Sylvester Stallone sues Warner Bros. over studio accounting practices

For years, many filmmakers have gritted teeth about the notoriously labyrinthian accounting practices used by movie studios; some have even tried to fight back. Now, the latest knight in shining armor to tilt at the studio bookkeepers is Sylvester Stallone.

Describing himself as "one of the greatest American talents of the last and present century," Stallone filed suit with his production company, Rogue Marble, against Warner Bros. on Wednesday, alleging breach of contract, unfair business practices and accounting fraud in connection with the revenues from Stallone's 1993 sci-fi film, Demolition Man.

The film, which also starred Sandra Bullock and Wesley Snipes, made about $58 million in its domestic theatrical run, another $101 million worldwide, and probably even more in home video sales, although the latter amount is not clear.

Stallone's lawsuit asserts that Warner Bros. has knowingly played fast and loose with the accounting of the film's revenues and owes him profits. But he also staked a wider motive: Reforming "Hollywood accounting" for the benefit of "all talent" in Hollywood.

"The motion picture studios are notoriously greedy," the lawsuit says. "This one involves outright and obviously intentional dishonesty perpetrated against an international iconic talent. WB decided it just wasn't going to account to Rogue Marble on the film. WB just sat on the money owed to Rogue Marble for years and told itself that Rogue Marble was not owed any profits."

The suit says that at one point, Warner Bros. claimed that the film failed to recoup a deficit of about $67 million. When challenged on that, the studio later sent a check for nearly $3 million.

Stallone wants a "full accounting" and an explanation of "how this practice came to be, (plus) interest, damages and an end to this practice for all talent who expect to be paid by WB for the fruits of their labor."

The suit does not specify damages because "Rogue Marble is not presently aware of the exact amounts of damages resulting" from the studio's practices, and wants a jury trial to determine that.

But it is clear how Stallone views the studio's behavior: "Unfair, unlawful and fraudulent."

"Defendants' conduct is unscrupulous, unethical and offensive," the suit states.

Warner Bros. is the same studio that distributed 2015's Creed, which earned Stallone, 70, an Oscar nomination.

His suit is replete with complicated industry and accounting terms — artist loanout agreement, defined gross of the picture, profit participation statement — but the bottom line is that Stallone believes studio accounting practices are intentionally baffling and complicated in order to unfairly benefit the studios at the expense of filmmakers.

"WB intentionally concealed or suppressed the material facts with the intent to defraud Rogue Marble because, by concealing or suppressing the facts, WB was able to maintain control over a significant amount of money for its own benefit.," the suit says.

Stallone is seeking "disgorgement of contingent relief wrongfully withheld," and punitive damages against Warner Bros.

Stallone's lawyer, Neville Johnson, declined to comment further. Warner Bros. has not yet responded to the suit.

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