Comedy Goes to Court E-Book

Carl Unegbu

• Herausgeber: WS
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 346

Veröffentlichungsjahr: 2022

Beschreibung

This is a book for anyone with an interest in comedy. For people in the comedy industry itself and indeed the broader entertainment industry, this book is literally a must-read. For those thinking about embarking on a career in comedy, not reading this book beforehand is probably something you can only do at your own peril. For all others (think the growing influence that comedy exerts on our contemporary pop culture) this book is a should-read. At the minimum the book offers useful guidance on how comedians should proceed in making a deal for their work; what a comedian can or cannot safely say or do, whether on stage or off stage; how to protect their comedy “material”, which means their money; and how to safely manage their relations with their comedy industry colleagues as well as people in other industries or even just everyday folks out there.  To properly drive home its point, the book draws lessons from the life and work of comedians not only here in the US, but also in Canada, Britain, Australia, Germany and more.  

Long story short, this book helps comedians cover all their bases. Above all, this book has been years in the making and is the sort of book that could only have been written by somebody from a vantage position who not only knows the law around comedy but also has covered the world of comedy intimately and with good insight. In other words, someone like Yours Sincerely. Enjoy!  

Leseprobe

COMEDY GOESTO COURT

When People Stop Laughing and Start Fighting

Carl Unegbu

Published byHybrid Global Publishing333 E 14th Street#3CNew York, NY 10003

Copyright © 2022 by Carl Unegbu

All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without the written permission of the Publisher, except where permitted by law.

Manufactured in the United States of America, or in the United Kingdom when distributed elsewhere.

Unegbu, Carl.Comedy Goes to Court

ISBN: 978-1-957013-31-2eBook: 978-1-957013-32-9LCCN: 2022906816

Cover design by: Natasha ClawsonCopyediting by: Dea GunningInterior design by: Suba MuruganAuthor Photo by: Deborah Sanders

https://www.ocarlslaw.com

This book is dedicated to the comedy community everywhere and to all who love the comedy art form.

Contents

Acknowledgments

Introduction

Chapter 1 Hashing Out the Deal for Comedy Jobs

Chapter 2 The Right of Comedians to Free Speech

Chapter 3 Copying the Work or Appearance of Somebody Else

Chapter 4 Comedians Getting in Trouble Onstage and Offstage

Chapter 5 When the Funny Goes Silly

Chapter 6 Divvying Up the Dollars from Comedy Work

Chapter 7 The Intersection Crisis—Comedy and Other People’s Lives

Epilogue

About the Author

Acknowledgments

It has taken me a while to finally get this book published and, needless to say, this would not have been possible without the help and collaboration of many people along the way. First, I would like to give many thanks to Karen Strauss, the head of Hybrid Global, the publishing firm responsible for this book, and her team for their diligent and professional efforts in bringing this work to market. Karen’s very capable team included my project managers Sara Foley and Karina Cooke; my developmental editor Claudia Volkman and my cover designer Natasha Clawson.

I would also like to thank comedian and journalist Travis Irvine, who was my co-host at the quarterly Comedy Dialogue series in the Upper West Side of Manhattan, which were pretty exciting hybrid events that regularly served up standup comedy bits and panel discussions. These series often illuminated some of the big issues in contemporary comedy and did certainly inform some of the stories covered in the book. Of course, I am also Immensely grateful to all the many attendees and friends of the series over the years for their enthusiasm about the events.

Also deserving of my thanks are attorney Carol Hauge and other friends and colleagues of mine for their moral support and encouragement in the writing of the book.

And, considering how the journey on this book all began, there is no forgetting to warmly thank the many readers of my blog O’Carl’s Law for their comments and words of encouragement to me as a blogger over the years. I thank each and every single one of them very sincerely. As noted in the Introduction and Epilogue sections of this book, the blog was the inspiration for the book and, as everyone knows, without the readers a blog is nothing.

Thank you all very much.Carl Unegbu

Introduction

This book is the culmination of a journey that began about ten years ago when I started writing a blog named O’Carl’s Law (www.ocarlslaw.com). That was not long after I became an editor at Comedybeat, a website that covered comedy at the time. For me, launching the blog was purely a labor of love since my work on the blog was not intended as a money-making enterprise, and there was certainly no plan whatsoever to write a book. My only goal in starting the blog was to periodically provide a running commentary on the entertainment stories of the day, in a style so simple it would feel like an informal conversation between two pals hanging out in the bleachers at a New York Yankees baseball game. And as I began to focus my writing more on comedy industry events and controversies, I noticed that my growing audience was literally hanging on every word in each succeeding blog entry.

By their remarks in the “Comments” section of the blog, it was evident that most of my readers were very appreciative of what they described as the “easy” and “simple” style of the writing, which allowed them to understand and follow the complex and sometimes esoteric stuff being discussed in the posts. They often said they felt like I was having a conversation with them on many of the things they’d usually just wondered about. By this, the readers were referring to the way that comedians have to navigate the tricky intersection between two worlds that can seem to be at odds with one another—namely, the world of the law which tends to be restrictive in nature because it essentially regulates things and the world of the comedians themselves which, in contrast, tends to encourage permissiveness because of its rather edgy and sometimes “weird” nature.

I also realized that nobody else was writing about things like this—at least not that I could find. Then, about eight years ago, I released my first book Comedy Under Attack: The Golden Age & the Headwinds, and during a Q&A session at a book reading in New York City, a local comedian and a regular reader of my blog told me she thought it would be a great idea if my next book was based on the kinds of stuff that I wrote about on my blog.

As I thought about it more, the realization hit me that I was perhaps in a better position than most people to write a book of this kind. For starters, I covered comedy regularly as an editor at Comedybeat, which caused me to have frequent interactions with comedians and other industry players. Plus, I figured that being a lawyer also placed me in a good position to break down and explain many of the arcane legal stuff—or as some might put it, legal mumbo jumbo—in a way that, say, the average Joe riding the New York City subway could readily understand. I was determined early on not to allow myself to fall into the class of lawyers who, as a result of talking just like lawyers, unwittingly shut out non-lawyers from the conversation. In trying to avoid this pitfall, I came to rely quite heavily on my training and work as a journalist, which is a line of work that comes with a fair amount of storytelling skills.

Given my background, the content of this book doesn’t contain any legal-format citations of the kind that I must concede, lawyers obsess about when they write. No citations of legal cases whatsoever! There are very few, if any, legal jargons or Latin words or phrases contained in the writings. My hope is that this book will be similarly reader-friendly, whether the reader is someone versed in the law or just a regular guy.

Concerning the arrangement of the book, each of the several legal cases or situations discussed in the book have been put under a broad category (or chapter) which describes the kinds of situations that are dealt with by the cases included in that chapter. Thus, there are such chapters as “Hashing out the Deal for Comedy Jobs;” “the Right of Comedians to Free Speech;” “Copying the Work or Appearance of Others”; “Comedians Getting in Trouble Onstage and Offstage;” “When the Funny Goes Silly;” “Divvying Up the Dollars from Comedy Work;” and finally, “The Intersection Crisis: Comedy & Other People’s Lives.” The beginning of each chapter contains a brief description of the kinds of subject matter covered by the cases or situations contained in that chapter.

Furthermore, though the popular imagination of comedy seems dominated by both the antics and the brilliance of stand-up comedians, it is worth noting that there is more to it than just stand-up comedy: the other genres include sketches, improvisations, and sitcoms. Considering this, I figured that it might be a good idea in a book of this nature to include some interesting situations that occur in other genres of comedy besides stand-up. So, I have included a few “pushing-and-shoving” situations from the sitcom world. For instance, one of the cases discussed in this book concerns the disagreement surrounding Charlie Sheen’s messy exit from the hit CBS comedy Two and a Half Men in March 2011. Another case dealt with the money fight over Tim Allen’s 1990s sitcom Home Improvement, which has since gone into syndication. Suffice it to say then that this book made a conscious decision to broaden its lens in an attempt to take in a fair selection of cases and situations in the world of comedy where people, as the subtitle of the book suggests, simply ‘stop laughing and start fighting’ instead.

Also, since many of the cases covered in the book were ongoing court cases at the time they were discussed in my blog, I deemed it a worthwhile idea, wherever appropriate and available, to give the readers a more complete picture of the entire situation by including “updates” on those cases. These updates provide information on how the cases were settled by the parties themselves or failing that, how the courts instead resolved the cases for them. Where no updates have been provided because no further recorded information exists, odds are that the cases are still pending or perhaps have been abandoned by the litigants themselves. Needless to say, that doesn’t affect the validity of the legal principles controlling the situations as discussed in the stories.

Each case discussed in the book is preceded by the place where the events in the case took place, the date I originally posted the information on my blog, and the original content. Therefore, please note that the articles do not appear in chronological order, but rather according to the particular subject or topic that each article is illustrating.

In the end, in choosing to write this book, my intention is to offer it as a sort of service to the comedy industry: by illuminating some of the issues and circumstances that a lot of funny men and women seem to be struggling with in their professional lives. In a manner of speaking, who better to attempt this rather difficult task than someone whose background and experience appear to stand at the intersection of the worlds of comedy and the law?

HASHING OUT THE DEAL FOR COMEDY JOBS

CHAPTER ONE

HASHING OUT THE DEAL FOR COMEDY JOBS

As the opening chapter in the book, it seems appropriate to devote this section to the task of making the contracts and deals that allow comedians to get to work, whether stand-up comics or comedians who work in the sitcom world. Increasingly, as comedy settles into its “golden age” and comedians are recognized as true professionals who can make a genuine living doing what they enjoy doing, contracts will become increasingly utilized, much like entertainers in other fields such as acting and music. This chapter won’t cover interactions that occur in less formal situations like open mics for stand-up comics. Such forums are not usually understood by comedy industry people as money-making situations: oftentimes, the open mics merely offer working comedians a forum for working on their material in order to polish them up and get them ready for actual paying gigs.

Most entertainers don’t fully appreciate that many of the problems that come up in the course of their work could have been avoided by a careful wording of the agreements by which they are hired to perform in the first place. As the cases in this section show, sometimes the problem arises from something that wasn’t said in the agreement, which should actually have been said.

Other times, the problem is about provisions inserted into the agreement or perhaps powers and rights given under the agreement in circumstances where the parties did not know at the outset just how such powers and rights might be used in the future. While no one has a crystal ball and something like this cannot be an exact science, the more clearly the agreement anticipates what problems could lurk around the corner and the more it fully covers the bases of the working relationship, the less there will be the potential for disputes, especially the very unnecessary ones. Now, let’s get to the cases!

* * *

Avoiding Garry Shandling’s Big Mistake

CaliforniaJanuary 11, 2010

In 1998, comedian Garry Shandling and his then manager, Brad Grey, the current chairman and CEO of Paramount Studios in Hollywood had a major falling out, followed by a $100 million lawsuit by Shandling. Their long-term relationship collapsed over money issues surrounding the well-acclaimed HBO series The Larry Sanders Show, which ran between 1992 and 1998.

Claiming that he alone created and sold the show to HBO, Shandling accused Grey of “triple-dipping” on him by taking a half ownership of the show, snagging a producer’s fee, and collecting commissions from Shandling’s writing and acting fees.

Worse, Shandling claimed that when asked about the monies he was collecting, Grey threatened to make his life miserable and sent private detective, Anthony Pellicano, to snoop on his police records and plant smears against him. Pellicano himself ended up getting indicted by the Feds for racketeering and wiretapping.

In 1999, Grey paid $10 million to Shandling to settle the case at the last minute. But Shandling’s mistake is a genuine teachable moment for entertainers with managers and agents.

For starters, Shandling apparently got himself a lawyer rather late in the game, only after Grey allegedly stonewalled his request for information about the monies. He needed a lawyer much sooner and here’s why. Most managers tend to be long term pals of entertainers who trust them to provide the best career advice; promote the entertainers’ careers and watch their backs for them. Sometimes, managers can double as agents by finding work and negotiating deals for the entertainers. Thus, managers can really loom pretty large in entertainers’ professional lives.

But the flip side is that managers can and sometimes do abuse their position. So, the smarter thing is for the entertainer to protect himself first against his manager before having his manager protect him from the world. This means that the comedian ought to draw up a well-rounded contract with his manager, which would address most, if not all of the issues that can arise in their relationship going forward.

It cannot be said enough that despite the entertainer’s bond of trust and affection for his buddy and manager, he needs to negotiate his contract with him at arms’ length and this is where the entertainer could really use his high-prized lawyer to carry the buckets for him. To be sure, the relationship between the entertainer and his manager is one that would qualify as a “fiduciary” relationship in which the law tries to look out for the little guy. However, the law is not in the business of assisting people who have neglected their own affairs.

Above all, entertainers should make an effort to understand the terms of any contracts their managers are negotiating or signing on their behalf. Here, entertainers should “trust but verify.” And this is important, because Shandling claimed that Grey would not even let him see the contracts he was negotiating with outsiders on Shandling’s behalf and that Grey simply kept him on a “need to know” status. Big problem!

In negotiating the manager’s contract, entertainers and their lawyers may perhaps want to follow a simple rule of thumb sometimes called the “officious bystander” rule, something that most English transactional lawyers would be familiar with. In the Shandling case here, one can perhaps imagine this [officious bystander] character as some busybody standing around while Grey and Shandling are negotiating their agreement, and although he has no assigned role in their negotiations, this character, being so officious, nonetheless proceeds to ask the negotiators whether, for instance, Grey would get any share of Shandling’s writing and acting fees. If their [Grey and Shandling’s] answer to that question is not exactly the same, then an expensive lawsuit is probably in their future, meaning that they still need to reach an agreement on that particular question, in order to avoid any trouble ahead.

The big lesson here is that what happened to Shandling didn’t need to happen and as the saying goes, “a stitch in time saves nine.”

COMEDY CENTRAL Versus DAVE CHAPPELLE: Lessons from a Standoff

New YorkDecember 13, 2009

The year was 2004, comedian Dave Chappelle was ruling the comedy scene, and Comedy Central also wanted a piece of him. So, the network made him an offer he couldn’t refuse. But less than a year later, he couldn’t walk away from it fast enough as he dropped the gig like he’d been holding a red-hot stove.

Here’s the story: In August 2004, Comedy Central’s parent Viacom and the comedian inked an unprecedented $50 million deal, (which included a share of DVD sales), to continue the Chappelle’s Show for two more years. The show had become a ratings jackpot for the network and its DVD sales were the highest of any TV show at the time. Everything looked okay until May 2005 when Chappelle stunned the world by unexpectedly quitting the show in mid-production and fleeing to South Africa where he would remain for the next two weeks, amid rumors that he had become an inmate in a mental health facility.

In the ensuing standoff, the network demanded Chappelle’s return to the production set while the comedian vowed never to return unless big changes were made to his working conditions. As a condition for his possible return, Chappelle requested that the network not air the unfinished material prepared for the show’s third season, stuff that he hated.

In the end, neither side got what it wanted: Chappelle went back to doing live stand-up comedy and never returned to Comedy Central; for its part, Comedy Central ignored Chappelle’s wish by airing the unfinished material from the comedian’s abandoned third season around July of that year (the so-called Lost Episodes) plus an uncensored DVD of the disputed material.

The disappointment on both sides is no surprise. For starters, this was a contract for “personal services” and courts normally would not force an unwilling person to render a personal service to another person. The simple reason here is that there is no way for the courts to ensure that one person serves another in good faith and properly: the courts are not job supervisors. So, Chappelle didn’t have to return to work. Yet, if it would have had a provision such as a negative covenant in its contract with Chappelle, Comedy Central could use an injunction from the court to prevent Chappelle from working for a rival TV network during the time he was supposed to be working for Comedy Central.

The core issue here is creative differences, as Neal Brennan, the co-creator of the show, correctly observed. Chappelle simply didn’t think he had his creative space: he said he felt awful every day he worked on the show and felt like some kind of prostitute. “I want to be well-rounded, and the industry is a place of extremes,” he famously said. Apparently, Comedy Central did not see things the same way.

The big lesson here for comedians is that, in an industry “of extremes,” they must look out for themselves right from the time the contract is being negotiated. The good news is, we have freedom of contract in America and, in most cases, folks can put in pretty much any clauses they want in their contracts. Comedians must pay close attention to clauses in the agreement that pertain to creative space and format for the shows.

And this is important because what is good for the bottom line of the TV networks may not necessarily be good for the comedian’s career and emotional well-being.

For instance, Chappelle reportedly said he did not personally like the sketch-comedy format. Yet that was exactly what his contract with Comedy Central required him to do on the show. And he went along with it until the so-called “pixie sketch” on the show freaked him out when he reportedly discovered somebody laughing at him instead of laughing with him. Well, today, he’s moved back to doing his favored stand-up comedy.

A final word: A blockbuster deal with a major TV network that employs a lot of lawyers can often seem like getting in a gun fight, and no comedian should go into that gun fight with just a knife. So, just be ready to negotiate hard and don’t forget to “lawyer up”!

CONAN’S NBC: No Laughing Matter for a Funnyman

CaliforniaJanuary 24, 2010

On Sunday, January 10, 2010, NBC made it official that it would cancel the 10 p.m. Jay Leno Show and move Leno over to an 11:35 p.m. time slot. NBC offered Conan O’Brien, the funnyman from Harvard, the chance to move his Tonight Show back just a half hour from 11:35 p.m. to 12:05 a.m., to be followed by Jimmy Fallon’s Late Show.

Looking back now, the Leno-O’Brien shuffle by NBC Universal’s boss Jeff Zucker easily looks “boneheaded” because, with Leno gone, Letterman now rules the ratings at 11:35 p.m. in spite of O’Brien’s best efforts. Plus, Leno himself is doing rather poorly at 10.p.m., as NBC languishes in fourth place among the major networks. This is now being called Late Night Crisis 2010. Disaster all around!

Yet, NBC won’t be getting its wish: O’Brien is leaving in a foul mood with an unfriendly dig at NBC, which he accuses of making him a scapegoat for its “terrible” prime time ratings. He also claims that starting the Tonight Show at 12:05 a.m. the next day amounts to a “destruction” of the show. O’Brien’s bold reaction somehow recalls an earlier and bigger drama on the Tonight Show when Jack Paar stormed off the show in 1960 to protest alleged censorship from NBC folks.

When the dust settles, O’Brien will leave NBC with millions of dollars in his pocket. But some people have wondered what the scenario could have looked like if the funnyman had chosen to stay and fight instead. No easy answers here, but there are options all around the table.

Speaking of O’Brien’s options, a small oversight by his lawyers may have made all the difference against him, something that NBC has to be thankful for. And here it is: the language of the agreement did not include that O’Brien’s Tonight Show must be held at 11:35 p.m. And NBC has ended up using this oversight as an escape route. Recall that NBC told O’Brien he could carry his show intact over to 12:05 a.m.

If that loophole didn’t exist, O’Brien’s legs would be stronger in a fight against NBC if he had chosen to stick around and mix it up with them. He could easily seek an “injunction” from a court to prevent NBC from moving Leno to 11:35 p.m. Plus, he could also request an order of “specific performance” to make NBC keep its word to leave him on at 11:35 p.m. Not having these options made O’Brien something of a sitting duck as NBC selfishly maneuvered to fix Zucker’s big blunder earlier on, in moving Leno into the 10 p.m. slot. Some have described NBC’s tactic against O’Brien as “Machiavellian.”

To be sure, O’Brien isn’t the only one with options here. His contract with NBC reportedly contains what’s called a “negative covenant” that could allow NBC to keep him off any rival television networks during the time he was supposed to be working for NBC. Already, Zucker is said to be “threatening to ice him” if he walks away from NBC. All this is important because FOX is reportedly interested in hiring O’Brien to launch Fox’s own rival late night show.

But, aside from Fox’s interest in O’Brien, can NBC really enforce any agreement to keep O’Brien off late night television for even one day? Not likely, under the circumstances.

For starters, NBC has not dealt fairly and in good faith with O’Brien, and the law requires a party complaining to come with “clean hands.” Plus, the courts would probably find such an action “unreasonable” since the law aims to protect both competition in the marketplace as well as a person’s right to earn a living. So, one can safely predict that if push comes to shove here, NBC will likely suffer the same fate that ABC endured in 1980 when ABC failed in its suit against CBS in trying to stop sportscaster Warner Wolf from jumping ship to CBS.

True, O’Brien has asked us not to “feel sorry” for him and, considering all the big money he’s leaving with (about $30 million by some estimates), perhaps we shouldn’t. Yet we cannot help but wonder just what could have been had the Ivy League funnyman been in a good position to really take the fight to NBC.

HOWARD STERN vs. SIRIUS XM: Starting a Fire in the House

New YorkJune 3, 2011

Howard Stern is a major newsmaker with a large footprint, and these days he is starting some fires inside the house of Sirius XM satellite radio.

This past March, the humorist and self-styled “king of all media” sued Sirius XM [through his production company, One Twelve Inc.,] in a Manhattan court alleging breach of contract against the satellite radio company for unpaid stock awards under their contract. Also suing Sirius XM is Don Buchwald, the agent for One Twelve, Inc., who is claiming a consultation fee allegedly promised him under the agreement.

And it all comes down to what the agreement said or did not say about what happens if and when the big bucks start rolling in. Stern says the agreement requires Sirius to compensate him in the form of additional company stock every time his presence causes the number of subscribers to Sirius XM to increase over a certain number set in advance throughout the five-year period. Sirius XM begs to differ and claims that it has met all its “obligations under the terms of our [the] 2004 agreement with Howard, his agent and production company.” Sirius XM also says it is “surprised and disappointed” by the lawsuit, which means that it has no plans to pony up to Stern and his agent any time soon.

It may seem rather odd that the parties continue to do business together despite the lawsuit, but this shouldn’t be too surprising given that the collaboration has been very lucrative for both parties so far. What’s not to like about smiling to the bank. (In January 2011, Stern got another five years on his contract for an estimated $400 million and Sirius XM is now twenty million subscribers stronger.)

It is interesting that Stern did not raise this issue of the additional stock awards until during the last year of the contract. So, can he now turn around and seek to enforce the right he seemed to have abandoned for years? Or does his silence over those years somehow mean that perhaps he knew he didn’t have the right he is now trying to enforce? Could this be some Monday morning quarterbacking to corral more money? Stern claims that he held back out of sympathy for Sirius’ financial situation following its acquisition of rival XM in 2008. Yeah, right, one might well say. This obviously seems like a lame explanation in the all-too practical world of businesspeople. As that famous saying goes (in English company law), “Charity has no business sitting on the board of directors.” And everyone knows that Stern is a business-savvy guy.

And there is the issue of the Sirius/XM merger. Assuming that the agreement in fact requires payment by additional stock awards to Stern, does the number of subscribers include the people coming in from the XM side of the ledger? Or is it limited to just the folks from the old Sirius alone? In talking about compensation based on performance or “rainmaking,” it may not be easy to just put them all in the same pot, especially if the XM subscribers were brought in simply because of the merger, and not directly because of anything Stern did. Take this loose analogy: If someone promised you $1 million if you have five children in ten years, can you still claim that money on the same footing in ten years if some of the five kids you are presenting happen to be adopted? This may be debatable.

However, one thing is for sure: if Stern is in fact entitled to get what he is claiming, then that particular clause in the agreement was so poorly drafted that it did him no favors at all. He shouldn’t have needed to go to court in order to receive what should be rightfully his. It all comes back to the old lesson among lawyers that a badly drafted agreement usually hands off an unnecessary lawsuit to the lawyer’s client and would often only help the person who is under obligation to do something for the benefit of the other person. In this case, it would be Sirius XM.

Still, just because Sirius XM may well be ahead on points doesn’t mean it would welcome this kind of publicity, especially coming from a media sensation with a big microphone like Howard Stern (who is remarkable for his on-air remarks when talking with the callers on his show). So far, he’s kept a surprisingly low profile on the whole thing, but who knows for how long. Also, the lawsuit itself is simply not good for business, to say the least: the day after it was filed, the company’s shares fell off a bit and some analysts downgraded them from Buy to Hold. Translation: these circumstances may be good grounds for Sirius XM to consider settling the case just to put out the in-house fires. And keep the courts out of the company’s business.

CASE UPDATE: While the outbreak of the lawsuit itself was a surprise to many, the actual end result wasn’t that surprising. On April 11, 2013, the court dismissed Howard Stern’s case against Sirius XM Radio. The court flat out said that the parties’ contract was “unambiguous” and that since the additional subscribers to Sirius XM’s operations came from the XM Radio side of the ledger, Stern’s deal did not give him a claim to any monies from those sources.

Sound familiar? You may recall the so-called loose analogy I made earlier in the original discussion of the case above, which went something like this: “If someone promised you $1 million if you have five children in ten years, can you still claim that money on the same footing in ten years if some of the five kids you are presenting happen to be adopted? Well, obviously, the New York appeals court didn’t think so. If Stern really wanted it to be so, then he should have used more “unambiguous” language in his contract.

ADAM CAROLLA: Juggling Comedy, Business and Friendship in Court

CaliforniaJune 9, 2013

Funnyman Adam Carolla has quite a situation on his hands these days. And he does have some court dates coming up where he’ll be sorting out a few money matters with some old friends. It all comes back to the whole idea that doing business with other folks is never an easy thing and there is no guarantee that things would get any easier just because those other folks happen to be a guy’s close pals. Especially when business starts to boom, and it comes time to divvy up the money. But first, here’s the story.

Around February 2009, Carolla’s radio gig, The Adam Carolla Show, was unexpectedly canceled by CBS. That was when Donny Misraje, a longtime close friend of Carolla’s suggested that the comedian roll his show over to a daily podcast as a way to “retain his avid fan base.”

According to Misraje, he and Carolla agreed to form a partnership business to pursue the new venture together. Under the oral agreement, Carolla was to hold a sixty percent interest in the partnership, leaving thirty percent to Misraje and his wife Kathee, and another ten percent to a guy named Sandy Ganz.

Misraje claimed that by 2011 profits from the business had grown by a lot and that Carolla had begun shutting out all three of the other stakeholders from the operations of the business, including at one point, banning him (the producer) from being on site at the live show. He said that by the end of October 2011, Carolla had fired all three of them altogether and was refusing to honor the partnership agreement. In response, Misraje and his co-plaintiffs filed a lawsuit against Carolla, alleging breach of the partnership agreement plus a demand for accounting, and the imposition of a constructive trust for their benefit and protection; and more.

The outcome of this case could provide some clarity for the benefit of the many comedians on the late-night TV shows, radio shows, podcasts, and comedy specials who work under various arrangements, promises and understandings with their buddies, whether as show sidekicks, as producers, or as whatever else they’re asked to do on the shows.

The starting point in figuring out this case is to determine if there was indeed a partnership agreement between the parties, and if so, whether Carolla’s actions violated the terms of that partnership. If the answer is yes, then the next thing is to figure out what kind of remedy can be awarded in order to set things right.

Under the law, a partnership relationship arises when two or more people carry on business together for profit. And the agreement between any two or more people to form a partnership could either be written down in a document somewhere or it could be made orally as by word of mouth. Regardless of whether the agreement was written or oral, what must exist in every case is that each partner had the “intent” to enter into the partnership with the other partners, and that each of them “consented” to become partners with one another. In short, the partners must be on the same page as to whether they want to form a partnership. Business lawyers often refer to this requirement as a “meeting of the minds” between the folks involved. And this requirement is a pretty big deal because in the eyes of the law, each partner is an “agent” of the other partners, and his actions could bind the other partners whether they like it or not. Also, the partners are considered “co-owners” of the business, meaning that all the partners have the right to participate in the management of the business and the sharing of its profits.

Therefore, as in every partnership case, the simple question here is whether Carolla intended to and consented to become partners with Misraje and the others. In other words, was there a “meeting of the minds” between Carolla and the plaintiffs to form a partnership? Well, since we do not have a written agreement here, the intention and consent of the parties to become partners will have to be gathered from their actions at the time that their collaboration began, as well as the period before and after. These actions are usually referred to as “course of conduct” and they are deemed to shed light on what the parties had in mind when they were interacting with one another.

Speaking of “course of conduct” between the parties, the courts have over the years come up with certain ways of reading between the lines when attempting to figure out the intentions of folks involved in contract situations. And the process can sometimes be tricky because this surely isn’t a perfect science. Usually, when the evidence presented by both sides is sort of evenly balanced and could go either way, the courts come down in favor of the person who is denying that there is a partnership.

Here’s how it works: In one case that happened in New York, the first guy claimed that he gave a certain amount of money to the other guy in exchange for a ten percent partnership stake in a restaurant business. (Both guys had been close pals for over twenty years at the time.) However, the other guy claimed that the money was a “loan” rather than a “capital investment” in the restaurant business. It was shown that the first guy who lived in Washington, DC, visited the restaurant just once or twice during the first year that it opened; that he gave out menus and business cards about the restaurant to other folks; and that he requested a friend of his in the media to feature the restaurant in a prominent magazine. The court concluded that these actions could have been the actions of a guy just trying to help his friend’s business rather than the actions of a person acting as a partner in a business. The court instead gave more weight to all the things (get this!) that he did not do. For instance, that he did not inquire about the leases; the contracts; the insurance; and the debts of the business. Also, he did not raise or discuss with his supposed partner any concerns about the profits or losses of the business; nor did he indicate in any of his loan applications or tax returns filed during that time period that he had acquired a partnership interest in the restaurant.

In the Carolla case, it is interesting that Misraje has taken pains in his Complaint to outline actions and steps that he and the other plaintiffs took to establish the intention and consent of all the parties to the partnership, including Carolla. As consideration for his stake in the business, Misraje (an experienced producer and editor) claims that he was to produce and manage the show. He also claims that he quit his entertainment industry job paying $231,000 annually in order to focus on his work at Carolla’s podcast, which carried no salary at all. During this time, he claimed that he and his family lived off a home equity line of credit on their property. In addition, Misraje said he kicked in $10,000 worth of personal equipment and supplies into the business operations of the podcast plus other sacrifices that he and his wife made. For his part, Carolla was to be the star of the comedy show, while Ganz would contribute his expertise in technology as consideration for his own share of the business. Obviously, if Misraje’s side can sustain these claims in court, they’ll likely have a far better day in court than the restaurant guy described above.

Of course, if the court finds that there is no partnership relationship between the parties, then it is game over for the plaintiffs, meaning that Carolla wins. However, if the court finds that there is in fact a partnership situation between them, then the action next shifts to the question of “remedies,” where the court decides how to set matters right between the parties. And the courts can be pretty flexible when they are dealing with the issue of remedies. For starters, considering that each partner is entitled to participate both in management and profit sharing, for one partner to exclude a fellow partner from the operations of the business or to refuse to share profits with another partner is a violation of the partnership relationship, and such an action would be a good cause to dissolve the partnership. In real life, what usually happens when partners can’t agree on the way forward is that the court will “order” the partners not to shut out one another from the business and will appoint a “receiver” to run the affairs of the business until the court proceedings are finished.

However, appointing a receiver may be more appropriate to situations where partners are, for instance, running a restaurant than where they are running a podcast show. Unlike a restaurant and similar businesses, life in the entertainment world tends to be quite personal in nature and the show itself (including the buzz and the ratings) is all about the “star” of the show. Therefore, as a practical matter, it will be unusual and pretty messy for the court, for instance, to order Carolla to allow Misraje to keep producing his show against his will. Plus, since receivers are folks who take over the business operations in the meantime from the partners, a receiver just won’t work in this particular situation since Carolla, as the star of the show, will still be front and center of the show. (The show simply cannot go on without him.) Long story short, receivers and injunctions just won’t cut it in this case.

However, that doesn’t mean it’s the end of the case. What will likely happen is that the court (if it finds that a “partnership” exists) will impose a ‘constructive trust’ upon Carolla for the benefit of the other partners. In this case, the thing being held in ‘trust’ by Carolla will be the share of the profits and other assets of the partnership that rightfully belong to Misraje and the other co-owners. (A “constructive trust” situation arises when someone is deemed to be holding something for the benefit of another person and it usually arises when the courts want to prevent “unjust enrichment” of one person at the expense of another in the interest of justice.) And with constructive trusts comes an obligation to render “accounting” and to distribute the stuff that’s being held in trust.