March 25, 2013 12:38pm PT by Eriq Gardner
CBS Allowed to Pursue 'Glass House' Producers in Arbitration (Exclusive)
Last year, CBS went to war against ABC over the latter's strangers-living-together reality TV series Glass House, alleged to be a copycat of Big Brother.
After a federal judge denied a request for a temporary restraining order that would have barred ABC from airing Glass House, the lawsuit was dropped. The fact that the series hadn't performed particularly well in the ratings likely contributed to CBS' decision to retreat.
But that doesn't mean the legal battle is over.
Even as CBS announced it was dropping its claim against ABC, the network said it would continue to fight Glass House producers alleged to have stolen trade secrets. Now, thanks a decision from a federal judge last week, Glass House executive producer Kenny Rosen, ABC vp alternative programming Corie Henson and Glass House producer Michael O'Sullivan could be in danger of having to pay a lot of money to CBS.
CBS has not forgiven Rosen, who used to be a producer on Big Brother.
During a seven-hour deposition last year, the network's lawyers grilled him about whether he used any secret information or resources from his previous job to create Glass House.
Although much of the attention paid to last year's CBS-vs.-ABC skirmish focused on the issue of copyright -- and formed the basis for U.S. District Judge Gary Allen Feess' denial of a restraining order -- the trade secrets aspect of the case arguably was more provocative, a rare instance in Hollywood where the flight of producers from one network to another instigated a battle over duties of secrecy.
After CBS dropped its case against ABC, the network announced it would proceed in arbitration, which caused Rosen, Henson and O'Sullivan to file a lawsuit against CBS, alleging that CBS was "using the 'litigation equivalent of war' " and has brought arbitration against them "as part of its campaign to prevent or, at the very least, disrupt and harass the production of "Glass House."
The producers demanded that CBS be ordered to cease the harassment. The producers argued that the network had given up its right to arbitration by suing them.
But on March 18, Feess rejected the producers' attempt to stop CBS, allowing the network to go ahead with arbitration. Read the full ruling here.
The judge analyzed the contract between the parties, in particular the provision that states “any effort by any party to enforce, interpret, construe, rescind, terminate or annul this Agreement, or any provision thereof” is to be resolved by binding arbitration.
Feess concludes that "challenges to its enforceability and its interpretation should be arbitrated," meaning it will be up to an arbitrator to decide whether the dispute is arbitrable (as funny as that might sound).
But Feess also provided the reason why the dispute likely will stick in arbitration, saying that even if this particular decision wasn't up to the arbitrator, "the result would not change."
"The dispute in the initial litigation was complex and involved not only Rosen but also ABC, which was not a party to the Arbitration Clause and could not have been forced into arbitration," the judge wrote. "Moreover, the suit included non-arbitrable claims, most notably the CBS claim that ABC’s Glass House infringed on CBS’ claimed copyright in its Big Brother reality series."
The judge concluded that the "relative brief" lawsuit brought by CBS last year didn't prejudice Rosen nor waive CBS' right to arbitrate.
It will now go to an arbitrator to look at the contract and CBS' claims.
CBS is looking to collect $500,000 in liquidated damages from the alleged violation of a non-disclosure agreement, according to information provided in Rosen's lawsuit. The producers are arguing that "confidential information" learned on Big Brother wasn't really confidential, that the NDAs are unenforceable insofar as attempting to restrict employee mobility and that the liquidated damages bears no reasonable relationship to the harm that CBS expected to suffer when making its contracts.
But CBS has drawn first blood by getting a federal judge to defer to the contract rather than accept the position that it waived the right to pursue damages in arbitration.
The Hollywood Reporter has reached out to both parties; CBS tells THR, “We are pleased with the judge’s decision."
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