19 Entertainment, the producer of American Idol that filed for Chapter 11 bankruptcy in late April, is now gunning for Phillip Phillips. A complaint filed on Thursday in New York bankruptcy court alleges that the winner of Idol’s 11th season has been holding on to as much as $1 million of 19’s money and that he should also be forced to pay at least $5 million for repudiating and breaching various agreements.
Back in January 2015, Phillips aimed to escape a management agreement by lodging a bold petition with the California Labor Commissioner asserting that 19 “manipulated” him into accepting jobs and was in violation of California’s Talent Agencies Act, which says only licensed talent agents can procure employment for clients. The Idol star’s move threatened to be disruptive to competition shows that often require participants to sign onerous agreements pertaining to post-show deals. Here, Phillips also maintained that 19 had a fiduciary duty to him, and that the company had breached such duty by compelling him to take jobs that were of benefit to the company and its affiliates rather than to him.
The petition has moved more quickly than most at the California Labor Commissioner, but not quickly enough to reach any determination before the final season of Idol this year. In fact, as a favor to Idol executive producer Nigel Lythgoe, Phillips appeared in the final season.
But that hardly settled matters. There was a Labor Commissioner hearing scheduled for May 31, but before that happened, 19 declared bankruptcy on April 28 amidst a separate money dispute with Idol creator Simon Fuller.
Soon after the Chapter 11 filing, according to court documents, a hearing officer with the Labor Commissioner announced he was “closing the file without adjudication of the petition.” In other words, the bankruptcy paused Phillips’ gambit.
Now, 19 is going on the offensive by filing an adversary complaint in bankruptcy court that is sure to test jurisdiction.
The complaint alleges that Phillips has been holding on to somewhere between $850,000 and $1 million based upon the “anticipation” that his agreements (which include a recording and publishing deal) would be voided.
“Phillips has refused and insists that he will continue to refuse to perform pursuant to the Agreements, thereby causing Plaintiffs additional damages,” states the complaint being handled by attorneys at Willkie Farr & Gallagher. “The amount of the additional damages from these continuing breaches is not presently calculable with precision but will be presented at the time of trial and will exceed $5,000,000.”
Says Phillips’ attorney Howard King in reaction: “19’s new complaint is a blatant attempt to evade California’s jurisdiction and thwart its fundamental public policies crafted to protect artists. 19 cannot murder its parents, then seek mercy as an orphan.”