Paramount Global will remain on the hook for some of the claims in its legal battle with Warner Bros. Discovery over a 2019 licensing agreement for the long-running Comedy Central series “South Park,” which was brokered for more than $500 million.
The media giant is accused of breach of contract after South Park Digital Studios made two special episodes available to Paramount and MTV and not WBD; “tortious interference” for causing SPDS to breach its agreement with WBD and “unjust enrichment” because it benefitted from streaming the specials that were outside the scope of the deal.
In a ruling on Tuesday, Justice Margaret A. Chan of Manhattan’s State Supreme Court advanced the case to the discovery stage and denied a motion for partial summary judgement to dismiss the unjust enrichment claim, which Paramount had argued is duplicative to the breach of contract and tortious interference claims.
The ruling moves the case to the discovery stage, clearing the way for a trial.
Warner Bros. Discovery claims that Paramount’s priorities “changed drastically” upon the launch of Paramount+ in 2021, resulting in a “multi-year scheme to unfairly take advantage” of the former conglomerate by breaching its agreement and “stealing its content.”
Per the 2019 agreement, where Warner/HBO outbid others in a highly competitive situation to garner the exclusive rights to the series, the company acquired the series’ entire catalog (23 seasons at the time) in addition to three new installments, totaling more than 300 episodes. Based on the representations made in the deal, WBD alleges that Paramount Global promised exclusivity in hosting all 333 episodes — the 303 existing at the time, in addition to the 30 that would be added across the three new seasons — and that sharing rights was a “non-starter.”
However, as a result of the pandemic, Paramount delayed filming on Season 24, instead producing two nearly hour-long COVID-themed specials that released initially on Comedy Central and were later put on HBO Max. Because of the specials’ longer runtime, WBD paid double the typical single-episode rate. The company says it did not receive Season 24 episodes despite the entry of a new deal in 2021 between the show’s creators and the Paramount subsidiary MTV worth $900 million to produce 14 original movies for Paramount+. At the time, the series was also renewed through Season 30.
Chan found that the “ambiguous contract” is “silent on vital details,” such as “how to decide what is in the Seasons 24-26 and whether plaintiff can pursue disgorgement against third parties who stream content before the plaintiff.”
“As such, the dispute is not properly addressed by the contract,” she wrote. “Given the ambiguity of the Term Sheet, parol evidence will likely be necessary to determine whether and how the Term Sheet applies — parol evidence that is unavailable at this early stage of litigation. Thus, summary judgment is denied as premature.”
Chan also said that the unjust enrichment and tortious interference claims in the case “share little overlap,” making it premature to determine whether the former claim is duplicative.
“Because there are still disputed facts regarding the scope of the parties’ relationships and the rights to the Specials, plaintiff is not required to elect between tortious interference and unjust enrichment at this stage,” Chan added. “After discovery, when the facts are no longer in dispute, plaintiff can choose a claim.”
In addition to the three existing claims, Paramount previously faced two additional claims of “breach of the implied covenant of good faith and fair dealing” and “violation of New York Business Law,” though those had been dropped in November.
