8:57am PT by Eriq Gardner
Judge Drags CBS Back Into Lawsuit Over 'Hawaii Five-0' Profits (Exclusive)
It doesn't happen often, but in the midst of a lawsuit over profits from the hit CBS crime drama Hawaii Five-0, a judge has decided to reverse course suasponte -- Latin for of his own will.
L.A. Superior Court Judge Gregory Alarcon has reconsidered a ruling last January to dismiss CBS as a defendant in a case that alleges the successful reboot deprived George Litto -- the talent agent who represented the original Hawaii Five-0 creator, Leonard Freeman -- of money. As a result, the network is facing a potential trial next January that threatens to make the top-rated series much less lucrative for Leslie Moonves' company.
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The ruling, made public on Monday, allowing Litto to revive claims against CBS comes after new evidence was introduced that, for the first time, showcases some of the legal fisticuffs that preceded the network's decision to go ahead with the Hawaii Five-0 reboot. It also comes after Litto's camp gave assurances to the judge that CBS' right to make the show wasn't at risk. Instead, this is purely a fight over dollars.
The lawsuit traverses nearly a half century of dealmaking.
Litto's boutique agency represented Freeman in 1966 when the writer-producer made his first deal with CBS for the original Hawaii Five-0, which lasted on the network from 1968 to 1980. The first deal entitled Freeman to 50 percent of the profits from the show; Litto got a 10 percent commission.
Freeman passed away in 1974 as the result of heart bypass surgery. After his death, his widow, Rose Freeman, concluded that the profit-sharing agreement needed to be amended. According to Litto's lawsuit, a 1974 modification to the contract gave CBS the right to produce the show in the future and shifted responsibility for production from Freeman's company to CBS. In return, CBS gave Freeman a substantial stake in the show and a sweetheart arrangement in which it wouldn't be allowed to recoup production overages.
Over time, after the original Hawaii Five-0 went off the air, Freeman's estate and CBS began quarreling over the extent to which CBS retained and controlled rights to the property. CBS wanted to make a movie version, and the parties fought in the early 1990s in federal court and in arbitration over it.
In the mid 1990s, Rose Freeman and Litto are said to have teamed up to defeat CBS' claims by establishing an LLC. According to Litto's original lawsuit, the agent also got an agreement signed in 1997 to jointly exploit and equally share revenue derived from all future productions of Hawaii Five-0.
Flash forward to 2010, when CBS wanted to revive the series. The network cut a deal with Rose's camp without Litto's assent. The deal reduced Freeman's backend to 10 percent and eliminated the no-production-overage accounting. In return, CBS increased the upfront episodic fees paid to Freeman by more than $30,000 per episode.
Litto claimed in his lawsuit that this had caused him to lose tens of millions of dollars and argued that CBS had no right to unilaterally make the arrangement, knowing as it did about the 1997 operating agreement between Rose and Litto.
But in a ruling last January, the judge said that "it would be inequitable to rescind the 2010 amendment. … To restore the consideration would essentially require CBS to 'un-make' or, in the alternative, pull what has become a very popular television series."
Litto, represented by attorney Henry Gradstein, then spent months urging the judge to reconsider.
Key to the motion were unearthed documents that show some of the maneuvering that happened after CBS announced in 2008 that it was brining back Hawaii Five-0.
After hiring writers for a pilot episode, the network heard from Michael Plonsker, the attorney for the Freeman camp, who, in reaction to the news, wrote, "We were surprised because we had not yet finalized our deal."
As discussions continued, Plonsker is said to have returned a $250,000 advance that CBS had tendered. Nevertheless, CBS proceeded with the pilot and cast two of the lead actors. On March 4, 2010, about nine months before the reboot premiered to solid ratings, Plonsker told CBS that if it produced the show it would be committing copyright infringement.
CBS responded by saying it had a right to produce the show under the 1974 agreement. The dispute over CBS' control over the property seemed primed for a courtroom showdown. And at that very moment, Litto's own lawyer, Lawrence Kopeikin, wrote to CBS and warned the network that "no agreement regarding a change to the existing terms can be effective without George [Litto]'s consent."
CBS rejected that position, seeing Litto as a third-party beneficiary, but when it reached a new deal with Freeman -- thus saving a potential copyright infringement lawsuit on the eve of the premiere of the Hawaii Five-0 reboot -- it extracted assurances that the network would be clear of trouble. CBS wrote, "Of course, CBS will expect the Freeman Trusts to indemnify CBS in connection with any liability that arises from the claims asserted in Mr. Kopeikin's letter."
In a motion for reconsideration, Litto argued that this was all evidence that CBS had proceeded with the series with "full knowledge" about Litto's rights as a partner in the company that was set up with Freeman and had created a "risk-free transaction despite warnings."
The judge was also told that an attempt to reintroduce CBS as a defendant didn't threaten cancellation of the series.
"Declaring the 2010 CBS Amendment to be invalid would not require CBS to 'unmake' or in the alternative, pull what has become a very popular television series," said a declaration from Litto's attorney. "It would only require CBS to adjust the payments to conform to the Existing Hawaii Five-0 Deal by paying considerably less in upfront episodic fees and potentially paying more in backend fees."
Judge Alarcon has accepted this.
Saying that the new unsealed papers shed more light on the allegations of the complaint, the judge writes that Litto has "clarified its position that CBS knew it always had the right to make the show and entered into negotiations for the sole purpose of improving its financial structure, not over uncertainty as to whether it held the rights."
CBS had no immediate comment about the ruling.