On July 30, 2021, a California appellate court ruled that CBS Corp. did not breach its obligations to share its profits with talent agency, Rebel Entertainment Partners Inc. (“Rebel”), when CBS Corp. voluntarily lowered their profits to increase Judith Sheindlin’s (“Judge Judy”) salary to $47 million.
In 1995, Richard Lawrence, a show packager who started Rebel, sold a court-oriented show featuring Sheindlin to CBS. Part of this agreement required CBS to pay Lawrence’s agency a backend five percent of the show’s profits. The profits equaled the gross amount the show earned less the specified expenditures, including the amounts paid for Sheindlin’s services.
Sheindlin had met with CBS every three years to present them with a new, non-negotiable salary demand, and told CBS that if her demand was not met, she would terminate their relationship. In 2009, CBS doubled Sheindlin’s salary, which substantially reduced the proceeds, and thus Rebel’s receipts. Rebel then sued CBS for breach of contract.
Following Sheindlin’s 2009 salary increase, Sheindlin demanded CBS increase her salary once again in 2012 from $45 million to $47 million. By allocating Sheindlin’s entire compensation as a cost of production, the show’s profits were reduced to a negative balance. CBS argued that payments to her constituted necessary costs of production.
Rebel argued that treating Sheindlin’s pay increase as a production expense rather than a form of profit participation constituted a breach of their obligations to share profits with the talent agency.
However, the court ruled that the cost of production provision in CBS’s contract with Rebel included payments for services of performers, and without any other choice other than to meet Sheindlin’s salary demand, CBS acted in good faith. Thus, the court held that the salary increase properly constituted costs of production and Rebel’s lost benefits under the agency agreement was because of the judge’s demand for a large salary and not because of any action by CBS.
In January 2018, two producers for the show, Kaye Switzer and Sandi Spreckman, filed a $4.75 million suit against Sheindlin, CBS, and Big Ticket. In this suit, they claim that they were wrongfully cut out of a deal when Sheindlin sold her show’s library to CBS for more than $95 million back in 2017. The case is set to go to trial in June 2022, according to the court docket.
In a separate lawsuit back in August 2020, Sheindlin accused Rebel of wrongfully collecting more than $22 million in fees from the Series, which were deducted from her share of the Adjusted Gross Receipts, despite not contributing to the show’s success. In support of her allegation, she argued that Rebel never worked on putting a package for the Series together and only represented two non-writing producers. In February, a California state judge dismissed three of her claims due to her being neither a party to the syndication agreement she objects to nor a third-party beneficiary. However, the judge allowed her time to amend her claim that Rebel violated California’s Unfair Competition Law (“UCL”) since she only alleged that she had a contingent interest in the $22 million dollars paid to Rebel, rather than alleging that she had a vested interest in the fees paid to Rebel, which was insufficient to state a cause of action for violation of the UCL.
According to the docket, this litigation is ongoing.
Rebel is represented by Bryan J. Freedman and Sean M. Hardy of Freedman & Taitelman LLP and Robin Meadow and Gary J. Wax of Greines Martin Stein & Richland LLP.
CBS and Big Ticket are represented by James A. Curry and Daniel J. Friedman of Loeb & Loeb LLP.
The case is Rebel Entertainment Partners Inc. v. Big Ticket Television Inc. et al., case number B305862, in the Court of Appeals of the State of California, Second Appellate District.
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