Nye

BACKGROUND SUMMARY

On March 31, 1993, Buena Vista entered into the Agreement with plaintiffs William Nye (Nye), James McKenna (McKenna), and Erren Gottlieb (Gottlieb), KCTS-TV (KCTS) and Rabbit Ears Production, Inc. (now Ablesoft, Inc.) to produce and distribute the Series together. Under the Agreement, in exchange “for certain rights” to exploit the Series, Buena Vista is to pay plaintiffs 50 percent of all contractually defined Net Profits. The Agreement calls for plaintiffs to receive quarterly accounting statements. However, Buena Vista did not automatically send these statements until 2005, when the Series earned Net Profits. In 2008, Buena Vista informed plaintiffs they had been overpaid due to an accounting error. Buena Vista asked plaintiffs to return the overpayments. A year later, Nye declined to return any overpayments, demanded additional information, and asserted Buena Vista had breached the Agreement. Buena

3 Vista rejected Nye’s claims and advised a formal audit could be sought under the Agreement. In the meantime, Buena Vista began recouping the purported overpayments from plaintiffs’ Net Profits. Nye attempted to negotiate a resolution short of an audit. On…