Case Could Open Curtains of Hollywood Agency

A little-noticed court decision has put pressure on a super-secret Hollywood agency to reveal a broad range of financial information about its big-name Hollywood clients.

The decision, handed down by a Los Angeles Superior Court judge earlier this year, ordered Creative Artists Agency to open its books to attorneys and accountants representing casting director Ellen Meyer in her hotly contested divorce proceeding against CAA co-founder Ron Meyer. Settlement talks to avoid a public trial have been held and a formal settlement conference, considered fragile by both sides, is set for July 27. Individuals close to both sides have called a settlement likely within two weeks.

Ellen Meyer, whose 11-year marriage to Ron Meyer ended in separation about two years ago, is demanding a share of her husband’s assets, including his agency stock. CAA represents hundreds of major movie stars and TV producers--including Dustin Hoffman, Tom Cruise, Aaron Spelling, Sylvester Stallone, Jane Fonda, and Robert Redford--and is widely regarded as one of the most powerful institutions in the entertainment business.

A trial in the divorce case could provide the first public glimpse of the privately held agency’s fees and practices--though disclosure of star salaries and agency contracts isn’t likely to happen quickly. CAA has promised to appeal the disclosure order, and any documents delivered would be withheld from public scrutiny by a protective order. Further, the ongoing settlement talks between CAA and the Meyers are aimed at staving off a trial, at which agency secrets might be aired.

In resisting the disclosure order, Meyer--perhaps Hollywood’s most prominent actors’ agent--at one point told the court that CAA’s financial data are so secret that even he, one of three co-owners, wasn’t allowed access.

“Those documents have been maintained exclusively under the direction and control of (agency president Michael) Ovitz,” Meyer said in an affidavit filed with the court. In a statement that indicated Ovitz’s personal control over the agency, Meyer added in the affidavit:

“I am absolutely certain that if I request Mr. Ovitz to produce that documentation, he will decline that request, as he has done in the past. Therefore, if petitioner’s requested order (to disclose) is made by the court, it would require a direct confrontation between me and Mr. Ovitz. I am also confident that if I were to create a confrontation situation and demand the production of documents, I run a risk of expulsion from CAA. . . .”

Ovitz and Meyer declined to comment on the case. Attorneys for Oberstein, Doniger & Fetter, which represents Ellen Meyer, also declined to comment.

Filings in the case, which was initiated on Sept. 21, 1987, provide a look at the way CAA operates.

According to a filing by Ron Meyer, for instance, CAA president Michael Ovitz since 1986 has owned 55.556% of the agency, while Meyer and TV agent William Haber own 22.222% each. The arrangement took effect that summer, when the agency increased Ovitz’s power by buying out shareholders Rowland Perkins and Martin Baum. Previously, Ovitz owned about 47%, while four partners--Meyer, Haber, Perkins, and Baum--split the rest in equal shares, according to the filing.

Ellen Meyer’s court filings estimate Ron Meyer’s stake in the agency to be worth at least $10 million to $15 million, but they argue his stake may be worth twice as much--something her attorneys have claimed they can’t determine without access to an accurate accounting of income from star salaries and packaging fees.

According to Ellen Meyer’s filings Ron Meyer’s “admitted income” is not less than $1.8 million a year. Ron Meyer’s court filings claim that Ellen isn’t entitled to any community property stake in the agency, since she married him three months after it was founded in February of 1975.

CAA has hired its own attorney and has filed documents to protect its business practices. In its filings CAA has argued that to disclose its records might expose sensitive areas by indicating, for instance, where more than one client is up for the same part, and might violate the privacy and competitive position of Hollywood stars by revealing the terms under which they work.

Agency fees are based on a percentage of income from particular clients or TV shows. The court order, entered last January, required CAA to reveal “any analysis of revenues by client” and “all accounting books and records,” among other things.

Feelings have occasionally run high in the case. At one point, for instance, Ellen Meyer in her affidavit accused her husband of keeping her support payments low to “teach me a lesson” for demanding a full accounting from the agency. She added in the document that various partners in the agency had told her they would fight disclosure with tactics as severe as terminating her husband’s involvement with CAA, or reducing Meyer’s fortune by having his stock “bought out on a forced liquidation at below market value.”