Category Archives: Lawsuits

The Fight Continues to Stop the Paramount/Warner Bros. Discovery Merger

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Bold red text reading 'Not so fast!' with a comic-style explosion background.

Monday brought the news that a dozen attorneys general caved to Paramount in their attempt to acquire Warner Bros. Discovery. The $111 billion deal was halted while an antitrust suit was brought by a dozen states with a trial originally set for March 2027. With opposition seemingly caved and giving up, the deal felt like a sure thing and would be closed by the September 30 deadline before a “ticking fee” began on October 1 adding costs to the mega-deal.

But, there’s still resistance.

Block the Merger, a group formed in opposition, was granted their motion to file amicus briefs regarding the deal and settlement. All amicus briefs will have to be filed on the docket no later than 12:01 am PST on September 25 and the deadline will not be extended and briefs submitted after not accepted.

A settlement hearing was set to be done today, and it was expected it would have rubberstamped the deal. But, with this latest decision by the Judge, things will be delayed a bit.

Paramount attempted to stop the approval of amicus briefs, stating a delay would “inflict massive harm” on Paramount without the filing of an antitrust action. It’s a similar action that had Paramount demanding a $1.88 billion bond from the dozen states and Writers Guild of America if their antitrust suit moved forward.

Paramount had threatened to leave California over the lawsuit by the attorneys general causing them, as well as other California elected officials, to swerve in the political game of chicken. Governor Gavin Newsom, L.A. Mayor Karen Bass (who is seeking reelection), California gubernatorial front-runner Xavier Becerra, and some unions urged California AG Bonta to settle fearing job losses from the move. In reality, the merger between Paramount and Warner Bros. Discovery will result in job losses in the 10s of thousands anyways.

But not all Democrats caved. Senator Cory Booker sent a letter to Judge Araceli Martinez-Olguin urging:

…the Court to subject the proposed consent decree to an independent public-interest review before entering it. The Court should measure the proposed remedies against the relief the States originally sought: an injunction blocking the merger altogether. The decree does not address the core of the case—that the merger is anticompetitive and will eliminate jobs.

Booker is asking for the deal between Paramount and the states to be subject to an “independent public-interest review.”

Judge Martinez-Olguin seems to be doing some due diligence asking attorneys to address by September 29 the concerns raised by Sen. Booker.

The judge challenged the AG officials in a hearing today if the settlement actually addresses the concerns they raised and the Clayton Act which is about antitrust concerns.

The judge also asked if the deal was “not the result of collusion and was more of an arm’s length process.”

California Senior Assistant AG Paula Blizzard in the meeting argued for the settlement but said that they were still prepared to go to trail starting March 2, 2027 as well as acknowledging the negative response to the settlement. Blizzard also noted that New Jersey, the state Booker represents, was part of the AGs initially suing and is part of the settlement. Blizzard pushed hard for the settlement thinking the five year time frame of it will somehow protect consumers and industry workers and “preserve competition.” Paramount’s attorneys highlighted the penalties that will keep them honest.

No matter, this isn’t a done deal after all and with a September 29 response date, Paramount gets closer to its “ticking fee” kicking in and the deal getting more expensive each day it drags on.

Discovery Plan in Diamond vs. Comic and Game Publishers Gets Approved

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We brought the news in early March that there was some movement in the court case between Diamond and numerous publishers. The various parties and Diamond met on February 26 and March 3-4 in an attempt to find a resolution, the nature of the claims and defenses, to arrange disclosures, and propose a discovery plan. On March 4, there was a filing hashing out the plan for discovery.

Discovery is the process where documents related to the case are handed over to the parties involved for them to go through as far as evidence. This can be emails, text messages, Slack messages, and can easily go into the millions of documents.

The issue is who owns the consigned goods that are still being held by Diamond. Zenescope, Action Lab Entertainment, Ablaze, American Mythology, Battle Quest Comics, Paizo, Living the Line, Herman & Geer Communications, and Green Ronin Publishing are all fighting to get their inventory back. Diamond wants to keep the inventory to be able to sell it off to pay creditors. JPMorgan Chase Bank wants Diamond to sell off the inventory so it can get paid back by Diamond. Sparkle Pop is involved because it has sold off some of the inventory when it wasn’t supposed to and currently is holding the physical product in a warehouse it controls.

While this has been ordered, there’s now multiple settlements making their way through the courts between Diamond, publishers, and Sparkle Pop (who is currently housing the consigned goods). One of those agreements is being litigated and the other was just announced. The one being litigated involves the publishers and this discovery timeline.

An updated timeline has been approved by the court:

  • Discovery Requests. The Parties shall serve all additional document requests, interrogatories, and requests for admissions on or before October 1, 2026.
  • Agree on ESI Search Terms. The Parties will make reasonable efforts to agree on ESI Search Terms on or before October 15, 2026.
  • Substantial Document Production Completion Date. The Parties expect to have document production substantially completed by November 15, 2026.
  • Fact Discovery Cut Off. The Parties have agreed that, except for Rule 26(a)(1) disclosures, all fact discovery in this case shall be initiated so that it will be completed on or before January 15, 2027. The Parties have agreed that they may take fact depositions at any time prior to the expiration of the fact discovery deadline.
  • Privilege Logs. Privilege logs shall be produced in accordance with the Federal Rules of Civil Procedure so as to be completed within five (5) business days of the related document production. Privileged communications occurring after June 15, 2025, need not be included on a privilege log.
  • Expert Initial Disclosures. The identity of expert witness and subject matter of expected testimony, per Rule 26(a)(2)(A) and 26(a)(2)(C)(i), shall be disclosed on February 1, 2027. Any rebuttal experts, and subject matter of expected testimony, shall be disclosed on February 8, 2027.
  • Expert Reports and Expert Discovery Cut Off. Expert reports and all other information required by Rule 26(a)(2)(B), along with any documents or information considered by the expert, shall be exchanged on March 1, 2027. Rebuttal expert reports and all other information required by Rule 26(a)(2)(B), along with any documents or information considered by the expert, shall be exchanged on March 15, 2027. All expert discovery shall be completed by April 15, 2027.

Based on all of those dates, we won’t see a court case before 2027.

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Breaking: Diamond and Trustee Morgan W. Fisher, Sparkle Pop, and 13 more Publishers Reach a Settlement

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Graphic text that reads 'NOW THAT'S WHAT I CALL A SETTLEMENT' against a colorful, abstract background.

Another big motion in Diamond’s chapter 7 drama has been filed today as a compromise has been reached between Diamond and its Trustee Morgan W. Fisher, Sparkle Pop, and 13 more publishers. This new settlement impacts the “Palik Consignment Group” which includes Aspen, Black Mask Studios, DSTLRY, Heavy Metal International, Magnetic Press, Massive Publishing, Oni-Lion Forge Publishing, Panini UK, Alien Books, Graphic Mundi, Titan Publishing Group, Vault Comics, and Dark Horse Comics.

The publishers, Diamond, and Sparkle Pop have been a fight regarding consigned goods. The publishers feel the goods are theirs, Diamond claims it has a right to them and wants to sell it to pay back debts, and it’s currently stored by Sparkle Pop (which purchased some of Diamond’s assets). Sparkle Pop has also been caught selling the consigned goods.

In August, Diamond and its Trustee reached a settlement with a different group of publishers, a total of 15. That settlement didn’t include Sparkle Pop and is currently being litigated further.

The two deals are very different. While the initial deal involved an audit and publishers paying for the packing and shipping, this deal is a similar concept but structured very differently.

It would end fights over relief between these publishers, Diamond, and Sparkle Pop, effectively closing the long-running battle over consigned goods.

The deal includes:

  • The Palik Consignment Group are granted Chapter 11 administrative expenses;
  • Money in Court Registry Escrow will be released to the Trustee;
  • When the settlement agreement with the Ad Hoc Consignment Group (the other publishers) is approved, the Trustee will disburse $308,890 to Sparkle Pop with remaining funds going to the Trustee;
  • The SP Escrow will be released to Sparkle Pop. That amount is $105,856;
  • The Distribution Agreements of the Palik Consignment Group are officially rejected;
  • Adversary Proceedings will be dismissed;
  • The Trustee will file a notice that the Consigned Inventory is abandoned and belongs to the Palik Consignment Group;
  • Sparkle Pop will get inventory of the default judgements including Digital Manga, Net Comics, Valiant, and the inventory covered in the Image Comics settlement.

Sparkle Pop will get $787,380 total. They are also part of Tariff Refund Rights Sharing and that as well as the escrow amount will satisfy Sparkle Pop’s claims against the Trustee, Diamond, and the Palik Consignment Group. Sparkle Pop has been fighting to get paid for warehouse storage as well as costs associated with selling consigned goods.

Tariff Refunds were mentioned, I believe for the first time, in this filing. They’ll be split 50/50 between Sparkle Pop and the Trustee minus whatever costs to get the refund.

The mechanism for publishers to get their product back is interesting. There are two options listed:

  • Pik&Pak Option 1: Sparkle Pop picks 4% of the value of remaining wholesale Consigned Inventory in lieu of payment; the remaining 96% is picked, packed, palletized, and made available without additional charge;
  • Pik&Pak Option 2: Each member pays 2% of wholesale value directly to Sparkle Pop; all remaining inventory is picked, packed, palletized, and made available. Risk of loss transfers upon loading at dock or tender to carrier.

Each Palik Consignment Group Member shall have thirty days after notice to remove its inventory from the Warehouse with failure to timely remove it being deemed abandonment. Members can also request that Sparkle Pop destroys the inventory at no additional cost.

This is a major step into wrapping up Diamond’s chapter 7 drama which began in January 2025. While there’s still a long way to go this is potentially a key compromise to wrapping things up.

You can read all of the filings below:

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Writers Guild of America admit Attorneys General Left Them Out to Dry in Paramount Appeasement

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An illustration of two arms engaged in a strong arm wrestling match, with the phrases 'Screwing Everyone,' 'Paramount,' 'Skydance,' and 'Democrat Attorneys General' labeled on the arms.

Today, a dozen attorneys general settled with Paramount regarding the company’s $111 billion takeover of Warner Bros. Discovery. The attorneys general received little in return but did try to make it look like they actually got something in return. In July, twelves states and the Writers Guild of America filed antitrust lawsuits in an attempt to stop the merger. The AGs have caved, along with numerous spineless unions, and now the WGA has spoken out in a rather damning statement. We put in bold the big “fuck you” to the AGs involved.

We continue to believe the merger will cause damage to writers and the industry at large. Now that the Attorneys General have settled with Paramount, however, as a nonprofit, the WGA must contend with the reality of forging ahead alone, with no backing from government enforcers, with a complex antitrust lawsuit that would cost millions of dollars to pursue through trial. Consequently, we have also settled our lawsuit with an agreement from Paramount to prohibit writer layoffs at CBS News Broadcast for 5 years, and to pay $17.5 million to our health fund along with our attorneys’ fees in the litigation.

Though we were not successful in blocking the merger, our advocacy brought more attention to the harms that this merger—and others like it—will cause. We will continue to fight the harms of industry consolidation.

As the number of outlets to sell our work to and the corresponding diversity of programming shrinks, we need industry-wide structural separation between streamers and studios in order to promote competition in programming, like the Financial Interest and Syndication Rules once required in broadcast television. We will continue to fight for these goals.

The merger is expected to cost 10s of thousands of jobs as well as negatively impact economies. Congrats attorneys general and Democrats for throwing the WGA under the bus! That’s how you continue to build support!

Details of the Paramount/Attorneys General Settlement Revealed

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California AG Bonta waving the white flag

California Attorney General Bonta and eleven other Democratic Attorneys General are celebrating their waving the white flag in their caving and settling with Paramount regarding its $111 billion takeover of Warner Bros. Discovery.

They’re actually celebrating a WHOLE FIVE YEAR court enforceable commitment of $1.5 billion to bolster film production and a $47.5 million fund for workers impacted by the merger as well as restrictions on how the company handles cable negotiations to help keep prices competitive.. That’s a whopping $300 million a year! Paramount has said it will save $6 BILLION a year in staffing reductions alone… that’ $47.5 million is all of 0.79% of their savings… The deal to purchase Warner Bros. Discovery is $111 billion. This commitment is a whole 1.3% of that and that’s over 5 years. It’s a sliver of Warner Bros. Discovery and Paramount’s profits.

It wasn’t just a dozen attorneys general that showed their inability to play hardball. They were joined by IATSE International President Matthew D. Loeb, Directors Guild of America National Executive Director Russell Hollander, iUNA! Local 724 Business Manager Alex Aguilar Jr., International Brotherhood of Teamsters General President President Sean M. O’Brien, and Sean Astin, President of SAG-AFTRA and Duncan Crabtree-Ireland, National Executive Director and Chief Negotiator of SAG-AFTRA.

The deal also includes:

  • 30 films a year — including 20 wide releases — in the first two years.
  • 32 films a year — with 21 wide releases — in years three, four, and five.
  • Paramount commits to release at least four independent films in each year of the commitment period.

To put this in perspective.

In 2024, Warner Bros. released 12 films in the top 200 and Paramount release 9 films for a total of 21. In 2025, Warner Bros. released 11 films in the top 200 domestic gross and Paramount released 12 for a total of 23. 2026 has 10 films by Paramount so far and 9 from Warner Bros. with another 11 still to come, currently, before the end of the year. That’s a total of 30 in 2026, so the commitment of 20 wide release films is a DECREASE from 2026 with 30 the same. There’s already 18 Warner Bros. and 12 Paramount films announced for 2027, that’s a total of 30, so their commitment is already met. 2028 already has 10 announced Warner Bros. films and 9 from Paramount, 19 of the 21 wide releases. Those numbers don’t include Warner Bros. or Paramount’s direct to video or streaming releases. The bump touted in perspective isn’t that much and has no protections after five years. To say this is a whole lot of nothing to make it seem like something is an understatement and shows how little those negotiating either understood the assignment or cared.

If Paramount fails to meet this film output requirement in any year, the company will be required to divest Miramax Studios and must pay $30 million per missed film toward the healthcare and retirement trust funds associated with the Writers Guild of America (WGA), International Alliance of Theatrical Stage Employees (IATSE), Directors Guild of America (DGA), International Brotherhood of Teamsters (IBT) and other unions, and to the National Association of Attorneys General (NAAG) for more antitrust enforcement.

Domestic Production: The $1.5 billion investment over five years also has a kicker if the company gets a U.S. federal film tax credit of at least 20%, the U.S. production would need to be increased to 20% for years one and two and 30% for the next three years from the current 5%. If a film tax credit is passed in California or New York, production investment would need to be increased to 40% of all film production being in the U.S.

California Attorney General Bonta has committed to kissing Paramount’s ass further to uncap California’s Film and Television Tax Credit.

Independent Film Fund: The company will form a fund with annual contributions of $5 million per year, for a total of $25 million. We have no doubt that money will then be siphoned into projects Paramount/Warner Bros. Discovery are involved in. It’ll be a net gain of zero.

Protection for Workers: The merged company will commit to $47.5 million in a Workforce Fund over five years for training and career development for workers fired by the merger. Paramount has stated they will have a savings of $6 billion through staff reductions alone. Workers are fucked in this one.

Cable Agreements: For five years, the negotiations for Paramount’s basic cable channels and Warner Bros. basic cable channels must be conducted independently. After five years, expect your cable rates to skyrocket or channels getting pulled. Consumers are fucked in this one.

Ongoing Monitoring: The company also agreed to appointment of an independent monitor to oversee its compliance with this agreement. We’re sure Trump and the Ellison’s friends will be taking part (or other ass-kissing individuals).

It has been reported that the board to oversee monitoring would be established within 180 days of closing, feature five individuals (established journalists active or retired with 10 years experience) and those individuals will be appointed by the company’s board of directors and feature “no more than two” “affiliated” with the same political party. If you can’t see the loopholes there and how toothless that’ll be, we don’t know what to tell you. The panel will resolves disputes over “alleged reporting bias or failure to meet agreed reporting fairness standards” as well as monitor editorial independence including from the ownership and shareholders. CNN’s already dwindling stature is getting double tapped with the buyout and then this.

This terrible deal has been blessed by lead Attorney General Bonta and the attorneys general of Arizona, Colorado, Connecticut, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon and Washington.

The protection for consumers and workers and minimal and this was all about caving to Paramount’s threats in an election year.

Word came out over the weekend that while Bonta wanted to settled, the AGs of New York, Connecticut, Minnesota, and Nevada were hold outs but eventually came around late Sunday. Bonta “assured them” he’d hold Paramount’s “feet to the fire” that the company stuck to its commitments. those commitments that have been leaked are all job related and have nothing to protect the company from lurching CNN right and playing propaganda for the Trump administration like it has for CBS. David Ellison’s father Larry Ellison is part of a group that has invested in TikTok, a major source of news for younger individuals. Larry Ellison is a friend of Donald Trump, even having been in meetings regarding the January insurrection by Trump. As part of the deal to purchase Paramount, the Ellison’s Skydance pledged to eliminate diversity, equity, and inclusion (DEI) programs and establish a CBS News ombudsman position to review bias complaints. Paramount has come under scrutiny for its takeover of CBS News removing its editorial independence for a more right-wing bent calling into question is history of quality journalism. Paramount owner David Ellison appointed Bari Weiss as the head of the news service as well as a conservative to act as its ombudsman, an “internal advocate for journalistic integrity and transparency.” That move by Ellison has tanked ratings for CBS News and 60 Minutes so there’s a chance that he may think about doing the same for CNN.

California Governor Gavin Newsom has been pushing for a settlement as he still attempts to run for President in 2028. This should kill any chance he had of that, which was slim to start. His advocating for it again sides him with billionaire oligarchs and big business instead of the general American public. He again shows he’s a Republican wolf in Democratic sheep clothing. There’s a chance it kills Bonta’s future, though he’s likely hitching it to Newsom hoping to land a role in his never going to happen Presidency. The other AGs will be facing questions about their approval of the deal and how they can claim they’re pro-consumer or pro-worker protections.

Paramount needed the deal to be completed as soon as possible as the cost of it would begin to increase by $7 million a day if not closed by September 30. With the projected lawsuit from the AGs starting in March 2027, it’d have added about $1.3 billion to Paramount’s cost.

Paramount also was facing the changing tide in American politics. While the Presidency, House, and Senate are currently favorable to them, it’s likely the Democrats will take the House and Senate in November. While it’s unlikely they’d find a spine to stop the deal, the chance greatly increases if they were to.

The Warner Bros. Discovery deal also puts Paramount into massive debt with 49.5% equity take by Saudi Arabia, UAE, and Qatar, each of them facing issues due to the current war in Iran. Add in the volatile wealth of David Ellison and his father Larry Ellison, founder of Oracle who is also funding the deal. Paramount will likely at some point have to sell assets to pay down debt.

Remember, vote Blue No Matter to gain further appeasement and lack of accountability for oligarchs!

AGs Cave to Paramount Putting the Final Nail in Antitrust Protection

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A coach in a white shirt with a whistle stands in a gymnasium, animatedly expressing the phrase 'Dollar, dollar bills ya'll'.

Hope that a dozen Democratic Attorneys General had spines were dashed this Monday as word has spread they have caved and settled with Paramount in the company’s move to acquire Warner Bros. Discovery. While full details have yet to be released, the initial details shows the settlement and focus was only on jobs, not protecting consumers or the media.

A lawsuit was launched by a dozen states to try to stop, or get consolidations, in Paramount’s purchase of Warner Bros. Discovery for $111 billion. The deal would consolidate the media further giving Paramount control over CNN along with Warner Bros.’ massive television and movie catalogue, HBO, HBO Max, DC Comics, and more. The states were joined by the Writers Guild of America.

Paramount played California and its Attorney General Rob Bonta perfectly, threatening to leave the state, threatening to cost it jobs and money, in an election year. The merger itself will cost the state money as well as jobs. It’s damned if you do and damned if you don’t situation. Paramount also was demanding a $1.88 billion bond from the states and WGA to cover possible damages if the case went to trial which was set for March 2027.

Word came out over the weekend that while Bonta wanted to settled, the AGs of New York, Connecticut, Minnesota, and Nevada were hold outs but eventually came around late Sunday. Bonta “assured them” he’d hold Paramount’s “feet to the fire” that the company stuck to its commitments. those commitments that have been leaked are all job related and have nothing to protect the company from lurching CNN right and playing propaganda for the Trump administration like it has for CBS. David Ellison’s father Larry Ellison is part of a group that has invested in TikTok, a major source of news for younger individuals. Larry Ellison is a friend of Donald Trump, even having been in meetings regarding the January insurrection by Trump. As part of the deal to purchase Paramount, the Ellison’s Skydance pledged to eliminate diversity, equity, and inclusion (DEI) programs and establish a CBS News ombudsman position to review bias complaints. Paramount has come under scrutiny for its takeover of CBS News removing its editorial independence for a more right-wing bent calling into question is history of quality journalism. Paramount owner David Ellison appointed Bari Weiss as the head of the news service as well as a conservative to act as its ombudsman, an “internal advocate for journalistic integrity and transparency.” That move by Ellison has tanked ratings for CBS News and 60 Minutes so there’s a chance that he may think about doing the same for CNN.

California Governor Gavin Newsom has been pushing for a settlement as he still attempts to run for President in 2028. This should kill any chance he had of that, which was slim to start. His advocating for it again sides him with billionaire oligarchs and big business instead of the general American public. He again shows he’s a Republican wolf in Democratic sheep clothing. There’s a chance it kills Bonta’s future and the other AGs will be facing questions about their approval.

Paramount needed the deal to be completed as soon as possible as the cost of it would begin to increase by $7 million a day if not closed by September 30. With the projected lawsuit from the AGs starting in March 2027, it’d have added about $1.3 billion to Paramount’s cost.

Paramount also was facing the changing tide in American politics. While the Presidency, House, and Senate are currently favorable to them, it’s likely the Democrats will take the House and Senate in November. While it’s unlikely they’d find a spine to stop the deal, the chance greatly increases if they were to.

The deal, which will reportedly be revealed this Monday, involves an investment of $1.5 billion for home-grown film production and protecting and creating jobs, requirements for additional production if the federal government approves tax incentives, and a $47.5 million workforce development fund and to honor existing collective bargaining agreements. Paramount grossed $28.75 billion in 2025 and Warner Bros Discovery annual gross profit for 2025 was $16.411 billion. The amount of money mentioned is nothing for the mega company and likely would include money already going to be spent in domestic production anyways.

Paramount has stated they project $6 billion in cost savings when pitching investors, which is expected to be through significant layoffs.

The deal also puts Paramount into massive debt with 49.5% equity take by Saudi Arabia, UAE, and Qatar, each of them facing issues due to the current war in Iran. Add in the volatile wealth of David Ellison and his father Larry Ellison, founder of Oracle who is also funding the deal. Paramount will likely at some point have to sell assets to pay down debt.

We’ll have more details when they’re officially released.

Trump’s DoJ Supports his Buddy David Ellison’s Bond Demand in its Antitrust Fight with States

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Warner Bros. logo

The Ellison’s support of Donald Trump keeps paying off as the Department of Justice, under President Trump, have filed to support David Ellison and Paramount‘s demand for a $1.88 billion bond from a dozen states and the Writers Guild of America in the antitrust lawsuit currently going on over Paramount’s attempt to acquire Warner Bros. Discovery. On August 17, Paramount requested the bond, a federal law protects mergers and acquisition parties from “potential harm” from halting the deal for litigation.

In July, a dozen states, as well as the Writers Guild of America, sued Paramount citing antitrust concerns to stop the $111 billion deal to take over Warner Bros. Discovery. With the trial set to take place in March 2027, the deal will be delayed with a cost increase, “ticking fee,” for Paramount Skydance to complete its purchase. The price increases 25 cents per share per quarter after September 30 it’s not approved. That would add $627 million each quarter, or roughly $7 million per day and if the court case’s timeline remains what has been proposed, it’ll add about $1.3 billion to the $111 billion cost. Paramount’s bond request is an attempt to recover that increased cost. The bond would cover potential damages if the preliminary injunction under federal antitrust law is overturned.

Paramount had agreed to freeze its acquisition until the trial is completed or June 2027, whichever comes first, before filing the bond request.

Hearing set for October regarding Audit of Consigned Goods

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October 6 is going to be a busy day when it comes to Diamond’s bankruptcy. A hearing was already set regarding the compromise between 15 publishers, Diamond, and its trustee Morgan W. Fisher regarding consigned goods. Now, two more issues are being added to the discussion.

A notice has been posted expanding the scope of that original hearing (we’ve taken the notice from American Mythology but the same notice was sent to multiple publishers):

In person hearing Courtroom 9−D Baltimore, Judge Rice.
PLEASE TAKE NOTICE that a hearing will be held on 10/6/26 at 10:00 AM to consider and act upon the following:
32 − Third Party Plaintiff’s Motion to Compel Discovery Filed by American Mythology Productions LLC. (Attachments: # 1 Exhibits 1−6 # 2 Proposed Order) (Hopkin, Catherine)
33 − Memorandum of Law in Opposition to Third−Party Plaintiffs Motions to Compel Discovery Filed by Jodie E. Bekman (related document(s)32 Motion to Compel filed by 3rd Party Plaintiff American Mythology Productions
LLC, Counter−Claimant American Mythology Productions LLC, Defendant American Mythology Productions LLC).(Attachments: # 1 Exhibit 1 # 2 Exhibit 2 # 3 Exhibit 3) (Bekman, Jodie)

The first issue, “Third Party Plaintiff’s Motion to Compel Discovery,” is regarding a filing in early August where publishers requested the court to force Sparkle Pop to allow for an audit of the consigned goods in the company’s possession. The plaintiff’s claim they haven’t gotten an updated count as to what is in the warehouse and there needs to be a physical count of what remains.

The second topic, “Memorandum of Law in Opposition to Third−Party Plaintiffs Motions to Compel Discovery” is Sparkle Pop’s response to that. They’re against the request for a long list of reasons including the cost to them, safety issues, and more.

Paramount and State Attorneys General set New Settlement Talks for October

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A warning graphic featuring a skull and crossbones, with the text 'warning antitrust settlement talks occurring' in bold white letters on a black background.

In late August, Paramount and State Attorneys General were set to meet to discuss a settlement regarding Paramount’s acquisition of Warner Bros. Discovery. That meeting was canceled due to a “lack of good faith” by Paramount. California Attorney General Rob Bonta accused Paramount of breaking confidentiality and misrepresenting the discussions.

The judge in the case has instructed the parties to sit down for two consecutive days at the end of October. To prevent it from being a waste of time, the parties will submit a schedule to the judge by the end of September 15. The request to meet is pretty standard in cases and doesn’t indicate the parties are close to a settlement or it’s even in progress.

A dozen state attorneys general are suing Paramount to prevent, or get changes, to Paramount’s $111 billion purchase of Warner Bros. Discovery. The states believe that the deal violates antitrust laws and will be negative to consumers and those within the entertainment industry.

The Halloween-ish meeting is one of major dates coming up for the case.

The Supreme Court has asked the attorneys general to respond to a push by two Republican attorneys general to get the Supreme Court to stop the lawsuit. They have to respond that lawsuit by September 25.

A hearing is set regarding a $1.88 billion bond that Paramount is demanding from the states and Writers Guild of America over damage they’ll suffer due to delays of the deal.

At the end of September, a $7 million a day ticking fee for Paramount’s deal begins. That fee is why Paramount is demanding the bond from the parties suing them. The ticking fee will add $635 million a quarter to the deal and currently, the court date for the antitrust case is set for March 2027 which would add about $1.3 billion to the cost of the deal.

Sparkle Pop submits Memorandum of Law Dropping Details of the Consigned Goods Negotiations

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A hearing has been set for October 6 focused on the potential compromise between (old) Diamond and its trustee Morgan W. Fisher and 15 publishers regarding the fate of consigned goods in possession of (old) Diamond and the warehouse of Sparkle Pop. While (old) Diamond, Fisher, and the publishers are in favor of the deal, lending bank JPMorgan Chase submitted a filing with a “reservation of rights” while Sparkle Pop submitted a filing objecting to the compromise. Now, Sparkle Pop has submitted a “memorandum of law” going into details about the negotiation over the consigned goods.

Here’s how things break down with the Sparkle Pop’s key points as well as revelations of the behind the scenes negotiations.

Inspection of Sparkle Pop’s Distribution Facility

Part of Sparkle Pop’s objection is the call for inspections of Sparkle Pop’s distribution facility which it calls “highly intrusive.” Publishers have filed a motion to get Sparkle Pop to open up the facility to inspect what remains and get a better account of what remains. There’s a belief that Sparkle Pop has sold more consigned goods than is known and that money would be owed for that.

Sparkle Pop believes the inspection is a fishing expedition to get more information to be used in what it calls “baseless and hypothetical claims” that would be brought against Sparkle Pop.

There has been hints at negotiations between the publishers, (old) Diamond, Fisher, and apparently Sparkle Pop. But, Sparkle Pop in their objection stated they were a part of the settlement agreement. Directly from their objection filing with the key part in bold:

If this Court were to approve the proposed settlement (negotiated without Sparkle Pop’s involvement and which wholly discounts Sparkle Pop’s interests), Sparkle Pop would not only have to relinquish its interests in the registry and escrow…

But, in this latest filing, Sparkle Pop says they were part of the negotiations:

The parties engaged in meet-and-confer discussions by email over the course of a week, during which Sparkle Pop made multiple unilateral concessions and provided supporting data. After the last round of Sparkle Pop’s concessions, however, when Sparkle Pop believed that the parties were negotiating in good faith towards a resolution, counsel for the Third-Party Plaintiffs abruptly terminated discussions without further explanation and brought this Motion.

But, this can be true as well, Sparkle Pop provided data and info but wasn’t part of direct negotiations. They also could have been involved at one point and it was determined they were being an obstacle to getting things settled as well. All of this is sure to come out at some point.

What has come out is that Sparkle Pop wanted publishers to pay for the inspection. In this latest filing, Sparkle Pop states they first proposed a fee of $1,000 per hour to “defray costs Sparkle Pop expected to incur” during the inspection as well as wanting the plaintiffs (publishers) to pay the rent and processing fees that Sparkle Pop claims it is owed. Sparkle Pop then reduced the proposed fee to $639.94 per hour and dropped the rent request entirely.

Sparkle pop then proposed:

  1. The inspection would be carried out by Debtor’s former warehouse manager, Shawn Hamrick, with the assistance of persons designation by the Third-Party Plaintiffs, as preapproved by Sparkle Pop;
  2. The Third-Party Plaintiffs to pay Sparkle Pop $639.94 per hour, to defray the significant costs Sparkle Pop would incur in connection with the inspection.
  3. The inventory count for the inspection shall be a basic cycle count (i.e., a general inventory count by carton),
  4. The inspection shall be completed no later than 10 business days from commencement of the inspection, shall be no more than one, 8-hour shift per day, and shall be conducted only after business hours or 5:00 p.m. Central Time.
  5. Sparkle Pop shall not be required to stage the Consigned Inventory for the inspection,
  6. No materials shall be removed from the Warehouse during the inspection, which would be strictly limited to Third-Party Plaintiff s consigned inventory, identified by location numbers.

Sparkle Pop claims they expect to incur a cost of $770.32 per hour for the inspection and include that logic in an exhibit you can read below.

According the Sparkle Pop, the publishers agreed to points 3 through 6 with “certain qualifications.” There was an objection to the first two points over what they saw as “unilateral control” over the inspector and there was no compromise candidate proposed. The second point was just rejected.

Sparkle Pop says the inspection is far more complicated than providing documents and that relevance needs to be proved because of that.

Who Owns the Stock?

Sparkle Pop continues to focus on the fact that who actually “owns” the consigned goods is still up for dispute. There’s over 30 lawsuits submitted by (old) Diamond against publishers in an attempt to resolve that question and that has yet to be decided upon and might not due to the compromise over the goods. In it, (old) Diamond gives ups its claims, which brings us to…

If There’s a Settlement, Do We Need the Inspection?

It feels like there’s some circular logic in this point. The publishers will need to pack and ship the goods as part of the settlement, but wouldn’t they need to know what’s there to ship? Sparkle Pop doesn’t seem to think so stating that the settlement is out there and that the consignors own the goods (which also seems to be odd to state since Sparkle Pop asked who owns it?), claims in cases go to the consignors, and Diamond abandons claims on the consigned goods.

Though Sparkle Pop objected to the settlement, they state they’re not against Diamond abandoning its claims:

Although Sparkle Pop has filed an objection to the motion to approve this settlement, it has not objected (and does not object) to the Trustee’s abandonment of the Estate’s claims to the Stock.

Sparkle Pop has issues with all of those cases between (old) Diamond and the publishers settled and then the publishers using the ongoing cases to try to get an inspection.

Because there is no remaining dispute as to the ownership of the Stock, the underlying adversary proceedings are effectively defunct, and if the proposed settlement between the consignors and the Trustee is approved, they will be entirely rendered moot. Under these circumstances, it is improper for the Third-Party Plaintiffs to simultaneously petition this Court to approve a settlement that resolves the adversary proceedings in their favor, while also invoking these same proceedings as the ostensible basis for seeking a highly intrusive physical inspection of Sparkle Pop’s premises.

Have they just asked for an updated inventory?

While publishers hint that they’ve asked for an update on inventory, Sparkle Pop says they haven’t. A “less intrusive” method than an inspection would be for them to ask the court to force Sparkle Pop to update the inventory list.

You can read all of the filings below:

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