Actor-producer sued Rysher for share of profits

Don Johnson’s $23.2 million legal victory over Rysher Entertainment may explain why most of TV’s self-dealing lawsuits never make it to the jury phase.

The verdict, rendered Wednesday, came the same day Celador won a separate suit against Disney over “Who Wants to Be a Millionaire.” The suits were different, but the message was the same: Producers who feel they’ve been short-changed profits from successful TV shows hold sway with jurors over bigtime Hollywood conglomerates.

Entertainment lawyer Stanton “Larry” Stein, who pioneered the self-dealing lawsuit after vertical integration between the networks and studios took hold, told Daily Variety that Johnson’s side gained the upper hand once Superior Court judge Michael L. Stern greenlit the case for trial.

“I’ve always said that if you could get past the judge on the legal issues and get to the jury, a jury is going to cut through all the technicalities in the contract and all the maneuvering and accounting and basically look at a situation as a layperson is supposed to,” Stein said.

“And when you have a production company or a studio or network making tens or hundreds of millions of dollars off a show, and someone who was supposed to be their partner or profit participant in that show is being told, ‘You deserve nothing’ … a jury is just not going to accept that.”

That’s why most of the more famous self-dealing lawsuits — including Wind Dancer’s beef with Disney over “Home Improvement” and David Duchovny’s “X-Files” complaint against 20th Century Fox (both of which involved Stein) never went to jury.

Another case — David Kohan and Max Mutchnick’s “Will and Grace” suit against NBC — went to trial and was ruled in favor of the scribes, but was voided because of a juror’s actions. Both sides then quickly settled.

In the case of Johnson, Rysher Entertainment was ordered by a jury to pay the thesp $23.2 million, deemed to be the actor-producer’s share of profits to date from the CBS drama “Nash Bridges.”

The verdict recognizes Johnson as a co-owner of the show’s copyright, entitling him to future profits from syndication also worth in the millions.

“We’re thrilled,” Johnson attorney Mark Holscher of Kirkland & Ellis LLP told Daily Variety. “This vindicated Don’s position all along that the 1995 contract that … gave him half the copyright. The jury has found he’s a co-owner of the show, and he’s entitlted to half the profits.”

Johnson said he had waited “more than ten years for Rysher to recognize me as the co-owner of the ‘Nash Bridges’ series.” The CBS action drama, which ran from 1996 to 2001, was also exec produced by Carlton Cuse.

“It was my idea, and I owned the rights in the first place,” Johnson said. “From the beginning, I have asked only that Rysher honor our contract, and I am so pleased that the jury agreed with me.”

Attorney Bart H. Williams of Munger, Tolles & Olson LLP, representing Rysher, said there would be an appeal.

“Rysher is extremely disappointed in today’s verdict and will aggressively pursue all legal recourse,” Williams said. “While we respect the jury’s right to their judgment, there are several matters of law that will form the basis of Rysher’s appeal. We are ready to undergo the appeals process and are confident that, in the end, today’s outcome will be reversed.”

A question remains about who exactly Rysher is today. Johnson’s suit named 2929 Entertainment and Qualia Capital as owners of Rysher, but according to The Associated Press, attorneys for those companies contended in court that Rysher had never been a subsidiary of either company.

Yet 2929 and Qualia are both cited in countless media stories through the years as having owned Rysher at one point or another.

Cox Enterprises purchased Rysher in 1993, but distribution of Rysher’s asset library went to Paramount in 1999. Cox maintained ownership of the company until 2001.

According to media accounts at the time (including in Variety), that’s when Mark Cuban and Todd Wagner paid close to $300 million to acquire Rysher’s library from Cox. The duo then formed 2929 Prods. to house the assets of Rysher and other acquisitions.

Then, media stories on March 30, 2006 reported that Qualia Capital had acquired Rysher from Cuban and Wagner, and even included quotes from Qualia principal Amir Malin. A year later, Qualia announced the formation of Qualia Library Cos. to exploit properties from Rysher, Gaylord Films and Pandora Films.

Johnson filed suit in Los Angeles Superior Court in 2009, claiming that his production company shared in copyright ownership of the show, still seen in syndication in roughly 50 countries. A Superior Court judge ruled in May against Rysher’s request for dismissal of the case.

According to the filing in May, Johnson had requested 50% of profits from a show that has generated more than $300 million in overall revenue, with the goal that he would be awarded as much as $100 million. Rysher argued that production costs had made the show unprofitable, while also disputing the language of Johnson’s copyright clause, which has been interpreted to have vested after the series’ 66th episode. (“Nash Bridges” ultimately ran for 122 over six seasons.)

The 1995 contract that Johnson signed was unique. During the trial, entertainment lawyer Skip Brittenham testified that Johnson was the only TV actor whose contract he successfully negotiated to include copyright ownership of a show.

Johnson’s and Celador’s court success could spur profit participants on other past shows to file similar suits. But these legal tussles will grow increasingly rare, as networks and studios have gone to great lengths over the past decade to prevent such scenarios.

These days, network and sister studio negotiations are now implicitly allowed in most contracts; disputes are often now usually required to go to arbitration rather than the courts. In addition, both sides in major negotiations now usually hire outside consultants to oversee deals in order to prevent future disputes.

Stein said he believed Hollywood is probably not done seeing trials involving shows that predate those changes — but the next wave of lawsuits could address the new language itself, such as whether a contract that prevents the pursuit of punitive damages is enforceable.

“There are some real serious issues,” Stein said.

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