Buchwald v. Paramount
Encyclopedia
Buchwald v. Paramount was a breach of contract
lawsuit filed and decided in California
in which humorist and writer Art Buchwald
alleged that Paramount Pictures
stole his script idea and turned it into the 1988 movie Coming to America
. Buchwald won the lawsuit and was awarded damages, and then accepted a settlement from Paramount before any appeal took place.
The decision was important mainly for the court's determination in the damages phase of the trial that Paramount used "unconscionable" means of determining how much to pay authors. Paramount claimed, and provided accounting evidence to support the claim, that despite the movie's $288 million in revenues, it had earned no net profit
, according to the definition of "net profit" in Buchwald's contract, and hence Buchwald was owed nothing: a classic example of Hollywood accounting
. The court agreed with Buchwald's argument that this was "unconscionable", and therefore invalid. Fearing a loss if it appealed, and the subsequent implications of the unconscionability decision across all its other contracts, Paramount settled for undisclosed terms. The case was the subject of a 1992 book, Fatal Subtraction: The Inside Story of Buchwald v. Paramount by Pierce O'Donnell, the lawyer who represented Buchwald, and Los Angeles Times reporter Dennis McDougal
.
of Paramount, with the intention of starring Eddie Murphy
, who was under contract to Paramount at the time. Paramount optioned
the treatment in early 1983 and commissioned several unsuccessful scripts from several screenwriters. John Landis
was considered as the director from time to time. After two years of development hell
, Paramount decided to abandon the project in March 1985.
In May 1986, Paramount's rival Warner Bros.
optioned Buchwald's treatment.
In the summer of 1987, Paramount began to develop a movie that was credited as being based on a story by Eddie Murphy, and which was to be directed by John Landis. The story outline seemed similar to Buchwald's story idea, and to the failed Paramount scripts that had been based on it.
In January 1988, Warner Bros. cancelled their version of Buchwald's project, citing the Paramount project.
When the movie Coming to America
was released by Paramount in 1988, Eddie Murphy was given sole story credit. Buchwald was not paid, or even credited as the story writer. Buchwald sued Paramount for breach of contract, as his contract with Paramount stated that he would be paid a certain amount if his treatment were made into a film.
In the second phase of the trial in which the court determined the appropriate amount of damages to be paid to Buchwald, Paramount testified that despite the movie's $288 million in ticket sales, it had spent so much money on the movie's development and marketing
that, according to the formula specified in Buchwald's contract, Paramount had made "no net profit". The court then found that the formula was "unconscionable" and that Buchwald therefore could pursue a separate tort
lawsuit against the company.
Fearing a loss on appeal and, presumably, a wave of lawsuits by authors claiming they, too, had been wronged by the unconscionable net profit formula, Paramount settled with Buchwald for an undisclosed amount of money. As part of the settlement, the "unconscionability" decision was vacated.
that the movie studios use when creating their financial statements
that are reported to the U.S. Securities and Exchange Commission and to the investing public. The "unconscionable" formula in the authors' contracts effectively double-count many costs borne by the movie studio.
Some commentators have claimed this lawsuit was a watershed that would affect Hollywood's payments to anyone who enjoyed "profit participation", by forcing a change to the net profit formulas. However, another California Superior Court ruled in Batfilm Productions v. Warner Bros. in the case of the 1989 Batman
movie that a similar formula was not unconscionable. To date, there has been no review of this type of claim by an appellate court, meaning that the superior courts cannot look to an appellate court's decision for guidance. The "watershed" role of this lawsuit has therefore not been demonstrated.
Still, the case has caused nearly all studios and production companies to be more careful about how they handle scripts. Concerned that "similarities" between future script drafts and movies could cause lawsuits, nearly all studios and production companies now return unsolicited scripts to their authors unopened.
make no mention of Art Buchwald's lawsuit, and maintain that the film's story originated with Eddie Murphy, with Blaustein and Sheffield writing the screenplay from Murphy's 25-page treatment. In an interview filmed around the time of the film's theatrical release, and included on the DVD, Murphy himself claims that he came up with the idea for the movie whilst on tour
.
In Giulia D'Agnolo Vallan's 2008 book John Landis, Landis is quoted as saying that Art Buchwald's case against Paramount was "without merit," going on to state the following:
Landis also provided the following response as to why Buchwald's lawsuit receive more attention in the press than other similar lawsuits:
Breach of contract
Breach of contract is a legal cause of action in which a binding agreement or bargained-for exchange is not honored by one or more of the parties to the contract by non-performance or interference with the other party's performance....
lawsuit filed and decided in California
California
California is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third-largest by land area...
in which humorist and writer Art Buchwald
Art Buchwald
Arthur Buchwald was an American humorist best known for his long-running column in The Washington Post, which in turn was carried as a syndicated column in many other newspapers. His column focused on political satire and commentary...
alleged that Paramount Pictures
Paramount Pictures
Paramount Pictures Corporation is an American film production and distribution company, located at 5555 Melrose Avenue in Hollywood. Founded in 1912 and currently owned by media conglomerate Viacom, it is America's oldest existing film studio; it is also the last major film studio still...
stole his script idea and turned it into the 1988 movie Coming to America
Coming to America
Coming to America is a 1988 comedy film directed by John Landis. The screenplay was written by David Sheffield and Barry W. Blaustein, from a story by Eddie Murphy, who also stars in the film. Murphy plays an African prince, who heads to the United States in hopes of finding a woman he can marry...
. Buchwald won the lawsuit and was awarded damages, and then accepted a settlement from Paramount before any appeal took place.
The decision was important mainly for the court's determination in the damages phase of the trial that Paramount used "unconscionable" means of determining how much to pay authors. Paramount claimed, and provided accounting evidence to support the claim, that despite the movie's $288 million in revenues, it had earned no net profit
Net profit
Net profit or net revenue is a measure of the profitability of a venture after accounting for all costs. In a survey of nearly 200 senior marketing managers, 91 percent responded that they found the "net profit" metric very useful...
, according to the definition of "net profit" in Buchwald's contract, and hence Buchwald was owed nothing: a classic example of Hollywood accounting
Hollywood accounting
Hollywood accounting refers to the opaque accounting methods used by the film, video and television industry to budget and record profits for film projects...
. The court agreed with Buchwald's argument that this was "unconscionable", and therefore invalid. Fearing a loss if it appealed, and the subsequent implications of the unconscionability decision across all its other contracts, Paramount settled for undisclosed terms. The case was the subject of a 1992 book, Fatal Subtraction: The Inside Story of Buchwald v. Paramount by Pierce O'Donnell, the lawyer who represented Buchwald, and Los Angeles Times reporter Dennis McDougal
Dennis McDougal
Dennis McDougal is an author and journalist. He has worked for a variety of publications and has earned over 50 honors, including the National Headliners Award and several Associated Press awards, and has been called "L.A.'s No...
.
Timeline
In 1982, Buchwald wrote a screen treatment that was pitched to Jeffrey KatzenbergJeffrey Katzenberg
Jeffrey Katzenberg is an American film producer and CEO of DreamWorks Animation. He is perhaps most famous for his period as chairman of The Walt Disney Company's film division, and for producing DreamWorks animated films such as Shrek, Antz, The Prince of Egypt, The Road to El Dorado, Chicken...
of Paramount, with the intention of starring Eddie Murphy
Eddie Murphy
Edward Regan "Eddie" Murphy is an American stand-up comedian, actor, writer, singer, director, and musician....
, who was under contract to Paramount at the time. Paramount optioned
Option (films)
In the film industry, an option is a contractual agreement between a potential film producer, such as a movie studio, a production company or an individual, and a writer or third party who holds ownership of a screenplay...
the treatment in early 1983 and commissioned several unsuccessful scripts from several screenwriters. John Landis
John Landis
John David Landis is an American film director, screenwriter, actor, and producer. He is known for his comedies, his horror films, and his music videos with singer Michael Jackson.-Early life and career:...
was considered as the director from time to time. After two years of development hell
Development hell
In the jargon of the media-industry, "development hell" is a period during which a film or other project is trapped in development...
, Paramount decided to abandon the project in March 1985.
In May 1986, Paramount's rival Warner Bros.
Warner Bros.
Warner Bros. Entertainment, Inc., also known as Warner Bros. Pictures or simply Warner Bros. , is an American producer of film and television entertainment.One of the major film studios, it is a subsidiary of Time Warner, with its headquarters in Burbank,...
optioned Buchwald's treatment.
In the summer of 1987, Paramount began to develop a movie that was credited as being based on a story by Eddie Murphy, and which was to be directed by John Landis. The story outline seemed similar to Buchwald's story idea, and to the failed Paramount scripts that had been based on it.
In January 1988, Warner Bros. cancelled their version of Buchwald's project, citing the Paramount project.
When the movie Coming to America
Coming to America
Coming to America is a 1988 comedy film directed by John Landis. The screenplay was written by David Sheffield and Barry W. Blaustein, from a story by Eddie Murphy, who also stars in the film. Murphy plays an African prince, who heads to the United States in hopes of finding a woman he can marry...
was released by Paramount in 1988, Eddie Murphy was given sole story credit. Buchwald was not paid, or even credited as the story writer. Buchwald sued Paramount for breach of contract, as his contract with Paramount stated that he would be paid a certain amount if his treatment were made into a film.
Decision
The California Superior Court decided in 1990 that Buchwald had demonstrated by a preponderance of the evidence that his story treatment—and Paramount's unsuccessful scripts based on the treatment—were "similar" to that of the Coming to America movie. Together with the evidence that Murphy and Landis previously had access to Buchwald's treatment, the court determined that the movie's story was indeed "based upon" Buchwald's treatment. Since Paramount never paid Buchwald, as the option agreement specified would occur if a movie based on his treatment were ever released, Paramount did indeed breach the contract. The court went out of its way to avoid criticizing Murphy, who, it said in its holding, was a "creative genius" just as Buchwald was, and the fault in the whole matter lay with Paramount.In the second phase of the trial in which the court determined the appropriate amount of damages to be paid to Buchwald, Paramount testified that despite the movie's $288 million in ticket sales, it had spent so much money on the movie's development and marketing
Marketing
Marketing is the process used to determine what products or services may be of interest to customers, and the strategy to use in sales, communications and business development. It generates the strategy that underlies sales techniques, business communication, and business developments...
that, according to the formula specified in Buchwald's contract, Paramount had made "no net profit". The court then found that the formula was "unconscionable" and that Buchwald therefore could pursue a separate tort
Tort
A tort, in common law jurisdictions, is a wrong that involves a breach of a civil duty owed to someone else. It is differentiated from a crime, which involves a breach of a duty owed to society in general...
lawsuit against the company.
Fearing a loss on appeal and, presumably, a wave of lawsuits by authors claiming they, too, had been wronged by the unconscionable net profit formula, Paramount settled with Buchwald for an undisclosed amount of money. As part of the settlement, the "unconscionability" decision was vacated.
Implications
Hollywood accounting has long been derided as a cynical attempt by movie studios to cheat individual authors out of royalty payments. The accounting formulas used by the studios have allegedly been designed specifically to ensure that it is mathematically almost impossible for any movie to show a net profit. Specifically, the net profit formula in authors' contracts does not correspond to the net profit formula of generally accepted accounting principlesGenerally Accepted Accounting Principles
Generally Accepted Accounting Principles refer to the standard framework of guidelines for financial accounting used in any given jurisdiction; generally known as accounting standards...
that the movie studios use when creating their financial statements
Financial statements
A financial statement is a formal record of the financial activities of a business, person, or other entity. In British English—including United Kingdom company law—a financial statement is often referred to as an account, although the term financial statement is also used, particularly by...
that are reported to the U.S. Securities and Exchange Commission and to the investing public. The "unconscionable" formula in the authors' contracts effectively double-count many costs borne by the movie studio.
Some commentators have claimed this lawsuit was a watershed that would affect Hollywood's payments to anyone who enjoyed "profit participation", by forcing a change to the net profit formulas. However, another California Superior Court ruled in Batfilm Productions v. Warner Bros. in the case of the 1989 Batman
Batman (1989 film)
Batman is a 1989 superhero film based on the DC Comics character of the same name, directed by Tim Burton. The film stars Michael Keaton in the title role, as well as Jack Nicholson, Kim Basinger, Robert Wuhl and Jack Palance...
movie that a similar formula was not unconscionable. To date, there has been no review of this type of claim by an appellate court, meaning that the superior courts cannot look to an appellate court's decision for guidance. The "watershed" role of this lawsuit has therefore not been demonstrated.
Still, the case has caused nearly all studios and production companies to be more careful about how they handle scripts. Concerned that "similarities" between future script drafts and movies could cause lawsuits, nearly all studios and production companies now return unsolicited scripts to their authors unopened.
Response from John Landis
In the retrospective interviews included on the 2007 DVD release of Coming to America, John Landis and screenwriters Barry Blaustein and David SheffieldDavid Sheffield
David Sheffield is an American comedy writer best known for his writing on Saturday Night Live and the screenplays for The Nutty Professor and the Nutty Professor II: The Klumps, in which he collaborated with Barry W...
make no mention of Art Buchwald's lawsuit, and maintain that the film's story originated with Eddie Murphy, with Blaustein and Sheffield writing the screenplay from Murphy's 25-page treatment. In an interview filmed around the time of the film's theatrical release, and included on the DVD, Murphy himself claims that he came up with the idea for the movie whilst on tour
Eddie Murphy Raw
Eddie Murphy Raw is an American stand-up comedy film directed by Robert Townsend and starring Eddie Murphy. It was Murphy's second feature stand-up video, following Eddie Murphy Delirious...
.
In Giulia D'Agnolo Vallan's 2008 book John Landis, Landis is quoted as saying that Art Buchwald's case against Paramount was "without merit," going on to state the following:
Landis also provided the following response as to why Buchwald's lawsuit receive more attention in the press than other similar lawsuits: