5:02pm PT by Eriq Gardner
MSNBC Host Ed Schultz Must Again Face Partnership Lawsuit
Talk show host Ed Schultz likes to talk about labor issues on his MSNBC show, but he is now facing renewed claims of cheating a man who allegedly worked to get him into the television business. On Friday, the D.C. Circuit Appeals Court reversed in part a district judge's dismissal and went out of its way to remand for further proceedings a claim that Schultz breached a partnership agreement.
The lawsuit came from Michael Queen, who was working at NBC in 2008 when he approached Schultz about a TV opportunity. The plaintiff alleged he had broached the idea with the late Tim Russert, then senior vp of NBC News, gave Schultz a tour of the NBC studio and taped Schultz appearances on a variety of TV networks to create a demonstration reel to sell the prospective show.
Schultz and Queen disagreed whether there was an agreement about a partnership.
The plaintiff said there was first a verbal deal and that later an exchange of emails setting out the terms of a partnership. Schultz refused to sign a written agreement, though, and negotiations dragged on. During this time, around 2008, Queen says he continued to pitch the idea of a television show starring Schultz to NBC executives and booked a studio for the production of a pilot episode. Queen fronted the $11,000 rental fee.
A CBS affiliate in Washington then is said to have made a deal with Queen for a Schultz show, but just weeks before production was about to start, Schultz backed out and accepted an offer from MSNBC to host The Ed Show.
Queen demanded his money, but all he got from Schultz was reimbursement for the studio rental fee plus interest. Queen sued for breach of contract, fraud in the inducement, tortious interference and intentional infliction of emotional distress. Schultz responded by counterclaiming for fraud, slander and libel. In August 2012, a judge rejected all of the claims on summary judgment.
In his ruling, Appeals Court Circuit Judge Sri Srinivasan won't revive the breach of contract claim because Queen failed to show the "material terms" of the purported contract -- there were moments when Queen was to get 25 percent of profits and other times different compensation structures discussed. Nothing was firmly finalized including Queen's hope of attaining "salaries," which also went undefined.
But Queen is more successful in his argument that Schultz owed a duty of loyalty in a partnership and that the TV host breached that duty by competing with that partnership.
Schultz maintains there was no partnership and rather incredibly, Queen never alleged a partnership breach or even mentioned the word "partnership" in his complaint (it later got stuffed into the question of an overall contract breach) and yet Judge Srinivasan writes "a reasonable jury could conclude from the parties’ conduct and communications that Queen and Schultz intended to, and did, form a partnership to develop a television show."
The judge adds that it remains to be seen whether the existence of a partnership will be proven to a jury, but says Queen has made a sufficient showing to present the matter to a jury.
"Queen says he developed the concept for the show, marketed the show to NBC and MSNBC executives, arranged for the production of the pilot, and negotiated with CBS’s Washington affiliate for a Sunday morning time slot," the judge writes. "A reasonable jury that credited Queen’s testimony on those points could conclude that Queen shared in control of decisionmaking."
"Queen contends that he advanced $11,000 to rent an NBC studio for the pilot, paid other pilot expenses, and devoted considerable time and energy to the partnership," the judge continues. "All of those outlays potentially qualify as capital contributions to the partnership."
Judge Srinivasan also adds, "Although there is no evidence that Queen and Schultz actually shared profits from the show, Schultz’s April 5, 2008 e-mail to Queen assured Queen that he would have 'a financial involvement' in any 'TV deal.' A reasonable jury could interpret that assurance as an indication that Schultz and Queen intended to associate as co-owners for profit."