Benjamin Melniker and Michael Uslan (plaintiffs), owned the movie rights to the Batman comic-book characters. Melniker was the former general counsel and senior executive of MGM, a major motion-picture studio. Melniker and Uslan entered into an agreement with Polygram Pictures, Inc. (Polygram) (defendant) to develop and produce a Batman movie (Batman). Polygram later assigned the contract to Warner Bros. (defendant). Under the agreement, Melniker and Uslan were to receive 13 percent of the “net profits” of the film, as defined under the contract. Under the contract, the calculation of “net profits” included various overhead costs, tax credits for foreign taxes, sound stage holdover charges, only 20 percent of revenue from videocassette distribution, and interest charges on production costs. Melniker, Uslan, and the two corporations that furnished their services, Batfilm Productions, Inc. and Franklin Enterprises, Ltd., (plaintiffs) sued Warner Bros. and Polygram, claiming Melniker and Uslan did not receive their fair net-profits compensation from Batman.