Universal reaches deal to settle class-action lawsuit for $26 million

Universal has agreed to settle a class-action lawsuit over home video royalties.

A proposed settlement reached Friday would provide $26 million to compensate directors, writers, actors and others who’ve alleged they’ve been underpaid their share of home video revenue, according to a court filing.

If approved by the court, the agreement would end a class-action lawsuit filed in January 2013 by director Colin Higgins.

Higgins alleged the studio short-changed him on his profit participation for the studio’s 1982 comedy “The Best Little Whorehouse in Texas.”

The case centers on what has long been a source of tension in the creative community: how Hollywood divvies up profits in the home video market.

Since the early days of the home video business, studios have calculated profit participation amounts to talent based on 20% of home video revenue.

Higgins and others argued their profit participation should be based on the full 100% of home video revenue.

Universal contended that it was following standard industry practice and that it did not violate profit participation contracts.

The case is one of several that have been filed against studios over the issue. 20th Century Fox, Paramount Pictures, Warner Bros and Sony Pictures also were also hit with similar class-action lawsuits in 2013. Most of the cases involve disputes over royalties from movies shot in the 1970s.

The notice of settlement was filed Friday in Los Angeles County Superior Court. It creates two $13-million funds to compensate class members and provides for up to $4.3 million in attorney fees.

A hearing is set for July 15 on a motion for preliminary approval of the settlement.

Neville Johnson of Johnson & Johnson, Paul Kiesel, and Daniel Warshaw of Pearson Simon & Warshaw represented the class members.