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MAR
16
3 YEARS

Charlie Sheen Suffers Setback in Legal Battle With Warner Bros., Chuck Lorre (Exclusive)

Ruling means private arbitration can move forward, making a public trial of his $100 million lawsuit unlikely.

Charlie Sheen
MJ Kim/Getty Images
Charlie Sheen in "Two and a Half Men"

Charlie Sheen has been dealt a procedural blow in his lawsuit against Warner Bros. Television and Two and a Half Men co-creator Chuck Lorre over his firing from TV's No. 1 sitcom.

Sources tell The Hollywood Reporter that the private dispute-resolution company JAMS on Tuesday sided with WBTV and Lorre in deciding that its own arbitrator has jurisdiction over the dispute, meaning the confidential arbitration will go forward despite Sheen's request that the fracas be litigated publicly via the $100 million lawsuit he filed in Los Angeles Superior Court. The decision, communicated in a letter Tuesday from a JAMS lawyer to all the parties, makes it much more likely that Sheen's high-stakes legal war with Warners and Lorre will be resolved in private -- and not in a public trial, as Sheen has said he is entitled to under the law.
 
Sheen's lawyer Marty Singer on Wednesday criticized the decision, and his partner William Briggs fired off a response letter to JAMS challenging the ruling. Singer tells THR that the dispute-resolution company should change its mind and let a court decide whether it will hear the dispute. "JAMS is wrong," Singer says in an interview. "This case involves many different parties and different issues, and it should not be subject to an arbitration agreement between Charlie Sheen and Warner Bros."
 
Singer's letter, a copy of which was obtained by THR (read it here), also threatens to ask a judge to stop JAMS from going forward with the arbitration. "In the unfortunate event that JAMS decides to proceed with the arbitration process, JAMS will force my client to seek judicial relief, which may include enjoining JAMS from proceeding with this matter," the letter states.
 
The moves are the latest legal maneuvers in a 2-week-old case stemming from Sheen's abrupt dismissal from TV's most-watched comedy. As we first reported, Warner Bros. asked JAMS to initiate an arbitration March 4 in response to threats by Sheen and Singer that the actor would sue over his termination. Sheen's contract with the studio includes a broad arbitration clause providing that disagreements be resolved by a JAMS arbitrator, but Sheen has no contract with Lorre, his Chuck Lorre Prods. or CBS, which airs Men. JAMS informed both sides March 7 that it had officially opened a case, giving the parties 14 days to submit their first written arguments.
 
Furious, Singer sent a letter to JAMS arguing that several of Sheen's claims -- notably, the portions of the lawsuit accusing Lorre of interference with a contract and his wage claims against Warners -- aren't subject to the arbitration agreement. And on March 10 he filed a bombshell $100 million lawsuit on behalf of Sheen and the Men cast and crew alleging a conspiracy among Warners and Lorre, its top comedy showrunner, to shut down the series.
 
Lorre, who by then had hired well-known Hollywood litigator Howard Weitzman, asked JAMS to consolidate Sheen's disputes with Warners and Lorre into one private arbitration.
 
And now JAMS has decided--over Singer's objections--that it has the authority to settle both the Sheen vs. Lorre and Sheen vs. Warners battles. Siding with case law provided by Weitzman and Warners attorney John Spiegel, JAMS found that Sheen's arbitration clause provided that the question of whether the dispute should be arbitrated gets to be decided by the arbitrator, not a judge in a separate but related court action.
 
"Despite Charlie Sheen's objections, JAMS made the correct decision to proceed with the arbitration, as requested by Warner Bros. and Chuck Lorre," Weitzman tells THR.
 
Warners declined to comment.
 
If Singer can't stop the whole mess from going to private arbitration, Sheen would lose a significant piece of leverage in the case. Juries tend to side with high-profile celebrities (even those with erratic public behavior), and the prospect of Sheen getting a public venue in which to expose Warner Bros.' private financial information and attack the studio and showrunnner, might have prompted Warners to settle.
 
Now, assuming JAMS doesn't reverse its decision, if Singer wants to stop the case from proceeding in a private arbitration, he might have to convince the Los Angeles Superior Court to issue an injunction to stop the arbitrator -- who has yet to be chosen -- from exercising jurisdiction over the case. That's a tough -- though not impossible -- hurdle to jump. Singer will need to convince a judge that there are claims in the lawsuit that are not subject to the arbitration agreement, or perhaps that the state court lawsuit should proceed on a separate track from the arbitration.
 
"The subject matter of this dispute is not just Charlie and Chuck Lorre," Singer says. "Our lawsuit involves claims over the entire cast and crew, and there is no right to arbitrate with them."
 
In addition, Singer says the arbitration clause in Sheen's deal--which was negotiated by the Bloom Hergott law firm, one of Hollywood's top talent boutiques -- might be unenforceable because it's unconscionable.
 
Even with the favorable ruling from JAMS, lawyers for Warners and Lorre must still file a motion to compel arbitration in state court, requesting that the judge relinquish control of the case. The decision from JAMS is good ammunition for their argument but Sheen is likely to vigorously oppose that motion.
 
With the arbitration now moving full speed ahead, the parties will first choose the independent arbitrator -- "strike lists," or groups of arbitrators that are deemed undesirable to handle the case -- are currently due on Friday. Once an arbitrator is chosen, arguments can begin.
 
Singer, for his part, is still confident.
 
"Whether we go to arbitration or court, we still feel we will prevail because the facts and law are 100% in our favor," Singer says. "I can understand why Chuck Lorre wants to keep this in a secret tribunal. When the facts come out they will show that he and Warner Bros. had absolutely no basis to terminate my client."