E-Served: Jul 22 2020 PDT Via Case Anywhere

FILED

Superior Court of California
County of Los Angeles

 

JUL 2 2 2020
Sherri R. rt ,Exwmcermlerk
By (I . Deputy
Siephame Chung 

SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF LOS ANGELES

ROBERT KIRKMAN, et al., LASC Case No: BC672124
Pla?m'ff? STATEMENT OF DECISION
V- Judge Daniel J. Buckley

Department 1
AMC FILM HOLDINGS LLC, et al.,

Defendants.

 

 

 

 

INTRODUCTION

This is a contract dispute between Plaintiffs Robert Kirkman, David Alpert, and Gale
Anne Hurd (collectively, ?Plaintiffs?), on the one hand, and AMC Film Holdings, LLC
AMC Network Entertainment, LLC Network?), and AMC Networks Inc.
Inc.,? and, collectively with AMCFH and AMC Network, or ?Defendants?), on
the other. (There also are alleged disputes between AMC and Plaintiffs Charles Eglee and Glen
Mazzara. The parties agreed, however, that this phase of the case would focus on Kirkman,
Alpert, and Hurd.) Defendants produce and broadcast the television shows The Walking Dead,
Fear the Walking Dead, and Talking Dead on the AMC channel. Plaintiff Kirkman is the
creator of The Walking Dead comic books, and he and the other two Plaintiffs are executive
producers of The Walking Dead and Fear the Walking Dead and consulting producers of Talking
Dead.

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STATEMENT OF DECISION 

 

 



Plaintiffs allege Defendants breached contracts between the parties regarding these
shows. The Court conducted a bench trial to interpret key provisions of the parties? contracts,
particularly provisions related to calculation and payment of ?contingent? compensation
to Plaintiffs. Contingent compensation (also commonly called ?pro?t participation?) is
calculated as a percentage of a show?s contractually de?ned ?pro?ts.? Because this
compensation becomes available only if a show is suf?ciently pro?table, this type of
compensation is ?contingent? on a show?s success.

In this case, Plaintiffs argue that Defendants have improperly calculated the contingent
compensation to which Plaintiffs are contractually entitled. Defendants respond they have
accurately calculated and paid contingent compensation pursuant to the terms of the parties?
agreements. Defendants say Plaintiffs?who vigorously negotiated the terms of their contracts,
including their contingent compensation terms?are asking the Court to rewrite their agreements
and award them greater compensation than required by the agreements.

The contracts also provide that Plaintiffs will receive ??xed? compensation for their
work, in the form of guaranteed per?episode fees enumerated in the contracts, and, in Kirkman?s
case, up?front payments for the rights to his graphic novels. In this lawsuit, Plaintiffs do not
complain about Defendants? payment of their ?xed compensation.

The contingent compensation terms at the heart of this case were thoroughly negotiated
and this is not a case where one party imposed contract terms on the other. Plaintiffs were
represented by sophisticated and experienced talent lawyers who negotiated at length with AMC
about the parties? respective rights and obligations with respect to The Walking Dead.
Discussions regarding compensation were the centerpiece of the parties? negotiations before
Plaintiffs executed their The Walking Dead agreements. The agreements included numerous
and detailed provisions regarding compensation, including an entire separate section devoted
speci?cally to and entitled ?Contingent Compensation.? (In Alpert?s and Hurd?s contracts, this
section is entitled ?Contingent Participation?) In these sections of their contracts, each Plaintiff

agreed that his or her contingent compensation would be calculated as a percentage of what is

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STATEMENT OF DECISION

 

 



NM?u?u?p?nl?I?I?nu?n?pknown as ?modi?ed adjusted gross receipts? or MAGR is a pool of certain revenues
or ?receipts? associated with a show, less certain expenses associated with that show. The
receipts that go into MAGR and expenses that come out of MAGR are typically set forth in a
document known as a MAGR ?de?nition.?

In their contracts, Plaintiffs agreed that shall be defined? using standard
MAGR however, that the de?nition must include certain MAGR terms
negotiated for and speci?ed in the parties? contracts.

Plaintiffs now challenge use of its MAGR de?nition to calculate Plaintiffs?
contingent compensation for The Walking Dead and Fear the Walking Dead. More
speci?cally, Plaintiffs argue AMC cannot use its MAGR de?nition to calculate the MAGR paid
in connection with exhibition of the shows on own channel. standard
MAGR de?nition provides that the MAGR derived from the telecast of the shows on the AMC
channel is to be calculated using an ?imputed license set amount of money added to the
MAGR pool for each episode of a show that AMC creates and broadcasts on its own channel.
For the past nine years, AMC has calculated the MAGR attributable to its broadcast of The
Walking Dead and Fear the Walking Dead on the AMC channel by using that ?imputed license
fee? in the MAGR De?nition.

MAGR de?nition speci?ed that the license fee payable for the right to
broadcast [The Walking Dead] by means of Non?Standard Television in the Territory in
perpetuity over any programming services of AMC or an AMC Af?liate, AMC shall be deemed
to have received an amount (the ?Imputed License set to equal of the production
costs of the series, up to a per-episode cap (set at $1,450,000 per hour-long episode), increasing
5% each season127; Ex. 2027 at 27 (emphasis in original). The
MAGR de?nition also speci?ed that Gross Receipts would include: all fees received from
other television broadcasts of the show other than broadcast on its channel); (2)
revenues received from home video distribution; and (3) ?[a]ll other revenues? received from a

variety of sources, including merchandising and the licensing of ?lm rights. Ex. 9 at 6-7; Ex.

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27-28; Ex. 2027 at 27-28. MAGR de?nition also provided the detailed formula
for how MAGR would be calculated, specifying the distribution fees, charges, and production
costs that would be deducted from the Gross Receipts. Ex. 9 at 8?12; Ex. 129 at 29?33; Ex.
2027 at 28?33.

Plaintiffs contend written MAGR de?nition and the imputed license fee in that
definition are unenforceable. They say AMC cannot use the imputed license fee because the
MAGR de?nition containing the imputed license fee was provided to Plaintiffs after they signed
their The Walking Dead contracts. Plaintiffs argue that the Court should not enforce that
MAGR de?nition, and instead should impose a new and different MAGR de?nition by looking
to industry custom and practice and other provisions of the parties" contracts.

Defendants respond that the parties? agreements expressly state that MAGR
de?nition is binding. Defendants argue that the parties agreed in their The Walking Dead
contracts that MAGR de?nition ?shall? govern the calculation of MAGR, subject to
speci?c MAGR terms (such as the inclusion of home video revenue in MAGR) for which
Plaintiffs separately bargained. Therefore, Defendants contend, the terms of MAGR
de?nition govern, including the MAGR de?nition?s imputed license fee.

Upon consideration of the contracts, the record, the patties? arguments, and the law,

Defendants? position is correct.
This case must be decided based on the plain terms of the agreements and New York

contract law. All of the relevant contractual provisions are unambiguous and demonstrate that
MAGR de?nition is binding. Even ifextrinsic evidence is considered, it supports
Defendants? interpretation of the contracts.

The agreements state that MAGR ?shall be de?ned? pursuant to ?standard
de?nition? of MAGR, ?provided, however, that? each Plaintiff receives the bene?t of certain

MAGR terms speci?ed in their contracts.' The meaning of this contract language is clear and

 

This quoted language is from Kirkman?s The Walking Dead Agreement. The language in Alpert?s

and Hurd?s contracts differs but the effect is the same: shall be defined, computed and paid by
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STATEMENT OF DECISION

 

 





 

 

unambiguous: Plaintiffs bargained for and received certain MAGR terms, and in exchange
agreed that AMC ?shall? have the right to de?ne the balance of MAGR.

Plaintiffs argue the parties merely agreed to negotiate the balance of the MAGR terms at
some unspeci?ed, future date. This reading contradicts the plain terms of the agreements.
The agreements do not state that MAGR shall be de?ned after some future agreement; they
expressly state that MAGR de?nition ?shall? be binding. The Court cannot rewrite the
parties? contracts or treat their agreement that shall be de?ned? by AMC as if it were
meaningless.

Plaintiffs? reading of the contracts would also render them unenforceable. Under New
York law, an ?agreement to agree? does not create a binding obligation, yet that is what Plaintiffs
ask. According to Plaintiffs? expert witness, the parties did not ?have a complete agreement?
on the MAGR de?nition terms at the time of contracting, and instead ?ha[d] to strive to get that
complete agreement? through future negotiations. 2/1 1/20 Trial Tr. 1 1:21-23 (Ziffren). 1f
Plaintiffs? interpretation is correct, there would be no operative MAGR de?nition at all. This
would render the contracts unenforceable, and defeat Plaintiffs? claims in this case, which are
predicated on a breach of the MAGR requirements in the contracts.

RULINGS

The Court pushed the parties to litigate the disputed issues of contract interpretation
before jumping into a protracted, complicated jury trial. The parties determined seven disputes
regarding contract interpretation should be decided by the Court. Each issue is discussed below

with the pertinent factual ?ndings and law provided in each section. The decisions on these

 

IAMCI in accordance with MAGR definition," which, ?for purposes of the calculation of Artist?s
participalion hereunder. . . shall? contain certain speci?c terms. Exs. 3, 4 
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seven issues do not need a copious recitation of the facts relating to backgrounds, relationships,
motivations, negotiations, conflicts and communications.

Plaintiffs ignored the Court?s instruction to assert objections to declaration testimony
within the prOposed Statement of Decision and only as to material testimony. The Court will not
provide rulings on the individual objections in the l62?page document entitled ?Plaintiffs
Objections to Defendants? Direct Testimony Declarations.? If the Court cites to such testimony,
the objection is overruled.

Both sides raised objections to certain exhibits or portions of exhibits. All objections are
overruled although the Court does not necessarily ?nd that these exhibits had much evidentiary
value. All redactions in these documents are to be maintained.

Both sides offered opinion testimony regarding custom and practice in the television industry
from lay witnesses who had not been offered as experts and then turned around to object to some
of the testimony proffered by the adversary. Again, while one may question the value of some, if
not much, of that testimony, the objections are overruled.

Plaintiffs asked Kenneth Ziffren, an undoubtedly renowned expert on entertainment law,
to express various opinions. The Court cannot consider those portions of Ziffren?s testimony
which purport to interpret the meaning ofthe contracts themselves. It is well settled that ?the
meaning of [contract] is a question of law about which expert opinion testimony is
inappropriate.? Cooper Cos. v. Transcon. Ins. Co., 31 Cal. App. 4th 1094, 1100 (1995). That
is because ?[t]he interpretation of . . . contract, as with that of any written instrument, is 
primarily a judicial function.? Id.; see also In re Tobacco Cases 1, 186 Cal. App. 4th 42, 51
(20l0) interpretation of contractual language is a legal matter for the court?). Thus,
courts in this State have long found ?[e]xpert opinion on the legal interpretation of contracts . . .

to be inadmissible.? Summers 12. AL. Gilbert Co.. 69 Cal. App. 4th 1 155, 180 (1999); see also

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SL'hrijj?ier v. Creative Capital Leasing Grp., LLC, 166 Cal. App. 4th 745, 752 n.2 (2008) (?Expert
opinion on contract interpretation is usually inadmissible?). The Court thus does not consider
Ziffren?s testimony about the meaning of the contracts at issue. See, Ziffren Decl. 46(b)
(Ziffren?s interpretation of the meaning of the term ?initial license fee?); id. 84 (purporting to
interpret whether a term effects ?the right to negotiate?); id. 49 (offering several pages of
impermissible opinion testimony about the meaning of Paragraph 24 of Kirkman?s The Walking

Dead contract).
A. Issue Whether What Plaintiffs Call Proposed MAGR De?nitions And
Defendants Call The MAGR De?nitions Govern The Calculation, Reporting, And

Payment Of MAGR Under Plaintiffs? The Walking Dead And Fear The Walking
Dead Agreements?2

This is the threshold and controlling issue in this case. If the AMC MAGR de?nition
controls, its imputed license fee for AMC Network?s exhibition of the shows on channel
controls as well?which resolves Issue #1 (whether an imputed license fee is allowed at all), Issue
#3 (whether the Fear the Walking Dead agreements also demonstrate that the imputed license fee
applies), Issue #4 (whether the ATP, instead of the imputed license fee, determines what MAGR
receipts are attributable to exhibition of the shows on the AMC channel), and Issue #5

(whether the imputed license fee applies to Hurd).
Because AMC had never previously produced a show in-house, The Walking Dead was

the first show that used its standard MAGR de?nition. The de?nition was drafted in the
months prior to March of 201 1, as AMC and its counsel devised a ?market-comparable
M.A.G.R. de?nition? that could be used in The Walking Dead and in future AMC shows.
2/18/20 Trial Tr. 20624-10 (Arar). That standard de?nition is still in use by AMC, ?10 years

later.? Id. at 206:8?10 is the de?nition that they used then and here we are 10 years

 

2

The parties have used different phraseology to characterize the issues, although they
appeared to agree on the language when the issues were first given to the Court. The differences are largely
immaterial however phrased, the key issue is whether MAGR de?nition controls, and it does.

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4st?



 

 

later and they still use This standard de?nition has now been used in at least ?dozens, if
not hundreds, of deals? with pro?t participants. Id. at 206:] l?l2. As transactional
counsel explained, ?it?s their standard definition for everybody.? Id. at 206: 19-20.

1. The Parties Agreed That MAGR De?nition ?Shall? Control.

In their contracts, all three Plaintiffs agreed that shall be de?ned, computed,
accounted for and paid in accordance? with MAGR de?nition. Ex. I (Kirkman The
Walking Dead Agreement) 1 l(b) (emphasis added); Ex. 4 (Alpert The Walking Dead Agreement)
Ex. 3 (Hurd The Walking Dead Agreement) The meaning of this provision
is unambiguous: de?nition of MAGR must be used to de?ne, compute, account for, and
pay MAGR. N. State Elec. Gas Corp. v. Aasen, 157 965, 968 (3d Dcp?t 1990) (the
word ?shall? is ?mandatory?); Stop Shop Cos, Inc. v. Assessor of City of New Rochelle, 924
766, 771 (Sup. Ct. Westchester Cty. 2011) (contract?s ?use of the mandatory words
?shall?? confers an ?unfettered right?); SHALL, Black?s Law Dictionary (1 ed. 2019) (?Shall?
means ?is required That resolves this issue: ?shall? means ?shall,? and MAGR

de?nition is controlling.

Plaintiffs argue that it would be unfair or unreasonable to ?nd they agreed to be bound by
a MAGR de?nition they had not seen or negotiated, but this argument is contradicted by the law,
the express terms and structure of the contracts, and common sense.

The agreements are clear that AMC ?shall? have authority to de?ne MAGR, and Plaintiffs?
fairness arguments are thus foreclosed by the express terms of the parties? contracts. See
Greenfield, 98 569-70 the agreement on its face is reasonably susceptible of only
one meaning, a court is not free to alter the contract to re?ect its personal notions of fairness and
equity?). These contracts are readily enforceable New York courts routinely uphold the right
of one party to a contract to ?x a material price term in the future. In Arbitron, Inc. v. Tralyn

Broadcasting, Inc, 400 F.3d 130 (2d Cir. 2005), for example, the court held that a license

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agreement for radio ratings information gave the licensor the unilateral right to change the license
fee, subject only to the requirement that the licensor abide by the ?duty of fair dealing under New
York law.? Id. at 138-40 (citing Cobble Hill Nursing Home v. Henry Warren Corp., 74 
475 (1989)). And in Cordell v. McGraw?Hill Companies, Inc, 2012 WL 5264844 (S.D.N.Y.
Oct. 23, 2012), 525 F. App?x 22 (2d Cir. 2013), the court held that the parties lawfully agreed
that a publisher could sell the plaintiffs? books at the price ?it shall deem suitable.? Id. at see
also id. at *4 (?Cordell?s contention that McGraw-Hill had the implicit obligation to sell the works
at fair market value?irrespective of what McGraw-Hill deemed suitable?would imply a term
inconsistent with the express terms of the Agreement?). Similarly, here, Plaintiffs agreed that
AMC ?shall? have the right to de?ne MAGR, and this express contractual agreement should be
enforced according to its terms. Ex. 1 (Kirkman The Walking Dead Agreement) 1 

In any event, Plaintiffs? bargain was not unfair or unreasonable. Plaintiffs agreed to grant
AMC authority to define MAGR only after securing numerous provisions in the agreement that
strengthened their contingent compensation rights and limited authority.

First, Plaintiffs bargained for?and received?speci?c MAGR protections in their The
Walking Dead contracts that they considered important. For example, Kirkman negotiated that
shall include home video/DVD and merchandising? and that network sales fee?
would be deducted from the show?s initial license fee. Ex. 1 (Kirkman The Walking Dead
Agreement) ll(b); see also Ex. 3 (Hurd The Walking Dead Agreement) (capping
?distribution fees? and the ?administrative overhead charge? charged against Ex. 4
{Alpert The Walking Dead Agreement) 4(d)(ii) (prohibiting the charge of a ?studio supervisory
fee? against MAGR and certain ?overhead? charges). Plaintiffs granted AMC Network a broad
right to set a ?standard de?nition? of MAGR, ?provided, however, that" the definition would
include the MAGR terms that Plaintiffs individually negotiated. Ex. 1 (Kirkman The Walking
Dead Agreement) 1 1(b) (emphasis added); see also Ex. 4 (Alpert The Walking Dead Agreement)
4(d)(ii) MAGR de?nition shall include the following terms and conditions . . . Ex.

3 (Hurd The Walking Dead Agreement) 4(d)(ii) (including similar term).

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Where, as here, a contract states that one party shall have the right to later set a term, a
?provided that? clause constrains that authority and imposes certain limitations. Cent. Sch. Dist.
No. of Towns ofDewitt v. Litz, 1969 WL [0979, at *l n.l (Sup. Ct. Onondaga Cty. Oct. 16,
1969) (contract?s use of ?provided that? following a ?shall? provision imposed a ?limit? and
?state[d] legal duty?). All three Plaintiffs secured such specific limitations on AMC
Network?s right to de?ne MAGR. Plaintiffs thus used the ?provided, however, that? clause in
their contracts to constrain AMC Network?s authority?while also confirming that AMC
Network?s authority was essentially unbounded except as set forth in the proviso. See, Safka
Holdings LLC v. t'Play, lnc., 42 F. Supp. 3d 488, 494-95 (S.D.N.Y. 2013) (contract that gave
defendant the right to withhold approval of plaintiffs? use of certain materials, ?except to the
extenlt] such failure or refusal is a result of fraud,? gave defendant nearly the unbounded right to
withhold approval, limited only by its agreement not to practice ?fraud or willful misconduct?
(emphasis added)}; Lite, 1969 WL 10979, at *1 n.l (?provided that? clause ?limit[ed]?
arbitrator?s power, but only in the ways expressly stated in the clause). Based on these clear
contract terms, AMC Network was free to exercise its right to de?ne MAGR so long as it complied
with the MAGR protections negotiated by and agreed to by the parties in the ?provided, however,
that? clause of their The Walking Dead agreements.

Second, Plaintiffs bargained for and received the protection of an MFN provision, ensuring
that they would receive the bene?t of any more ?favorable? MAGR terms obtained by any other
The Walking Dead profit participant in the future. Ex. 1 (Kirkman The Walking Dead
Agreement) ll(b)(ii). Plaintiffs? negotiators acknowledged the value of these MFN
protections, and that they were of prime importance during the negotiations of the contingent
compensation terms in Plaintiffs? The Walking Dead Agreements. See, 2/11/20 Trial Tr.
I32: 14-17 (Rosenbaum). That is because, as Plaintiffs? negotiators testified, the MFN provisions
provided Plaintiffs with a ?safety net??i.e., the security that the Plaintiffs? MAGR terms would
be the very best terms received by any other participant on the series. See 2/ 13/20 Trial Tr. 126:3-

19(Rosenman); 2/14/20 Trial Tr. l87:1 16(Abramson). Kirkman?s

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43mm



counsel testi?ed at his deposition, read into the record at trial, that once he secured for his client
this and ?other protections? in The Walking Dead agreement, he was comfortable
?advising [his] client to sign an agreement that referenced an M.A.G.R. de?nition that [he] had
never seen.? 2/13/20 Trial Tr. 127:8?24 (Rosenman); see also id. at 126:16-19.

Third, it de?es common sense to credit Plaintiffs? argument that they would not have given
AMC the right to de?ne MAGR because AMC could then de?ne MAGR as consisting of nothing
at all. AMC expressly agreed it would de?ne MAGR with a ?standard de?nition? of MAGR that
it would use throughout its business. AMC could not create some arbitrary, and
oppressive MAGR de?nition that it would use only for the purpose of denying pro?ts to Plaintiffs.
Ex. I (Kirkman The Walking Dead Agreement) 1 see also Ex. 3 (Hurd The Walking Dead
Agreement) 4(d)(ii) (mandating the use of MAGR de?nition,? not a de?nition custom?
made for Plaintiffs). Had AMC created an oppressive or commercially unreasonable de?nition
for Plaintiffs, it would have been obligated to use that same de?nition with every other pro?t
participant? an obligation that deterred AMC from implementing such an unreasonable de?nition
in the ?rst place. Cf 2/18/20 Trial Tr. 206: 19-20725 (Arar) (future pro?t participants would stop
dealing with AMC if it used ?an unreasonably low standard imputed license fee? in their ?standard

definition for everybody?).
Plaintiffs? bargain?to receive speci?c MAGR protections that they wanted, rely on an

MFN safety net, and otherwise give AMC Network the right to use its ?standard? de?nition to
define the rest of the MAGR calculation?should be enforced in accordance with the parties?
expressed intent. Quadrant, 23 at 564 {?[l?nder our law where the language of the
contract is clear we rely on the terms of the document to give effect to the parties? 
2. The Parties Agreed To Be Bound By MAGR De?nition.
Plaintiffs argue that because MAGR de?nition was not attached to Plaintiffs? The
Walking Dead Agreements or shown to them at the time of contracting, MAGR was effectively

left undecided to be agreed upon by the parties at some future date, after ?good faith negotiation.?

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(Kirkman The Walking Dead Agreement) ll(b). According to Plaintiffs, they would
never have agreed to be bound by a MAGR definition they had not yet seen. But that is precisely

what Plaintiffs did when they agreed that MAGR ?shall? be de?ned by MAGR de?nition.

Further, this argument was directly contradicted by one of Plaintiffs? own transactional
counsel, who admitted that ?this was not the ?rst time in [his] career where [his] clients have
signed a deal like this and the MAGR de?nition was provided later.? 2/l4/20 Trial Tr. 125:16-
19 (Nochimson).

To begin, Plaintiffs? arguments have no support in the text of Alpert?s and Hurd?s
agreements. Those contracts provide that if AMC produces the show, then shall be
de?ned, computed and paid by Network] in accordance with AMC [Network]?s MAGR

9

de?nition,? without any mention of "good faith negotiation.? See Ex. 4 (Alpert The Walking
Dead Agreement) 4td)(ii) (emphasis added); Ex. 3 (Hurd The Walking Dead Agreement)
ii] [same]. The contracts make clear that Alpert and Hurd have no right to engage in ?good
faith negotiation? over MAGR de?nition?a conclusion that is further supported by the
fact that their contracts do include such a ?good faith negotiation? right if the show is produced by
a third party. See Ex. 4 (providing that if the series ?is produced with a third party
supplying producer? then shall be de?ned? by the ?standard de?nition? of that third party,
?subject to good faith negotiation?); Ex. 3 (same). ?The use of different terms in the
same agreement strongly implies that the terms are to be accorded different meanings.? NFL
Enters. LLC v. Comcasr Cable Commc?ns, LLC, 51 52, 60-61 (4th Dep?t 2008) (language
in one term ?that is similar, yet not identical? to language in another term demonstrated the parallel
terms had different meanings); Frank B. Hall C0. of N. Y., Inc. v. Orlen.r Overseas Assocs., 48
958, 959 {19?9) (?The difference in the language of the two [parallel] provisions? dictates
that ?the parties must be deemed to have intended different meanings?). The presence of a ?good
faith negotiation? term in the MAGR provisions dealing with a di?erenr situation where there is

a third?party producer?con?rms that the absence of that same language in this situation?where

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the producer?was intentional and meaningful. See also, Wiseman Decl. 43, 45
(decision not to give any good faith negotiation right if AMC produced the show ?was a deliberate
differentiation?).

Kirkman?s contract does provide that the MAGR de?nition is ?subject to good faith
negotiation.? See Ex. 1 (Kirkman The Walking Dead Agreement) 1 But granting a right
of good faith negotiation does not give any party the right to unilaterally disregard or change
negotiated and agreed upon terms. It means that the parties must act ?in good faith? if they
choose to further negotiate a binding contract that was already agreed to. See Scholastic, Inc. v.
Harris, 1999 WL 1277246, at *7 (S.D.N.Y. Nov. 29, 1999) (applying New York law) (?Although
the parties also agreed to negotiate in good faith? this ?does not vitiate that which was already
agreed?). Here, then, the parties agreed that MAGR de?nition ?shall" be binding on the
parties, and that the parties would negotiate in ?good faith? if Kirkman later wanted to seek
improvements to that binding MAGR de?nition. Ex. 1 (Kirkman The Walking Dead Agreement)
1 This reading is dictated by the plain language of the agreement and gives effect to all of
the words in Section ll(b). See Rmrenberg v. Davidge Data Sys. Corp., 215 191, 196
(1st Dep?t 1995) (?An interpretation that gives effect to all the terms of an agreement is preferable
to one that ignores terms or accords them an unreasonable interpretation?).

This reading of the plain language of the contracts is also con?rmed by the testimony of
negotiators at trial. See, Arar Decl. 31 Iabject to good faith negotiation? did
not mean there would be no operative MAGR de?nition absent such negotiation . . . . The exact
opposite is true. The language in Section [1 says that shall be de?ned, computed,
accounted for and paid in accordance with the standard de?nition thereof? (emphasis added).
This is intentional and clearly mandatory. It meant that standard MAGR de?nition would
be binding on Mr. Kirkman. And, unless and until ?good faith negotiation? occurred, 
standard MAGR definition would govern. Even if good faith negotiations occurred, 
standard MAGR de?nition necessarily would continue to govern unless and until any changes

were agreed upon. I can say without question that is how ?subject to good faith negotiation?

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Jib-)language is intended to work in 2/18/20 Trial Tr. 116:20?26 (Arar) (?While A.M.C.
had the . . . obligation to entertain a negotiation with Mr. Kirkman?s representatives over its
provisions, as long as they were operating in good faith in saying no to whatever requests were
made, . . . the M.A.G.R. definition remains operative as originally tendered?); id. at 68:10?11
(explaining that the ?subject to good faith negotiation? provision in Section 1 1(b) of Kirkman?s
contract ?does not negate the mandatory nature of ?shall be defined??); id. at 17:2-6 (describing
the ?subject to good faith negotiation? provision in Section 1 1(b) as a ?right to request negotiated
changes?).

Kirkman?s counsel never attempted to negotiate that MAGR de?nition prior to threatening
litigation. 2/11/20 Trial Tr. 143:1-10 (Rosenbaum) (Kirkman?s counsel admits that ?prior to
threat of litigation in this case, neither [she] nor [her] partner . . . sought to negotiate in good faith
M.A.G.R. definition?). The ?good faith? language did not give Kirkman an indefinite
time to commence or effectuate negotiations.

Plaintiffs argue that the language of Kirkman?s MAGR provision should be read as if it
stated that shall be de?ned by further agreement after good faith negotiation,? but this
is a re-writing of the contract, not an interpretation of it. See Lui V. Park Ridge at Terryville
As.s"n, Inc, 196 579, 581 (2d Dep?t 1993) court should not, under the guise of contract
interpretation, . . . rewrite the Plaintiffs? reading would render meaningless the
parties? contractual agreement that shall be de?ned" by ?standard definition.?
Ex. 1 (Kirkman The Walking Dead Agreement) 1 1(b) (emphasis added}. Such a reading cannot
be adopted, because the contract cannot be interpreted in a way that would leave the agreement
that shall be defined? by AMC without force or effect. See, City of Bu?alo City
Sch. Dist. v. LPCimine/li, Inc, 159 1468, 1473 (4th Dep?t 2018) may not interpret
the contract in such a manner as to render any provision meaningless?); Ruttenberg, 215 
at 196 (?It is a recognized rule of construction that a court should not adopt an interpretation which
will Operate to leave a provision of a contract without force and The reading argued by

Defendants, by contrast, gives effect both to the contractual clause that states shall be

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Ude?ned? by AMC and the clause that states any further negotiation shall be in ?good faith.?

?[T]he easiest way for a party to make clear an intention not to be bound is to say so,? and
Plaintiffs easily could have avoided being bound by MAGR de?nition by no! agreeing that
it ?shall? control. Scholastic, 1999 WL 1277246, at But they did agree to that language,
and the they cannot be released from the clear bargain they made years ago.

At trial, Plaintiffs? witnesses also contended that AMC was obliged to initiate a negotiation
of its MAGR de?nition once AMC provided Plaintiffs with a copy, or at least was obliged to
inform Plaintiffs that AMC believed its de?nition was binding and operative. See Trial Tr.
2/13/20 28:8-19 (Rosenbaum). There is no support for these contentions in the text of the parties?
agreements. First, it would be commercially unreasonable for AMC to agree to (1) furnish a
MAGR de?nition, and then take on the burden of chasing Plaintiffs so that Plaintiffs could
negotiate even better terms for themselves. See Lipper, at 171 contract should not
be interpreted to produce a result that is absurd, commercially unreasonable or contrary to the
reasonable expectations of the parties?). Second, the parties contractually agreed that 
MAGR definition ?shall? control. See, e. Ex. 1 (Kirkman The Walking Dead Agreement)
11(b). AMC did not have an af?rmative obligation to remind Plaintiffs of this provision of
their agreements or inform Plaintiffs that AMC intended to abide by the provision.

3. Plaintiffs? Argument Would Render Their Contracts Unenforceable.

Plaintiffs? argument that their The Walking Dead agreements were merely ?agreements to
negotiate? about MAGR fails for another reason. It is undisputed that the terms governing the
calculation of MAGR are material terms of the agreements. 2/10/20 Trial Tr. 42:25-43zl
(Ziffren) (Plaintiffs? expert testi?es that terms? were ?materia1?). Therefore, if
Plaintiffs are correct and there was no agreement on MAGR, but rather an agreement to agree on
MAGR in the future, then their agreements are missing a material term and are unenforceable.
Joseph Martin, Jr., Delicatessen, Inc. v. 52 105, 109 (1981) mere
agreement to agree, in which a material term is left for future negotiations, is unenforceable?). The

law prohibits an interpretation of agreements which then create unenforceable agreements. See

1 5
STATEMENT OF DECISION

 

42.1..)



Joseph E. Seagmm Sons, Inc, 413 F. Supp. 693, 697-98 (S.D.N.Y. 1976), 552 F.2d
447 (2d Cir. 1977) law of New York expresses a clear preference for a [contract]
construction in favor of validity?); see also Warden 12. ER. Squibb Sons, Inc, 840 F. Supp. 203,
207 (E.D.N.Y. 1993) there are two reasonable interpretations of an agreement, preference
should be given to that which renders the agreement enforceable.? (applying New York law)).

As the New York Court of Appeals has explained, ?it is rightfully well settled in the
common law of contracts in this State that a mere agreement to agree, in which a material term is
left for future negotiations, is unenforceable.? Joseph Martin, 52 at 109; Rao 12. Verde,
222 569, 570 (2d Dep?t 1995) (an ?agreement to ?negotiate in good faith?? over sale price
did not create any sale contract). Here, the definition of MAGR?which is required to calculate
Plaintiffs? contingent compensation?is clearly a material term of the contracts. See, 
Gurkowski v. Stein/manner, 680 F. Supp. 2d 602, 610 (S.D.N.Y. 2010) (?Price or compensation
are material terms in a contract requiring definiteness? to be enforceable under New York law)
(collecting cases); DerOhamwsian v. City ofAlbany, 110 1288, 1291 (3d Dep?t 2013)
(?Price is a material term of a Allen 12. Robinson, 201 WL 5022819, at *6 (S.D.N.Y.
Oct. 19, 201 1) (under New York law, ?compensation? was ?a material term of the agreement?).

This was confirmed by testimony from both sides at trial. Plaintiffs? expert testi?ed that
terms? were ?material.? 2/ 10/20 Trial Tr. 42:25-43:] (Ziffren). (This reference to
Ziffren does not Open the door to opinions on the interpretation on the contract, but to show
Plaintiffs cannot dispute this conclusion.) Defendants? expert was in agreement, testifying that the
protections? in Plaintiffs? contracts addressing how shall be defined? are
?material to parties negotiating pro?t participation agreements.? 3/9/20 Trial Tr. l78:28-l79:7
(Sabin). Therefore, if the parties merely agreed to ?negotiate in good faith? about the MAGR
definition and leave that definition undetermined until a future agreement?as Plaintiffs argue?
then there would be no contract. See Goodsrein Consrr. Corp. v. City ofNew York, 80 
366, 373 (1992) (plaintiff could not recover in contract for breach of agreement ?to negotiate in

good faith?); Fairchild Corp. v. State, 169 643, 645 (2d Dep?t 2019).

16
STATEMENT OF DECISION

 

 

 

43m

OWOOHQW

Putting materiality aside, New York law is clear that any contract provision that is left open
to further negotiation is by de?nition not enforceable?for the obvious reason that there is nothing
to enforce. See, Spherenomfcs GIob. Contact Centers v. vCusromer Corp, 427 F. Supp. 2d
236, 249 (E.D.N.Y. 2006) (even when contract otherwise exists, ?a mere agreement to agree? on
a term does not provide any grounds ?to enforce? that term); see also Cannon v. Sole/1 Bone/1 Ltd,
206 450, 451 (2d Dep?t 1994) (?open terms? left to negotiation are unenforceable). Here,
Plaintiffs are suing to recover MAGR. If MAGR was never agreed to in the ?rst place, then there
is no MAGR to recover at all.

Plaintiffs attempt to avoid this problem by arguing that because the parties purportedly did
not agree on how MAGR should be de?ned, the Court should create a MAGR de?nition. 2/1 1/20
Trial Tr. 27:3-7 (Ziffren) (Plaintiffs? expert testi?es that ?if the parties don?t agree, then --
forgive me the Court has to decide?); id. at 62:23-38 {Plaintiffs? expert testi?es that ?because .
. . no M.A.G.R. de?nition was agreed to, the Court needs to ?ll in the missing terms?).

Plaintiffs? argument that the Court can create a MAGR term to which the parties never
agreed has no support in the text of the contract or New York law. The New York Court of
Appeals opinion in Joseph Martin is instructive. There, the parties to a rental contract did not
agree on a rental price at the time of contracting, and their contract merely speci?ed that the rental
price was ?to be agreed upon.? 52 at 108. In that case, the plaintiffs?much like
Plaintiffs here- argued that even though the parties had merely ?agreed to agree? on a rental price,
the court could create its own ?fair market? or ?reasonable? rental term. Id. at 10809. New
York?s highest court rejected this argument, holding that ?a mere agreement to agree, in which a
material term is left for future negotiations, is unenforceable.? Id. at 109. The contract gave no
indication that the parties intended to be bound by a ?fair market? or ?reasonable? term?and the
court could not create a term to which the parties never agreed. Id. at 1 1 1 (?There is not so much
as a hint at a commitment to be bound by the ?fair market rental value? . . . or ?reasonable rent?
. . . much less any de?nition of 

Just as in Joseph Martin, here there ?is not so much as a hint? in the parties? contracts ?to

l7
STATEMENT OF DECISION 

 

 

atom-boo

bound by ?fair market or ?reasonable? standard. Id. The Court cannot step in to create
a brand new MAGR term itself: ?Nowhere is there an inkling that either of the parties directly
or indirectly assented? that MAGR would be 1d. Ifthe parties merely had
an ?agreement to agree? on the de?nition of MAGR there would be no binding MAGR right and
Plaintiffs would have no right to sue for MAGR under the contract. Id. at 109.

Plaintiffs also argue that custom and practice in the television industry dictate that MAGR
de?nitions are merely pr0posals and do not become binding until the participant has seen and
signed off on the de?nition?s particular terms. There is no support for this argument in the law
or the record. Television agreements are subject to the same rules of construction as other
agreements?~?an agreement to negotiate in good faith? an MAGR is unenforceable, regardless of
what Plaintiffs may say is customary in their industry. Fairchild Corp, I69 at 645 (?an
agreement to negotiate in good faith? about a term does not create ?an enforceable commitment?
about the term); see also Green?eld, 98 .Y.2d at 569 (in the entertainment industry, ?long-settled
common-law contract rules still govern the interpretation of agreements?). Moreover, purported
industry custom cannot contradict the express terms of an agreement and here, the express terms
mandate that the producer?s standard MAGR de?nition ?shall? control, notwithstanding the fact
that Kirkman did not know who the producer would be or what its ?standard de?nition? would
look like. Ex. I (Kirkman The Walking Dead Agreement) 11(b); Croce v. Kumit, 737 F.2d
229, 238 (2d Cir. 1984) of industry practice may not be used to vary the terms of a
contract that clearly sets forth the rights and obligations of the parties?). The MAGR de?nition
was not a proposal; it was binding because of the parties? express agreement that AMC ?shall"
define MAGR. Ex. I (Kirkman The Walking Dead Agreement) ll(b).

In any event, actual industry custom appears to be at odds with Plaintiffs? argument.
Parties to pro?t participation contracts?the entertainment company, on the one hand, and talent,
on the other hand?do not leave a term as important as MAGR for resolution at some later date.
They understand that, by the time a pro?t participation agreement is signed, the show?s owner has

secured whatever agreement it needs to calculate MAGR going forward. Sabin Decl. 27-29.

18
STATEMENT OF DECISION

 

 



television ?network wouldn?t undertake to ?nance and green-light such an expensive and
complicated production? like The Walking Dead if the network believed that the parties had not
yet reached an agreement on contingent compensation. 3/9/20 Trial Tr. l97:25-l98:2 (Sabin).
Including the words ?subject to good faith negotiation? in a pro?t participation agreement does
not change that analysis. In the television industry, when parties agree that MAGR will be
?subject to good faith negotiation,? the words are understood to obligate the parties to act in good
faith if they negotiate about MAGR?they do not mean that MAGR is undecided and further
negotiation is needed to resolve it. Sabin Decl. 49-54.

Alpert?s own transactional counsel acknowledged that Plaintiffs? reading of the contract
would result in the possibility that MAGR might never be agreed to?a result that would not just
render the contract unenforceable, but also would be commercially absurd. See 2/14/20 Trial Tr.
212:3-10 (Abramson) But based on your understanding that it would not become operative
until an agreement at the end of any negotiation, it was your understanding that that may never
happen and the parties would remain without an operative M.A.G.R. definition; correct? A. I
guess.? (emphasis added)); see also Lipper, at 17] contract should not be interpreted
to produce a result that is absurd, commercially unreasonable or contrary to the reasonable
expectations of the parties.? (citations omitted)).

Ultimately, Plaintiffs? effort to avoid the plain language of the agreements is unavailing.
Even if Plaintiffs were correct and the calculation of MAGR was never agreed to, their claims

would fail because they would have no contract to enforce. But in fact the parties did agree:
MAGR de?nition ?shall? control the calculation of MAGR. That resolves this issue, and

much of this case.

4. The Parties? Course of Performance Con?rms Their Intent To Be Bound By
MAGR De?nition.
The express language of the contracts establishes that MAGR definition ?shall?
be binding. Although extrinsic evidence therefore is not relevant or necessary because the

contracts are not ambiguous, the parties? post-agreement conduct?waiting years to object to

19
STATEMENT OF DECISION

 

 

LUMAGR de?nition, negotiating additional ?xed compensation but not MAGR, and
cashing an advance subject to recoupment using the MAGR de?nition?demonstrates that when
the Plaintiffs executed their The Walking Dead contracts they intended that AMC would de?ne
MAGR, subject only to the speci?c MAGR terms they secured.

Kirkman and Alpert waited nearly four years?from March 201 1 until February 20l5 to
raise any objection to MAGR de?nition. Defendants? outline of facts, found at pages 21
to 32 of their Proposed Statement of Decision, demonstrates that Plaintiffs did not object to, and
accepted bene?ts under, the MAGR de?nition.

During these four years, Kirkman and Alpert repeatedly accepted bene?ts under that
de?nition and con?rmed their intent to be bound by that de?nition: they cashed an advance that
they explicitly were told would be recouped against MAGR de?nition; they received
participation statements calculated based on that de?nition; they signed amendments reaf?rming
that their The Walking Dead Agreements and their compensation terms remained binding and
effective; they exercised audit rights granted to them pursuant to MAGR de?nition; and
they signed Fear the Walking Dead Agreements in which they expressly agreed that ?[t]he
de?nition of MAGR applicable to [their] contingent compensation on [The Walking Dead]? would
?apply? to the new show. See ExsTheir conduct clearly demonstrates that they understood MAGR de?nition bound
them and controlled the calculation of their MAGR distributions. See Record Club 0fAm., Inc.
v. United Artists Records, Inc, WL 73838, at (S.D.N.Y. Apr. 29, 1991) (acceptance of
payment calculated pursuant to opponent?s interpretation of contract and ?statements? re?ecting
opponent?s interpretation of the payment terms demonstrates acquiescence in or agreement with
opponent?s interpretation); la re Marshall v. Cent. Sch. Dist, 100 1498, l500
(4th Dep?t 2012) (?Parties cannot accept bene?ts under a contract fairly made and at the same time
question its validity.? (citations omitted?; Melm'tzky v. Sorlteby Parke Beater, 300 201,
202 (1st Dep?t 2002). Their February 2015 objections came far too late, and there is ?no

explanation? as to why they would have waited nearly four years to protest use of its

20
STATEMENT OF DECISION

 

 

 



~40"

10
11

 

 

MAGR de?nition if they believed it was inapplicable. See Disney Enters, Inc. v. Finanz St.
Honore, B. V., 2016 WL 7174650, at *6 (E.D.N.Y. Dec. 7, 2016) (failure to explain acquiescence
in opposing party?s interpretation of contract is further evidence that opposing party?s
interpretation is correct).

l-lurd objected earlier than the other Plaintiffs, but she did not have a right to object because
she agreed to be bound by MAGR de?nition and did not even have a right of good faith
negotiation. See Ex. 3 (Hard The Walking Dead Agreement) Moreover, her conduct
still evidences that, at the time of contracting, she intended to be bound by MAGR
definition. Like the other Plaintiffs, she did not object or reserve any rights when AMC sent its
definition in March 201 1. Instead, she ?rati?ed and con?rmed? her The Walking Dead
Agreement after receiving MAGR de?nition, Ex. 2079 at 2, and she did not object when
she received a detailed participation statement in late 201 1 that calculated MAGR using 
MAGR definition, Ex. 2076 at 2. Only after Hurd and her representatives had spent over a year
demonstrating an understanding that MAGR definition controlled did her representative
raise objections?and even then, only in the context of trying to negotiate her compensation for a
different show. See Ex. 155. Even after raising that objection, Hurd and her representatives
cashed a $750,000 advance that they were explicitly told would be recouped against 
MAGR de?nition. Ex. 2077 at 2.

Later, when Hurd audited AMC, she did so by exercising audit rights that were granted by
MAGR de?nition and did not exist anywhere else in her The Walking Dead Agreement.
On cross-examination, Hurd?s counsel, David Nochimson, admitted that when he ?noticed the
audit? of books and records regarding MAGR, he did so ?pursuant to? ?the [Accountings]
provision of the M.A.G.R. definition.? 2/14/20 Trial Tr. 141:8-24 (Nochimson). In other
words, Hurd exercised the audit rights conferred on her by the same MAGR definition she now
claims in this lawsuit she never agreed to and is inoperative. New York law makes clear that
?[p]arties cannot accept bene?ts under a contract fairly made and at the same time question its

validity.? In re Marshall, 100 at 1500 (Citations omitted).

2 1
STATEMENT OF DECISION

 

 

 

AWN



Although Hurd raised concerns earlier than Kirkman or Alpert, there is still ?no
explanation? for her failure to object to MAGR de?nition for more than a year?and to
accept bene?ts under the de?nition even after raising the objection?other than that she understood
that MAGR de?nition did, in fact, control. See Disney, 2016 WL 7174650, at see
also Record Club, 1991 WL 73838, at *11 (receipt of roughly one year?s worth of quarterly
statements and payments established course of performance). Hurd?s conduct, and that of her
attorney, merely demonstrates that she believed she could rely on her clout in the industry to seek
to negotiate the AMC MAGR de?nition and secure a better deal?not that she had any contractual
right to do so.

Thus, even if the The Walking Dead Agreements were ambiguous?and they are not?the
?parties? course of performance under the contract[s]? constitutes the ?most persuasive evidence?
that the parties intended for MAGR de?nition to be binding. Fed. Ins. Co., 258 
at 44.

B. Issue Whether Kirkman?s The Walking Dead Agreement Requires AMC
Network To Pay Actual License Fees To AMCFH in Connection With AMC
Network?s Exhibition of The Walking Dead?

The decision on Issue #2 is dispositive of Issue Issue #1 asks whether Kirkman?s
2009 The Walking Dead Agreement required AMC Network to pay an ?actual license fee? to its
wholly?owned subsidiary, AMCFH, for the right to exhibit The Walking Dead on the AMC
channel. binding and operative MAGR de?nition answers this question. That
de?nition explains that the amount of money put into the MAGR pot from AMC Network?s
broadcast of the show on its own channel is an ?imputed license fee,? which is set at a particular
amount of the show?s production costs. Because that de?nition is binding, as decided in Issue
the ?imputed license fee? that is part of the definition is binding as well. Therefore, AMC
Network was not required to pay an ?actual license fee? to exhibit The Walking Dead; rather, an
imputed license fee is the requirement set forth in the MAGR de?nition.
I I
I

22
STATEMENT OF DECISION

 

 

 

43mm



AMC Network?s Broadcast Of The Walking Dead On Its Own Channel Is
Controlled By The MAGR De?nition, Which Prescribes An Imputed License
Fee.

?Modi?ed adjusted gross receipts" or is a creature of contract and is calculated
however the parties agree to calculate it. See 2/10/20 Trial Tr. 4 :25-42:7 (Ziffren) (Plaintiffs?
expert agrees that pro?t participants and networks negotiate ?to address what goes into
M.A.G.R. and what comes out of Here, the parties agreed that shall be
de?ned? by MAGR de?nition, excepting only those MAGR terms speci?cally set forth
in the contracts. See Issue supra. If a particular MAGR term is not speci?cally agreed to
in the parties? contracts, then that term is governed solely by MAGR de?nition. See
Ex. I (Kirkman The Walking Dead Agreement) Ex. 4 {Alpert The Walking Dead
Agreement) 4(d)(ii) (emphasis added); Ex. 3 (Hurd The Walking Dead Agreement} 

Here, Kirkman?s The Walking Dead Agreement does not address how the ?gross
receipts? derived from AMC Network?s broadcast on its channel will be calculated? leaving that
element of MAGR to MAGR de?nition. The contract does not say that the ?receipts?
from broadcast will be calculated using an ?actual? license fee, an ?imputed? license fee,
or anything else. See Ex. 1 (Kirkman The Walking Dead Agreement) 1 1(b) (specifying that
shall include? home video revenue, but not including any speci?c term addressing gross
receipts derived from broadcast). In fact, the contract does not specify whether MAGR
will include any receipts from AMC Network?s broadcast of the show on its channel. See id.
Therefore, MAGR de?nition controls how gross receipts derived from broadcast
of the show shall be calculated. And MAGR de?nition expressly provides that the
?Gross Receipts? derived from broadcast over its own ?programming services? the
AMC channel} will be calculated using an ?Imputed License Fee.? Ex. 9 at 6 (emphasis in
original}; id. (?As the license fee payable for the right to broadcast the Program by means of
Non-Standard Television in the Territory in perpetuity over any programming services of AMC
or an AMC Af?liate, AMC shall be deemed to have received an amount (the ?Imputed License

Fee?} equal to [the following formula] . . . Thus, an imputed license fee governs the

23
STATEMENT OF DECISION

 

 






 

 

computation of MAGR derived from AMC Network?s broadcast on its own channel.

Kirkman argues that the final sentence of Section I states ?No network sales
fee shall be charged regarding initial license fee??demonstrates that AMC must use an
actual license fee to account for MAGR receipts derived from its broadcast of the show on its
own channel. Kirkman is wrong. This sentence, by its plain terms, simply prohibits AMC
Network from deducting a line item known as a ?network sales fee? from any receipts that are
attributable to the ?initial license fee? for the show. Ex. I {Kirkman The Walking Dead
Agreement) see also 1/20 Trial Tr. 179:9-12 (Rosenbaum) (Kirkman?s counsel
agrees that the ?nal sentence of Section I l(b) ?prevents A.M.C. from taking a distribution fee on
the initial domestic exhibition of [The Walking Sabin Decl. 58 {explaining that the
?nal sentence of Section 1 l(b) is ?a very common MAGR term that has nothing to do with
mandating any particular kind of license fee and everything to do with preventing one speci?c
charge from going on the expense side of the MAGR calculation?). Plaintiffs argue this
sentence should be read as if it states that must use an actual license fee to account for
MAGR derived from its broadcast of the show on its own channel,? but there is nothing even
approaching that language in this sentence. Further, the words ?actual license fee? do not
appear anywhere in the contract. See Ex. 1 (Kirkman The Walking Dead Agreement) 1 
see also Arar Dec]. 34 (?The sole purpose of the ?nal sentence of Section[l was to
exclude one particular charge?the ?network sales fee??from the MAGR pot, whether that
charge was on an ?actual license fee? or on an imputed license fee. . . . I did not intend for the
?nal sentence of Section [1 to prescribe any particular type of license fee that must be used
to calculate Plaintiffs? argument that it should rewrite the provision to include an
unstated ?actual license fee? obligation cannot be accepted. E. Vt. Teddy Bear, 1 at
475 should be extremely reluctant to interpret an agreement as impliedly stating
something which the parties have neglected to speci?cally include?).

Kirkman agreed that shall be de?ned, computed, accounted for and paid in

accordance with? MAGR definition, provided that AMC adjusted that de?nition to

24
STATEMENT OF DECISION

 

 



 

 

account for the handful of speci?c MAGR terms Kirkman bargained for. Ex. I (Kirkman The
Walking Dead Agreement) 1 1(b) (emphasis added). The method of calculating the gross
receipts derived from broadcast of the show on its own channel is not one of those
bargained?for terms. And because standard de?nition provides that the gross receipts
derived from broadcast of its show on its channel are computed using an ?Imputed
License Fee,? that imputed fee controls- not some other, ?actual? fee that is not mentioned
anywhere in the contract or MAGR de?nition.

There is no need to resolve what, exactly, an ?initial license fee? refers to or whether a
?network sales fee? can be charged against an ?actual? license fee or an ?imputed? fee. The
only relevant issue is whether the single sentence of the contract prohibiting the charge of a
?network sales fee? against an ?initial license fee? also creates an obligation to pay an ?actual
license fee? for broadcast of the show on its own channel. As explained, the plain
language of this provision which does not mention ?actual? or ?imputed? fees?does not
include any such obligation. Both interrogatory responses and its witnesses are
consistent on this dispositive point. See Ex. 80 at 34-35 (?Section I l(b) of Kirkman?s TWD
Agreement neither contains the phrase ?actual license fees? or any language re?ecting any
?promise? that AMC Network would pay ?actual license Arar Decl. 8(a) is
nothing in the agreement that says an actual license fee is required, and it would make no sense
for the agreement to do 

2. The Parties Intended That An Imputed License Fee Would Be Used.

Even if Issue #2 was decided in Plaintiffs? favor, Defendants still prevail on Issue 
Without MAGR de?nition, the The Walking Dead Agreement is silent about the type of
license fee that may be used to calculate MAGR. The law is clear, however, that ?silence does
not equate to contractual ambiguity.? Greenfield, 98 at 573. Instead, the entire
agreement must be considered ?as a whole to determine its purpose and intent,? and, in light of
its intent, the contract is ?susceptible to only one reasonable interpretation? with regard to the use

of an imputed license fee. Id. at 572 (intent to grant broad ownership rights in music to

25
STATEMENT OF DECISION

 

 

 

 

producer demonstrated that producer had rights to use artist?s works in ways not explicitly
allowed in the contract). Considering Kirkman?s The Walking Dead Agreement as a whole, the
only reasonable interpretation of the agreement is that it allows for MAGR to be computed using
an imputed license fee?because, among other things, at the time of contracting the parties did
not know if there would ever be an ?actual? license fee paid in connection with the initial
exhibition of the show on channel.

Kirkman granted AMC Network both the production and exhibition rights in The
Walking Dead, meaning that AMC Network could, simply by exercising its contract rights,
produce and broadcast the show on its channel. Ex. 1 (Kirkman The Walking Dead Agreement)
Sch. 1, 3 (granting AMC Network exclusive production rights??the exclusive right to make
the Production(s) based on [The Walking Dead]??and distribution rights??to transmit,
reproduce, distribute, exhibit, advertise and exploit such Productions in any manner by any
means?). As Kirkman?s counsel admitted on cross?examination, the network . . .
obtained all the rights it needed from Mr. Kirkman to produce ?The Walking Dead,? to distribute
?The Walking Dead,? and to exhibit ?The Walking Dead? on its channel.? 2/1 1/20 Trial Tr.
162:22 28 (Rosenbaum). In such a situation, there would be no ?actual license fee? paid in
connection with the show?s initial broadcast because there would be no ?license? at all?AMC
Network would be the producer and the distributor, and would not need to pay itself to exhibit its
own show on its channel. Kirkman?s counsel tellingly concluded ?ifthe rights [to The Walking
Dead] were kept at the Network level, it would be absurd for the Network to pay a
license to itself.? 2/13/20 Trial Tr. 21:10?12 (Rosenbaum).

Kirkman?s sophisticated counsel assuredly wanted the pot of money from which their
client was to be paid (MAGR), to include some value attributed to the initial broadcast ofthe
show (here, AMC Network?s broadcast on its channel). But they also understood that if AMC
Network exercised its own right to produce and broadcast The Walking Dead, there would be no
?actual? license fee paid?because AMC Network would not pay a license fee to itself, and

certainly not for the broadcast rights it already owned. 2/13/20 Trial Tr. 21: 10?12

26
STATEMENT OF 

 

 

 

 

 

(Rosenbaum); see also 3/9/20 Trial Tr. 95: 14-22 (Sabin) (?the only way? to give Kirkman ?some
in?ow of revenue by virtue ofthe broadcast of the show on A.M.C. . . . would have been through
an imputed license?}. In that situation, restricting the MAGR attributable to the initial
broadcast to a portion of an ?actual license fee? would leave Kirkman with nothing?because
there would be no ?actual? license fee at all. It would be absurd to suggest that Kirkman and
his counsel would have agreed tn?and indeed insisted on??-an ?actual license fee? arrangement
that would have prevented Kirkman from receiving any value if AMC Network simply exercised
the rights granted to it via Kirkman?s The Walking Dead Agreement. See, e. Upper, 1
at 171 contract should not be interpreted to produce a result that is absurd,
commercially unreasonable, or contrary to the reasonable expectations of the parties?); Reape v.
N. Y. News, Inc, 122 29, 30 t2d Dep?t I986) a particular interpretation would
lead to an absurd result, the courts can reject such a construction in favor of one which would
better accord with the reasonable expectations of the parties?). In fact, Kirkman and his
counsel did not specify how the MAGR attributable to the initial broadcast would be calculated
at all and simply left that term to AMC. See Ex. 1 (Kirkman The Walking Dead Agreement)
1 see also 2/1 1/20 Trial Tr. 181:18-18224, 184: 1-5 (Rosenbaum) (Kirkman?s counsel
acknowledges that Kirkman?s contract does not mention an ?actual license fee? or an ?imputed
license fee?).

Departing from the text of the agreement, Plaintiffs argue that under the custom in the
television industry, a pro?t participant (like Kirkman) would never agree to an imputed license
fee without seeing the speci?c terms of the fee ?rst. Thus, they argue, because no MAGR
definition (and no imputed license fee) was presented to Kirkman by the time he signed his
contract, the parties impliedly agreed no imputed license fee would be used.

Although a court may generally refer to industry practice to provide context to the
Agreement?s written terms, it cannot consider this purported industry practice, because it varies
from the terms of the Agreement itself. The law is clear that ?evidence of industry practice may

not be used to vary the terms of a contract that clearly sets forth the rights and obligations of the

27
STATEMENT OF DECISION

 

 

 



parties.? Croce, 737 F.2d at 238 (Citing In re W. Union Tel. C0., 299 NY. 177, 184-85 (1949);
Cab/e-Wiedemer, Inc. v. Friederich Sons C0., 336 139, I41 (Monroe Cty. Ct.
1972)); see id. (rejecting argument that ?industry custom? could change the express terms of a
songwriting royalty provision). Here, the terms of Kirkman?s The Walking Dead Agreement
make clear that AMC Network had full rights to broadcast the show without ever paying an
?actual license fee.? Instead, the parties agreed that the producer?s ?standard de?nition? would
control the fee, knowing that this could result in revenue for the initial broadcast being
recognized in any manner of ways?including through an imputed license fee. Kirkman may
now wish that his counsel had negotiated the MAGR provision differently, but a court cannot
now imply a requirement for an ?actual license fee? that the parties did not negotiate or specify.
See, e. Vt. Teddy Bear, I at 475 should be extremely reluctant to interpret
an agreement as impliedly stating something which the parties have neglected to speci?cally
include?).

Further, the other The Walking Dead Agreements in this case disprove Plaintiffs?
contention that a pro?t participant always reviews and approves the terms of an imputed fee
before agreeing to it. Both Alpert?s and Hurd?s The Walking Dead Agreements expressly state
that an ?imputed license fee? will be used to calculate MAGR if AMC Network produces the
show, Ex. 4 (Alpert The Walking Dead Agreement) Ex. 3 (Hurd The Walking Dead
Agreement) even though neither Hurd nor Alpert were presented with the terms of the
imputed license fee before they signed their contracts. Thus, contrary to Plaintiffs? argument,
two other pro?t participants in this case, including Kirkman?s manager, agreed to an imputed
license fee without knowing its terms.

Other witnesses provided further support. See 3/10/20 Trial Tr. 46:5-18 {Stein} {testifying
that Section 4(d)(ii) of Hurd?s The Walking Dead Agreement is drafted to incorporate the terms
of the imputed license fee that would be used in the MAGR de?nition, and indicates that Hurd
?agree[d] to those terms, sight unseen?); 2/19/20 Trial Tr. 58:9?19 (Wiseman) (explaining that

the terms of an imputed license fee are ?often not articulated in the body of [an] agreement,? and

28
STATEMENT OF DECISION

 

 



instead are ?often articulated in other documents?).

Although the plain language of the contract forecloses Plaintiffs? argument, the testimony
of Defendants? expert, Edward Sabin, is persuasive that talent representatives universally expect
that a network rights holder?like AMC Network here?will use an imputed license fee to
calculate MAGR derived from the network?s own exhibition ofthe show. See Sabin Decl. 70.
Sabin explained that a network will not pay itself a fee to exhibit a series it already owns, and
pro?t participants thus understand that when they contract with a network, they will earn no
revenue from the initial exhibition of a show on the network?s channel unless there is an imputed
license fee. See id. 68. Sabin?s extensive experience at Fox Television Studios and 
con?rmed this standard industry practice. See 3/9/20 Trial Tr. 86:3-21 (Sabin); see also id. at
17?: 17-128: 16. It is not credible Kirkman?s sophisticated representatives did not expect an
imputed license fee would be used to calculate the MAGR derived from AMC Network?s
broadcast ofthe show on its own channel. See 3/9/20 Trial Tr. 106:15 107:3 (Sabin); contra
2/1 1/20 Trial Tr. 172:6?17 (Rosenbaum) (Kirkman?s counsel suggests she did not think AMC
Network would use an imputed license fee).

MAGR de?nition and its imputed license fee are binding, see Issue but even
ifthat de?nition were not binding, nothing in the parties? agreements precludes or prescribes a
particular type of license fee when calculating the gross receipts attributable to broadcast
of the show on its own channel. See Arar Decl. 34; Sabin Decl. 58-61. That

broadcast can be accounted for using an ?imputed? license fee.

3. The Parties? Course Of Performance Confirms That Kirkman?s The Walking
Dead Agreement Did Not Require Payment Of An ?Actual? License Fee.

Given that Kirkman?s The Walking Dead Agreement unambiguously allows the use of an
imputed license fee, the review of extrinsic evidence is unnecessary. But even if such evidence
is considered, the same conclusion is reached.

Prior to ?ling this lawsuit in 2017, Kirkman never objected to the use of an imputed
license fee. His counsel admitted on cross-examination that ?[t]here is not a single letter or a

single e-mail or a single piece of paper from either of [Kirkman?s attorneys] on behalf of Mr.

29
STATEMENT OF DECISION

 

 



Kirkman objecting to use of an imputed license fee between 201 1 when [Kirkman]
received the de?nition and 2017 when [Kirkman] ?led this litigation.? 2/1 1/20 Trial Tr. 170:9-
22 (Rosenbaum); see also id. at 155:5-13 (Kirkman?s counsel admits that between March 201 
and May 2014, she ?never contacted anyone at A.M.C. and said, we don?t agree to the use of an
imputed license fee, just so you know Kirkman and his counsel stayed silent, despite
receiving MAGR de?nition in 2011, which explicitly included an ?Imputed License
Fee? (Ex. 9 at 6 {emphasis in originall), a $500,000 advance to be recouped based on that
MAGR de?nition containing an ?Imputed License Fee,? (Ex. 2100 {emphasis in original?, and
multiple pro?t participation statements based on that imputed fee. See 2/ [/20 Trial Tr.
155: 14?26 (Rosenbaum) (Kirkman?s counsel admits she stayed silent while ?[k]nowing that
A.M.C. was accounting, all the while, to [her] client on the basis of an imputed license fee?).
This demonstrates that Kirkman always understood his The Walking Dead Agreement allowed
for an imputed license fee, until his position changed in the complaint ?led in this lawsuit}
Kirkman?s failure to object for more than six years to the imputed license fee in the
MAGR de?nition is dispositive. After March 201 1, when Kirkman received MAGR
de?nition with its ?Imputed License Fee? identi?ed in bold text, Kirkman repeatedly signed
amendments in which he ?rati?ed and confirmed? his The Walking Dead Agreement?including
its contingent compensation provisions. See Exs. 2019, 64. He signed two Fear the Walking
Dead Agreements stating that MAGR would be based on ?[t]he de?nition of MAGR applicable
to [Kirkman?s] contingent compensation on [The Walking Dead],? and that this The Walking
Dead de?nition ?shall specify an imputed license fee.? Ex. 171 at 5, 19?20 (emphasis added).
Even more telling, in December 2012 he received a $500,000 MAGR advance from AMC,
accompanied by a letter stating that the ?advance will be recouped in accordance with the MAGR
definition previously provided.? Ex. 2100 at 2 (emphasis added). Kirkman?s acceptance of
pro?t statements and even a MAGR payment that was expressly subject to MAGR

de?nition, including its imputed license fee, is strong evidence that he understood the de?nition

 

1

The Court limits its analysis to Kirkman?s conduct, given that there is no dispute that Hurd?s and
Alpert?s The Walking Dead Agreements expressly allow for an imputed license fee.

 

STATEMENT OF DECISION

 



appropriate. See Jobim v. Songs of Universal, Inc, 732 F. Supp. 2d 407, 416
(S.D.N.Y. 2010) (?Universal?s royalty statements have always utilized a ?net receipts?
arrangement [that Plaintiffs later challenged in litigation]. Plaintiffs, represented by
sophisticated counsel and accounting advisors, failed to object to this calculation?) (applying
New York law); Record Club, 1991 WL 73838, at *1 1 (acceptance of one year of royalty
payments and failure to object to ?four quarterly statements? demonstrated acquiescence in other
party?s interpretation). And Kirkman persistently failed to object to MAGR de?nition
and its imputed license fee?despite having numerous opportunities to do so, including when he
was asked to ratify that The Walking Dead Agreement?s terms were in full force and effect?and
he ?offers no explanation for [his] actions, which further supports Disney, 2016 WL
7174650, at *6 (failure to explain acquiescence in opposing party?s interpretation of contract is
further evidence that opposing party?s interpretation is correct}.

?The parties? interpretation of the contract in practice, prior to litigation, is compelling
evidence ofthe parties? intent,? and here, prior to litigation, Kirkman did not interpret his
contract as barring the use of an imputed license fee. Aircraft Servs. Resales LLC v. Oceanic
Capital C0., 2013 WL 4400453, at *3 (S.D.N.Y. Aug. 14, 2013), aff?d, 586 F. App?x 761 (2d
Cir. 2014) (quoting Ocean Transp. Line, Inc. v. Am. Philippine Fiber Indus, Inc, 743 F.2d 85,
91 (2d Cir. 1984)) (applying New York law); 1/20 Trial Tr. 170:14-26 (Rosenbaum)
is not a single letter or a single e?mail or a single piece of paper from either
[Rosenbaum or Rosenman] on behalfof Mr. Kirkman objecting to use of an imputed
license fee between 201 1 when [she] received the de?nition and 2017 when [Plaintiffs] ?led this
litigation?).

Although the Court concludes that Kirkman?s The Walking Dead Agreement always
permitted the use of an imputed license fee, even if the Agreement had not allowed an imputed
license fee at contract formation, the course of performance described here would be suf?cient to
effectuate an amendment. New York courts ?acknowledge that ?any written agreement, even

one which provides that it cannot be modi?ed except by a writing signed by the parties, can be

3 1
STATEMENT OF DECISION

 

 





effectively modi?ed by a course of actual performance.? Gala House Mezz LLC v. State Sr.
Bank Tr. Can, 720 F.3d 84, 90-91 (2d Cir. 2013) (quoting Rosen Tr. v. Rosen, 53 342,

352 (4th Dep?t. 1976)).

C. Issue Whether Kirkman?s Fear The Walking Dead Agreements Clari?ed And/Or
Con?rmed That The MAGR Definition Applicable To Kirkman?s The Walking
Dead Agreement Contains An Imputed License Fee?

The third issue to resolve is whether Kirkman?s Fear the Walking Dead Agreements
confirmed that the MAGR de?nition applicable to his contingent compensation on The Walking
Dead contains an imputed license fee. MAGR de?nition?which included an imputed
license fee?controlled Kirkman?s MAGR calculations under his The Walking Dead Agreement
(see issue Because the unambiguous language of Kirkrnan?s contract makes clear that
MAGR de?nition applies, including its implied license fee, there is no need to consider
extrinsic evidence?including Kirkman?s later Fear the Walking Dead Agreements.

Nevertheless, whether or not MAGR de?nition and imputed license fee controlled,
one must conclude that Kirkman?s Fear the Walking Dead Agreements offer relevant course of
performance evidence confirming that, pursuant to Kirkman?s The Walking Dead Agreement,
MAGR for The Walking Dead is calculated using an imputed license fee.

When evaluating the parties? course of performance under Kirkman?s The Walking Dead
Agreement, other agreements that the parties entered into may be considered to provide evidence
that Kirkman was acquiescing in interpretation of the original The Walking Dead
Agreement. Cont?l Cas. Co. v. Rapid-Am. Corp, 80 640, 651 (1993) (course of
performance, also known as ?practical construction," is evidence demonstrating that a party
engaged in conduct ?expressly or inferentially? demonstrating its view of the ?doubtful provision,?
accompanied by ?knowledge thereof and acquiescence therein, express or implied, by the other
see also In re 4K1?ds Enrm Inc, 463 BR. 610, 697-98 (Bankr. S.D.N.Y. 201 1) (course
of performance evidence in interpreting 2001 license agreement included evaluating use of the
same disputed term in a subsequent 2008 agreement; party ?cannot be faulted for relying on the
course of conduct that had developed since the inception of the 2001 Agreement and on contractual

32 
STATEMENT OF DECISION

 

Lia-3N



 

 

language that was adopted verbatim in the 2008 Agreement?).

The text of Kirkman?s two Fear the Walking Dead Agreements demonstrates that he and
his counsel understood and agreed?not once, but twice?with view that Kirkman?s The
Walking Dead Agreement allowed for an imputed license fee. Both of Kirkman?s Fear the
Walking Dead Agreements provide that ?[t]he de?nition of MAGR applicable to [Kirkman?s] -
contingent compensation on [The Walking Dead] will also apply to [Kirkman?s] Contingent
Compensation on [Fear the Walking Dead], which de?nition shall specify an imputed license fee
in connection with license and rights to exhibit the Series on AMC. . . Ex. 17]
(Kirkman Fear the Walking Dead Agreements) at 5 (emphasis added). The contracts thus plainly
state that ?[t]he de?nition of MAGR applicable to . . . [The Walking Dead]? includes an ?imputed
license fee.? Id. This was a reference to the MAGR de?nition that AMC sent to Kirkman?s
representatives two years prior to the Fear the Walking Dead negotiations, which included an
imputed license fee. Ex. 9 at 6. Kirkman?s counsel were thus well aware that AMC understood
the imputed license fee in its MAGR de?nition to apply to the MAGR calculation for The Walking
Dead, and made no attempt to draw any distinction between the type of license fee allowed on The
Walking Dead and Fear the Walking Dead at the time Kirkman was negotiating his Fear the
Walking Dead Agreements. 2/11/20 Trial Tr. 148:14?15 (Rosenbaum) (Kirkman?s counsel
understood by the time that she received MAGR de?nition in March 2011 that it was
?position that there would be an imputed license fee?); id. at 155:14-26 (Kirkman?s
counsel did not object for years after 20] 1, despite ?knowing that A.M.C. was accounting, all the
while, to [her] client on the basis of an imputed license fee?).

Plaintiffs incorrectly argue that the statement that the ?de?nition shall specify an imputed
license fee? demonstrates that the de?nition for The Walking Dead did not already include such a
fee. The Fear the Walking Dead Agreements? use of forward?looking language (such as that the
?de?nition of MAGR applicable to. . . [The Walking Dead] will also apply? and that the ?de?nition
shall specify an imputed license fee?) is merely a linguistic device intended to convey that the

parties ?will? and ?shall? be bound from the date of execution of the Fear the Walking Dead

33
STATEMENT OF DECISION

 

 

 





Agreements they do not demonstrate that the ?de?nition of that the Fear the Walking
Dead Agreements refer to did not already exist. Moreover, to the extent Plaintiffs argue in Issue
#1 that no imputed license fee could ever be used in calculating MAGR under Kirkman?s The
Walking Dead Agreement, even a forward-looking provision conclusively rebuts that claim.

Kirkman?s counsel made clear that they believed there already was a binding MAGR
de?nition for The Walking Dead, and af?rmatively demanded that this de?nition apply to Fear
the Walking Dead. The evidence shows that Kirkman?s representatives were adamant during
negotiations that their client?s MAGR de?nition for Fear the Walking Dead should be the same as
his MAGR de?nition for The Walking Dead. Ex. 11 at 2; see also Ex. IO at 3 (Kirkman?s
representative insisting that MAGR terms for Fear the Walking Dead should be no ?less favorable?
than MAGR terms for The Walking Dead). Kirkman?s counsel would not insist that his Fear the
Walking Dead agreement use a MAGR de?nition for The Walking Dead unless they understood
that de?nition was already extant and in force.

Kirkman?s counsel agreed, without complaint, that the MAGR de?nition ?applicable to?
both The Walking Dead and Fear the Walking Dead included ?an imputed license fee,?
demonstrating that the MAGR calculation for The Walking Dead was, in fact, governed by the use
of such an imputed fee. If Kirkman and his representatives truly believed that Kirkman?s The
Walking Dead Agreement did not permit an imputed license fee, they would have made clear in
the ?Contingent Compensation? sections of Kirkman?s Fear the Walking Dead Agreements that
an imputed license fee could not be used for The Walking Dead. Scholastic, 1999 WL 1277246,
at easiest way for a party to make clear an intention not to be bound is to say 
(quoting Farnsworth on Contracts 3.7 (2d ed. 1998)). Instead, they agreed to contract language
stating that the MAGR de?nition applicable to both The Walking Dead and Fear the Walking Dead
included an imputed license fee.
I I 

ll 


34
STATEMENT OF DECISION

 

 

 



Issue Issues Pertaining To Section 24 Of Kirkman?s The Walking Dead
Agreement And Section 4(d)(ii) Of Alpert?s The Walking Dead Agreement (The
?Affiliate Transaction Provision(s)? Or 

1. Sub-Issue Whether The ATPs Apply To AMC Network?s Exhibition Of
The Walking Dead On The AMC Channel?

The parties dispute whether Section 24 of Kirkman?s The Walking Dead agreement,
referred to as the governs the calculation of MAGR for AMC Network?s exhibition of
The Walking Dead on its own channel.4 It does not.

The ATP (Af?liate Transaction Provision) provides, in relevant part, that 
transactions with Af?liated Companies will be on monetary terms comparable with the terms on
which AMC enters into similar transactions with unrelated third party distributors for
comparable programs after arms length negotiation.? Ex. I (Kirkman The Walking Dead
Agreement) 24 (?Dealings with Affiliates?).

Plaintiffs argue that the ATP controls the calculation of MAGR derived from AMC
Network?s broadcast of The Walking Dead on its own channel. This result, Plaintiffs argue, is a
consequence of AMC Network?s transfer of its right to broadcast the show to its wholly?owned
subsidiary, AMCFH. According to Plaintiffs, because AMCFH now holds the exhibition rights
for The Walking Dead, AMC Network must ?license? those rights back from ACMFH in order to
broadcast the show on AMC Network?s channel. Plaintiffs argue that this purported ?license?
constitutes a ?transaction? with an affiliated company under the ATP. Therefore, Plaintiffs
contend, the ATP requires AMC Network to pay a broadcast license fee to that
complies with the ATP?and this license fee must be used to calculate the MAGR derived from
AMC Network?s broadcast of the show on its channel.

Defendants respond that the ATP cannot supersede the binding imputed license fee that
governs the MAGR derived from AMC Network?s telecast of the show on the AMC channel.

Defendants contend that Plaintiffs and their sophisticated counsel negotiated extensively with

 

4 Alpert?s The Walking Dead agreement also contains an ATP, which is worded similarly to the ATP

in Kirkman?s contract. See Ex. 4 (Alpert The Walking Dead Agreement) None of the parties have
argued that there is any meaningful distinction between Kirkman?s ATP and Alpert?s ATP. The interpretation of
Kirkman?s ATP controls Alpert?s ATP as well.
35
STATEMENT OF DECISION

 





AMC regarding how their contingent compensation would be calculated and paid, securing
certain speci?c MAGR terms and protections and giving AMC the right to de?ne the remainder
of the MAGR terms. This agreement was memorialized in the ?Contingent Compensation?
section of Kirkman?s contract 1 l) and the ?Contingent Participation? section of the other
Plaintiffs? agreements 4), which state that AMC ?shall? have the authority to de?ne MAGR.
AMC exercised its right to de?ne MAGR by, among other things, using an ?imputed license fee?
in MAGR de?nition to calculate the MAGR derived from AMC Network?s broadcast of
the show on its channel. Therefore, Defendants argue, this imputed license fee is a binding
term of the MAGR de?nition and constitutes the parties? agreement. The ATP, by contrast,
applies to self-dealing transactions among AMC af?liates that Plaintiffs do not have a seat at the
table to negotiate. Unlike a self?dealing transaction where the Plaintiffs do not have any ability
to negotiate, the imputed license fee here was the result of an arm?s-length transaction between
s0phisticated parties?Plaintiffs and AMC. Plaintiffs heavily negotiated their contingent
compensation terms, and ultimately agreed that MAGR ?shall? be de?ned by MAGR
de?nition?including any imputed license fee in that de?nition.

Thus, the imputed license fee governs the calculation of MAGR derived from AMC
Network?s broadcast, and that imputed license fee is a term of the parties? agreements that cannot

be overridden by the ATP.

a. The Imputed License Fee Governs AMC Network?s Exhibition Of
The Show On The AMC Channel.

Pursuant to the parties? agreements, the imputed license fee, not the ATP, governs the
calculation of MAGR for AMC Network?s exhibition of the show on the AMC channel.

As decided in Issue Section 1 l(b) of Kirkman?s The Walking Dead Agreement
expressly states that MAGR de?nition ?shall? control the calculation of MAGR,
provided that the de?nition is consistent with speci?c MAGR terms agreed to in that section.
Id. 1 supra. The ?Contingent Compensation" sections of all three Plaintiffs?
The Walking Dead agreements include speci?c negotiated MAGR protections, which were

summarized at trial in Demonstrative Exhibit 2168. Ex. 1 (Kirkman The Walking Dead

36
STATEMENT OF DECISION

 

 



Agreement) 1 Ex. 4 (Alpert The Walking Dead Agreement} Ex. 3 (Hurd The
Walking Dead Agreement) The agreements make clear that, aside from these
specific protections, the balance of the MAGR terms were left to AMC, which ?shall? have the
right to de?ne MAGR in accordance with standard MAGR de?nition. See id.

1 standard MAGR de?nition, which Kirkman and the other Plaintiffs received in
201 1, states that an ?Imputed License Fee? would be used to calculate and pay contingent
compensation for exhibition of the show on channel, and provides the detailed formula
for calculating that imputed license fee. Ex. 9 at 6 (emphasis in original?. Thus,
per the express terms of Section 1 l(b) of Kirkman?s The Walking Dead Agreement, the imputed
license fee in MAGR de?nition determines the amount of MAGR resulting from AMC
Network?s exhibition of the show on the AMC channel.

The imputed license fee governs AMC Network?s broadcast of the show; the ATP does
not. As Plaintiffs? expert conceded, the ATP does not override or supersede any other term of
Kirkman?s contract?it is meant to govern ?transactions? between AMC and its af?liates when
the pro?t participant has no seat at the table to negotiate the transaction and cannot shape its
terms. See Ex. 1 (Kirkman The Walking Dead Agreement) 24; see also 2/ 10/20 Trial Tr.

107: 15-2] (Ziffren) (the comes into play? to ensure ?that pro?t participants are not
deprived [of] the ability to participate in the pro?ts of a deal they have no ability to shape?); id.
at [03:10-19 (?the ATP. sets a benchmark for the transaction because talent doesn?t have a seat
at the table and they don?t want to be deprived of the ability to participate in pro?ts to a deal to
which they have no ability to The imputed license fee here is not the result of any
?transaction? between af?liated companies?it is a binding term in the MAGR de?nition, and
thus a binding term in Kirkman?s contract, which incorporates that MAGR definition(Kirkman The Walking Dead Agreement) 1 Jones v. Canard
5.5. Ca, 238 AD. 172, 173 (2d Dep?t 1933) (an incorporated document is ?made a part of the

 

5 For example, if AMC later gave away its international broadcasting rights for free to an af?liate, the
pro?t participants could not control that ?transaction??and would need the protection. Sabin Decl. 
2! 10l20 Trial Tr. 107:7-2] (Ziffren).
37
STATEMENT OF DECISION

 

htinstrument as if incorporated into the body of Because the imputed license fee is a binding
term of Kirkman?s contract, the ATP does not apply to it or negate it.

Plaintiffs carefully negotiated the aspects of MAGR that they deemed important before
signing their agreements, which further supports the conclusion that the ATP does not apply to
MAGR terms like the imputed license fee. As with any other contractual term, Kirkman was
free to negotiate how the MAGR derived from broadcast would be calculated before he
signed his contract?and he did, in fact, take advantage of the opportunity to negotiate the
contingent compensation terms that were important to him. See, (3.3., 2/1 1/20 Trial Tr. 132: 14-
17 {Rosenbaum} (Kirkman?s counsel negotiated the contingent compensations provisions ?that
were important to [her] client?). He secured certain material MAGR terms such as the
inclusion of ?home video/DVD and merchandising? revenue in MAGR as well as an MFN.
Ex. I {Kirkman The Walking Dead Agreement) 1 If Kirkman wanted to further negotiate
how MAGR derived from AMC Network?s broadcast on its own channel would be calculated, he
could have done so. See 2/ lO/20 Trial Tr. l06:15?20 (Ziffren) Now, when a is
negotiating, in this case, with A.M.C. Network, as Mr. Kirkman did, as we established, there?s an
ability to negotiate a whole range of contract terms, including compensation terms; correct? A.
Absolutely?). He chose not to, secure in the knowledge that he had obtained the MAGR terms
that were most important to him in Section I 1 and had an MFN that would provide him with the
most favorable MAGR de?nition available to any pro?t participant. Kirkman agreed to be
bound by the terms of MAGR de?nition, and any imputed license fee it might include.

Kirkman?s own transactional counsel agreed with Defendants that where, as here, a
contract includes a binding imputed license fee that is used to calculate the MAGR derived from
a broadcast, that imputed license fee?and not an ATP?controls the calculation of contingent
compensation for that broadcast. At trial, Kirkman?s counsel admitted that if a contract
includes a binding, ?agreed? upon imputed license fee, that imputed license fee ?would nor have
been governed by the 2/13/20 Trial Tr. 159: 19?160:2 (Rosenman) (emphasis added); id.

at l55:19-26 (deposition testimony, read into the record, that ?[the imputed license] fee

38
STATEMENT OF DECISION

 

 

43ka



addresses what it addresses . . . . But anything that?s not covered by that would be covered by the
(emphasis added)); id. at 156:5-7 (deposition testimony that for what?s covered . .
. in this part of the provision. A.T.P. for everything 

Witnesses? understandings of the meaning of contractual provisions are not relied on to
inte1p1'et the contract. See Greenfield, 98 at 569 (unambiguous contract ?must be
enforced according to the plain meaning of its terms?). Nevertheless, the fact that Plaintiffs?
transactional counsel understood the contract to Operate in a manner that is contrary to Plaintiffs?
position in this litigation further con?rms the ?nding that the ATP does not apply here.

Therefore, the parties negotiated how contingent compensation would be calculated,
agreed that Kirkman would receive various MAGR terms and protections and AMC would
receive the right to de?ne the remainder of MAGR in its MAGR de?nition, agreed that the
binding MAGR de?nition?s imputed license fee determines the amount of MAGR derived from
the broadcast on channel, and agreed that this imputed license fee cannot be superseded

or overridden by the ATP.

b. The Transfer Of Rights From AMC Network To AMCFH Does Not
Trigger Application Of The ATP And Override The Imputed License
Fee.

The imputed license fee is a binding term of Kirkman?s agreement that governs how
much MAGR is derived from AMC Network?s broadcast of the show on its own channel.
Nevertheless, Plaintiffs argue that this binding term should be ignored, because, according to
them, Kirkman and AMC Network agreed the ATP, and not an imputed license fee, would be
used to calculate the MAGR derived from AMC Network?s broadcast of the show. Plaintiffs
argue Kirkman and AMC Network expected and impliedly agreed that AMC Network would
transfer its broadcast rights to an af?liate and then ?license? back those rights to AMC Network.
The parties planned on this transfer occurring, Plaintiffs contend, so the ATP would be
triggered?and the MAGR derived from AMC Network?s broadcast would be a ?license fee?

paid from AMC Network to AMCFH in compliance with the ATP standard.

39
STATEMENT OF DECISION

 

 

 





This argument fails because, as already decided, the imputed license fee is the contractual
term that controls the calculation of MAGR from broadcast on its channel. Further, the
argument fails on its own terms for the following reasons.

(1) The Contract Does Not Require That AMC Network Transfer Its Rights And
License Them Back. Contrary to Plaintiffs? argument, nothing in Kirkman?s The Walking
Dead Agreement demonstrates the parties intended for AMC Network to transfer its own
broadcast rights to an af?liate (and later license them back} to trigger the ATP. Rather, at the
time of contracting, the parties agreed AMC Network had the right to broadcast the show on its
channel without entering into any further transaction with its af?liates or anyone else. See
Evans, 1 at 458 (court must ?ascertain the intention of the parties at the time they entered
into the contract?). AMC Network did not need any other rights in order to broadcast The
Walking Dead on its channel.

When AMC and Kirkman contracted in 2009, Kirkman granted to AMC nearly unlimited
rights to produce, broadcast, and distribute the show. See Ex. I (Kirkman The Walking Dead
Agreement) Schedule I As both of Kirkman?s transactional counsel admitted at trial,
AMC Network acquired all the rights it needed to exhibit the show on its own channel and did
not need to enter into any further transactions to do so. 2/1 1/20 Trial Tr. 189:2-14
(Rosenbaum) There?s nothing in the agreement that requires A.M.C. to create any
additional entities in order to produce or air ?The Walking Dead,? is there? A. Yes. . . . That?s
correct. . . . A. [The contract] does not require the assignment or creation of affiliates?); id.
at 162:7?9 (Rosenbaum) (Kirkman?s transactional counsel testifies that in 2009, was
getting from Mr. Kirkman the right to produce and to air ?The Walking Dead??).

Thus, at the moment of contracting in 2009, AMC Network ?obtained all the rights it
needed from Mr. Kirkman to produce ?The Walking Dead,? to distribute ?The Walking Dead,?
and to exhibit ?The Walking Dead? on its channel.? Id. at 162219?28 (Rosenbaum). Even
under Plaintiffs? theory, this meant as acknowledged in Rosenbaum?s testimony?that ?[t]he

ATP would not be implicated? if AMC Network had simply broadcast the show after it

40
STATEMENT OF DECISION

 

 

 

 

contracted with Kirkman. Id. at 190:14-17 (Rosenbaum) (emphasis added). By Plaintiffs?
own admission, then, Kirkman signed an agreement that, on the one hand, granted him numerous
bene?ts including ?xed and contingent compensation, and on the other hand, permitted AMC
Network to produce and broadcast the show without entering into any additional transaction to
do so. Plaintiffs were not, at the time of contracting, relying on or even expecting AMC
Network to engage in a transaction or transfer that AMC Network had no obligation to
undertake.

The fact AMC Network ultimately did, in fact, transfer its rights to its wholly owned
subsidiary for administrative purposes is irrelevant?nothing in the contract indicates the parties
anticipated this transfer, much less that they were relying on it. See Ex. 1 (Kirkman The
Walking Dead Agreement). When interpreting the intent of the parties, ?it is their intention as it
existed at the time the contract was executed which must control rather than any subsequent
intention tailored to complement an individual?s posture once an agreement has gone sour.?

U.S. for Use Bene?t of alco Constr. Corp. v. Summit Gen. Contracting Corp, 760 F. Supp.
1004, 1013 (E.D.N.Y. 1991) (applying New York law). Here, the intention of the parties,
expressed in the words of their agreement, is clear: Kirkman granted to AMC Network the
exclusive right to ?transmit, reproduce, distribute, exhibit, advertise and exploit? The Walking
Dead on television, and did not need to enter any further transaction to do so. Ex. 1 (Kirkman
The Walking Dead Agreement) Sch. 1 ?Therefore, [Plaintiffs?] attempt to rewrite the
contract with the benefit of hindsight is rebuffed.? Summit Gen., 760 F. Supp. at 1013.

In addition, Plaintiffs failed to support their position that networks always transfer their
rights to their own shows to af?liates and then license those same rights back before
broadcasting those shows. As Plaintiffs? expert admitted, AMC Network is a ?cable television
network? that is in the business of broadcasting the ?initial exhibit[ion] of television programs.?
2/ 10/20 Trial Tr. 108:8? 15 (Ziffren). The evidence at trial revealed numerous examples of
networks that acquire the rights to a show, produce a show in-house, and then air the show while

still holding those rights?disproving Plaintiffs? assertion that networks like AMC Network

4 1
STATEMENT OF DECISION

 

 

t4invariably transfer their rights to an af?liate and then license them back before a show is
broadcast. See 2/18/20 Trial Tr. 153:20?23 (Arar) (explaining that itself exhibited
many unscripted programs where it was [both] the and the network and there were
no af?liates involved?); id. at 153:27-154: 12 (explaining that ?Showtime? had four scripted
series ?in the last year? where the network owned and broadcast the series, and merely
subcontracted the task of production); id. at 210221-21 1:24 (explaining that Showtime was a
network ?that acquired rights to produce and exhibit [and] distribut[e] show? and ?did not
assign those rights to an af?liated entity?).

Therefore, there is no evidence that, at the time of contracting, the parties expected that
the ATP would be implicated by AMC Network exercising the very rights to broadcast the show
that it acquired from Kirkman in the ?rst place. The contract cannot be interpreted in a manner
that does not align with the parties? original expectations. Evans, 1 at 458.

(2) AMC Network?s Airing Of Its Own Show Is Not A Covered ?Transaction.?
The language of the ATP con?rms that AMC Network?s airing of its own show on its own
channel did not constitute a ?transaction? governed by the ATP. Kirkman?s ATP provides that
transactions with Af?liated Companies will be on monetary terms comparable with the
terms on which AMC enters into similar transactions with unrelated third party distributors for
comparable programs after arms length negotiation.? Ex. 1 (Kirkman The Walking Dead
Agreement) 24. Accordingly, by its plain terms, the ATP applies only to 
transactions with Af?liated Companies? if there are ?similar transactions? that AMC could have
entered into ?with unrelated third party distributors for comparable programs after arms length
negotiation.? Id.

When AMC Network exercises its own broadcast rights to exhibit the show on its own
channel, there is no ?similar? transaction that AMC Network could enter into ?with unrelated
third party distributors.? Cf. id. That is, when AMC Network acquires the rights to a show, it
does so in order to air the show on its own channel?not to license the rights to air the show to a

third?party network. Arar Dec]. 7! 82 (?When AMC Network obtains the rights to exhibit a

42
STATEMENT OF DECISION

 

 

 

show like The Walking Dead, it exhibits the show itself; it does not enter into further transactions
with third?party distributors to broadcast the The very purpose of AMC Network?s
contract with Kirkman was to give AMC Network the right to exhibit the show on its own
channel. See id; Ex. 1 (Kirkman The Walking Dead Agreement) Schedule I (granting
AMC Network broad rights to produce and air the show). The only transactions that AMC
Network (or any other network) could enter into with ?unrelated third party distributors? would
be transactions for distribution of the show beyond the initial exhibition on the network?s own
channel?for example, licensing the show for exhibition on a third-party streaming service, like
Net?ix or Hulu; licensing the show for distribution by a third-party abroad; or licensing the show
to a company that handles home video distribution. Id. if?! 17, 47. By its terms, the parties
here agreed that the ATP would apply only to transactions that could have been entered into
?with unrelated third party distributors.? This means that the ATP does not apply to AMC
Network?s distribution of the show on its own channel. See Ex. 1 (Kirkman The Walking Dead
Agreement) 24.

(3) The Administrative Rights Transfer Between AMC Network and AMCFH
Did Not Create Any Revenue 0r Deprive Plaintiffs Of Any MAGR. The parties? experts
agree that, in the television industry, ATPs are understood to apply only to ?self-dealing?
transactions between af?liates that ?deprive the pro?t participant of money? to which he is
otherwise entitled. 2/ 10/20 Trial Tr. 100: 1?5 (Ziffren) (objective of ATP is to address
?af?liated companies self-dealing? undertaken ?to deprive the pro?t participant of money?);
Sabin Dec]. ?11 That is not the case here.

As noted above, Plaintiffs negotiated and agreed how their contingent compensation
would be calculated. Plaintiffs do not dispute that they had a seat the table?a full and fair
opportunity to negotiate contingent compensation before they signed their agreements.

Plaintiffs took advantage of that opportunity?they negotiated for and received the MAGR terms

and protections they deemed important and agreed that AMC would have the authority to define

43
STATEMENT OF DECISION

 

 

 

the balance of MAGR. See supra; Ex. 1 (Kirkman The Walking Dead
Agreement) ll(b).

The internal rights transfers here between AMC Network and AMCFH were not the kind
of transactions that presented a risk of self-dealing that would ?deprive the [Plaintiffs] of money?
that the parties? agreement on contingent compensation entitled them to. See 2/ 10/20 Trial Tr.
100: 1-5 (Ziffren). It is this potential situation?shortchanging pro?t participants through
af?liate transactions?which, according to Plaintiffs? own expert, the ATP is designed to
address. See id. That situation is not presented in this case because Plaintiffs negotiated their
contingent compensation rights for AMC Network?s exhibition of the show on the AMC
channeL

It is signi?cant that the internal rights transfers from AMC Network to its wholly-owned
subsidiary do not have any economic consequence at all to pro?t participants like Plaintiffs here.
As recounted in the unrebutted testimony of Stefan Reinhardt, AMC Network?s President of
Business Operations and Studio Operations, AMC Network transferred its intellectual property
to a single-purpose production entity, TWD Productions, LLC, and then to AMCFH for
administrative reasons?namely, to make it easier to obtain valuable production tax credits and
more ef?cient to license content to third-party distributors. Reinhardt Decl. 20, 29-30; I.E,
supra. These administrative transfers did not have any economic impact on Plaintiffs?
Plaintiffs? own expert, Kenneth Ziffren, conceded that he ?can?t point to any revenue, money, to
which Mr. Kirkman was deprived, as a result of these intracompany af?liated rights transfers
within 2/10/2020 Trial Tr. at 1517-25. This admission is signi?cant. As
Defendants? expert, Edward Sabin, explained, ATPs do not apply to such ?purely internal
transactions of no economic consequence.? Sabin Decl. 91. Therefore, on this record, these
internal rights transfers had no negative economic consequence for Plaintiffs and do not trigger
application of the ATP.


IN

44
STATEMENT OF DECISION

 

 

mistSub Issue Whether The ATP Requires Transactions With
Af?liated Companies? To Be At Fair Market Value And/0r Whether A
Participant Suing For Breach Of The ATP May Pursue Fair Market Value
Damages?

Although the ATP is not applicable here, the parties have requested that the Court resolve
whether the ATP requires transactions with Affiliated Companies? to be at fair market
value, and, relatedly, whether a profit participant (like Plaintiffs) suing for breach of the ATP
may recover damages measured at a fair market value rate. The ATPs neither impose a fair
market value standard nor allow for fair market value damages.

The plain language of the ATP forecloses application of a fair market value standard.
Kirkman?s ATP states that transactions with Af?liated Companies will be on monetary
terms comparable with the terms on which AMC enters into similar transactions with unrelated
third party distributors for comparable programs after arms length negotiation.? Ex. 1
(Kirkman The Walking Dead Agreement) 24 (emphasis added]?1 Thus, where applicable,
the ATP requires consideration of other deals that ?AMC??not the ?market? generally --has
actually entered into with third parties. See id. Construing the ATP to instead require that
affiliate transactions be judged by what would be required in the ?market? contravenes the plain
language of the parties? agreement. See Quadrant, 23 at 564 our law where
the language of the contract is clear we rely on the terms of the document to give effect to the
parties? intent?).

What is more, ?fair market value? is a well-known term, but it does not appear in the
ATP or anywhere else in Kirkman?s and Alpert?s The Walking Dead Agreements. See
generally Ex. 1 (Kirkman The Walking Dead Agreement); Ex. 4 (Alpert The Walking Dead
Agreement); see also Sabin Decl. 98 (explaining that fair market value provisions are always
explicitly stated when used in television profit participation contracts). As Plaintiffs? own

counsel has acknowledged, fair market value is an incredibly rare standard in contemporary

 

The relevant sentence of the ATP in Alpert?s The Walking Dead Agreement provides that 
transactions with Affiliated Companies will be on monetary terms comparable to the terms on which the Affiliated
Company enters into similar transactions with unrelated third party distributors for comparable programs.? Ex. 4
(Alpert The Walking Dead Agreement) 

45
STATEMENT OF DECISION

 

 

 





 

 

television pro?t participation agreements. See Ex. 2131 (Nessim, ?Pro?t Participation Claims?)
at 8 (explaining that while fair market value standards were sometimes used in earlier
participation contracts in the 1990s, ?[r]equring that fair market value be paid . . . create[s] a very
dif?cult standard for a studio to meet and almost invite[s] litigation if the program is successful.
Contractual provisions like these will probably never again be seen in participation contracts
with studios.? (emphasis added)). Plaintiffs? expert likewise testi?ed that ?fair market value? is
a standard that is ?very, very hard? for profit participants to bargain for and receive in the
television industry. 2/10/20 Trial Tr. 82: 14-83:5 (Ziffren). If the sophisticated parties who
negotiated these agreements in 2009 and 2010 wanted to include such a rare standard, they
would have said so explicitly in the agreements. See, Vt. Teddy Bear, 1 at 475
should be extremely reluctant to interpret an agreement as impliedly stating something
which the parties have neglected to speci?cally include?).

Indeed, as discussed in Issue New York courts consistently refuse to imply a ?fair
market value? term in contracts that do not already include them. Joseph Martin, 52 at
1 1 (?There is not so much as a hint at a commitment to be bound by the ?fair market rental
value?? in contract that did not have that term); Stone Key Farmers LLC v. Monster Worldwide,
Inc, 333 F. Supp. 3d 316, 333-34 (S.D.N.Y. 2018), 788 F. App?x 50 (2d Cir. 2019)
(?Stone Key?s only argument to the contrary is that Monster?s assets should be measured
according to their fair market value . . . . But Stone Key provides no basis to conclude that the



[contract]?s reference to ?assets should use a fair market value standard) (applying New York
law); Cordell, 2012 WL 5264844 at *4 (?Cordell?s contention that McGraw-Hill had the
implicit obligation to sell the works at fair market value . . . would imply a term inconsistent with
the express terms of the Hales v. HSBC Bank USA, NA, 2008 WL 1 1435681, at
*7 n.13 (S.D.N.Y. June 10, 2008) settlement [contract] makes no reference to selling the
shares at ?fair market value? and the Court declines to read such a term into the 

Plaintiffs? are wrong that the phrase ?after arms length negotiation? means the ATP

demands a fair market value standard, as that would require ignoring practically the entirety of

46
STATEMENT OF DECISION 

 

 

Loans.)

OKDOOMJQLII

the relevant provision. The ATP states that the relevant comparison transactions are those
?which AMC enters into . . . with unrelated third party distributors for comparable programs after
arms length negotiation.? Ex. 1 (Kirkman The Walking Dead Agreement) 24 (emphasis
added). The reference to ?after arms length negotiation? simply clarifies that for purposes of
the ATP, the universe of ?similar transactions? that are considered does not include
sweetheart transactions that were not negotiated at arms? length. But this quali?cation at the
end of the sentence does not delete the preceding language, which makes clear that the relevant
transactions are only those that enters into,? not transactions conducted at ?fair market
value? generally.

Finally, Plaintiffs argue that if the ATP requires affiliate transactions to be conducted
only on terms ?comparable? with other transactions, Plaintiffs are entitled to damages
measured at a different, ?fair market value? standard if the ATP is breached. This argument is
rejected. Plaintiffs? argument that they can recover damages under a ?fair market value? standard
that varies from the substantive standard in the ATP. This would contravene one of the most
basic propositions of contract law: damages can only ?put [the plaintiff] in as good a position
as it would have been in had the contract been performed.? Goods'rei'n, 80 at 373 (citing
Restatement (Second) of Contracts 347 cmt. a (1981)). The ATP standard is ?monetary terms
comparable with the terms on which AMC enters into similar transactions with unrelated third
Ex. 1 (Kirkman The Walking Dead Agreement) 24. This is not a fair market
value standard, and Plaintiffs cannot claim damages based on something they would never have
received ?had the contract been performed? in the ?rst place. Goodsi'ei'n, 80 at 373.

Alpert?s transactional counsel, Howard Abramson, admitted his client?s damages for any
breach of the ATP would be the difference between the amount AMC had used to calculate
MAGR and the money required to go into MAGR by the ATP not fair market value. 2/ 14/20
Trial Tr. 232:23-233221 (Abramson) (Abramson testi?es at his deposition, read into the record,
that the relevant question is the difference between what the ATP requires and what AMC had

used).

4?
STATEMENT OF DECISION

 

 



Ultimately, this sub-issue is straightforward. Because the ATP expressly requires
consideration of AMC ?s own transactions?not consideration of every transaction done at ?fair
market contention that, under this agreement, it is somehow entitled to the

equivalent of fair market value is simply without substance.? Cobble Hill, 74 at 485.

E. Issue Whether Hurd?s 2010 The Walking Dead Agreement Requires AMC To
Use A Fair Market Value Imputed License Fee For Purposes 0f Calculating,
Reporting, And Paying 

The ?fth issue is whether Hurd?s MAGR for The Walking Dead must be calculated using
a ?fair market value? imputed license fee. Plaintiffs argue that when a pro?t participation
agreement speci?es that MAGR will be calculated using an imputed license fee but does not
specify the precise terms of the imputed license fee or include an ATP, the imputed license fee
must be calculated based on a ?fair market value? standard.

Again, the decision on Issue #2 controls. Because Hurd, like the other Plaintiffs, is
bound by the de?nition of MAGR she agreed to?that is, de?nition, as modi?ed by the
speci?c terms Plaintiffs agreed to in the contract?she cannot receive a different, ?fair market
value? imputed license fee contrary to the terms of her agreement.

Even setting Issue #2 aside, Plaintiffs? argument that when the elements of a
compensation term?such as an imputed license fee?are not speci?ed, an implied ?fair market
value? term is substituted in its place is misplaced. This assertion is contrary to long-
established New York law, which holds that courts will not imply ?fair market value? terms that
are not expressly stated in the contract. See, Cordell, 2012 WL 5264844 at *4 (?Cordell?s
contention that McGraw-Hill had the implicit obligation to sell the works at fair market value . . .
would imply a term inconsistent with the express terms of the Agreement?); Joseph Martin, 52
at (The contract?s ?simple words leave no room for legal construction or resolution
of ambiguity. . . . There is not so much as a hint at a commitment to be bound by the ?fair market
rental value. . . That is especially true here, where the parties agreed on the manner in
which MAGR would be de?ned: in accordance with MAGR de?nition, not a ?fair

market value? standard.

48
STATEMENT OF DECISION

 

 



While Hurd?s The Walking Dead Agreement unambiguously does not require the use of a
?fair market value? license fee, if the Agreement were ambiguous, the extrinsic evidence would
support the same conclusion. After receiving MAGR de?nition in March 201 l, Hurd
did not raise any concerns for over a year, instead accepting a pro?t participation statement
based on the imputed license fee she now complains about and signing an amendment to her The
Walking Dead Agreement that ?con?rmed and rati?ed? the existing contract. Ex. 2079 at 2.
Even when her counsel attempted to negotiate the de?nition, he did not argue that the imputed
license fee must be calculated based on a fair market value standard. See Ex. 2078 (with
respect to the imputed license fee, asking only to ?eliminate the cap?); 2/ 14/20 Trial Tr. 139:8-13
(Nochimson) And during any of your negotiations about the imputed license fee with AMC
in that time period, did you tell AMC that you believed Ms. Hurd was entitled to a fair market
value imputed license fee? A. Not at that time, The evidence shows that Hurd never
raised this ?fair market value? argument prior to litigation, and her course of performance under
the contract demonstrates that the argument is meritless. See Aircraft Servs., 2013 WL
4400453, at *3 (?The parties? interpretation of the contract in practice, prior to litigation, is

compelling evidence of the parties? intent.? (emphasis added)) (applying New York law).

F. Issue Whether Plaintiffs? Fear The Walking Dead Agreements Include The MFN
In Plaintiffs? The Walking Dead Agreements?

The sixth issue is whether Plaintiffs? Fear the Walking Dead Agreements incorporate by
reference the ?most favored nations? or clause in Plaintiffs? The Walking Dead
Agreements}- The Fear the Walking Dead Agreements donor incorporate any MFN clause.

Plaintiffs argue that language in their Fear the Walking Dead Agreements incorporates

the MFN clauses in their The Walking Dead Agreements}: The relevant MAGR language in

 



In Kirkman?s The Walking Dead Agreement, the MFN provision states that ?in no event shall
MAGR be de?ned, computed, or paid on a basis less favorable than for any other non-east [pro?t participantl on the
Series." Ex. (Kirkman The Walking Dead Agreement) Alpert?s and Hurd?s The Walking Dead
Agreements each contain an almost identical provision. Ex. 4 (Alpert The Walking Dead Agreement} (?In
no event shall Artist?s MAGR participation be de?ned less favorable than the MAGR de?nition accorded to {other
particular participants] on the Series.?i; Ex. 3 {Hurd The Walking Dead Agreement} {same}.

5 There is no dispute that Plaintil?l's? Fear the Walking Dead Agreements do not expressly include an
MFN provision. See Exs. 171 (Kirkman?s Fear the Walking Dead Agreements}, 27 (Alpert?s Fear the Walking Dead

49

STATEMENT OF DECISION

 

 

Ham-599M



 

 

 

Kirkman?s and Alpert?s Fear the Walking Dead Agreements is as follows: ?The de?nition of
MAGR applicable to [the Plaintiff?s] contingent compensation on [The Walking Dead] will also
apply to [the Plaintiff?s] Contingent Compensation on [Fear the Walking Dead], which
definition shall specify an imputed license Ex. l7l (Kirkman Fear the Walking Dead
Exec. Producer Agreement) at 5; id. (Kirkman Fear the Walking Dead Writing Services
Agreement) at 19; Ex. 27 (Alpert Fear the Walking Dead Agreement) at 4. Hurd?s Fear the
Walking Dead Agreement has a shorter but similar provision: ?The de?nition of MAGR
applicable to [Hurd?s] contingent compensation on [The Walking Dead] will also apply to [Fear
the Walking Ex. 170 (Hurd Fear the Walking Dead Agreement) at 4.

Plaintiffs argue that because their Fear the Walking Dead Agreements state that the
?de?nition of MAGR applicable to [their] contingent compensation on [The Walking Dead] will
also apply? to Fear the Walking Dead, their Fear the Walking Dead Agreements must
incorporate the entire sections dealing with MAGR in their The Walking Dead Agreements?
Section lib) in Kirkman?s Agreement, and Section 4 in Hurd?s and Alpert?s Agreement?
including the MFNs in those sections. This argument fails.

The relevant provisions of Plaintiffs? Fear the Walking Dead Agreements state that,
however Plaintiffs? MAGR is on The Walking Dead, that ?de?nition of will
also apply to Fear the Walking Dead. There is no reference to an MFN in any of the Plaintiffs?
Fear the Walking Dead Agreements, or any indication that the parties intended to incorporate
anything other than the ?definition of MAGR applicable to [Plaintiffs?] contingent compensation
on [The Walking Dead].? Ex. 27 (Alpert Fear the Walking Dead Agreement) at 4; Ex. 17]
(Kirkman Fear the Walking Dead Exec. Producer Agreement) at 5; id. (Kirkman Fear the
Walking Dead Writing Services Agreement) at 19; see also Ex. 170 (Hurd Fear the Walking
Dead Agreement) at 4. And the MAGR de?nition applicable to Plaintiffs? contingent
compensation on The Walking Dead does not itself contain an MFN. See Ex. 9.

The Plaintiffs? MFNs are provisions of their The Walking Dead Agreements that are

 

Agreement), l70 (Hurd?s Fear the Walking Dead Agreement).
50
STATEMENT OF DECISION

 

LUJN



separate from the ?de?nition of incorporated into those agreements. Arar explained
this distinction well on cross?examination, testifying that an MFN ?gives [participants] the
bene?t of M.A.G.R. terms other participants may have negotiated, but that would result in an
upgraded M.A.G.R. definition, but . . . the M.F.N. is not itself part ofthe M.A.G.R. definition.?
2/18/20 Trial Tr. 96: 10-20; id. at 191:7?18 (Arar testi?es that MFN was [not] part of the
de?nition itself?). The MFN creates a right to acquire any better MAGR de?nition
that someone else on the project negotiates, but it does not de?ne or calculate does
not say what receipts go into MAGR or what expenses come out of it. See Ex. 1 (Kirkman The
Walking Dead Agreement) 1 Ex. 3 (Hard The Walking Dead Agreement) Ex. 4
{Alpert The Walking Dead Agreement) see also Stein Dec]. 30. The receipts that
go into MAGR and the expenses that come out of it are set forth in the MAGR de?nition AMC
sent Plaintiffs in March 201 1. See Ex. 9.

Based on a plain reading of these documents, the parties agreed only to incorporate into
their Fear the Walking Dead Agreements the ?de?nition of applicable to The Walking
Dead, and did not intend to incorporate separate provisions from Plaintiffs? The Walking Dead
Agreements?including the MFNs?that are not part of that ?de?nition of ?The well
settled rule is that ?a reference by the contracting parties to an extraneous writing for a particular
purpose makes it a part of their agreement only for the purpose speci?ed,? and here, the only
?purpose? the parties had in referencing The Walking Dead contracts was to incorporate the
MAGR de?nition that applied to them, not their MFNS. CooperVision, Inc. v. Imek Integration
Tee/13., Inc, 794 812, 819 (Sup. Ct. Monroe Cty. 2005) (emphasis added) (quoting
Guerini Stone Co. v. Carlin Constr. Ca, 240 US. 264, 278-79 (1916)).

This conclusion does not render Plaintiffs? MFN rights from The Walking Dead irrelevant
to Fear the Walking Dead. If a pro?t participant on The Walking Dead receives a more
favorable MAGR de?nition than Plaintiffs, Plaintiffs will receive the bene?t ofthat more
favorable de?nition on The Walking Dead. See Ex. 1 (Kirkman The Walking Dead Agreement)

1 Ex. 3 (Hurd The Walking Dead Agreement) Ex. 4 (Alpert The Walking Dead

5 1
STATEMENT OF DECISION

 

Lia-Agreement) This will also bene?t Plaintiffs? Fear the Walking Dead compensation,
because their compensation for that show is governed by the same ?de?nition of 
applicable to The Walking Dead?and thus an improvement in their The Walking Dead
definition will be mirrored by an improvement in their Fear the Walking Dead de?nition.

Thus, Plaintiffs? MAGR de?nitions on both shows will always be at least as favorable as that
used for any other relevant pro?t participant in The Walking Dead.

But Plaintiffs? Fear the Walking Dead Agreements do not also give them the right to a
MAGR de?nition that is at least as favorable as the de?nitions used for all other Fear the
Walking Dead participants. Stated another way, it is possible that a participant on Fear the
Walking Dead will have a MAGR de?nition that is more favorable than Plaintiffs? de?nition.
But, as noted, no pro?t participant on The Walking Dead will have a more favorable MAGR
de?nition than Plaintiffs? de?nition. No such MFN right is incorporated into the Fear the
Walking Dead Agreements.

An MFN is not implied. See Rowe v. Great/1t]. Pac. Tea Co., 46 62, 72
(1978) should be extremely reluctant to interpret an agreement as impliedly stating
something which the parties have neglected to speci?cally include?). provisions are
common and . . . all parties to these agreements knew how to write an MFN provision? if they
intended to include one. Arar Decl. 135. Further, MFN provisions in pro?t participation
agreements can have signi?cant ?nancial implications for a company?potentially obligating the
company to pay many individuals high compensation based on the terms that the talent with the
most leverage is able to command. They are not ?implicitly, inadvertently, or casually
granted.? ld. 138. While the parties explicitly included MFNs in their The Walking Dead
Agreements, the absence of ?parallel? text in the related Fear the Walking Dead Agreements
leads the Court to ?presume[] that the drafters acted intentionally and intended a different
meaning.? U.S. Bank v. LLC, 2014 WL 4290543, at *3 (S.D.N.Y. Aug. 29, 2014); see
also Quadrant, 23 at 560 parties to a contract omit terms?particularly, terms that

are readily found in other, similar contracts?the inescapable conclusion is that the parties

52
STATEMENT OF DECISION

 



intended the omissions?).

Plaintiffs? argument is thus foreclosed by the plain language of the Agreements, but the
extrinsic evidence defeats their claim as well. The record shows that during the negotiations of
Kirkman?s Fear The Walking Dead Agreement, Kirkman?s counsel viewed a Fear the Walking
Dead MFN to be separate and distinct from Kirkman?s The Walking Dead MAGR de?nition.
While negotiating Kirkman?s Fear the Walking Dead Agreements, Kirkman?s counsel requested
two distinct terms: de?nition with all other participants and [Kirkman?s] (1an on
[The Walking Dead].? Ex. 1 at 3 (emphasis added}. After Kirkman?s counsel made these
two distinct requests?for a MFN, and (2) Kirkman?s The Walking Dead MAGR de?nition
AMC agreed only to one of them (the MAGR de?nition, item See Ex. 12 at 4 (in response
to Kirkman?s counsel?s request for both an MFN and the MAGR de?nition from The Walking
Dead, AMC offers only the latter, that ?[t]he de?nition of MAGR applicable to [Kirkman?s]
Contingent Compensation on [The Walking Dead] will also apply to [Fear the Walking 
As negotiator testi?ed, ?[Kirkman?s counsel] asked for two things . . . . She asked for
an M.F.N. as one thing. And she separately asked for the same de?nition on ?The Walking
Dead.? . . . We agreed to the one thing, which was the de?nition [on] ?The Walking Dead.??

3/ 10/20 Trial Tr. 21: 10-21 (Stein). The record demonstrates that Kirkman?s counsel viewed the
request for an MFN as separate and distinct from the request for Kirkman?s The Walking Dead
MAGR de?nition, and AMC granted only the latter request (for the MAGR de?nition) and
rejected the former (for the MFN).

The parties agreed to incorporate the Plaintiffs? The Walking Dead MAGR de?nitions
into their Fear the Walking Dead Agreements, but did not agree to incorporate the separate MFN
provisions from their The Walking Dead Agreements. Therefore, Plaintiffs? Fear the Walking

Dead Agreements do not include the MFNs in their The Walking Dead Agreements.

G. Issues Whether Plaintiffs Are Entitled To Contingent Compensation In
Connection With Talking Dead, Under Their The Walking Dead And Talking Dead
Agreements, Assuming Talking Dead Is Derivative?

The ?nal issue is whether Plaintiffs are entitled to contingent compensation in connection

53
STATEMENT OF DECISION

 





 

 

with the talk show Talking Dead, assuming, for purposes of this mini-trial, that Talking Dead is a
?derivative production? under their The Walking Dead Agreements.9 Plaintiffs argue that under
their The Walking Dead Agreements, if Talking Dead is a ?derivative production? that is also a
?series,? then AMC must pay Plaintiffs contingent compensation on terms that are at least as
favorable as their contingent compensation terms on The Walking Dead? regardless of whether
the Plaintiffs? Talking Dead contracts provide for contingent compensation. Defendants argue
Plaintiffs? Talking Dead contracts are the only agreements that govern their work on Talking
Dead, and that the Court cannot imply a contingent compensation term that was never agreed to
for Talking Dead. Further, Defendants point out Plaintiffs never requested contingent
compensation for Talking Dead prior to this litigation. Defendants are correct.

The Talking Dead Agreements do not provide for contingent compensation. See Ex. 57
(Kirkman Talking Dead The only compensation they provide for is ?xed
compensation, in the amount of a $10,000 per episode producer fee. Id. 1.

Plaintiffs do not dispute that their Talking Dead Agreements contain no contingent
compensation terms. See, e. 2/ 14/20 Trial Tr. 237:20?28 (Abramson) (Alpert?s transactional
counsel agrees that contingent compensation is set forth in [Alpert?s Talking Dead]
agreement?). However, they argue that their The Walking Dead Agreements mandate that any
agreement for an derivative series includes contingent compensation on at least the same terms
as the contingent compensation in their The Walking Dead Agreements. Plaintiffs argue that
this right is derived from the ?First Negotiation? provisions of their The Walking Dead
Agreements, which address Plaintiffs? rights to negotiate for executive producer roles on any
?derivative production based on [The Walking Dead].? Ex. 1 {Kirkman The Walking Dead

Agreement) Kirkman?s ?First Negotiation? provision states, in relevant part:

 

9 The parties have agreed that the Court should assume Talking Dead is a derivative production for

purposes of the mini-trial, with the question whether Talking Dead actually is a derivative production to be decided
later, if necessary.

'0 Alpert?s and Hurd?s Talking Dead Agreements are substantially the same as Kirkman?s Agreement,
and also have no reference to contingent compensation. See Exs. 204? (Alpert Talking Dead Agreement), 2096
(Hurd Talking Dead Agreement).
54
STATEMENT OF DECISION

 



AMC and [Kirkman] agree to negotiate in good faith for a period of thirty (30)

days, with respect to [Kirkman] rendering executive producer services in

connection with each derivative production based on the Series, with a floor of . .

. the executive producing ?nancial terms of this deal development fee,

executive producer fee and Producing Participation) for any comparably budgeted

television series. . . .
Id. ?Producing Participation? is de?ned in the contract as one-half of Kirkman?s contingent
compensation. Id. 1 Alpert?s and Hurd?s ?First Negotiation? provisions, while similar
to Kirkman?s, contain different language:

Network] and [Alpert] agree to negotiate in good faith (within 
Network]?s customary parameters) for a period of thirty (30) days with respect to
[Alpert] executive producing derivative productions based on the Series any
theatrical ?lm or television spin-off, prequel, sequel and/or remake of the Series),
on terms no less favorable than the terms hereof with respect to a comparably
budgeted television pilot and/or series. If no agreement is reached during said
thirty (30)?day period, Network] shall have no further obligation to
[Alpert] with regard to such derivative production.

Ex. 4 (Alpert The Walking Dead Agreement) Plaintiffs argue that these provisions
require AMC to offer at least some contingent compensation on any series that is a ?derivative
production? of The Walking Dead.

Plaintiffs? argument is misplaced. The ?First Negotiation? provisions give Plaintiffs a
right to negotiate executive producer agreements for derivative series?they do not dictate what
terms the parties must ultimately agree to, or that they must reach agreement at all. See, 
Ex. 4 (Alpert The Walking Dead Agreement) 8 (?If no agreement is reached during said thirty
(30)-day period, Network] shall have no further obligation to [Alpert] with regard to such
derivative production?); see also Sabin Decl. ?ll?il 108, 1 (explaining that these kinds of ?right
of negotiation? provisions allow a pro?t participant to protest if the show?s owner refuses to
negotiate, but do not set any final terms). Here, there is no dispute that the parties did negotiate,
and that as a result of those negotiations Plaintiffs signed Talking Dead contracts that do not
provide for contingent compensation. Because the parties did, in fact, ?negotiate in good faith?
(and Plaintiffs do not argue otherwise), the ?First Negotiation" provisions were not breached.

See Ex. I (Kirkman The Walking Dead Agreement) l7(a); Ex. 4 (Alpert The Walking Dead

 

Hurd?s ?First Negotiation? provision contains slight differences from Alpert?s, but is substantively
the same. See Ex. 3 (Hurd The Walking Dead Agreement) IO.
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STATEMENT OF DECISION

 

 

LIAgreement) 8; Ex. 3 (Hurd The Walking Dead Agreement) 10.12

Even if the First Negotiation clauses dictate terms for some derivative production
agreements?rather than merely require negotiation?Defendants still prevail because the
clauses do not apply to these executive producer agreements for Talking Dead. The clauses
require that there be a ?floor of . . . the executive producing ?nancial terms of this deal . . . for
any cmnparabl budgeted television Ex. I (Kirkman The Walking Dead Agreement)
l7(a) (emphasis added}. If a show is not ?comparably budgeted? to The Walking Dead, then
the ?floor? does not apply. See id. It is undisputed that Talking Dead is not comparably
budgeted to The Walking Dead. 2/14/20 Trial Tr. 234:3-235: 15 (Abramson) (Alpert?s
transactional counsel testi?es that it is his understanding that ?the budget for Talking Dead is
much less than The Walking Dead, because [Talking Dead is] a talk show,? and that Talking
Dead?s budget is not ?comparable to that of The Walking Dead?); see also Rosenman Decl.

49(b)(ii) (arguing that Kirkman would be entitled to Talking Dead contingent compensation
but assuming that it is ?not a comparably budgeted series"); Nochimson Decl. 43(b) (same);
Wiseman Decl. 73 (explaining that Talking Dead is ?promotional and ephemeral,? unlike The
Walking Dead). Therefore, by the plain words of The Walking Dead Agreements, the ?floor?
Plaintiffs point to in the First Negotiation provisions of those agreements does not apply for
Talking Dead.

Plaintiffs nevertheless argue that the First Negotiation provisions create a sliding scale??
requiring ?nancial terms that are equivalent to Plaintiffs? The Walking Dead Agreements if the
derivative series is ?comparably budgeted? to The Walking Dead, and requiring proportionally
less generous contingent compensation terms?but still some terms if the derivative series has
a smaller budget. See Rosenman Decl. 49(b)(ii). There is no textual support in the First
Negotiation provisions for this argument. The provisions state that there shall be a ?floor? of
?the executive producing ?nancial terms of this deal . . . for any comparably budgeted 

Ex. I (Kirkman The Walking Dead Agreement) 17(a). But there is no mention of any

 

l2

Plaintiffs do not argue, for instance, that AMC Network breached the good faith negotiation
provision by failing to make an offer with an appropriate financial ?floor."

 

STATEMENT OF DECISION

 





??oor??even a less generous ??oor?-?applying to a non-comparably budgeted series. Simply
put, if the derivative show is not ?comparably budgeted? to The Walking Dead, no floor applies.
For this reason, the absence of an integration clause in Plaintiffs? Talking Dead Agreements is,
however unintentional, irrelevant?given that the Plaintiffs? The Walking Dead Agreements do
not provide for a contingent compensation ?floor? on a show that is not comparably budgeted, as
is indisputably the case with Talking Dead.

In fact, David Alpert?s transactional counsel, Howard Abramson, testi?ed that the First
Negotiation provision does not apply to Talking Dead. Abramson testified that he believes ?the
budget for Talking Dead is much less than The Walking Dead, because [Talking Dead is] a talk
show,? and that Talking Dead?s budget is not ?comparable to that of The Walking Dead.?
2/14/20 Trial Tr. 234:3-235:15 (Abramson). And, as he admitted, if Talking Dead is ?not a
comparably budgeted show, did not have to offer terms? for contingent compensation
under the First Negotiation provision of The Walking Dead contracts. Id. at 238:] 1-23. Thus,
at his deposition, read into the trial record, Abramson testi?ed that not [his] understanding
that any rights to contingent compensation Mr. Alpert has for Talking Dead are based on this
First Negotiation right.? Id. at 240:9-18. Abramson is correct?if Talking Dead is not
comparably budgeted to The Walking Dead, then the First Negotiation provision of The Walking
Dead contracts does not apply.

Moreover, the Court cannot assume that AMC Network agreed to give Plaintiffs
contingent compensation in contracts that do not mention or even suggest that such
compensation has been promised. ?[C]ourts should be extremely reluctant to interpret an
agreement as impliedly stating something which the parties have neglected to speci?cally
include.? Rowe, 46 at 72. This is particularly true with something as potentially
valuable as contingent compensation. Price terms are typically the most ?ercely negotiated
term of a contract, and the Court cannot assume that the parties agreed to give Plaintiffs some of
Talking Dead?s pro?ts but neglected to ever say so. See, e. Riverside S. Planning Corp, 60

at 68 (finding it ?untenable? that the parties would not be specific about their contractual

57
STATEMENT OF DECISION

 

 





 

 



obligations, ?especially given the obvious need for ?commercial certainty in a valuable
commercial contract). In this case, the parties? Talking Dead Agreements ?should . . . be
enforced according to [their] terms,? and those terms do not include contingent compensation.

Vi. Teddy Bear, 1 at 475.

Even if the Talking Dead Agreements were ambiguous with respect to contingent
compensation, the parties? course of performance con?rms that they did not understand Plaintiffs
to have received a right to contingent compensation on the show. Prior to this lawsuit,
Plaintiffs never raised the issue of Talking Dead contingent compensation or demanded that
AMC Network explain why it has never provided them with any Talking Dead pro?t
participation statements or related documents. 2/14/20 Trial Tr. 144:5-9 (Nochimson) (Hurd?s
counsel agrees that he ?never raised any concerns with anyone at A.M.C. about contingent
compensation on ?Talking Dead? at any time before this lawsuit was ?led in August 2017?);
2f13i20 Trial Tr. 146:23- 147: 12 (Rosenman) (Rosenman agrees that ?between 2012 and 2017
when [his] client ?led this lawsuit, [he] never reached out to AMC to discuss the issue of
contingent compensation on the ?Talking Dead,?? other than an unrelated conversation about
?buyout? McKean Decl. 41-42. That is decisive evidence that the Plaintiffs did not
understand the Talking Dead contracts to grant them any pro?t participation right. See Aircraft
Senna, 2013 WL 4400453, at *3 (?The parties? interpretation of the contract in practice, prior to
litigation, is compelling evidence of the parties? intent.?) (applying New York law). Plaintiffs
are not entitled to contingent compensation in connection with Talking Dead.

Plaintiffs also argue that the Court should decide what contingent compensation, ifany,
they should receive if Talking Dead is a part of the same ?Series? as The Walking Dead or Fear
the Walking Dead?that is, if Talking Dead is an integral part of those shows, rather than its own
talk show. The Court declines to address this question, given that even Plaintiffs? own
witnesses testi?ed that Talking Dead is its own, separately budgeted talk show. 2/ 13/20 Trial
Tr. 138212-15 (Rosenman) (Kirkman?s transactional counsel testi?es that ?Talking Dead is a

show that has a host, Chris Hardwick, who brings on guests to talk about The Walking Dead . . .

58
STATEMENT OF DECISION

 

 

4314-310

and Fear the Walking Dead?); 2/ 14/20 Trial Tr. 233:25-235:15 (Abramson) (Alpert?s
transactional counsel testi?es that Talking Dead is ?a talk show where people talk about The
Walking Dead or ear the Walking Dead,? and has a budget that is ?much less than The Walking
Dead, because it?s a talk show?).
ORDER

In accordance with the foregoing, it is hereby ORDERED:

1. Issues One, Two, Three, Four, Five, Six, and Seven are decided in favor of

Defendants; and
2. This case proceeds to a full trial on the merits based on the contract interpretations

so decided in this trial;

 

 

Dated: 27?) 2020 EEK 
0 Daniel J. Buckley

Judge of the Superior Cour

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STATEMENT OF DECISION