Sony Pictures pushed a Florida federal court Monday to force the producer of one of the films leaked to the public in the wake of a 2014 cyber attack to arbitrate its breach of contract claims, arguing that the parties had agreed to resolve all disputes that way. In its motion to compel arbitration, Sony Pictures Worldwide Acquisitions Inc. contended that the “sweeping language” of the arbitration provision contained in a March 2014 distribution agreement it penned with Possibility Pictures II LLC for its motion picture “To Write Love On Her Arms” covered the current dispute, which accuses Sony of breaching the pact by allowing hackers to steal the movie and widely leak it online for free before its distribution date.
Possibility Pictures has argued that the arbitration clause in the agreement — which states that “all actions or proceedings arising in connection with, touching upon, or relating to” a contractual breach should be submitted to binding arbitration — appears to be at odds with a “licensor’s remedies” provision that says it is “limited to bringing an action at law to recover damages.” But Sony countered Monday that the limitation of remedies provision addresses the distinct issue of preventing Possibility Pictures from interfering with the intellectual property that Sony had purchased by moving for relief such as an injunction or to terminate or rescind the distribution agreement, and does not conflict in any way with the broad provision that subjects “all actions or proceedings” related to disputes over the contract to arbitration.”Contrary to plaintiff’s assertion, the provisions are easily read together without creating any repugnancy,” Sony argued. “Because the limitation of remedies provision limits plaintiff to monetary damages recoverable in an ‘action at law’ for breach of the Distribution Agreement that is necessarily among the ‘actions’ that must be arbitrated pursuant to the Arbitration Provision.”To find otherwise would be to conclude that an “action at law” does not fall within the “sweeping umbrella” of the definition of “all actions and proceedings arising in connection with, touching upon, or relating to this agreement” that is contained in the arbitration provision, Sony continued. “That is an absurd contractual construction that this court should reject,” Sony said, adding that the term “action at law” is “simply a shorthand way to distinguish an action for monetary relief from an action for equitable relief” and should not be stretched to fall outside what is covered by the arbitration provision. Sony also argued that the filmmaker’s claims should be sent to arbitration before alternative dispute resolution provider JAMS in Los Angeles because the distribution agreement contains a delegation clause that “expressly delegates” to the arbitrator the decision on whether plaintiff’s monetary claims for breach of contract fall within the scope of the arbitration provision.
“Based on this clear and unmistakable intent of the parties expressed in the Distribution Agreement, this court must leave this matter to be decided by the JAMS arbitrator,” Sony said. Possibility Pictures first previewed its claims and its position on arbitration in a claim letter it sent to Sony before initiating the instant action July. In both the claim letter and in its complaint, the filmmaker expressed disappointment with the “meager revenues” generated by the movie, which was among the batch of intellectual property and personal information that hackers, which the U.S. government has said were from North Korea, lifted in a November 2014 cyber attack on the Sony Pictures unit. The hack — which Possibility Pictures blamed on Sony’s alleged failure to undertake even basic security precautions despite repeated hacking attacks and warnings about the vulnerabilities in its computer systems — resulted in the film being widely distributed and downloaded for free on the internet more than 200,000 times.
The filmmaker alleged that the leak and resulting poor performance of the film left it with out-of-pocket losses of $2.6 million in production costs, and that it was entitled to recover compensatory damages to cover its losses for the film, whose projected revenues were valued at more than $8.7 million.
KEYWORDS: cyber attack, plaintiff, meager revenues.
