This section contains the nature of the case and procedural background.

In 1979, Melniker and Uslan (Ps) obtained an option on the motion picture rights to the Batman comic book characters. In November 1979, they made a deal with Casablanca Productions (Polygram's predecessor) for the development and production of a motion picture to be based on those characters (Casablanca Agreement). Under the Casablanca Agreement, Ps were entitled to receive certain fixed and contingent compensation if a Batman motion picture were produced. Polygram assigned to Warner Bros. (D) its rights and obligations. Ps and D signed a written amendment to the Casablanca Agreement (Warner Agreement). Ps were entitled to receive $300,000 in fixed compensation for Batman, plus a $100,000 “deferment” once the film generated a certain level of receipts, plus 13% of the so-called “Net Profits,” as defined in an attachment to the Warner Agreement. D paid the fixed and deferment fees and an additional $700,000 in fixed fees on two additional motion pictures (Batman Returns and Batman: Mask of the Phantasm). Although Batman has generated more revenue than any other D film, it has not generated any “Net Profits” under the contract. The calculation of net profits included various overhead costs, tax credits for foreign taxes, soundstage holdover charges, 20 percent of revenue from videocassette distribution, and interest charges on production costs. Ps filed suit in 1992 claiming, inter alia, they were denied their fair “Net Profits” compensation. At the close of Ps' case, the Court believed that Ps had offered evidence to prove that the Warner Agreement was a contract of adhesion that should be strictly interpreted against Warner Bros. and should not be interpreted in a way that would be contrary to Ps' reasonable expectations. The primary claims originally to be tried an action for an accounting of the revenues and expenses of Batman and a declaration that Ps' “Net Profits” definition is unconscionable and, thus, unenforceable. D appealed.

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