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Producers of Sleeper Hit "Napoleon Dynamite" Sue Fox Searchlight for Over $10 Million

Few initially anticipated the level of success indie film Napoleon Dynamite would garner. But despite its extremely modest budget by Hollywood standards, approximately $400,000, the 2004 film has grossed around $45 million to date. Now, its producers are suing the movie’s distributor, Fox Searchlight, for more than $10 million for allegedly undercutting royalties and deducting revenue incorrectly.

The suit was filed on August 30 in the Los Angeles Superior Court. It claims that when the film debuted at the Sundance Film Festival in 2004, and due to the steadily rising buzz surrounding it, the production company had its pick from a list of eagerly courting distributors. According to the claim, the producers chose Fox because of a $4.75 million up-front payment in addition to promised high royalty rates for home video sales, which translated into 31.66 percent of profits.

However, the suit accuses that a 2008 audit revealed that Fox was only paying net royalties on home video sales at a rate of 9.66 percent, “far less than the industry standard minimum royalty rate of 20 percent of home video sales,” according to the lawsuit. The production company also claims a breach of contract and irresponsible misrepresentation with regard to other income generated from the popular movie.

Although the entertainment world is full of stories regarding business deals and promises gone wrong, every industry and company is vulnerable to disputes involving breaches in contract and accounting disagreements. For strong counsel and vigilant action in your case, contact the Los Angeles breach of contract lawyer Art Matthews at The Matthews Law Firm, Inc. at 800-449-4850 for a free consultation today.

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