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Ryan Kavanaugh Hit With Fraud Suit By Ex-Relativity President; Says CEO Has Resigned, Porn Shoots In Office

Deadline logo Deadline 1/12/2017 Dominic Patten
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(Updated with statement from Dana Brunetti) EXCLUSIVE: As Relativity teeters on the brink of returning to bankruptcy again, the studio’s former president Adam Fields today slapped company founder Ryan Kavanaugh with a potential multi-million dollar fraud lawsuit.

The jury seeking complaint states that Fields “is but the latest in a very long line of complainants that have been duped and defrauded by Defendant Ryan Kavanaugh” and also states that the Relativity CEO has also resigned from the company — something that has been rumored for a couple of weeks but not confirmed by the company itself.

“Fields arrived at Relativity and found not only a dysfunctional company that operated closer to the cantina scene in Star Wars than a normal production company, but also that Kavanaugh had grossly exaggerated and misrepresented Relativity’s financial outlook and its ability to produce films,” reads the 17-page filing against Kavanaugh and others that seeks unspecified compensatory and punitive damages to be proven at trial.

Given his experience both on set for Relativity and from his years in the business, Fields’ title of co-president of production was supposed to oversee business affairs, physical and post-production and bring some bottom-line financial common sense to the company. He was to work alongside what he thought was to be a an equal partnership with the other co-president Dana Brunetti. However, that relationship seemed doomed from the beginning when Fields arrived as co-president only to find that there was no other co-president. Brunetti was president and Kavanaugh gave Fields a co-president title that he shared with no one.

Alleging threats from recently departed Brunetti, a duplicitous Kavanaugh and porn website photo shoots in the office, the complaint filed Wednesday in Los Angeles Superior Court pulls back the curtain on what seems to be a husk of a company, its inner workings, and “hostile environment.” Requests for comment by Deadline from Kavanaugh were not returned. Brunetti is not named as a defendant in the suit.

Although having been in talks with Kavanaugh directly for months, Fields officially joined Relativity in April of last year having negotiated a four-year contract and a $10 million guarantee for his services. That deal included a multi-million-dollar buyout of his stock in lieu of waiting for a promised IPO — a clause which, apparently, according to today’s lawsuit, no one else in the company had. Fields was told by the company’s chief counsel, Lori Sinanyan, that his contract was “too good” and that Fields had taken advantage of Kavanaugh by negotiating directly with him. The suit stated that Kavanaugh chided Fields for not waiting for the huge upside of the IPO.

Fields’ suit states that the Relativity’s Kavanaugh also “assured him that Relativity would be and was sufficiently capitalized following its reorganization to develop, produce, market and distribute films. Unbeknownst to Fields at the time, Kavanaugh’s representations concerning the financial outlook of the company were patently false.”

“Relativity’s cash flow problems became particularly apparent to Fields when he discovered that the so-called ‘big digital initiative’ with which the company was supplementing its income was a pornography website that it invested in a discovery Fields made when he saw a group of ‘models’ show up at Relativity’s offices for a meeting with Brunetti for what he later learned was a photo shoot,” the complaint alleging fraud and negligent representation adds. Fields himself was let go in September for alleged breach of contract for leaking company info — a claim he denies in today’s complaint.

“The ‘porn’ site referred to is egotastic, which I had nothing to do with and predates my time at Relativity,” said Brunetti in a statement to Deadline.”Unfortunately, I never once met with any models for a photo shoot,” the producer added. “Though having a little insight into how Adam Field’s thinks, I am not surprised he could have that fantasy about me.”

Fields’ suit says there were prolonged tactics by Kavanaugh and others at the company to sideline and eventually pink-slip him because he and Brunetti clashed as he tried to make prudent deals for the company to keep them on the right path. According to the lawsuit, deals were then negotiated behind Fields’ back out of fear that the co-president would veto the deal not financially sound. “Fields would often see drafts of deals for the first time when they ~ were close to conclusion. On one occasion, when Fields asked why he was just being made aware of a deal at the time, he learned that Kavanaugh had specifically instructed the

attorney not to share it with him because Kavanaugh knew Fields would nix the bad deal,” the lawsuit states. “Fields further learned that attorneys had been given “strict instructions” by Brunetti to not allow Fields to “hold up any deals.”

“The hostility toward Fields came to a head in late August 2016,” claims the complaint. “Brunetti had made it clear that Fields was to have no authority, stating in an August 29, 2016 email to Fields on which numerous staff members were copied: ‘Despite what you may tell people on the outside, I’m in charge and make all decisions,’ ” Fields’ dense filing recollects. “The following day in a business affairs meeting, Brunetti made vulgar, loud insults toward Fields in front of the staff and then physically threatened Fields, stating: ‘I’ll fucking crush you,’ ” says the filing, while also describing other “icy” meetings, missed film credits and more that marred his brief tenure at Relativity.

Relativity has had a hard go financially for the past couple of years and ended up having to file for Chapter 11 bankruptcy protection. It seems that despite all the lawyers, would-be investors, reorganizations, new hires and even a couple of theatrical releases, things haven’t improved at Relativity. In recent months there have been layoffs, and what little staff is left was put on a pay furlough. Then there was Brunetti exiting late last year, EuropaCorp leaving Relativity to pact with STX and now today’s lawsuit, which lays all the rotten guts out there.

“While our complaint against Ryan Kavanaugh and the allegations of fraud against him speak for themselves, we look forward to Mr. Kavanaugh having to answer these allegations in front of a jury,” said Fields’ lawyer Dale Kinsella.

Fields and his Rebel Productions are represented in the matter by Kinsella and Gregory Korn of Kinsella Weitzman Iser Kump & Aldisert LLP.

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