Charlie Sheen: What His Court Loss Means for the $100 Million Lawsuit (Analysis)

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Talk about not winning.

Now that a Los Angeles Superior Court judge has declined to exercise jurisdiction over Charlie Sheen's $100 million lawsuit against Warner Bros. and Two and a Half Men co-creator Chuck Lorre, the case will likely be confined to a private arbitration. But it's certainly not over.

First, our take on today's ruling from Judge Allan Goodman: Sheen and his attorney Marty Singer had argued that the legal issues surrounding the actor's firing from Two and a Half Men should be decided by a judge and jury, while Warners and lawyer John Spiegel (backed by Lorre attorney Howard Weitzman) were seeking to enforce a broad arbitration clause in Sheen's contract and take the matter to a JAMS arbitrator. Goodman, after nearly two months of deliberation, ruled that that JAMS arbitrator, not him, will determine whether he should to hear the case. Hon. Richard Neal, the arbitrator assigned to the case, will likely agree to preside over the matter, but there are a lot of incorrect news reports out there saying Goodman ordered the case to be arbitrated. He didn't; he's letting Neal decide, and that decision should come soon.  

Still, Warners and Lorre have reason to celebrate. "We're very gratified by the court's ruling enforcing the parties' arbitration agreement," the studio says in a statement.

READ: Charlie Sheen Files $100 Million Lawsuit Against Warner Bros., Chuck Lorre

Weitzman is similarly pleased.

"The court made the appropriate ruling in denying Mr. Sheen's request to stay the arbitration in referring his lawsuit against Warner Bros. and Chuck Lorre to arbitration as his contract calls for," he says. "This matter will now proceed in an orderly fashion as the parties agreed to."

Here's what's next: If Neal agrees to exercise jurisdiction, as expected, the arbitration will then proceed with legal briefs filed, evidence collected through depositions and requests for documents, and ultimately a private trial in front of the arbitrator. The core issue in the case is still the same: Did WB and Lorre conspire to improperly terminate Sheen because they didn't like his personal life and he said nasty things about Lorre in the press, or was Sheen such a train wreck that he became unable to fulfil his duties on the show?

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Sheen has a strong argument that Warners dealt with his personal misbehavior for years, even negotiating a new contract when Sheen was embroiled in his domestic violence scandal, and only fired him when he attacked Lorre. On the other side, we've heard that Warners has collected some powerful video of Sheen looking haggard and unable to stand up on the Men set, evidence that the private behavior became intolerable. 

The only difference now is that the case will chug along in private. Warners can be expected to try to delay as much as possible. There's no real rush for the studio. It has moved on with Two and a Half Men, recasting the show with Ashton Kutcher, and sources say it has put a freeze on paying Sheen backend profits. (The studio's position is that Sheen repudiated his contract by being unable to perform, thus forfeting all the benefits of his deal.)

But Sheen would like a quicker resolution. Singer tells us his client wants "to get to the bottom of this as soon as possible," which actually could be a lot easier in a private arbitration than a procedurally cumbersome court trial.

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The downside for Sheen, of course, is that he now won't get to parade himself in front of a jury of his peers, potentially charming them and painting the largest Hollywood studio as the bad guy out to screw the man who delivered TV's most popular show. He also doesn't get the added leverage of possibly dragging the inner workings of Warner Bros. Television into open court. Sheen was the highest-paid sitcom star on television, every representative in Hollywood would love to pore over the details of his deals (so they can then demand the same for their clients).

We still believe this case will settle with Sheen taking a payout, though it would almost certainly be a fraction of the $100 million he's demanding (plus turning the profit participation spigot back on). But today's decision is certainly a win for WB and Lorre. While it doesn't really change the legal crux of the case, it changes how the case will play out with the public. And when dealing with Sheen, that's half the battle. 


Twitter: @THRMattBelloni, @EriqGardner