The Year of the Hollywood Trial

Did ABC really kill off Desperate Housewives star Nicollette Sheridan in retaliation for her gripes about being hit in the head by producer Marc Cherry? That’s the key question for the jury in the actress’ $6 million wrongful-termination and battery case, which awaits a verdict since closing arguments ended Wednesday afternoon in Los Angeles. Regardless of the outcome, however, the Sheridan matter could represent merely a ripple before a coming tidal wave of high-stakes Hollywood trials.

Disputes between talent and studios in the entertainment industry typically are settled quickly or fought privately in arbitration, with only a handful each year making it to the kind of big-money, high-profile trial that generates headlines and makes studio executives nervous. Yet insiders say the down economy has left Hollywood in a fighting mood — and more willing to do so openly despite risking a media circus like the Sheridan trial. Add in a few big-ticket verdicts in the past few years in cases claiming hidden profits from successful films and TV series, coupled with studios’ increasing unwillingness to pay off claims they see as bogus, and the 2012 court docket is filled with more showbiz-related trials than any year in recent memory.  

No reliable statistics exist, but consider the circumstantial evidence: In addition to the Housewives trial, already this year the Hollywood Foreign Press Association spent two weeks in court against Golden Globes producer Dick Clark Productions over a disputed deal to keep the awards show on NBC (a decision is pending).

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On March 20, a trial is set to begin in the long-running, multimillion-dollar battle over who came up with the idea for the 2003 Tom Cruise blockbuster The Last Samurai. On the docket in May is one of the biggest video-game trials ever, a $400 million case pitting Activision against fired Call of Duty creators Jason West and Vince Zampella over profits from the lucrative franchise. Then, in September, the years-long $70 million battle between Mark Burnett and his former business manager Conrad Riggs hits a courtroom to hash out revenue from the reality mogul’s empire. Also that month, Britney Spears‘ former manager and boyfriend Sam Lufti will face off against her mother, Lynne Spears, over alleged defamation in Through the Storm, a book she wrote in 2008 about Britney’s meltdown and recovery.

As if those cases weren’t plenty, a judge recently set an October trial date in Warner Bros.’ battle against Alfred Gough and Miles Millar, creators of The CW’s Smallville, who are demanding as much as $100 million in profits from the show’s decade-long run. Around the same time, CBS is scheduled to head to trial in its heated feud with JAG and NCIS creator Donald Bellisario over whether he’s entitled to profits from the spinoff NCIS: Los Angeles. And in January, producer Joel Silver has a trial date in his nasty dispute with Goldman Sachs over a $30 million film-financing deal.  

These are merely the trials scheduled in Los Angeles. Other disputes over such issues as music royalties and celebrity rights of publicity also are scheduled to make their way to juries around the country. And the rancor isn’t limited to public trials. Los Angeles private dispute-resolution companies JAMS and ADR Services both report upticks in Hollywood mediations and arbitrations.

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“We’ve definitely seen growth in entertainment cases,” says Gina Miller, a vp at JAMS, whose roster of 35 industry-specific arbitrators and mediators has expanded by a third in the past year or two. JAMS handled the September settlement of Charlie Sheen‘s $100 million litigation with Warner Bros. TV over his firing from Two and a Half Men, but the breadth of Hollywood-related cases now goes much deeper than typical money fights. “There are more profit-participation cases, yes,” Miller says. “But there also are digital-download, new-media and right-of-publicity cases. It’s grown beyond traditional film and television disputes.”

Like the Sheen case, any or all of the above matters could settle before trial, of course; the vast majority of cases still do. But observers say that certain high-stakes litigations are more likely than ever to go the distance thanks to a few eye-popping verdicts during the past few years that have caused talent (and their lawyers) to see dollar signs in studio litigation.

In 2007, producer Alan Ladd Jr. surprised Hollywood by winning a $3.2 million jury verdict against Warner Bros. in a case that alleged the studio hid profits from TV deals for a slate of movies from the 1980s and ’90s. (Disclosure: I worked on that case as a lawyer for Ladd before joining THR.) That was followed in December 2010 by a $23 million-plus jury award to Don Johnson against the producer of the CBS hit Nash Bridges and, that same month, a whopping $319 million award to Celador International, producer of ABC’s Who Wants to Be a Millionaire, over profits from the hit game-show franchise. (That case is on appeal.)

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“Anytime there’s an enormous, well-reported judgment, that always incentivizes more lawsuits,” notes Jay Dougherty, who runs the entertainment law program at Loyola Law School in Los Angeles. “It looks like that’s what’s happening here.”

Yet just as big verdicts beget more lawsuits, so too do high-profile settlements. ABC and parent Disney might be spending several million dollars — the going rate for a high-profile trial — taking the Sheridan case to a jury, but it’s better than sending a message to the Hollywood community that the company will pay out big money to plaintiffs.

“When word goes around that a studio isn’t willing to settle and won’t be a patsy, lawyers take notice,” says litigator Scott Edelman, who is representing Warner Bros. in the Smallville case and CBS in the Bellisario matter. “It’s in their interest to send that message.”

The result: a standoff, of sorts, leading to more trials. Says litigator Marty Katz, who represents Disney/ABC in the Millionaire case, “The difference is simple: There are bigger dollars at stake now.”

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UP NEXT: Another Housewife Heads to Trial

There’s more legal drama coming to Wisteria Lane. Nicollette Sheridan’s former co-star Teri Hatcher is preparing for trial as early as this summer against Jennifer Glassman, an industry marketing veteran who sued in 2010 claiming she was pushed out of running Hatcher’s production company after being promised 50 percent of profits. On March 7, Hatcher filed a cross-complaint claiming Glassman broke into her computer, stole information and changed e-mail passwords.

Hatcher is no legal newbie: She has defended a lawsuit brought by Hydroderm for allegedly violating an endorsement deal by touting a competing lip gloss; sued the Bally’s health club chain for endorsement money owed; and demanded libel damages from a British tabloid for saying she had sex in a van parked outside her home. She now wants at least $100,000 in damages from Glassman. There’s a trial conference scheduled for June, and even though she didn’t testify in the Sheridan case, Hatcher seems likely to take the witness stand. – Eriq Gardner

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A JURY OF THEIR PEERS: Notes from the field: Can you read the tea leaves of who’s judging Sheridan v. Cherry?

1. Male, Caucasian, 30-something. Takes a lot of notes, usually attentive.
2. Female, Asian, in her 40s. Her eyes follow the action, but she doesn’t take many notes.
3. Female, Caucasian, over 50. Pays close attention.
4. Female, Caucasian, probably in her 30s.
5. Female, Caucasian, over 70, the oldest juror by far. Takes a lot of notes.
6. Female, African-American, over 50. Takes notes.
7. Female, Caucasian, over 50. Quiet, doesn’t take a lot of notes but seems attentive.
8. Female, Asian, a small woman who sits on the edge of her seat, watching closely.
9. Male, Asian, 35 to 40. Probably the youngest juror. Seems engaged in the testimony.
10. Female, possibly Latina, over 50. Paying attention.
11. Male, Caucasian, over 45. Follows the action.
12. Male, Middle Eastern, over 55. An alternate promoted when another juror became ill. Attentive at times, half-asleep at others.

    ALTERNATES:

• Male, African-American, 40 to 50, often seems bored.
• Female, Caucasian, over 45. Mostly follows the action.