Cases & Deals

Relativity Media prevails in high-stakes litigation against Netflix

Clients Relativity Media, LLC

A federal bankruptcy judge in New York ordered Netflix to pay Relativity Media, LLC all of its more than $800,000 in attorney’s fees and expenses incurred in a high-stakes litigation that prevented Netflix from streaming two Relativity Films prior to their theatrical release. In issuing his ruling, Bankruptcy Judge Michael Wiles rejected Netflix's argument that in awarding fees pursuant to the contractual attorneys' fees provision to Relativity as the prevailing party, that "Relativity should not be allowed to recover the cost of a Cadillac (or a Ferrari) if a Honda Civic would have done the job."

Jones Day had represented Relativity Media in its chapter 11 case that was filed in July 2015 with approximately $1 billion in debt which resulted in a confirmed plan of reorganization in under one year. When Netflix threatened to release two Relativity films on its internet streaming service prior to their theatrical release, Relativity sought an order from the Bankruptcy Court preventing Netflix from releasing the films until after they had been theatrically released. Relativity prevailed in an expedited trial held before Judge Michael Wiles, who oversaw Relativity's Chapter 11 bankruptcy last year, and then sought to have Netflix pay the legal fees of Jones Day pursuant to a contractual provision.

"A complicated, fast-paced, "bet the company" litigation requires counsel of higher caliber (and expense) than a routine case that has little at stake. A party may not need a Ferrari to go to the corner grocery store, but winning a Grand Prix race is a different matter" said Judge Wiles.

In his 39-page opinion, Judge Wiles ordered Netflix to pay all of Relativity's legal fees finding that the rates were reasonable and market-based, and the matter "had to be litigated at a fast pace and under great pressure. The litigation required sophisticated counsel who could devote a great amount of specialized resources to the task on short notice."

Relativity Fashion LLC, Case Nos. 1:15-bk-11990 and 1:15-bk-11989 (Bankr. S.D.N.Y.)