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The Hollywood Reporter Publishes Deep-Dive Into Johnson & Johnson's Profit Participation Lawsuit for Glen Larson (Apr. 12, 2013)

Posted by Johnson & Johnson, LLP | Apr 12, 2013 | 0 Comments

Inside Universal’s Ugly Battle with the Creator of ‘Knight Rider’ and ‘Battlestar Galactica’

The Hollywood Reporter

April 12, 2013

By Eriq Gardner

Glen Larson is taking a “ready, fire, aim!”-approach to recouping millions in lost profit participation claims; the studio is fighting back, even subpoenaing his ex-wives.

From the moment that veteran TV producer Glen Larson, 76, filed a lawsuit in 2011 against Universal City Studios over millions of dollars in profits from hit series he created — classic genre shows like Knight Rider, Buck Rogers in the 25th Century, Magnum P.I. and the original Battlestar Galactica — the situation was bound to get ugly.

Fights over so-called “Hollywood Accounting” are nothing new, but Larson's complaint was particularly scathing.

“As the shows make more money for Universal, the deficit that Larson Productions must overcome continually increases,” the complaint stated. “It's Hollywood's version of being a sharecropper.”

Since the lawsuit was lodged in a L.A. Superior Court, both sides have engaged in the sort of mud-wrestling that sometimes occurs when heavy-hitting Hollywood litigators match up against each other. Except this time, the lawsuit has flummoxed the judge and now has triggered a long list of subpoenas, including several sent to Larson's ex-wives.

The case has grown so complicated that at a recent hearing, Universal's attorney suggested that it might take as much as a one-month-long jury trial to sort through the issues.

The pre-trial discovery process is rarely one that's shown on TV legal dramas (Universal's cable TV series Suits is a fine exception), but can factor quite importantly to the resolution of a dispute.

In this instance, Universal is quite upset that Larson — the 76-year-old producer who spent decades on some of its most successful shows — has taken what it calls a “Ready, Fire, Aim” approach to money. The studio would have preferred that Larson ordered up an audit of his profit participation agreements rather than kicking open the courtroom gates to dig around for dirt.

In turn, Larson has his own qualms with Universal's behavior.  Universal allegedly never once sent him profit participation statements despite his shows earning hundreds of millions of dollars. The producer is represented by attorney Neville Johnson, who previously handled the lawsuit of Jack Klugman, star of the Larson-produced show Quincy, M.E., and is also playing a key role in recently-filed lawsuits against five major studios — including Universal — over home-video revenue.

In other words, Johnson is engaged in a full-frontal assault on Hollywood Accounting, and believes he's on the cusp of turning over documents that will expose a dirty fraud being perpetuated on the industry's creative class. Like many profit-sharing disputes, the Larson case involves issues like net income and distribution costs. One of the big claims in the lawsuit is that when Universal makes a TV series, it deducts distribution fees from gross receipts, then charges up-front expenses but only books revenue from licensing agreements much later.

Not surprisingly, the studios have not made Johnson's crusade financially easy for his boutique firm to pursue. In the Larson lawsuit, frustrated by Universal's unwillingness to simply hand over all the documents he wishes to see, Johnson has made “high priority” requests for discovery — and the lawsuit has dragged on for months as the two sides do a tango over whose responsibility it is to identify which shows Larson holds profit participation. The number is anywhere from four shows to 21 shows, and amazingly, the parties haven't pegged down an exact figure.

It's been Judge James Dunn‘s responsibility to sort through the mess against the backdrop of a L.A. Superior Court that is experiencing a budget crisis necessitating closures and layoffs.

At a hearing in February, the flabbergasted judge repeatedly pressed Universal's lawyers, “What is the difficultly in identifying the TV shows in which Glen Larson, a profit participant, played? … Either he does or doesn't have a right to contingent compensation… What is the issue there?”

“It sounds simple,” said one of Universal's lawyers. “It's not all that simple.”

Universal's legal team is being spearheaded by Scott Edelman at Gibson Dunn, who has become a bit of a specialist in beastly profit participation fights. For example, on behalf of CBS, he recently brought to a conclusion a lawsuit from Donald Bellisario, the creator of NCIS and JAG, who sued over spin-off money. A couple of months before that case was settled on the eve of a January trial, Edelman subpoenaed Bellisario's medical records and wished to depose his physicians upon the revelation that the 77-year-old was experiencing a severe brain condition.

The Larson litigation is going similarly. Edelman has reacted to the plaintiff's discovery requests by making his own bold ones. Recently, Universal has served subpoenas on many in Hollywood including the Ziffren Brittenham law firm, International Creative Management and the law firms and accountants who handled Glen Larson's divorce from ex-wives Janet Larson and Carol Larson.

Edelman's efforts to score documents from folks affiliated with Larson is not without legal purpose. He's hoping to uncover evidence that the producer knew his contingent interest in shows at a date early enough that would preclude plaintiff's claims on statute of limitations grounds. (Indeed, the clock played an important factor in the Bellisario case, and statute of limitations has become a friendly weapon for studios in fights over profits.) In prying into Larson's divorce proceedings, there's an expectation that at some point, there was a calculation made about the value of Larson's profit participation.

This, of course, hasn't gone unchallenged.

Earlier this month, Janet Larson's law firm made a motion to quash the subpoenas based on attorney-client privilege and attorney-work product. Johnson's firm is also attempting to quash, limit or modify the subpoena, calling it a “fishing expedition” and “egregiously overbroad,” adding that Universal is asking the third parties to identify documents relating to Larson Shows “even though Universal itself has contended that identifying the shows that Plaintiff has a contingent compensation in is so complicated and complex a task that Universal itself has supposedly been unable to perform it.”

When will this all get to trial?

A jury is tentatively scheduled to hear the dispute in November. The plaintiff's side asked for ten days, and Edelman told the judge, “I think it's probably a 15- to 30-day trial, and I would ask for a trial in March.”

Judge Dunn responded, “Well, ten days versus 15 to 30 days is quite a different story… I'll give you a date at the end of the year, and we'll see if you need a continuance.”

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