Former Arms Dealer Suing Warner Bros. Over 'War Dogs' Takes Return Fire

What's really a secret when someone's life is discussed in a magazine or in the visiting room of a jailhouse?
Screengrab/Warner Bros. Pictures
'War Dogs'

Got a great story to tell? Maybe it'll make a wonderful film. Maybe a big studio will be interested. But here comes the tricky part: How can someone really protect rights to their life story? Witness the tale of Efraim Diveroli, a former international arms dealer who is now suing Warner Bros., director Todd Phillips, actor Bradley Cooper, Brett Ratner's RatPac Entertainment and others over War Dogs, a major motion picture due out in August that features what happened to Diveroli almost a decade ago when he and his partner David Packouz — played in the movie by Jonah Hill and Miles Teller — got a $298 million contract to supply weapons for U.S. allies in Afghanistan. Back then, Diveroli was just 22 years old when the Defense Department suspended contracts upon allegations of violating arms embargoes. Diveroli was indicted, and after taking a plea deal, served a 48-month prison sentence.

According to his lawsuit filed in Florida, Diveroli later wrote a 360-page manuscript titled "Once a Gun Runner," told his incredible story to Rolling Stone magazine and hooked up with well-connected Hollywood producer Elliott Kahn to sell film rights. Diveroli made Kahn sign a non-disclosure agreement. Together the two got some interest from Universal Pictures, but before Diveroli was out of jail, Phillips (the director of Hangover) allegedly became obsessed, optioned the Rolling Stone story and got Warner Bros. on board.

Now that War Dogs is set for release, how does Diveroli — through his company Incarcerated Entertainment — protect his story? Does he sue the filmmakers, who allegedly saw his manuscript, for copyright infringement? Nope. Instead, he's raising a host of claims from breach of the NDA, misappropriation of his likeness rights, plus conversion of confidential and proprietary information. But what's really a secret when someone's life is discussed in a national publication or in the visiting room of a jailhouse? This question is now being put to the test in a lawsuit that seeks to stop the film from being distributed.

Diveroli could have sued for copyright infringement, and his decision not to is worth noting. According to court papers in the case, his manuscript was registered with the U.S. Copyright Office in 2014. The law doesn't protect facts and events, but does protect a selection and arrangement of facts so long as the expression is original. But copyright cases against studios have been near impossible for plaintiffs and thus, it makes sense that Diveroli's attorneys are trying to win the case on a different legal theory.

His company asserts that Warner Bros. is infringing his name and likeness, and Diveroli could hit a roadblock there as well. Recently, the 9th Circuit Court of Appeals ruled that the First Amendment trumps publicity rights when storytellers "take the raw materials of life — including the stories of real individuals, ordinary or extraordinary — and transform them into art, be it articles, books, movies, or plays." Of course, this case is playing out in a Florida federal court, which is not beholden to the 9th Circuit. When Warners responds, it will probably be raising a First Amendment defense.

Then, there's supposed confidential information. Here's where this lawsuit has gotten a bit interesting.

According to the complaint, before Diveroli was sentenced, he was contacted by author Guy Lawson, who had previously helped write a biography of a NYPD officer who became a turncoat for the mafia. (That book's movie rights sold to Warners.) Lawson was interested in writing about Diveroli, too, and succeeded in getting an interview that became the basis for the 2011 Rolling Stone article. It is alleged that after the article published, Lawson again contacted Diveroli about co-authoring a book based on the same material. Diveroli says he agreed to prepare a manuscript and thus wrote "Once a Gun Runner," which allegedly was used without permission by Lawson to create Arms and the Dudes, published in 2015 by Simon & Schuster.

Phillips secured movie rights to Lawson's Rolling Stone article and, alleges the lawsuit, "as part of his obligations under the Option Agreement, [Lawson] assisted Phillips not only regarding the Rolling Stone Article but also through dissemination of the January 2012 Manuscript authored by [then-incarcerated] Mr. Diveroli."

As this was happening, Diveroli formed an entertainment company to monetize his story, and along with a new partner, sent a letter in June 2014 to Ratner, Phillips and Warner Bros. for the purpose of selling "Once a Gun Runner" rights. The letter stated, "We would love to join forces with you on this project." 

The legal team at Warner Bros. wrote back that it was discussing internally and would get back shortly. The lawsuit alleges there was no follow-up correspondence for months.

At that time, Diveroli's prison sentence was set to expire. Awaiting release, his sister was allegedly approached by Kahn, allegedly holding himself out as a Hollywood insider. Kahn had a dozen film credits to his name and his mother was an executive producer on the hit documentary Blackfish. Kahn and Diveroli are said to have attended the same synagogue in Miami Beach when they were children. Kahn hoped to explore a business relationship to advance movie rights, according to the lawsuit, and signed a NDA which agreed to protect certain confidential information. After which, Kahn was told about Universal's potential interest.

The complaint (read in full here) goes on to talk about how Warner Bros. advanced on its project and lays out other "far from coincidental" facts adding up to the allegation that Kahn was essentially an agent of Warners who had somehow flew on the same flight from Los Angeles to Miami with Phillips and shared a new version of Diveroli's manuscript.

In September 2014, Diveroli's other partner got back word from Warners that the studio "decided not to pursue a consulting agreement at this point in time." Kahn allegedly became unreachable on his cell phone.

Of all the defendants, it is Kahn who brings on Tuesday the first motion to dismiss claims with the suggestion that Diveroli's half-measures to guard against copyright infringement of his manuscript dooms claims of breaching confidence.

"The manuscript alleged to be covered by the NDA is excluded from protection because it has been publicly available for inspection in the United States Copyright Office and is not confidential," states Kahn's motion (read in full here), analogizing the situation to secrecy-negating patent applications.

Kahn's attorneys at GrayRobinson also talk about discussions between Diveroli and Lawson for the Rolling Stone article and more to knock the notion that the defendant has spilled secrets.

"At no point in the Complaint is there an explanation as to which pieces of information came from the manuscripts and which pieces of information came from other sources," continues Kahn's motion. "For example: (1) the information that formed the basis for the War Dogs movie could have come from [Diveroli's crime partner David] Packouz; (2) the information could have come from a third party who accessed the recordings of the jailhouse communications between Lawson and Diveroli , see Jackson v. State, 18 So.3d 1016, 1030 (Fla. 2009) (no reasonable expectation of privacy in recorded jail interactions); or (3) the rewrites to the War Dogs movie could have had to do with the War Dogs movie’s tone and not its factual content."

In short, Diveroli is suing on the proposition that the great story he had to tell was valuable. But as he sat in a jail cell and was approached by those interested in exploiting his story, he may have given up his rights to what made the story so treasured. Writing one's autobiography is a nice trick to gaining some very limited protection. And giving press interviews is a good way to attract attention. However, the cost of doing these things might be letting everyone else in on the great story. And once the cat is out of the bag ...

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