The Warner suit has far reaching implications because it encompasses not just Warner, but its especially lucrative catalog business via Atlantic Records (Aretha Franklin, Sam & Dave, Otis Redding, Wilson Pickett) and Rhino Records (which has repackaged all that material for decades). It’s also a class action suit, which means dozens of artists from the heyday of Warner-Elektra-Atlantic-Rhino can join the suit as it progresses. Damning for WMG are former CEO Edgar Bronfman’s quarterly proclamations to shareholders over the last six years that “digital sales are booming” (I’m paraphrasing) while everything else was in the toilet. Recordings of those analysts calls are sure to be played before some jury in the future.

The suit can be distilled thusly: “However, in breach of its contractual obligations under its Standard Recording Agreements, WARNER has treated its transactions with Digital Content Providers as “sales” rather than “licenses.” In so doing, WARNER has applied the incorrect formula for calculating royalties owed to Plaintiffs and Class members, taken unjustifiable deductions (including, but not limited to, the Net Sales Deduction, the Container Charge deduction, and the Audiophile Deduction), and applied a royalty percentage that is, in general, less than half of what it should beapplying in its computation.”

The suit was filed by four law firms. The principal is Pearson, Simon, Warshaw, and Penny in San Francisco.

http://www.showbiz411.com/2012/02/03/sister-sledge-files-class-action-v-warner-music-we-are-not-family

2/3/2012 by Eriq Gardner, The Hollywood Reporter

Last year, hip-hop superstar Drake released a song, “Marvin’s Room,” that quickly went viral and prompted various remixes by fellow artists intrigued by the depiction of a young woman on a phone call as the rapper drunkenly croons, “You could do better.”

Now, Ericka Lee, revealing herself to be Drake’s ex-girlfriend, has stepped up, saying she was the voice on the other end of the phone call. The woman is now suing Drake for excluding her from sharing co-writer royalties on one of his biggest recent hits.

Lee filed the lawsuit on Thursday in California federal court claiming the two had a romantic and business partnership between early 2010 and mid-2011. During the relationship, the two are said to have traded poems and song lyrics and discussed joint creative projects.

Last year, Drake allegedly agreed to work with Lee on “Marvin’s Room” and split the proceeds. Lee says she was asked to record the song’s “hook” as well as the opening monologue that would serve as the thematic framework for a song about Drake’s yearning for an ex-girlfriend and how his fame interfered with his love life. “Plaintiff’s contribution is highly significant to the overall work,” says the complaint.

Drake supposedly acknowledged Lee’s contributions in text messages sent to her. One read, “U basically made that song.” Another read, “It’s s–t without you.”

Drake purportedly gave Lee credit as a “vocalist” on the song as “Syren Lyric Muse.” Additionally, the parties are said to have registered the sound recording at the U.S. Copyright Office. On July 11, Lee made a claim there, saying, “My works and voice are used on this work.” About six weeks later, Drake’s label, Cash Money Records made its own claim, saying that the song author was an “employer for hire.”

Lee reports that after the song was released, their relationship ended and got ugly fast. The two discussed meeting in Los Angeles, but it never happened. According to the complaint, Drake later sent a text message to Lee that offered her 2 percent of “publishing royalties.”

By November, Lee hired a lawyer, which allegedly caused Drake to make threatening phone calls. “What the f— is your problem?” he said to her, according to the complaint, then offering her “4-5%” of publishing monies plus a $50,000 payout to go away.

Instead, Lee has filed a lawsuit over “Marvin’s Room,” which has been viewed more than 39 million times on YouTube. She demands a judge declare her as co-writer of the song. She’s also seeking damages and disgorgement of profits on allegations of breach of fiduciary duties and unjust enrichment. Lee is represented by Neville Johnson, who previously filed a lawsuit against Drake on behalf of Playboy Enterprises for sampling an unauthorized sound recording it owned on “Best I Ever Had.”

Drake’s reps gave us this comment:

“This claim is entirely without merit and our client has not engaged in any wrongful conduct. Ericka Lee consented to the use of her voice in the song ‘Marvin’s Room’ prior to its release. Lee asked only for the credit she received as ‘Syren Lyric Muse,’ and she did not ask for any compensation. It was only after she retained a lawyer that there was a demand for payment. Drake tried for months to resolve the matter amicably, and he now looks forward to being vindicated in court.”

Here’s the video to “Marvin’s Room”:

http://www.youtube.com/watch?v=nwyjxsOYnys

http://www.hollywoodreporter.com/thr-esq/drake-girlfriend-marvins-room-lawsuit-286916

Guild cites confidentiality in request to state judge
By Dave McNary

Ken Osmond

The Screen Actors Guild has asked a state court judge to seal information about how it handles millions of dollars of foreign levies as part of the settlement in the tangled class-action suit over the funds.

Lawyers for Ken Osmond, who filed the suit over the funds in 2007, oppose the motion and assert that SAG is required by federal labor law to disclose any disbursements of more than $5,000.

At issue is an exhibit dubbed a Foreign Royalty Status Table, which details the status of SAG’s foreign levy program, including specific dollar amounts collected from the inception of the program through March 21, 2011.

SAG is insisting that it has “an overriding interest” in protecting its confidential financial information which outweighs “right of public access” to the information. “If this motion is denied, then sensitive confidential financial information will be exposed, to SAG deteriment,” the guild said in a filing to Superior Court Judge Carl West.

The judge met with attorneys for more than an hour Wednesday and said he’d decided not to hold a public hearing that had been scheduled to address unresolved issues that he didn’t identify, adding that he’s scheduled a Jan. 10 hearing.

“We have identified several open issues and reporting requirements,” he told William Richert, the lead plaintiff in a similar suit filed against the Writers Guild of America.

Neville Johnson, attorney for Richert and Osmond, said Wednesday that the confidentiality issue remains unresolved. He’s contended that SAG’s required to disclose the information to the U.S. Dept. of Labor under the Labor-Management Reporting Act in a Form LM-2 and that the majority of the dollar amounts detailed on Exhibit 1 are in excess of $5,000.

“Further, the foreign levy funds detailed in Exhibit 1 are being paid out to members of the class, and thus are distributions of SAG,” Johnson contended. “Therefore, the contents of Exhibit 1 are to be included in SAG’s report to the DOL and must be included on the Form LM-2. As stated above, such report is to be made public.As a result, SAG has an obligation to make the contents of Exhibit 1 public.”

The Osmond suit was settled earlier this year and the Richert suit was setted in June 2010. In 2008, the Directors Guild of America settled a suit filed by William Webb.

The lawsuits stem from “foreign levies” for American actors, writers and directors — which began to flow in 1989 after the U.S. agreed to the terms of the Berne Convention, which established the right of authorship for individuals who create works of art. SAG, the WGA and the DGA began collecting the foreign funds in the early 1990s on behalf of members and nonmembers who had a stake in films and TV programs.

The funds are collected from countries through mechanisms such as taxes on video sales and rentals to compensate copyright holders for reuse. All three guilds have denied any wrongdoing. SAG announced earlier this year that it had created an online Foreign Royalties tracker for actors and asserted that the guild has collected $18.1 million in foreign royalties for performers and had distributed $8.78 million in more than 273,000 checks to more than 76,000 individuals.

Johnson said that both sides have resolved long-standing disagreements on the issue of engaging consultants Donald Jasko and Daniel Gervais to review the foreign levies programs at SAG and the WGA West.

http://www.variety.com/article/VR1118045120

By LIZ POTOCSNAK, Courthouse News Service, October 05, 2011

LOS ANGELES (CN) – The Estate of Rick Nelson claims Capitol Records grossly underreported royalties owed and is Bogarting $100 million to $250 million in so-called “unmatched income” that Capitol claims it cannot link to any particular artist.
“Capitol is in possession of $100 million – $250 million in so-called ‘unmatched income’ – large caches of income that Capitol claims it cannot link to any particular artist,” according to the Superior Court complaint. “On information and belief Capitol is perfectly capably of ascertaining the amounts due to Nelson LLC from the unmatched income cache, yet has refused to do so and doesn’t want to do so.
“Indeed, on information and belief, Capitol has intentionally tried to make it harder for royalty auditors to discover the information so that royalty artists could be paid monies legitimately due them. Capitol has refused to allow independent auditors the access to the unmatched report from inception to date, or access to any other documentation needed to ascertain the amount on behalf of Nelson LLC.”
The Estate claims Capitol made things even harder for artists by moving income formerly held in separate accounts into a general account with other assets.
The Estate claims Capitol refused to provide “crucial information” for an audit this year, and was “purposefully disregarding” a royalty increase that was supposed to have begun in 1992.
According to the complaint: “On or about May 21, 1992 Nelson LLC received a letter from Capitol (‘the Letter’) informing them that Capitol was implementing a new royalty calculation on sales of music for ‘Legacy’ artists from the 1950′s, 60′s and 70′s – a classification into which Rick fell. The new royalty rate was increased for Nelson LLC from five percent (5%) of ninety percent (90%) of records sold (an outmoded and extraordinarily low rate that was commonplace in the 1950′s and 60′s when artists’ rights were often blatantly disregarded), to ten percent (10%) ‘[o]f the retail list price for all full price albums’ for ‘all domestic and foreign sales.’ The Letter also promised Nelson LLC fifty percent (50%) of ‘net receipts’ on ‘sales or uses by our licenses.’” (Parentheses and brackets in complaint.)
But the 2011 audit showed “that (1) Capitol was accounting improperly, (2) Capitol was refusing to provide crucial information regarding royalties from the songs, (3) Capitol was purposefully disregarding the royalty increase outlined in the 1992 letter, (4) Capitol would not provide information as to so-called ‘unmatched income’ to which Nelson LLC was entitled,” according to the complaint.
Nelson’s estate says Capitol did not pay the increased royalties, and also is cheating on digital royalties, whose rates are “grossly inequitable.” The Estate claims Capitol takes discounts on digital recordings for bogus “anticipated costs (such as breakage of physical records, or physical distribution) that simply do not apply to digital sales of the same music.”
The Estate says Capitol cannot assert the statute of limitations as a defense, because Nelson LLC was led to believe that Capitol was maintaining fair accounting, so the Estate did not know it had a reason to file a complaint.
“Defendants were aware that they manipulated the accounting in such a manner that made it impossible for Nelson LLC to ever receive proper compensation from Rick’s compositions or songs in the ordinary course of events,” the complaint states.
The Estate adds: “In yesteryear, Capitol was one of the major records in America. Today, Capitol is crippled and operated by a skeleton crew as it prepares itself to be sold off.”
Nelson’s estate seeks disgorgement, restitution, accounting, damages and punitive damages on 10 counts, including breach of contract, unjust enrichment, money due, conversion, fraud, negligent misrepresentation, unfair business practices and breach of faith and fair dealing.
It is represented by Neville Johnson and Douglas Johnson with Johnson & Johnson.
Best remembered today for his hits, “Travelin’ Man,” and “Hello, Mary Lou (Goodbye, Heart),” Nelson co-starred in the 1950s hit TV show, “Ozzie and Harriet,” and from 1957 to 1973 recorded 53 songs that made the Billboard top 100, including 20 songs on the Top 10, according to the complaint. He died in a 1985 plane crash.
According to Joel Selvin’s 1990 book, “Ricky Nelson: Idol for a Generation,” in 1958 Nelson made the immortal statement: “Anyone who knocks rock ‘n’ roll either doesn’t understand it, or is prejudiced against it, or is just plain square.”

“Douglas L. Johnson of Beverly Hills-based Johnson & Johnson LLP said his firm has for years brought profit participation cases on behalf of artists, most of which have settled. Since last summer, he’s fielded more inquiries about the issue. In the past year, Johnson and his partner, Neville L. Johnson, have filed several complaints over classic hit television shows “Mannix,” “Head of the Class,” “Knight Rider” and several others in which the artists’ contracts didn’t contain now-prevalent arbitration clauses.”

‘”It’s catch me if you can, good luck finding a lawyer and paying the big fees,” Doug Johnson said.”

By Erica E. Phillips, Daily Journal

LOS ANGELES – In Hollywood, disputes over profit sharing from hit films and television shows have long pitted artists and studios against each other. But many in the industry say a shock to the system last year in the form of three hefty verdicts favoring the artists may have shifted the scales between Hollywood’s Davids and Goliaths.

The closely followed trials shed new light on accounting methods studios have used when calculating, reporting and paying out profits to producers, directors and lead actors. For decades, artists and executives in the close-knit production industry have quietly settled profit participation disputes away from the glare of the courtroom as a way to ease the negative impacts of legal acrimony on future projects.
But three verdicts last year – which favored “Chariots of Fire” producer Alan Ladd, Jr., “Nash Bridges” actor Don Johnson and “Who Wants to be a Millionaire?” producer Paul Smith – revealed a weakness in that practice, observers said. Artists of a certain age, with time and money to spend on litigation and perhaps less concern for their reputations than actors and producers at earlier career stages, could be more willing to go to court. Observers also noted that two of the three trial lawyers for the plaintiffs weren’t focused in the entertainment industry, giving them an outsider’s perspective that may have bolstered their cases.

These so-called “perfect plaintiffs” have apparently emboldened other artists to examine their own profit statements and encouraged studios to evaluate their accounting procedures. But many in the industry say a flurry of profit participation inquiries this year is only temporary and likely won’t lead back to the courtroom.

The first verdict, handed down by a unanimous jury in 2007 and affirmed by a California Court of Appeal last May, was a win for producer Ladd, who argued that Warner Bros. Entertainment Inc. cut him out of profits for the “Police Academy” movies, “Chariots of Fire” and “Blade Runner,” among other projects. The court ruled that the studio’s practice of licensing collections of films to television stations and equally allocating the fees among the properties didn’t fairly account profits for the more popular films in the group, in this case, Ladd’s – to the tune of $97 million.

In the second case, last July, a state court jury awarded actor Don Johnson and his production company $23.2 million in damages for the television show “Nash Bridges,” in which Johnson shares 50 percent of the copyrights with studio Rysher Entertainment Inc.

On the same day, British producer Paul Smith and his production company, Celador International Ltd., won $269 million from The Walt Disney Co. when a federal jury determined the studio-owned network ABC Inc. had been unfairly licensing Celador’s show “Who Wants to be a Millionaire?” to its own affiliate, Buena Vista Television, for a below-market rate.

Entertainment industry trial lawyer John M. Gatti of Stroock & Stroock & Lavan LLP represented Ladd at trial and on appeal.

Business trial lawyer Mark C. Holscher of Kirkland & Ellis LLP led Johnson’s legal team at trial, and plaintiffs’ trial lawyer Roman M. Silberfeld of Robins, Kaplan, Miller & Ciresi LLP represented Celador.

Profit participation cases, including Ladd’s, Johnson’s and Smith’s, have long followed a standard course. Artists who believe they have a claim commence the process by requesting an audit of the studio’s books. They wait in a queue, often for a year or so, hire a professional studio auditing firm to conduct the audit and sit down with studio representatives to go through their concerns.

“That’s the point at which most of these matters get resolved,” said Harrison J. Dossick, a studio-side litigator with Katten Muchin Rosenman LLP in Century City. “Oftentimes, there just isn’t enough at issue to justify the expense and uncertainty of litigation. If the two sides can get to within a couple hundred thousand dollars, then these cases tend to settle.”

What set Ladd, Johnson and Smith apart, said Jeffrey S. Weiss, a litigation consultant and former in-house business affairs lawyer at several studios, was that all three had the time and money to endure the litigation. And while younger artists might be deterred by the public exposure and the possibility of earning a bad reputation, these three “perfect plaintiffs,” Weiss said, had very little to lose. And there could be more where they came from.

Silberfeld pointed out that contracts “of a certain vintage” don’t contain the now-popular arbitration clauses that send most contract disputes over newer films and television shows straight to a private arbitrator. But in last year’s three big cases, as in the vast majority of profit participation cases, there were attempts to settle before trial. In the Celador case, Silberfeld said Smith and ABC held their ground, and the matter went before a jury.

“Because there’s not a huge track record of these cases having been tried, it was easier for the defendant to say, ‘You know what? Let’s just go roll the dice,’” Silberfeld said. Now, he added, “I think studios will think twice about taking what I regard as an extreme position on what a contract term means in the profit area.”

Studios, perhaps feeling more vulnerable, naturally want to prevent losses like those suffered last year. Gatti, who also advises some studios in profit participation cases, said that after he won Ladd’s case, several studio clients asked him to help them evaluate their accounting and licensing procedures.

Warner Bros.’ manner of allocating profits equally among films, despite their disparate popularity – a common practice in years past, according to lawyers – is no longer accepted.

“There are guidelines now,” Gatti said. “Before having these opinions, you were bound by what the industry was doing … These methods were used and accepted but not tested by the courts.”

In the year since the verdicts in the Ladd, Johnson and Celador cases, entertainment lawyers say profit participation cases have gained visibility and that has emboldened plaintiffs. The back-to-back, highly public studio losses got people talking, and Silberfeld, Gatti and Holscher said that in the immediate aftermath of the verdicts, they received a flurry of calls from potential plaintiffs wondering if they, too, might have claims worth pursuing.

Elaine P. Douglas of entertainment audit firm Hacker Douglas & Co. LLP said she has also been busy in the past year.

Of the three verdicts, Douglas said, “We were delighted with all of them, needless to say,” adding, “It raises everybody’s awareness … For a lot of major [artists], their attorneys and business managers are very savvy about that to start with, but a lot of other people will suddenly go, ‘Hmm, I wonder if there’s money there I should be going after.’”

Douglas L. Johnson of Beverly Hills-based Johnson & Johnson LLP said his firm has for years brought profit participation cases on behalf of artists, most of which have settled. Since last summer, he’s fielded more inquiries about the issue. In the past year, Johnson and his partner, Neville L. Johnson, have filed several complaints over classic hit television shows “Mannix,” “Head of the Class,” “Knight Rider” and several others in which the artists’ contracts didn’t contain now-prevalent arbitration clauses.

For parties whose contracts contain arbitration clauses, JAMS launched a practice this year focused specifically on the entertainment industry. Gina Miller, regional vice president of JAMS, said she expects to see more profit cases over time, though it’s not a new issue for the company’s neutrals.

Meanwhile, many lawyers said it’s too early to tell who will come out on the winning end of this year’s profit claims. They said the audit process takes time and could now be more likely to result in private settlement after last year’s verdicts.

The prohibitive costs of litigation may also limit trials.

“It’s catch me if you can, good luck finding a lawyer and paying the big fees,” Doug Johnson said.

Dossick of Katten Muchin said that a 2003 decision in a profit participation case involving Disney and the film “Who Framed Roger Rabbit” had already been driving disputes to private resolution. In that case, the California Court of Appeals ruled that artists couldn’t be awarded punitive damages in profit claims.

“That took a lot of incentive out of these cases,” Dossick said. “Now you’re just dealing with the difference between what was paid and what [the artists] think they should have gotten. There’s just not enough to fight about.”

In other words, said participants’ lawyer Chad R. Fitzgerald of Kinsella Weitzman Iser Kump & Aldisert LLP, “Even though [studios] got bloody noses, they don’t seem to
have dropped their defenses or lowered the intensity with which they fight these claims.”

The Celador case is currently on appeal in the 9th U.S. Circuit Court of Appeals, and Johnson’s case has been appealed to the California Court of Appeal. No dates for oral argument have been set in either. After last May’s appellate ruling in the Ladd case, the parties privately resolved the remaining issues.

August 15, 2011 by Jonathan Handel, hollywoodreporter.com

In a move that could shut down a high-profile musical on the eve of its national tour, the Writers Guild of America has filed a claim over Bring It On: The Musical on behalf of Jessica Bendinger, the screenwriter of the 2000 Universal film on which it is based, The Hollywood Reporter has learned.

The confidential arbitration demand, filed a week ago, asserts that Beacon Communications Corp. and Beacon Communications, LLC are exploiting Bendinger’s dramatic rights in the cheerleader-themed Bring It On without her consent, in violation of the guild agreement’s “separated rights” provisions. It seeks damages and an injunction against Bring It On: The Musical, which is being coproduced by Universal Pictures Stage Productions, Beacon Communications and others.

Beacon’s outside counsel for the matter, Alan Brunswick of Manatt, Phelps & Phillips, tells THR, “The claim is without merit. We will vigorously defend it.”

In an interview, Bendinger counters that “Imitation is not the sincerest form of flattery. Compensation is.”

The screenwriter says she first heard about the show “in the worst way.” She had been working on a stage version of her own for six years and was developing the project with former Universal production chief Marc Platt, producer of the Broadway hit Wicked. But then she learned that a New York theater attorney not affiliated with her had been heard to say at a cocktail party that he was shopping the theatrical rights to the movie – the same rights she had been seeking to exploit.

The play subsequently opened for previews in Atlanta earlier this year. It’s scheduled to begin a four-city national tour in Los Angeles on October 30.

“I was shocked,” Bendinger says. “A writer works all her life trying to have a first hit. I was not treated well, given the revenue stream I created for them.”

The film, which grossed $90 million worldwide, stars Kirsten Dunst and inspired four direct to video followups. The three most recent video outings logged $18 million to $24 million in sales each, according to the-numbers.com, but Bendinger did not share in the revenue.

Her case “underscores the horrors of being a successful writer in Hollywood,” says her attorney, Neville Johnson of Johnson & Johnson. After cutting her out of the film franchise she created, the company, in Bendinger’s view, is taking the same approach to the stage production.

“It feels like they thought they could just keep going,” she says.

Both Bendinger and Johnson praise the WGA for bringing the case. The arbitration could begin in several weeks, or might not start for several months, depending on the availability of the arbitrator. With the play scheduled to open in two and a half months, it’s unclear whether the guild’s request for an injunction will have any practical effect until the case is heard and decided.

A key issue in the case is expected to be the relationship between Bendinger’s screenplay and the stage play: even though the titles are similar, is the play indeed a stage version of the movie or not?

The guild agreement’s separated rights provisions delineate various rights that are reserved to screen and television writers under specified circumstances. The section is notoriously intricate – it sprawls across dozens of pages – but for all their detail, the clauses don’t clearly explain how to determine whether a stage production is or is not an exploitation of the dramatic rights in the original film.

Complicating matters, separated rights relate to the original movie’s “story,” not its screenplay. “Story” is defined in the guild agreement as “literary or dramatic material indicating the characterization of the principal characters and containing sequences and action suitable for use in, or representing a substantial contribution to, a final script.”

That’s more skeletal than a screenplay itself, which may give the WGA room to maneuver even if the movie and stage play have different plots,as a comparison of the film’s website and a newspaper review of the play suggest may be the case.

A 2000 arbitration decision involving a scripted Universal theme park show based on Waterworld touched on the issue, saying that where “the story of the Picture and the (theme park show) is substantially the same,” the live show represents an exploitation of dramatic rights in the original rather than an exploitation of sequel rights. However, the arbitrator didn’t explain how he arrived at that formulation, nor whether it was intended as a definitive explanation.

The writer prevailed in the Waterworld case, leading to a confidential settlement.

Arbitration decisions are not public, and it’s not known whether relevant cases have arisen since then. The decisions are also not technically binding as precedent, although they are routinely used as such.

http://www.hollywoodreporter.com/thr-esq/writers-guild-trying-shut-down-222926

KATE TAYLOR

http://artsbeat.blogs.nytimes.com/2011/08/15/bring-it-on-screenwriter-alleges-musical-shenanigans/

‘Battlestar’ Creator’s Lawsuit: Universal Frakked Me Over (Update)

The producer of “Knight Rider,” “Battlestar Galactica,” “Magnum, P.I.” and a string of other hits — and the man credited with creating the word “frak” — is suing Universal for millions in profits.

Glen A. Larson’s lawsuit says the 1970s and ’80s shows Larson created and produced were some of Universal’s biggest cash cows, and that Larson was “probably the most successful creator/producer of television shows in Universal’s history both in terms of revenue and critical acclaim.”

Also read: ‘Head of the Class’ Creators Sue CAA Over Profits

It says Universal has made hundreds of millions on the shows but underpaid Larson out of the profits. “Indeed, as the shows make more money for Universal, the deficit that Larson productions must overcome continually increases. It’s Hollywood’s version of being a sharecropper,” reads one colorful passage of the suit.

The imaginative imagery is fitting for a lawsuit from Larson, credited with basing “Battlestar” partly on Mormon theology and creating the curse word the show and its reboot made famous. He later used some of the “Battlestar” sets for “Buck Rogers in the 25th Century,” as he was in the midst of one of the most successful string of hits in TV history.

“We are surprised that Mr. Larson has brought this lawsuit,” an NBCUniversal spokesan said in response. “Mr. Larson did not conduct any audit or otherwise notify Universal of any claim in advance of this filing.”

The suit contends that Larson cannot yet demand a particular amount from the company because he doesn’t know how much money it has withheld. He requests that he be allowed to examine the company’s books, and said he never received profit participation statements. He also seeks punitive damages.

The suit, filed by Johnson & Johnson LLP, accuses Universal of fraud, breach of contract, unjust enrichment, negligent misrepresentation, and unfair business practices. Larson asked for a jury trial.

JJLLPLAW at September 2011 Las Vegas convention (Douglas L. Johnson in the blue polka dot tie!)

The creators of the hit sitcom “Head of the Class” sued CAA on Monday, accusing the agency of making its own side deals that cut into their profits from the two-decade-old show.

The suit takes aim at deals in which agencies receive a “package fee,” instead of the customary 10 percent commission, in exchange for packaging multiple elements of a show. It says the series, which has been syndicated worldwide, has earned more than $200 million in revenue.

Douglas Johnson, one of the attorneys who filed the suit on behalf of show creators Michael Elias and Richard Eustis, said CAA made deals with Warner Bros. Television that granted CAA better terms than their clients received and made the agency an extra $9 million. The suit accuses the agency of fraud, breach of fiduciary duty and breach of contract, among other allegations.

“They should have gotten the clients the best deal, but instead they got themselves the best deal,” Johnson told TheWrap.

CAA responded in a statement: “We deny the allegations and intend to defend the action vigorously.”

Read the Lawsuit

The lawsuit describes the earliest days of CAA, when agents’ wives served as secretaries and card tables sufficed as furniture.

It says that when Michael Ovitz, Ron Meyer, Bill Haber, Rowland Perkins and Mike Rosenfeld left the William Morris Agency to start Creative Artists Agency in 1975, Ovitz persuaded his friend Eustis to come with him. Eustis later persuaded his writing partner, Elias, to become a CAA client as well.

The suit contends that CAA negotiated a 1984 overall deal for Eustis and Elias that entitled them to “net profits” for the high school sitcom, which ran on ABC from 1986 to 1991. CAA negotiated itself a $3.2 million package fee, but the suit contends that it also received an additional $9 million in a side deal.

The plaintiffs allege that CAA was paid the $9 million out of “distribution” costs paid out ahead of net profits.

“These guys helped create this agency and this is how they were repaid,” Johnson said.

The suit contends that CAA should have disclosed the side deal to its clients. It also says that Eustis did not learn of the side deal until 2010, when “CAA (perhaps accidentally) sent… CAA’s own profit participation statements issued by the WB.”

CAA dropped Eustis and Elias as clients in 1995, around the time Ovitz left CAA, the lawsuit said.

Pamela Chelin contributed to this report.