Texas Film Commission Permitted to Slice and Dice Financial Incentives to Machete Films

by Foley Hoag LLP - Trademark, Copyright & Unfair Competition

It’s been a disappointing few months for Machete, Danny Trejo’s “Mexploitation” character created by Robert Rodriguez.  After making powerful enemies in Mexico, former Federale Machete found himself a day laborer and vigilante in Texas. His adventures allowed him to exact some bloody satisfaction against fictional corrupt Texas lawmen and politicians, but he is having decidedly less success against the real-world Texas government.  Recently, both state and federal appellate courts affirmed the dismissal of claims brought by the producers of the Machete films, thus approving the State of Texas’ decision not to provide economic incentives to the franchise.

The First Machete Film

A few minutes into Machete (the first film in the series, which was borne of a mock trailer from the intermission of the Tarantino/Rodriguez two-part bloodbath Grindhouse), a fictional member of the Texas border control shoots a pregnant Mexican woman in the abdomen, declaring as justification that, “[i]f it’s born here, it gets to be a citizen, just like you and me.”

Most people would consider that a less-than-flattering portrayal of Texas.  The Texas Film Commission, which administers the Moving Image Industry Incentive Program, apparently agrees.  The Program, like those in other states, offers financial incentives to filmmakers who produce movies in Texas, creating local jobs.  Not all movies, however, are so generously welcomed.  The Commission’s rules provide that it “may deny an application because of inappropriate content or content that portrays Texas or Texans in a negative fashion.” The Commission agreed to give Machete a grant in 2009 after reading the script, but changed its mind once it had reviewed the final film in 2010 – even though everyone agreed that the script had undergone no significant changes.

In 2013, Machete’s Chop Shop, which produced Machete, filed a lawsuit in Texas state court, seeking a declaration that the Commission acted improperly under its own rules, or that those rules were themselves invalid.  The Chop Shop argued that the Commission can withdraw preliminary approval of a grant only if there have been “substantial changes” to the script since the preliminary approval. But last month, the Texas Appeals Court disagreed and affirmed the trial court’s dismissal of Chop Shop’s complaint.  The Court held that the text of the regulations (and an enabling statute) allowed the Commission to deny an application at any stage for negative portrayal of Texans.  Chop Shop’s fairness argument – that it relied on the Commission’s original promise of funds – could not prevail against the state, which has the benefit of sovereign immunity.

Absent from the Court’s opinion was any mention of the supposed motive behind the Commission’s change of heart – that is, the political controversy that emerged once the plot of Machete came to be known.  Chop Shop, perhaps rightly, believed the denial of its application was the result of political pressure over the state funding a movie that dealt with topical but sensitive subjects in a bombastic and bloody B-movie fashion.

The Sequel: Machete Kills

Even before the legal dispute over the first Machete film was filed, in 2012 a related entity, Machete Productions, began production on the sequel, Machete Kills, also filmed in Texas (somewhat undercutting Chop Shop’s argument that – but for the Commission’s rescinded promise – Machete might have been produced elsewhere).  Machete Productions was told (by no less than Governor Perry’s chief counsel) that there was no way the second film would receive incentives from the state.  Undeterred, Machete Productions filed an application — which was denied because of “inappropriate content” – and then a lawsuit. The defendants, the current and former heads of the Commission, removed this litigation to federal court, and the Fifth Circuit recently upheld its dismissal.

The questions presented in the Machete Kills litigation were different, since there had been no preliminary approval of a grant for that film.  Here, the crux of the claims was that the Commission – or the Commission’s rules – violate the Texas Constitution and/or the First and Fourteenth Amendment of the US Constitution.  Machete Productions asserted that the Commission had previously – and very rarely – denied funding only to the makers of inaccurate historical films.

But the District Court and Court of Appeals were having none of it. The Fifth Circuit held that the First Amendment and the Texas Constitution protect only against state action that actually restrains, silences or censors speech.  According to the Court, however, a funding program that encourages one type of speech does not silence another – as evidenced by the fact that Machete Kills was still made, and made in Texas, after the application was denied.  The Court further held that the effects of such viewpoint discrimination are “not constitutionally severe” when the government “is acting as a patron rather than as a sovereign.”  Moreover, the producers of the film did not have a protectable property interest in the incentives, no matter how regularly they had been granted in the past, because the statute expressly gave the state discretion in granting them.

The message from the Texas Appeals Court and the Fifth Circuit is loud and clear:  Robert Rodriguez can keep making films about racist, corrupt, violent Texans, and Machete and friends can keep hacking them to pieces (next time, apparently, in space!) but Texas doesn’t have to help them foot the bill.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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