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This week, Stallone filed contract and fraud claims against Warner Bros. through his loan-out company, Rogue Marble, seeking lost profits from his 1993 sci-fi film “Demolition Man.” The complaint was filed in Los Angeles Superior Court. Stallone aims at doing something about “Hollywood Accounting” and intends to help other in the creative community. Stallone is seeking restitution for the alleged contractual breach and is also attempting to gain greater damages under fraud claims.

The complaint alleges that the studio’s conduct is “unscrupulous, unethical and offensive, and causes substantial injury to consumers.” and “threatens or harms competition because other studios have their own agreements with profit participants and account using their own accounting methods… WB attempts to keep its accounting method hidden from competitors and the public at large because revealing such methods will have an impact on competition.”

In the complaint, Stallone alleges that “the motion picture studios are notoriously greedy” and in this particular scenario there is an “outright and obviously intentional dishonesty perpetrated against an international iconic talent.” Rogue Marble was said to not be accounted for, and “WB just sat on the money owed to Rogue Marble for years and told itself, without any justification, that Rogue Marble was not owed any profits.” These inconsistencies were revealed when Rogue Marble asked for an accounting for which WB allegedly “sent a bogus letter asserting the film was $66,926,628 unrecouped. When challenged about this false accounting, it made a double-talk excuse, then prepared an actual profit participation statement for the same reporting period, and sent a check for $2,820,000 because the Film had, in fact, recouped its deficit.”

Stallone got 15% of defined gross when the picture earned $125 million, however, if in fact “Demolition Man” earned over $200 million, his percentage would increase to 17.5% and when it surpassed $250 million, his profit ascends to 20%. Since “Demolition Man” succeeded $125 million, Stallone contends that he is entitled to at least 15%.

Stallone states that after 1997 he did not receive a profit participating statement until his agents inquired with Warner Bros. in 2014. In January 2015 Stallone acquired a short summary, which is allegedly a deficit for a film, which said that no payment, was due. Stallone’s company mistrusted the validity of the numbers “because they did not make any sense.” Subsequently, another statement was received alongside a $2.8 million check. The current complaint alleges that there is additional contingent compensation.

Stallone also alleges fraud based on the studio’s misrepresentation and practiced of intentionally concealing facts. Stallone is also bringing a cause of action that alleges Warner Bros. has engaged in unfair business practices.

Finally, Stallone is also seeking injunctive relief and complaint states that he “is entitled to, among other things, a full accounting an explanation of how this practice came to be, interest, damages, and an end to this practice for all talent who expect to the paid by WB for the fruits of their labor.”

Warner Bros. has yet to respond.


Credit: Jessica Wong


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