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Fandango Sues Moviefone

29 Apr, 2002 By: Staff Reporter

Online movie ticketing operation Fandango Inc. filed a lawsuit against Loews Cineplex's parent company, Onex Corp., and competitor AOL Moviefone after Onex rejected Loews' contract with Fandango in bankruptcy court two weeks ago.

The suit, filed Thursday with the Los Angeles Superior Court, claims Moviefone negotiated with Loews Cineplex and Canadian-based holding company Onex to abandon the chain's exclusive advanced-ticketing agreement with Fandango for a competing deal with Moviefone.

“The malicious and fraudulent conduct of defendants has a potentially devastating effect on Fandango," the filing read.

Santa Monica-based Fandango claims that Loews, which maintains a seat on Fandango's board of directors and was one of the seven founding movie exhibitors in Fandango's online service, entered into an exclusive agreement in March 2000 that would become valid in February 2002 when Loews' existing contract with AOL MovieFone expired.

Fandango claims it spent considerable time and money preparing for the switchover, and that the contract was vital to securing new financing. The interference with contract, fraud and unfair competition lawsuit seeks at least $10 million in damages.

“We felt compelled to bring suit because we feel our rights to our contractual relationship with Loews has been threatened," said Sallie Green, vice president of marketing and product development.

New York-based AOL believes Fandango's suit "is baseless and we plan to vigorously contest the allegations in court," spokesman Jim Whitney said.

According to the filing, Loews "affirmed" its agreement after entering into bankruptcy in June, and invested an additional $500,000 into Fandango in November. The two companies then launched the service in February after a big media campaign. On April 18 Fandango was notified that Loews intended to reject the Fandango agreement.

Onex spokesman Anthony Monk, a defendant in the suit, declined to comment on it. Onex and Los Angeles-based Oaktree Capital Management purchased Loews out of bankruptcy in February.

–Nicole Sperling (Bloomberg news service contributed to this report.)

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