Writer From ‘Copshop’ Wins Appeal in Legal Battle Against Managers Over Pay Conflict

When a screenwriter’s script is acquired with a payment linked to the film’s budget, and subsequently, the budget rises due to signing a major celebrity, should the writer’s representatives—who are also producing the film—inform them about this change and discuss adjusting their compensation accordingly?

The response to that query might indeed be affirmative, as an appellate court has reinstated a legal case brought forth by screenplay writer Kurt McLeod against Zero Gravity Management. The suit alleges a potential bias in how they handled negotiations concerning his contract for scriptwriting duties.
Copshop
On Thursday, the Ninth U.S. Circuit Court of Appeals overturned

dismissal

Following the ruling from a federal judge, who determined earlier this year that Zero Gravity’s founders, Eric and Mark Williams, do not have to address allegations suggesting they favored their profits from the film production over their client’s interests by withholding information about significant increases in the movie’s budget.

The lawsuit began in 2022 when McLeod took action against Zero Gravity, accusing them of breaching their contractual agreement and violating fiduciary duties. These allegations stemmed from issues with his payment for co-authoring the script for the 2021 film featuring Gerard Butler. According to documents submitted to a California federal court, McLeod’s remuneration was linked to the production costs, capped at $125,000, but he had been informed earlier that these expenses were expected to range from $3 million to $10 million. However, subsequent information revealed that the final budget exceeded $45 million following Butler’s involvement.

In Hollywood, managers, as opposed to agents, are not prohibited from producing projects featuring their clients; however, this situation often leads to clear conflicts of interest. Take, for example, a scenario similar to McLeod’s where increasing payments received by the producer-manager from a movie’s budget could result in reduced earnings for the writer-client. Under such circumstances, the manager has an ethical obligation to prioritize the interests of their client above all else.

Less stringent rules regarding managers’ participation in productions featuring their clients have led more agents to choose entering management instead.

The case involves two agreements. In 2011, Zero Gravity and McLeod entered into a two-year representation pact. This arrangement granted the Williams family 15% of the writer’s income along with the authority to act as producers for any movie adapted from his screenplay. Eventually, McLeod penned the script.
Copshop
under that deal.

Once the representation agreement concluded in 2013, McLeod mentioned that he had made an verbal arrangement allowing the Williamses to keep acting as his managers. However, when rejecting the lawsuit, the court dismissed this claim, ruling that both parties concurred on having only Zero Gravity serve as McLeod’s representative.

On Thursday, the court highlighted evidence showing that the Williamses personally agreed to represent McLeod.

“According to the ruling, McLeod provided proof allowing a fair jury to conclude that the Williamses were part of the verbal pact and functioned as McLeod’s personal managers according to its stipulations,” the document read.

The court referenced statements suggesting that Mark Williams, most renowned for his work as an executive producer and writer,
Ozark
, talked about his two-fold position as both a manager and a producer
Copshop
, his inclusion as a manager in the Writers Guild of America directory and proof that he fulfilled those duties for the film.

The appellate court panel determined that McLeod might have secured extra remuneration if he was aware of the heightened budget. For example, the Williamses were able to utilize their producer fees, which potentially would have earned McLeod several hundred thousand dollars more.

The legal battle encompasses an arbitration involving the Writers Guild of America concerning writing credits for the movie due to claims that Mark Williams unjustly claimed co-authorship of the script. The guild determined that the “story by” credit should go to McLeod and Mark Williams, whereas the “screenplay by” credit should belong to McLeod and Joe Carnahan.
Copshop’s
Director McLeod alleged that Zero Gravity falsified papers to list Mark Williams as an author on the screenplay.

The sole aspect of the lower court’s decision that remained unaltered pertained to the allegations of fraud concerning the film’s chain of title. The appellate court determined that there was nothing deceptive or inappropriate regarding Mark Williams receiving co-credit for the story.

If an agreement isn’t reached, a jury will hear McLeod’s allegations regarding violations of contractual terms, breaches of fiduciary responsibility, and infringements of the implicit promise of fair treatment and good faith.

Devin McRae, who represents McLeod, chose not to comment. Zero Gravity did not provide an immediate response when asked for comments.