Way Cleared for Buchwald to Get Big Damages From Paramount

In a blow to Paramount Pictures, Judge Harvey A. Schneider tossed out the studio’s contract with movie producer Alain Bernheim and columnist Art Buchwald and opened the door for significant damages against Paramount in connection with the film “Coming to America.”

The Los Angeles Superior Court judge on Friday dismissed as “unconscionable” the contract’s profit participation provisions and other key clauses that would have minimized the award to the writer and producer. Schneider said the provisions created a grossly unfair “contract of adhesion” that was, in effect, forced on Bernheim without proper negotiation even though the producer was represented by William Morris Agency.

Paramount immediately said it planned to appeal the ruling. In a statement, the studio said Schneider had “gone far beyond existing law in permitting Buchwald and Bernheim unilaterally to rewrite their contracts to suit themselves.”

Attorney Zazi Pope with Kaye, Scholer, Fierman, Hays & Handler, which represents Bernheim and Buchwald, said she couldn’t estimate likely damages as a result of the ruling. She said she expected hearings on the exact amount of damages--which she contends should be “a multimillion-dollar award”--to begin in early January.

“We’re overjoyed,” Pope said of the ruling, which came in the form of a 36-page written decision that was distributed by the court to attorneys and reporters Friday afternoon.

Attorney Charles Diamond of O’Melveny & Myers, which represents Paramount, said he might withhold the studio’s appeal until after Schneider drafts new contractual formulas under which Bernheim and Buchwald are to be paid. “(Schneider) was giving them a Christmas present. . . . We’re quite perplexed as to which way to go. None of us know what the new contract will look like until the judge gets done writing it.”

If allowed to stand, the ruling could force big changes in Hollywood contracts, because the major studios generally use provisions similar to those invalidated by Schneider.

But a top entertainment attorney, who declined to be identified, said any changes would probably affect writers and lesser-known producers, like Bernheim, rather than major stars, who already have the clout to negotiate more favorable provisions. “The industry has changed over the years. I think it would be difficult to find a contract of adhesion with a major star in it now,” the attorney said.

Schneider earlier ruled that “Coming to America,” which starred Eddie Murphy, was based on a story by Buchwald. The writer had sold the story to Paramount under an option arrangement that would have allowed him to produce the film in return for a fee and up to 33.5% of the film’s net profits.

The studio has received more than $150 million in revenue from the film. But the movie hasn’t shown a major profit for participants because of accounting practices, widespread in the film industry, that let the company charge heavy fees for a broad range of services to the film’s account.

Schneider didn’t negate the largest such charge, a so-called distribution fee that typically takes 30% to 40% of a film’s revenue. But he disallowed as “unconscionable” such fees as a 10% studio overhead charge for advertising and interest charges, saying it was out of proportion to the studio’s actual cost of funds.