LOS ANGELES (CN) – Creative Artists Agency made millions of dollars from a deal with Warner Bros. TV for the 1980s high-school sitcom “Head of the Class,” at the expense of the show’s creators, the writer-producer team claims in Superior Court.
Michael Elias and Richard Eustis claim that because of their “long trusting relationship” with Creative Artists, they believed it was acting in their best interests in negotiating the deal with WB in 1984.
But the writers say that when CAA renegotiated new terms a couple of years later, instead of taking the standard 10 percent commission it secured nearly all the back-end profits through a “package” deal.
“By virtue of the fact that a ‘package fee’ allows for an agent to ‘participate’ in the revenue derived from the show, ‘package fees’ inherently present a conflict of interest,” the complaint states. “The more the agency negotiates for itself, the more the client is disadvantaged.”
The writers say that CAA has earned more than $9 million from its profit-participation agreement with WB. But the writers say they have not received net profits from the show and “are still in deficit to this day.”
“At no time has CAA ever disclosed the terms of their more favorable agreement with WB to plaintiffs or advised them of such,” the complaint states. “Nor did CAA advise plaintiffs of the conflict of interest arising from CAA’s ‘side deal’ with WB at the time it was renegotiating with WB on plaintiffs’ behalf and supposedly ‘improving’ WB’s ‘net profits’ definition for plaintiffs.”
The writers say: “CAA was not looking out for plaintiffs’ best interests.”
Elias and Eustis say they signed with CAA because of a longstanding relationship with its co-founder Michael Ovitz. Eustis says he was also friends with CAA agents Ron Meyer, Rowland Perkins and Mike Rosenfeld and Bill Haber, who negotiated the WB deal. Elias says Eustis persuaded him to sign up with the agency in 1979.
Both writers claim in the suit that they “believed that their agents” had their “best interests at heart.”
The only defendant in this case is Creative Artists Agency.
Plaintiffs, along with Elias and Eustis, include Elias’ loan-out corporation, Neversink Productions and Eustis’ loan-out, Skorpios Productions.
CAA dropped the writers as clients when Ovitz left the agency to become president of Disney in 1995, according to industry publications.
The writers say they learned that CAA had negotiated more favorable terms for itself when the agency sent them a profit participation statement in July 2010.
“Head of the Class” aired for five seasons, beginning in 1986, and made nearly $200 million through worldwide syndication, according to the complaint.
“A fiduciary acting this way is unheard of,” plaintiffs’ attorney Douglas Johnson of Johnson and Johnson told Courthouse News.
“You can’t be making a sweeter deal than your client. Artists look to their agents to protect them. The client relies on the agent to get them the best deal.”
Douglas said that based on the allegations in the complaint CAA “absolutely threw” the two writers “under the bus.”
The plaintiffs seek disgorgement and punitive damages for fraud, unjust enrichment, conversion, breach of contract, negligence, unfair business practices, interference with contract, negligent misrepresentation, and breach of fiduciary duty.
Creative Artists said through a spokesman: “We deny the allegations and intend to defend the action vigorously.”