.2 million, excluding calculation of the escalation

clause. However the 3 % escalation clause is cumulative, resulting in a total value of the contract

to PBTV in terms of gross revenue of $33,635,731.00.

The Facts in Greater Particularity

40. The essential elements of the true agreement, including the six rights of first

refusal, were agreed at a June 29, 2012 conference call between Jean Leclerc, representing PBTV

and, Charles Wright, in-house Counsel to AETN, who wrote the deal memo, copied to Thomas

Moody, Senior Vice-President, Programing, and Maggie Reilly-Brooks, Senior Vice-President,

Legal and Business Affairs, the latter two, upon information and belief, were auditory

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participants in the conference call.

The True Agreement Between the Parties (Meeting of the Minds/Consensus Ad Idem)

41. The true agreement was as follows:

• AETN rejected the idea of buying worldwide rights in perpetuity;

• AETN would have PBTV produce the fall 2013 series;

• AETN would use a different, undisclosed producer to produce the fall 2012 series;

• PBTV would have six rights of first refusal to all episodes in six additional series, a series

later agreed to as being 10-26 episodes;

• PBTV retained all worldwide rights not controlled by the production agreement while all

activity under the production agreement was considered "work for hire" and was to be

owned by AETN;

• Where an alternate producer in the U.S. was used for any episodes, PBTV would receive

artistic credits on those episodes, and would retain rights to sell those episodes in French

Canada, retaining 100% of the revenue from that source;

• PBTV's initial contract would be for 10 episodes at $200,000 per episode. Each episode

would consist of several criminal case stories involving juveniles in the U.S., for a total of

20 to 30 stories.

• The artistic and production requirements for PBTV's activity would mirror PBTV’s

activity for the original 8 episodes, purchased and aired by AETN (the Fall 2011 season),

and not part of this litigation. That element was specifically requested by PBTV so that it

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could be confident that if it produced work to the same standards as the first 8 episodes,

that work would be acceptable and PBTV would not become mired in uncontrollable "red

tape" and production issues, which in the artistic world can easily kill a project.

Paper Versions of the True Agreement

The Deal Memo

42. Defendant AETN produced a deal memorandum ("deal memo") email dated June

29, 2012, based on the conversation that morning during which agreement was reached, but

which only partially reflected the true agreement between the PBTV and AETN.

43. It stated (emphasis supplied):

De : Wright, Charles rmailto:Charles.Wriqht(5)aenetworks.coml

Envoye : 29 juin 2012 19:25

A : '[email protected]'

Cc : Moody, Thomas; Reilly-Brooks, Maggie

Objet: To Jean LeClerc / CONFIDENTIAL

CONFIDENTIAL Dear Jean -

This is a follow-up to your telephone discussion with Tom Moody earlier today. I'm pleased to be

able to confirm, on behalf of A&E Television Networks, LLC ("AETN"), the principal business

points upon which you and Tom agreed today and to set forth the terms for the agreement

between AETN and Planete Bleue.

1) PROJECT: Production by Planete Bleue of 10 new episodes of KILLER KIDS in

conformity with the episodes previously licensed to AETN. These 10 new episodes will be

produced as works for hire, to be owned and controlled exclusively by AETN throughout the

world, except that the episodes you produce will be made available to Canal D for telecast in

French in French-speaking Canada.

2) ECONOMIC TERMS: AETN will pay you a flat fee of $200,000 per episode, which is

a total of Two Million Dollars ($2,000,000), as the "all-in" price for production of the 10 new

episodes. The payment structure of the deal will be based upon production milestones, with

an initial payment upon mutual execution of the contract and subsequent payments upon

commencement of pre-production, commencement of principal photography, delivery of the

initial rough cuts, etc. You will be able to review the proposed payment schedule to make

certain that it will accord with the production's cash-flow requirements; but the payment

schedule must comply with the guidelines of AETN's Accounting and Finance Department.

3) REVENUE PARTICIPATION ("BACKEND") ON THE EPISODES THAT PLANETE

BLEUE PRODUCES - AETN pays revenue participation from separate "pots": (i) Off-Networks

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distribution, (ii) Videogram, (iii) Merchandising/Purchasing, and (iv) Licensing (i.e.,

merchandising or publishing ventures undertaken by a third party under license from AETN).

AETN will pay Planete Bleue the following "back end" or revenue participation on the episodes

that Planete Bleue produces for AETN:

OFF NETWORKS DISTRIBUTION (i.e., exploitation of the Series in any media, including

SVOD, but not Videogram, Merchandising & Publishing or Format, which are addressed

separately below) -10% of adjusted gross receipts, according to AETN's customary definition.

VIDEOGRAM DISTRIBTUTION -10% of adjusted gross receipts, according to AETN's

customary definition. MERCHANDISE/PUBLISHING -10% of adjusted gross receipts, according

to AETN's customary definition.All other points will be in accordance with AETN's customary

business and legal practices for program production.

4) EPISODES PRODUCED BY A PRODUCTION COMPANY OTHER THAN PLANETE

BLEUE: Planete Bleue and AETN have agreed that AETN may produce additional episodes of

KILLER KIDS with another production company.

AETN will pay Planete Bleue directly 4% of 100% of the per-episode budget of each episode of

KILLER KIDS that it produces with another production company. AETN will own all rights in and

to any episodes that are produced by a production company other than Planete Bleue.

Jean, please acknowledge your agreement to these points by return email.

Very truly yours, -Charles

44. That deal memo did not contain the entire agreement between the parties and in

particular did not contain a crucial reference to the six rights of first refusal to which the parties

had agreed and which PBTV had negotiated. Instead, it deceptively contained generalized

wording underscored at ¶ 4 on the issue of using that very producer who would go on to produce

most episodes of KK, to wit: “Planete Bleue and AETN have agreed that AETN may produce

additional episodes of KILLER KIDS with another production company.”

45. Although leading New York case law requires for a deal memo to be given legal

effect a signature by the party to be charged, a signature was not requested of PBTV.

Nevertheless, Leclerc acknowledged the agreement and on July 2, 2012, based upon the June 29,

2012 true agreement between the parties, supra, together with the deal memo. PBTV advised

AETN that it had commenced performance under the agreement, putting staff to work on that

very weekend.

46. In a subsequent email exchange, Moody, AETN’s senior VP Programming, asked

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for a modification to reduce the number of episodes from 10 episodes to 9 episodes so that the

$200,000 per episode budget would keep the gross amount that would need to be approved under

his approval threshold of $2 million, to avoid a more extensive and time consuming approval

process within AETN, with the 10th episode being ordered separately. Leclerc for PBTV agreed

to that request, asking if two long-form contracts would be required and Moody replied that it

should not, because the 10th episode would just be another episode “against the first option.”

The Long Form Contract or Production Agreement

47. The parties negotiated the terms of the long-form contract or "production

agreement" in the period between transmission of the deal memo on June 29, 2012 and

November 12, 2012, when AETN countersigned the long form contract previously executed by

PBTV on November 7, 2012. AETN had delayed producing a preliminary version of the

document until September 6, 2012 – and then only providing it upon several promptings from

PBTV.

48. The scope of the long-form, finalized version of the production agreement did not

encompass all PBTV’s intellectual property rights to KK, but was limited to nine new episodes

of KK (introductory paragraph) and it made AETN the sole owner (at ¶2) of those episodes,

subject to PBTV's format rights, also acknowledging the prior purchase of 8 "pre-existing

episodes.”

49. The production agreement provided, at ¶2, “OWNERSHIP & DISTRIBUTION”

for AETN "to utilize the structure, themes and general idea of the Series (the "Format") in

production programs with another or other production companies," setting out a royalty scheme

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of 4% of the per episode budget for episodes produced by a production company other than

PBTV, and specifying that PBTV and its executive producers shall be credited on each such

program, with PBTV acknowledged as creator of the series concept, the phraseology being at the

sole discretion of AETN.”

50. The production agreement further specified that where AETN engaged a producer

other than PBTV, plaintiff would still retain the rights to sell that producer’s episodes on a non-

exclusive basis to a television network in Canada, Les Chaines Téléastrale, a division of Astral

Broadcasting Group, retaining 100% of any revenues therefrom.

51. In addition to the nine episodes within the scope of the production agreement, the

following option language was included in the final executed version of the production

agreement at Paragraph 4, designated as "OPTIONS" (emphasis supplied):

AETN shall have an exclusive option (the "Initial Option"), exercisable in writing no later than the earlier of (i) one hundred twenty (120) days after the premiere telecast of the final Episode ordered hereunder, or (ii) one hundred eighty (180) days from the delivery and technical acceptance of the Delivery Materials for such Episode, to require Producer to produce a minimum of ten (10) and up to twenty-six (26) additional one (1) hour Episodes, substantially similar in look, feel and format to the Episodes previously produced, pursuant to all of the same terms and conditions as those set forth herein, and with the same per-Episode Financial Commitment as the Episode ordered herein. Notwithstanding the foregoing, if Producer determines at any time that it cannot reasonably produce additional Episodes, AETN shall be entitled to produce such Episodes with a third party of its choice and Producer shall not be in breach of this Agreement.

If AETN exercises the Initial Option, AETN shall have five (5) additional exclusive and dependent options (the "Second Option", "Third Option", "Fourth Option," "Fifth Option" and "Sixth Option", respectively), each to engage Producer (if exercised) to produce a minimum of ten (10) and up to twenty-six (26) Episodes for each Option pursuant to the same terms and conditions contained herein, with the per-Episode Financial Commitment for Option increasing by Three Percent (3%) on a cumulative basis over the per-Episode Financial Commitment for the preceding Option. Each such Option shall be exercisable in writing no later than the earlier of (i) one hundred twenty (120) days after the premiere telecast of the final Episode ordered under the preceding Option, or (ii) one hundred eighty (180) days from the delivery and technical acceptance of the Delivery Materials for such Episode. Notwithstanding the foregoing, if Producer determines at any time that it cannot reasonably produce additional Episodes, AETN shall be entitled to produce such Episodes

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with a third party of its choice and Producer shall not be in breach of this Agreement.

With respect to all Options herein, AETN and Producer shall mutually agree with respect to the dates on which any additional Episodes shall be delivered, as well as payment schedule of the applicable Financial Commitment; provided, however, such payment schedule for additional Episodes shall be no less favorable to Producer than the payment schedule set forth herein. Each Episode shall be substantially equivalent in artistic quality to those previously produced by Producer.

AETN shall be entitled to increase the number of Episodes under the initial Order herein and under each Option up to the maximum of twenty-six (26) Episodes in the initial order herein and/or in any Option order at any time during the production of the applicable order, so long as Producer is still in pre-production, active production or post-production at the time of the notification of amplification of the order. If AETN increases the number of Episodes of any order, as provided above, a new delivery schedule will be provided by Producer for such additional Episodes.

52. Thus, if AETN exercised its initial option of ordering 10-26 additional episodes, it then

had a right to five additional "exclusive and dependent" options to engage PBTV for 10-26 episodes per

option, under the language, supra.

53. The agreement between AETN and PBTV was an agreement for six "rights of first

refusal," allowing PBTV to produce the six series of 10-26 episodes at a minimum $200,000 per episode,

subject to a 3% cumulative escalation clause, for the amounts to be paid. The language requires that each

episode should have been offered to PBTV, not simply each of the six series.

54. Underlined language, supra,- drafted by AETN’s counsel from rough language provided

by PBTV, and inserted at the request of PBTV, shows that if PBTV determined it could not reasonably

produce certain episodes, then AETN could use a different producer, such as 44 Blue.

Representations, Misrepresentations and Negotiations concerning the Production Agreement

55. The following language in the final executed production agreement, supra,

reflects the six rights of first refusal on episodes of the six options. It bears repeating and states:

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“Notwithstanding the foregoing, if Producer determines at any time that it cannot reasonably produce

additional Episodes, AETN shall be entitled to produce such Episodes with a third party of its choice and

Producer shall not be in breach of this Agreement.”

56. That language reflects the true agreement between the parties and on its face

shows that PBTV, the producer, has a right to determine whether or not it can reasonably

produce additional episodes and if not, AETN only then becomes entitled to produce the

episodes with a third party of its choice.

57. That language operates as a limitation on, and an exception to, the broad grant of

power to defendant AETN to determine whether to trigger options under the contract and thus is

a limitation on that power, i.e., once triggered, the underlined language requires and presupposes

production is first offered to PBTV, on a per episode basis, consistent with the true agreement,

supra.

57. That first refusal language means that if no option is offered to PBTV and if

AETN is not advised by PBTV that it cannot reasonably produce a given episode, AETN has no

right to offer it to a different producer, such as 44 Blue.

58. The above first-refusal language was deceptively omitted from the initial

proposed draft production agreement from AETN’s legal department supplied to PBTV on

September 6, 2012, but was included at the request of PBTV, by Leclerc.

59. Leclerc supplied the following proposed language, noting that it would need to be

translated into New York legal language: “The producer may decide to limit the number of

episodes to be produced and so if he decline (sic) A&E can offer the contract to another producer

of its choice, this clause not altering any options below between the parties.”

60. The underlined language, supra, was drafted by AETN’s counsel to reflect

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PBTV’s request, the language of which, clearly reflects the true intention of the parties, which

was to provide PBTV six rights of first refusal on a per episode basis.

61. Leclerc wanted the agreed language inserted in the “ownership” section of the

contract, but Charles Wright, in-house counsel for AETN, advised him that the references, supra,

would be sufficient and apply throughout. Not being a lawyer, Leclerc accepted the revised draft,

secure in his perception that PBTV’s rights of first refusal had been protected. More particularly,

on October 19, 2012, Leclerc proposed that ¶2 of the contract, referred to supra at ¶S 48, 49 of

this complaint, also include the following underlined language, but was assured it was

unnecessary. That underlined language: “AETN shall be entitled, at any time and at all times, to

utilize the structure, themes and general idea of the Series (the "Format") in production of programs

with another or other production companies (and without Producer's involvement), for a first series of 10

episodes and also for any other series with respect and in conformity with specific options described in

point #4 OPTION to this agreement.”

62. Evidence as to contract negotiations is admissible as a matter of New York law

where some element of fraud or material misrepresentation is properly pleaded. Here, AETN’s

attorneys, Charles Wright and Cliff Milburn, and its executive, Thomas Moody, in oral

conversations preceding the June 29, 2012 agreement, on the day of the June 29, 2012

agreement, prior to November 12, 2012 contract execution and subsequent, thereto, agreed to,

discussed at great length, and repeatedly reassured PBTV’s Leclerc that PBTV had the six first

refusal rights, all the while representing to PBTV that those rights were in fact reflected in the

documentary contract language he executed.

63. It was not until June 11, 2015, or almost three years after the parties had a meeting

of the minds as to their agreement, that PBTV received formal notification by AETN’s Senior

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Vice-President, Legal and Business Affairs, Maggie Reilly-Brooks, that AETN asserted that

there were no rights of first refusal under the agreement. Reilly-Brooks was also the attorney

who executed the production agreement on behalf of PBTV on November 12, 2012, copied on

the deal memo supra, and various proposals and counter-proposals throughout.

64. Plaintiff PBTV asserts that the underlined language above is unambiguous on its

face and damages must be granted, in which case evidence outside the four corners of the

contract documents could be inadmissible.

65. However, PBTV also asserts in the alternate, that if the language of the final,

executed production agreement is deemed ambiguous as to whether or not rights of first refusal

per episode in six optional series were included in the contract, that ambiguity must be read

against the party that drafted the contract language (contra proferentem rule), and extrinsic

evidence may be offered to show and confirm the true intent of the parties to the agreement, as

alleged herein.

66. On October 19, 2012, Leclerc confirmed his understanding of the meaning of the

language in an email to the two lawyers he had been working with at AETN, Cliff Milburn and

Charles Wright. In that email he advises “[w]e agree with this contract and we will respect it if it

is expressing clearly that A&E can use another producer of its choice for a first series of 10

episodes right now and after that each time that Planete Bleue refuse (sic) an option specified in

the contract. But each time the option of producing a second, a third, a fourth series must be

offer(ed) to Planete Bleue first.”

67. Leclerc for PBTV received no contradiction from anyone at AETN to his October

19, 2012 written statement of his understanding of the meaning of the contract language and

therefore forwarded an executed version of the final contract on November 7, 2012, receiving a

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version executed by AETN’s Maggie Reilly-Brooks on November 12, 2012.

68. On June 11, 2015, more than two and a half years after the production agreement

was executed and three years after the true agreement between the parties was reached and

partially memorialized, and three years after performance under the agreement had commenced,

PBTV received the email from Maggie Reilly-Brooks, Senior Vice-President, Legal and

Business Affairs, for AETN and one of the signatories to the November 12, 2012 production

agreement, which stated in part: “Planete has no right of first refusal regarding production of any

episode.”

69. In an email to Wright in June 12, 2015, almost three years later, and after Leclerc

realized that AETN would not honor the agreement for first refusal rights, Leclerc reminded

Wright “having in mind our mutual numerous conference calls in which you and Tom (Moody)

discussed profusely on the meaning and the essence of first refusal rights which we would have

in the agreement to come. . .”, explaining why he had approached others in AETN about the

contract. Wright, an attorney and the principal contact negotiator throughout the process, advised

by email that he was not the proper person to answer and assured Leclerc the matter had been

passed up the chain of command.

Written agreement violated before it was even executed

70. Plaintiff PBTV proceeded forward to produce the 9 episodes referred to in the

introductory paragraph of the long-form contract.

71. Without written notice under the option notice provisions of the abovementioned

contract -- and long before the contract was executed -- AETN had arranged with defendant 44

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Blue to produce the 2012 Series, while PBTV's work commenced on the 2013 series.

72. That activity was consistent with the true agreement between the parties and to

PBTV showed that AETN had exercised an option to use an independent U.S. producer, 44 Blue,

precisely because PBTV had advised that it was not prepared to produce the fall 2012 series,

given its prior commitments.

73. Thus, PBTV waived its first refusal rights as to the 2012 KK season, albeit having

done so before its contract with AETN was even executed and, in utilizing 44 Blue, AETN

triggered the option series and the duty to offer episodic first refusals to PBTV.

Trademark obtained before contract signed

74. Before the AETN-PBTV contract was fully executed, and therefore before it had a

contractual right to do so, AETN obtained a trademark for Killer Kids, on September 24, 2012,

as PBTV later discovered.

Killer Kids Episodes produced before contract signed without artistic credits to PBTV

75. Before the AETN-PBTV contract was fully executed, it turned out that co-

defendant 44 Blue had produced at least two KK episodes and in so doing had caused AETN to

breach the long-form production agreement’s requirements for artistic credits in favor of PBTV

at the end of the 44 Blue-produced episodes, even before the contract was signed.

76. Thus, the contract drafted by AETN and proffered to PBTV contained language

which had been breached before it was drafted and therefore willfully mispresented the factual

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situation at the time it was presented.

77. Before the AETN-PBTV contract was fully executed, it turned out that AETN had

allowed co-defendant 44 Blue to utilize stories which had been reserved to PBTV on an agreed

reserve list.

Once production agreement executed, material terms of contract breached by AETN

78. Once the production agreement was executed, defendant AETN breached the

contract’s material terms, including payment terms.

79. The production agreement stated at ¶ 9:

PAYMENT SCHEDULE: The Financial Commitment for the Episodes (One Million Eight Hundred Dollars [$1,800,000] in the aggregate) shall be payable as follows (and each payment step shall require an invoice by Producer for the following amounts):

a. Five Hundred Forty Thousand Dollars ($540,000) within fifteen (15) business days after mutual execution of this Agreement;

b. Three Hundred Thousand Dollars ($300,000) within thirty (30) days after commencement of principal photography, contingent upon receipt of any background checks required by AETN;

c. Three Hundred Thousand Dollars ($300,000) within thirty (30) days after delivery to, and approval by, AETN of the rough cuts of Episodes ## 1-5, (to be delivered no later than July 30, 2013), provided Producer has submitted (1) proof of compliance with AETN's insurance requirements (as set forth hereafter) attached to Producer's invoice and (2) a copy of all executed Talent Agreements (such documentation should be delivered to AETN's Manager/Attorney Louis Ziccarelli (louis. ziccar elli@aenetworks. com);

d. Two Hundred Twenty Thousand Dollars ($220,000) within thirty (30) days after delivery to, and approval by, AETN of the rough cuts of

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Episodes ## 6-9, (to be delivered no later than November 30, 2013);

e. Two Hundred Twenty Thousand Dollars ($220,000) within thirty (30) days after delivery to, and approval by, AETN of the masters, for all Episodes (to be delivered no later than March 28, 2014;

f. Two Hundred Twenty Thousand Dollars ($220,000) within thirty (30) days after delivery to, and acceptance by, AETN of the final Delivery Materials, including the Rights Bibles, pertaining to all Episodes produced hereunder.

If Producer fails to deliver a technically acceptable master of any Episode in conformity with the milestones specified above, or a full and complete Rights Bible (or fails to cure delivery of such unacceptable master or incomplete Rights Bible within ten [10] business days of receipt of written notice by AETN of such fault or faults), and AETN has not agreed or consented in writing with Producer with respect to alternative delivery dates, AETN shall have the right to reduce, or terminate, payment of the amounts set forth in subparagraphs 9(e) & 9(f) respectively, each as applicable, with no further obligation to Producer for payment under this Agreement, including payment of revenue- sharing/royalties as set forth in paragraphs 11(a) and 11(b) (in addition to any remedies AETN may have at law or in equity) until Producer cures same. If the full and complete Rights Bible is not received by AETN within sixty (60) days after notice as provided above, Producer shall forfeit its rights to revenue-sharing/royalties as set forth in paragraphs 11 (a) and 11(b) (in addition to any remedies AETN may have at law or in equity). Such reduction or termination does not relieve Producer of any obligations set forth in this Agreement.For payments to be processed, Producer must follow the procedures set forth in Schedule A attached hereto and made a part hereof.

80. The payment requirements of ¶ 9 (a) was contingent on nothing more than the passage

of time. Untimely payment under 9 (a) was made on December 12, 2012.

81. The payment requirements of ¶ 9 (b) was contingent on the commencement of

photography. First shooting (photography) commenced in November, 2012, a date PBTV delayed from

previously scheduled September and October shootings, waiting for the contract to be finalized. No

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timely payment was made, 30 days after principal photography commenced.

82. Payment under ¶ 9 (b) was not made until March 27, 2013.

83. Payment under ¶ 9 (c) was not made until January 22, 2014.

84. Payment under ¶ 9 (d) was not made until May 8, 2014.

86. Payment under ¶ 9 (e) was not made until September 12, 2014.

85. Payment under ¶ 9 (f) was not made until January 16, 2015.

86. Despite the above straightforward contract language it was not until January 16, 2015

that plaintiff was paid the final installment under the production agreement, while royalty payments,

infra, are still outstanding.

87. Payment of the 4% royalties due PBTV on 44 Blue productions were routinely delayed,

the latest payment being September 27, 2013, with a final proposed payment being withheld unless

plaintiff gave up its claim to rights of first refusal.

88. The effect of non-payment was to force plaintiff PBTV to finance insurance required

under the contract, hire and then lay off production personnel such as writers, cameramen and others.

Artistic credits ,“Tail Credits” and the saga of the missing punctuation mark

89. When the credits roll at the end of a television episode or a movie, the producer’s

reputation is affirmed in a way that affects all other activity by that producer and therefore the issue of

“tail credits” is a big deal in the industry.

90. As to PBTV’s credits on episodes produced by 44 Blue for AETN, plaintiff realized they

had received no credits when they saw the first three episodes produced by 44 Blue, which started an

extended effort to get agreed credits, mistakes by AETN as to the wording of the credits, and airing of

multiple episodes without proper credits or defective credits and refusal by AETN to add credits to 44

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Blue episodes already produced.

91. As to AETN’s own credits on episodes produced by PBTV, the network engaged in a

litany of confusion, obfuscation, backtracking and outright dishonesty.

92. Section 5c of the production agreement required that PBTV’s episodes be designated as

produced by PBTV for AETN.

93. Accordingly, PBTV prior to the expensive production of “masters” sent multiple times to

AETN versions of tail credits for its approval. Then, PBTV sent a capture screen of the tail credits, for a

final review before starting the “masters.” The word “masters” is an industry term of art for a projectable

version of a movie or television episode or series.

94. Once the “masters” were complete with the pre-approved tail credits, AETN demanded

they be redone because of a missing punctuation mark. That punctuation mark was the period at the end

of LLC in AETN’s corporate name, which AETN decided should have read “LLC.” And not “LLC” as

previously approved

95. To emphasize the importance of why everything needed to be redone to accommodate

the missing period – despite AETN having previously approved the proposed tail credits without a period

on multiple occasions – AETN called a legal executive on a beach in the Caribbean to confirm PBTV

needed to make the changes.

96. Accordingly at considerable expense and despite the fact that it was AETN’s error in the

earlier approval process, PBTV made the changes.

97. Two months later, PBTV discovered that none of the tail credits required of competitor

44 Blue contained the famous missing punctuation mark, the period after LLC(.).

98. After bending over backwards to change the master to include the revised tail credits,

AETN suddenly discovered a new problem: All of the prior versions submitted and changed and

revamped were still wrong because of a missing letter “s” in “A & E Television Network(s) LLC.” That

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“s” had escaped everyone’s vetting in the much-disputed approval process, including mastering and

remastering. Now, that needed be changed.

99. PBTV discovered that the famous period, but not the “s” was missing from AETN’s

name on its own contract documents, such as the opening paragraph of the production agreement which

is the subject matter of this litigation.

100. There were various templates, mistakes by junior people at AETN and so on, which can

occur in the industry, but PBTV’s Leclerc began to form an opinion that AETN’s underlings had been

asked to create as many roadblocks as possible.

101. To test that theory, he sent AETN a template of tail credits which he said PBTV intended

to use, asking for approval. In fact the template was from an existing 44 Blue template, which had already

been approved for a show which had already aired. That template was refused.

102. Thus, AETN refused to approve a template for PBTV it had previously approved for 44

Blue and PBTV confirmed that it was the subject of an intentional and willful effort to slow its

production activity to favor 44 Blue.

Rights Bible and Releases

103. In the industry, it is standard practice to obtain a "rights bible" or "rights book"

before a series, or an episode, is accepted by a television network and aired. That rights bible

includes releases from authors, musicians, actors and any others who might have a claim.

104. In the instant case, defendant AETN delayed acceptance for what it claimed was

lack of a complete rights bible from PBTV and therefore delayed payment to PBTV for

documentaries it did produce.

105. At the same time, it approved and upon information and belief paid for episodes

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by 44 Blue without that very same completed rights bible, a fact which is evident from the simple

observation that AETN aired several episodes of Killer Kids before the contract with PBTV was

executed, same being a minimum condition for a grant of rights necessary to comply with rights

bible requirements, and indeed did so while the KK contract with PBTV’s terms were still being

negotiated.

106. Although 44 Blue, the California production company was given the fast track,

efforts by PBTV to do the same were willfully frustrated by AETN. As one egregious example

among many, PBTV, knowing that it was operating from Quebec, Canada, a jurisdiction which,

like Louisiana, utilizes a Napoleonic Code-type civil legal system, into a common law

jurisdiction, knew in advance that its own drafted legal wording for the releases required for a

rights bible by AETN might not be acceptable and therefore requested that AETN's law

department provide PBTV with wording that would work for AETN when it came to signing

releases with PBTV's artists and others.

107. AETN refused the request then raised objections once PBTV's best efforts were

submitted in lieu.

Role of 44 Blue

108. While all the above corporate bureaucratic entanglements were being forced upon

PBTV, defendant 44 Blue was proceeding with production at an accelerated pace, with upon

information and belief no issues as to insurance approvals, rights bible authorizations, or

payment.

109. PBTV found out that the then-unnamed competing producer had been given a

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“full speed ahead signal” in July of 2012, or a few weeks after the deal memo, through a

communication with AETN over reserved story lists which showed that AETN’s unnamed U.S.

producer had already produced two “rough cuts.” In industry parlance, archiving the penultimate

stage of “rough cuts,” means that there was abnormally fast work and abnormally fast approvals

for that producer, which later turned out to be 44 Blue. Moreover, it meant that 44 Blue was

given a written contract in May or June of 2012, i.e., on or before the deal memo agreement, or

three months before a written contract was even offered to PBTV, and five months before

PBTV’s contract was executed.

110. On July 27, 2012, AETN executive Peter Tarhsis, told PBTV by email in a

discussion over reserved story lists stated: “Jean, I have had a first look at stories being produced

by another producer” and forwarded on July 30, 2012 a list of episodes the other then-unnamed

producer was planning.

111. On November 24, 2012, or only 12 days after the ink is dry on PBTV’s

production agreement with AETN, Leclerc saw three KK episodes aired on AETN produced by

44 Blue and learned eight more had been produced. PBTV limited its comments to attempting to

ensure that the PBTV artistic credits missing from the first three would be included in subsequent

episodes.

112. On or about April 9, 2013, AETN formally advised that it had used another

producer for 8 episodes of Killer Kids and sought approval after the fact in the form of a letter

amendment to the production agreement.

113. Although it had not been offered its first refusal rights for any of the 8 episodes,

PBTV signed the document under protest.

114. On or about July 19, 2013, PBTV was asked and refused to sign a further contract

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amendment ratifying and approving after the fact 10 further episodes already produced by 44

Blue because it had not been offered its first refusal rights.

115. Among other factors, at AETN’s request, 44 Blue produced and aired three

episodes before the formal written contract between PBTV and AETN was executed, supra.

116. And 44 BLUE, at AETN’s request, with AETN’s assistance and blessing,

produced at least one (Craig Price episode) on an agreed reserve list between AETN and PBTV

and already produced by PBTV and approved by its senior executives.

117. AETN locked in intellectual property rights before the formal contract executed

by filing Trade Mark application and then allowing 44 Blue to produce episodes with that legal

cover.

118. AETN AND 44 BLUE failed to give PBTV artistic credits and the end of the

episodes produced. These credits were finally added a few years later, and after the email of

Maggie Reilly-Brooks claiming plaintiff lacked first refusal rights.

119. Upon information and belief, at AETN’s urging, 44 Blue sought and received

industry awards, etc. for PBTV's work.

120. AETN accelerated approvals for 44 Blue and delayed the approvals for PBTV,

breaching good faith and fair dealing duties implied in law for all New York contracts.

Role of AON

121. AON is the world’s second largest insurance broker and the world’s largest

reinsurance broker. AON is also a leading provider of risk management, human capital and

management consulting, and specialty insurance underwriting. Businesses and individuals who

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need insurance retain AON to help them design an insurance plan and negotiate with insurers to

get the best mix of coverage, service, financial security and price.

122. AON’s code of business conduct, posted on its website, states AON will “describe

[its] products and services truthfully and accurately” and “never mislead clients through

deceptive acts or practices . . . or [engage in] other unfair methods of competition.”

http://www.AON.com/about/pdf/AON_businessconduct guidelines.pdf.

123. Pursuant to the production agreement, use of AON via defendant Albert G. Ruben

was mandatory as it was, upon information and belief for 44 Blue.

124. Upon information and belief, AON via Albert G. Ruben aided and abetted AETN

in delaying approvals for those series produced plaintiff PBTV.

125. Upon information and belief, AON via defendant Ruben approved 44 Blue

episodes, even though 44 Blue's use of Killer Kids material was not approved by way of an

executed contract with PBTV.

126. AON via defendant Ruben is a captive broker as to AETN upon information and

belief, takes direction from, AETN to maintain its book of business.

127. AON via defendant Ruben, as insurance broker, owes fiduciary and contractual

duties to its clients, such as PBTV and 44 Blue, and may not, without legal consequence, favor

one client at the expense of another, where are clients competing for the same production, or in

so doing, aids and abets a party, such as AETN favoring its contract with 44 Blue over PBTV'S

contract with AETN.

128. AON was also the insurance broker for PBTV in Canada before AETN’s

involvement and the insurance broker, upon information and belief, for the first 8 episodes

produced by PBTV and purchased by AETN.

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129. Thus, coverage for subsequent PBTV episodes produced for AETN should have

been seamless. In fact, defendant AON via defendant Ruben and otherwise, threw up a series of

roadblocks to approvals for PBTV’s produced episodes while speeding up approvals for 44

Blue’s episodes of the same KK program on behalf of AETN.

130. More particularly, AON via defendant Ruben placed insurance coverage for 44

Blue, upon information and belief, at a time when it was impossible for 44 Blue to provide the

required “rights bible” which was a necessary condition of coverage, because a contract between

AETN and PBTV had not even been signed.

131. But when it came to PBTV, upon information and belief, acting in concert with

AETN, defendant AON via Ruben, placed sufficient roadblocks in the way of coverage that it

was many months after 44 Blue commenced production that PBTV’s insurance was secured.

FIRST COUNT- BREACH OF CONTRACT -AETN

132. Plaintiff repeats and reiterates the preceding paragraphs herein.

133. Defendant AETN breached the true agreement with plaintiff, breached its

production agreement with plaintiff and did so in a manner that was willful and contumacious

causing damage to plaintiff in an amount to be determined at trial, but in any event not less than

$33,635,731.00, plus punitive damages.

SECOND COUNT - BREACH IMPLIED AT LAW DUTY OF GOOD FAITH

AND FAIR DEALING – AETN


135. The duty of good faith and fair dealing implied in all New York contracts

embraces a pledge that neither party shall do anything which will have the effect of destroying or

29


injuring the right of the other party to receive the fruits of the contract. This covenant is breached

when a party to a contract acts in a manner that, although not expressly forbidden by any

contractual provision, would deprive the other party of the right to receive the benefits under

their agreement. To state a claim for breach of the applied covenant of good faith and fair

dealing, the plaintiff must show that the defendant sought to prevent performance of the contract

or to withhold its benefits from the plaintiff.

136. Defendant AETN’s activity enumerated, supra, shows plaintiff has suffered a

breach of the covenant of good faith and fair dealing, in a manner that was willful and

contumacious, all to damages to plaintiff in an amount to be determined at trial, but in any event

not less than $33,635,731.00, plus punitive damages.

THIRD COUNT- SPECIFIC PERFORMANCE – AETN


138. Plaintiff seeks specific performance on defendant AETN’s obligations under its

agreement and in particular its obligation to provide plaintiff a right of first refusal to six series of

26 episodes, or damages in lieu in an amount to be determined at trial, but in any event not less

than $33,635,731.00, plus punitive damages.

FOURTH COUNT – REFORMATION, UNILATERAL MISTAKE/FRAUD


140. Fraud is found where a party to a contract makes a misrepresentation of present

fact knowing that representation is untrue at the time it is made, inducing reliance by the co-

contracting party.

141. AETN by its in-house attorneys and executives repeatedly mispresented as a

present fact that the contract language reflected the fact that plaintiff PBTV and defendant ARTN

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had agreed to six rights of first refusal, knowing at the time the representations were made that

AETN had no intention of providing those rights of first refusal.

142. Additionally, defendant AETN represented at the time it proffered its draft and

final versions of the performance agreement, inter alia, that any episodes produced by a producer

other than PBTV would include PBTV producer credits, knowing at the time the representation

was made that it had received and aired episodes from an alternate producer which did not

include producer credits.

143. Defendant AETN then took the position that the contract did not offer six rights of

first refusal.

144. In the event that the Court determines that the contract language, supra, does in

fact contain six rights of first refusal, then plaintiff seeks reformation of the contract to conform

it to the true agreement between the parties, awarding damages for breach thereof in an amount

to be determined at trial but in any event at least $$33,635,731.00, plus punitive damages.

FIFTH COUNT – AON/Rubin


146. Defendant AON via defendant Ruben breached its contract with plaintiff and on

the above facts aided and abetted defendant AETN and 44 BLUE in activity directed to plaintiff,

all to damages in an amount to be determined at trial, but in any event not less than

$$33,635,731.00, plus punitive damages.

SIXTH COUNT - AON


148. Defendant AON via defendant Ruben breached its fiduciary duty to plaintiff and

on the above facts aided and abetted defendant AETN and 44 BLUE in activity directed to

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plaintiff, all to damages in an amount to be determined at trial, but in any event not less than

$$33,635,731.00, plus punitive damages.

SEVENTH COUNT - AON


150. The duty of good faith and fair dealing implied in all New York contracts

embraces a pledge that neither party shall do anything which will have the effect of destroying or

injuring the right of the other party to receive the fruits of the contract. This covenant is breached

when a party to a contract acts in a manner that, although not expressly forbidden by any

contractual provision, would deprive the other party of the right to receive the benefits under

their agreement. To state a claim for breach of the applied covenant of good faith and fair

dealing, the plaintiff must show that the defendant sought to prevent performance of the contract

or to withhold its benefits from the plaintiff.

151. Defendant AON’s activity via defendant Ruben enumerated, supra, shows

plaintiff has suffered a breach of the covenant of good faith and fair dealing, in a manner that was

willful and contumacious, all to damages to plaintiff in an amount to be determined at trial, but in

any event not less than $33,635,731.00, plus punitive damages.

WHEREFORE, may it please this court to grant plaintiff’s FIRST, SECOND, THIRD,

FOURTH, FIFTH, SIXTH AND SEVENTH counts in an amount to be determined by a trier of

fact but no less than $33,635,731.00, together with costs, interest at the judicial rate, and punitive

damages as a result of the willful and contumacious nature of defendants’ activity, together with

such other and further relief as to this court may appear just and equitable.

Dated: New York, New York November 30, 2016

Yours, etc.

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_____[S] ECF mjd-0552_____________MICHAEL J. DOYLE, ESQ. (MJD-0552)30 Wall Street, 8th FloorNew York, New York 10005(212) 859-5020(212) 898-1196 fax

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Documents

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW … · 2016-12-06 · some English. Neither is a lawyer. 31. Leclerc stated at the outset that he would rely on AETN's lawyers