Basinger vs. Mainline

Background Information.

In 1991, Main Line Pictures, Inc. sued actress Kim Basinger (and others) for breach of contract. Basinger had been in negotiation with Main Line to star in the film, "Boxing Helena" but had withdrawn from the project. Main Line claimed that Basinger’s withdrawal affected their potential $3 million domestic and $7.6 million in foreign pre-sale agreements based on Basinger's participation in the film. After her withdrawal, a lesser known actress, Sherilyn Fenn (a star of the television series, "Twin Peaks") was chosen to replace Basinger, resulting in only $2.7 million in foreign pre-sale agreements and no domestic distributor as of the time of the trial. Main Line contended that it incurred significant financial damages from Basinger's withdrawal from the project and sued Ms. Basinger. The case was tried in early 1993 in the Superior Court of the State of California, for the County of Los Angeles. Basinger was found liable for lost profits to the sum of $7,421,694 in damages and an additional $1.5 Million for bad faith denial of contract. Basinger appealed and filed for bankruptcy. The original decision was reversed on appeal in 1994.

1) Should Main Line's maximum and minimum lost profit amounts be revised downward for the following? Why?

a. The domestic distribution revenues of $3 million because the deal had not been

finalized.

The lost profit amounts should not be revised downward. The fact is that Kim Basinger agreed to appear in “Boxing Helena” produced by Main Line Since “Boxing Helena” with Kim Basinger was never filmed, it is impossible to know if it would have met or exceeded projected revenues. Main Line claimed it had lost $3 million and in “potential domestic revenue” and “$7.6 million in foreign pre-sale agreements” based on an event that never occurred. It is reasonable, however, to assume that a film starring Kim Basinger would have more “star appeal” than one starring Sherilyn Fenn. If we accept the...