Court Opinion

ID: 4708066
Source: CourtListenerOpinion
Date Created: 2021-07-30 19:05:17.790108+00
Date Added: 2024-06-11T08:06:48.191553
License: Public Domain

Filed 7/30/21 Rebel Entertainment etc. v. Big Ticket Television etc. CA2/1
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on
opinions not certified for publication or ordered published, except as specified by rule
8.1115(b). This opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                      SECOND APPELLATE DISTRICT

                                    DIVISION ONE

REBEL ENTERTAINMENT                                             B305862
PARTNERS, INC.,
                                                                (Los Angeles County
        Plaintiff and Appellant,                                Super. Ct. No. BC613594)

        v.

BIG TICKET TELEVISION, INC.;
CBS STUDIOS, INC., et al.,

        Defendants and Respondents.

     APPEAL from a judgment of the Superior Court of Los
Angeles County, Rupert A. Byrdsong, Judge. Affirmed.
     Freedman + Taitelman, Bryan J. Freedman, Sean M.
Hardy; Greines, Martin, Stein & Richland, Robin Meadow and
Gary J. Wax for Plaintiff and Appellant.
     Loeb & Loeb, James A. Curry, Daniel J. Friedman for
Defendants and Respondents.
             ___________________________________
       Big Ticket Television, Inc. and CBS Corporation
(collectively CBS), the production and distribution companies for
Judge Judy, a popular television show, were contractually
obligated to pay five percent of the “defined proceeds” derived
from the show to Rebel Entertainment Partners, Inc. (Rebel), a
talent agency and profit participant. Defined proceeds comprised
gross receipts less specified expenditures, including amounts paid
for the services of Judy Sheindlin, the star of the show. In 2009,
CBS doubled Sheindlin’s salary, which substantially reduced the
defined proceeds, and thus Rebel’s receipts. Rebel sued CBS for
breach of contract, alleging that the increased amount paid to
Sheindlin should have been accounted not as a salary boost but
an additional profit participation share, which would not have cut
into Rebel’s participation share. The trial court granted
summary judgment, finding no triable issue existed as to whether
the increased payment to Sheindlin constituted a salary boost or
participation share.
       We affirm.
                          BACKGROUND
A.     Rebel’s Representation of Sheindlin
       In 1995, Richard Lawrence, a show packager whose agency
later became Rebel, sold a court-oriented show featuring
Sheindlin, a New York family court judge, to CBS. As part of the
package, CBS agreed to pay Lawrence’s agency an upfront
percentage of the budget and a backend five percent of the show’s
                      1
“Defined Proceeds.”

      1
          Neither Lawrence nor Rebel was ever Sheindlin’s agent.

                                  2
       1.    Upfront Three Percent Commission
       The agency agreement provided that Rebel would receive a
commission of “three percent (3%) of the approved final
Production Budget of each episode” of Judge Judy. “Production
Budget” was defined as the “aggregate actual, out-of-pocket cost
of producing each episode.”
       2.    Backend Five Percent Participation
       The agreement further provided, as amended in 2005, that
Rebel would receive five percent of the “Defined Proceeds derived
from the exploitation” of Judge Judy.
       “Defined Proceeds” comprised “the excess, if any of ‘Gross
Receipts’ over the total of the ‘Distribution Fees,’ the
‘Distribution Expenses,’ and the ‘Cost of Production’ in such
order.”
       “Cost of Production” was defined as “all direct out of pocket
payments made or incurred by [Big Ticket], in good faith, on a
reasonable basis, and consistent with customary practice in the
United States television industry, in connection with the
production of [Judge Judy] and including all amounts incurred in
connection with the production thereof calculated according to
the standard accounting practices now or hereafter employed by
[Big Ticket] on a reasonable basis and consistent with customary
practice in the United States television industry. Such payments
shall include . . . those for . . . amounts paid or payable for
services of performers [and approximately 21 additional and
sometimes complex line items].”
       3.    Exclusion of Payments to Profit Participants
       Defined proceeds were not to be reduced by “sums paid or
payable to any third party profit participant . . . .”

                                 3
B.      Sheindlin’s Pay Increase
        Sheindlin met with CBS every three years to present an
envelope with a new, non-negotiable salary demand, and told
CBS that if her demand was not met, she would terminate their
relationship and produce Judge Judy herself. In 2009, after one
such demand, CBS doubled Sheindlin’s salary to $45 million,
three years later increasing it to $47 million, making her by far
the highest paid host on television. (The average of the next top
five salaries in television was $17.8 million.)
        CBS allocated Sheindlin’s entire compensation as a cost of
production, which reduced the show’s defined proceeds to a
negative balance, effectively stripping Rebel of its five percent
participation receipts.
C.      Summary Judgment
        Rebel sued CBS for breach of contract and breach of the
implied covenant of good faith and fair dealing, and sought an
accounting. It alleged that CBS’s allocating Sheindlin’s entire
compensation as a cost of production instead of attributing some
of it to backend profit participation was in bad faith and violated
its obligation to act reasonably and consistent with customary
practice in the United States television industry.
        CBS moved for summary adjudication, arguing it could not
have been unreasonable for CBS to agree to Sheindlin’s non-
negotiable salary demand, because she had the “unique ability to
end the ‘juggernaut’ show simply by walking away from it.”
        In support of the motion, Sheindlin testified in deposition
that she conveyed her nonnegotiable salary requirements to CBS
every three years, and told the company she would produce a
court show herself if her demands were not met. CBS had been
unable to “find another Judy,” and knew she could take Judge

                                 4
Judy to another producer, or produce her own court show.
Sheindlin told CBS, “[t]his is not a negotiation,” and said, “You
want it, fine. Otherwise, I’ll produce [a show] myself.” She
testified, “CBS had no choice but to pay me what I wanted
because otherwise I could take it wherever I wanted.”
       On one occasion, an executive presented Sheindlin with his
own proposal, sealed in an envelope. Sheindlin testified, “he
came to the meeting at the Grill on the Alley, and I handed him
my envelope, and he said, ‘Judy, I have my own envelope.’ And I
said, ‘I don’t want to look at it.’ He said, ‘Why not? Maybe it’s
more than what’s in your envelope.’ And I said, ‘Well, John, if I
look at your envelope, it’s a negotiation. This isn’t a negotiation.’
And he put his envelope away and they gave me what I wanted.”
       In support of its opposition to the motion, Rebel submitted
the declaration of Sabrina Robinson, an expert in the financial
and business aspects of the television industry, who stated that
charging 100 percent of Sheindlin’s $47 million salary to
production costs was “inconsistent with customary practice in the
United States television industry.”
       Robinson declared, “it is the custom and practice in the
television industry that, if a production company elects to pay
talent an increased upfront fee, such increased fee will not be of
such a magnitude as to deprive profit participants from realizing
any profit participation benefits. It is further the custom and
practice in the television industry for a production company to act
reasonably toward profit participants with respect to allocation of
the production costs of a television series, including the salaries
of talent.”
       Robinson declared that $45 million was “significantly in
excess of a reasonable salary and inconsistent with customary

                                 5
practice in the United States television industry.” She showed
that other top television industry personalities, such as David
Letterman, Jay Leno, and Conan O’Brien, received annual
salaries of $28 million or less in 2010. “Therefore,” she declared,
“the significant difference between the amounts paid to Judy
Sheindlin and industry standard represent an in-substance
participation on Judge Judy.”
      Robinson declared that amounts “significantly in excess of
a reasonable salary” would ordinarily be paid as part of a
recipient’s contingent compensation. Robinson “determined the
amount of [Sheindlin’s] in-substance participation” based on the
average salaries paid to other top syndication performers,
concluding that approximately $27.2 million of Sheindlin’s $45
million salary—and half of the $2 million increase three years
later—was, in substance, a profit participation.
      Referencing no specific passage of the agency agreement,
Robinson opined that deducting $45 million as a production cost
was “contrary to the Agreement,” and Big Ticket’s conduct
“unilaterally changed the very terms and condition[s] of Rebel’s
Agreement.”
      Finally, Robinson declared that CBS’s deduction of
Sheindlin’s entire salary “resulted in a show, which had only
previously reported profits to Rebel, to change irrevocably to a
permanent net loss deficit reported to Rebel. Based on this
current method of reporting, it would be impossible for Rebel to
ever achieve profits again.”
      The trial court found no triable issue of material fact as to
whether CBS breached the express terms of the agency
agreement or the implied covenant of good faith and faith
dealing. The court found that CBS had established that

                                 6
Sheindlin’s salary was reasonable and consistent with practices
in the United States television industry, concluding, “[t]hat
Judge Sheindlin is paid more than other television hosts does not
establish her salary is unreasonable or that Defendants
negotiated the salary in bad faith.” The court therefore granted
summary adjudication and, the parties having settled all other
claims, entered judgment for CBS.
                           DISCUSSION
       Rebel takes no issue with the amount CBS paid Sheindlin,
but contends triable issues exist as to whether CBS breached its
contractual obligation to allocate that cost in good faith, on a
reasonable basis, and consistent with customary practice in the
television industry.
A.     Legal Principles
       “[T]he elements of a cause of action for breach of contract
are (1) the existence of the contract, (2) plaintiff’s performance or
excuse for nonperformance, (3) defendant’s breach, and (4) the
resulting damages to the plaintiff.” (Oasis West Realty, LLC v.
Goldman (2011) 51 Cal.4th 811, 821.)
       The law implies in every contract, a covenant of good faith
and fair dealing, a supplement to express covenants. (Wilson v.
21st Century Ins. Co. (2007) 42 Cal.4th 713, 720.) “ ‘The implied
promise requires each contracting party to refrain from doing
anything to injure the right of the other to receive the
agreement’s benefits.’ ” (Ibid.)
       “The interpretation of a contract is a judicial function.
[Citation.] In engaging in this function, the trial court ‘give[s]
effect to the mutual intention of the parties as it existed’ at the
time the contract was executed. [Citation.] Ordinarily, the
objective intent of the contracting parties is a legal question

                                  7
determined solely by reference to the contract’s terms.” (Wolf v.
Walt Disney Pictures & Television (2008) 162 Cal.App.4th 1107,
1125-1126.) “When the contract has been ‘reduced to writing,’ the
parties’ intention ‘is to be ascertained from the writing alone, if
possible,’ subject to other rules of interpretation.” (Rodriguez v.
Oto (2013) 212 Cal.App.4th 1020, 1028.)
       A trial court properly grants summary judgment “ ‘if all the
papers submitted show that there is no triable issue as to any
material fact and that the moving party is entitled to a judgment
as a matter of law.’ (Code Civ. Proc., § 437c, subd. (c).) A
defendant may establish its right to summary judgment by
showing that one or more elements of the cause of action cannot
be established or that there is a complete defense to the cause of
action. (Code Civ. Proc., § 437c, subd. (p)(2).)” (Neiman v. Leo A.
Daly Co. (2012) 210 Cal.App.4th 962, 967.) “Once the moving
defendant has satisfied its burden, the burden shifts to the
plaintiff to show that a triable issue of material fact exists as to
each cause of action. [Citation.] A triable issue of material fact
exists where ‘the evidence would allow a reasonable trier of fact
to find the underlying fact in favor of the party opposing the
motion in accordance with the applicable standard of proof.’ ”
(Ibid.)
       On appeal, we apply an independent standard of review to
determine whether a trial is required—whether the evidence
favoring and opposing the summary judgment motion would
support a reasonable trier of fact’s determination in the plaintiff’s
favor on the cause of action or defense. (Aguilar v. Atlantic
Richfield Co. (2001) 25 Cal.4th 826, 850.) In doing so we view the
evidence in the light most favorable to the party opposing
summary judgment. (Id. at p. 843; Alexander v. Codemasters

                                 8
Group Limited (2002) 104 Cal.App.4th 129, 139.) We accept as
true the facts shown by the evidence offered in opposition to
summary judgment and the reasonable inferences that can be
drawn from them. (Spitzer v. Good Guys, Inc. (2000) 80
Cal.App.4th 1376, 1385-1386.)
B.     Application
       Rebel argues that triable issues exist as to whether CBS
breached its contractual obligation to allocate costs of production
in good faith, on a reasonable basis, and consistent with
customary practice. We discern no such issues.
       The agency agreement provided that Rebel would receive
five percent of the “defined proceeds” derived from the
exploitation of Judge Judy. “Defined proceeds” was defined as
“the excess, if any” of gross receipts over certain expenses,
including the “cost of production.”
       “Cost of Production” was defined as “all direct out of pocket
payments made or incurred by [Big Ticket], in good faith, on a
reasonable basis, and consistent with customary practice in the
United States television industry, in connection with the
production of [Judge Judy] and including all amounts incurred in
connection with the production thereof calculated according to
the standard accounting practices now or hereafter employed by
[Big Ticket] on a reasonable basis and consistent with customary
practice in the United States television industry. Such payments
shall include . . . those for . . . amounts paid or payable for
services of performers.”
       The “cost of production” provision thus comprises two
sentences, the first of which sets forth two categories of costs:
“direct out of pocket payments made or incurred” and
“amounts . . . calculated according to the standard accounting

                                 9
practices.” (Italics added.) The phrase “such payments shall
include” in the second sentence specifies that the first cost
category, “payments made or incurred,” includes amounts paid
for the services of performers.
       Sheindlin’s testimony established that CBS was forced to
accept her demands for $45 million in 2009 and $47 million in
2012, as failing to do so would jeopardize the profitable show.
Payments to her therefore constituted costs of production.
       This evidence carried CBS’s burden to establish three
things. First, CBS’s obligations to Sheindlin were incurred in
good faith, as it had no choice but to accept her demands in order
to keep Judge Judy on the air. Second, CBS’s obligations to
Sheindlin were consistent with customary practice, which, as
Robinson’s declaration showed, is to pay indispensable top
performers handsomely. Third, the payments to Sheindlin were
made for her services, which payments the agency agreement
classified as production costs. Rebel apparently disputes none of
these facts.
       Because the agency agreement classified amounts paid to
performers as production costs, and required CBS to incur
production costs reasonably and in good faith, consistent with
industry standards, CBS’s evidence carried its burden of showing
that it performed its obligations under the agreement.
       The burden thereafter shifted to Rebel to demonstrate a
triable issue as to whether CBS breached its contractual
obligation to make or incur direct out of pocket payments to
Sheindlin in good faith, on a reasonable basis, and consistent
with customary practice. Rebel offered no evidence to do so, but
on the contrary acknowledges that CBS had the right to make the
deal that it did.

                               10
      Rebel’s quarrel is thus not with the Sheindlin deal, but
with CBS’s expense sheet. It argues that the agency agreement
imposed on CBS an “express” obligation to allocate costs of
production in good faith. But Rebel identifies no such express
term, and we have been unable to locate it. No pertinent
provision of the agency agreement uses the word “allocate,” so
whatever CBS’s obligation to allocate costs might be, it must be
                     2
implied, not express.
       Rebel argues this obligation may be found in the second
clause of the first sentence of the agency agreement’s production-
cost provision, which Rebel argues obligates CBS to account for
Sheindlin’s salary in good faith, on a reasonable basis, and
consistent with customary practice in the television industry. To
do so, Rebel argues, CBS had to apportion part of Sheindlin’s
salary to participation expenses. We reject both the premise and
the conclusion.
       As noted above, after the “payments made or incurred”
clause, the agency agreement states that further costs of

      2
        One section of the agency agreement does mention
allocation. That section, entitled “Allocation Among and
Grouping of Episodes” states: “If the Episodes are licensed or
otherwise exploited in combination with other Episodes and/or
photoplays, then the Gross Receipts, Distribution Fees,
Distribution Expenses and Costs of Production with respect to
such Episodes or Subsidiary Rights shall be allocated in such
manner as [CBS] may determine in its good faith business
judgment, on a reasonable basis and consistent with custom and
practice in the United States television industry.” But we fail to
discern, nor Rebel to explain, how allocation of production costs
among combined episodes obligates CBS to allocate Sheindlin’s
salary between production costs and participation rights.

                                11
production include “amounts . . . calculated” according to
standard accounting practices. The agreement mandates that
those amounts be “calculated according to the standard
accounting practices now or hereafter employed by [Big Ticket]
on a reasonable basis and consistent with customary practice in
the United States television industry.”
       Assuming for the sake of argument that “on a reasonable
basis” applies to the verb “calculated,” such that “amounts
incurred in connection with the production” of Judge Judy must
be “calculated . . . on a reasonable basis and consistent with
customary practice in the United States television industry,”
those amounts do not include Sheindlin’s salary, which, as stated,
was not calculated by CBS at all, but imposed by Sheindlin.
       Assuming further that “amounts calculated” included
Sheindlin’s salary, nothing about “calculating” those amounts
suggests her salary should be apportioned on CBS’s expense
sheet in any particular respect. But if such an obligation existed,
the undisputed evidence showed that Sheindlin gave CBS no
option to allocate her salary in some manner other than the way
it did. Any apportionment of Sheindlin’s salary to some form of
profit participation would, by definition, introduce risk that
Sheindlin was unwilling to accept. In any event, we have
discovered no authority, and Rebel offers none, obligating an
entity to reclassify a performer’s salary as something other than
salary for accounting purposes.
       Robinson’s declaration lacked foundation, was speculative,
and ventured into legal conclusions. Her opinion that the
industry standard was for the objectively excessive portion of a
salary to be deemed an “in-substance” participation was
unsupported by any explanation about either the basis for this

                                12
opinion or about what constitutes an “objectively” excessive
salary, and took no account of the unique situation presented by
Sheindlin’s demands. “If a witness is testifying as an expert,
[her] testimony in the form of an opinion is limited to such an
opinion as is [¶] . . . [¶] . . . [b]ased on matter . . . that is of a type
that reasonably may be relied upon by an expert in forming an
opinion upon the subject to which his testimony relates.” (Evid.
Code, § 801.) “ ‘An expert opinion has no value if its basis is
unsound.’ ” (Sargon Enterprises, Inc. v. University of Southern
California (2012) 55 Cal.4th 747, 770; see also McGonnell v.
Kaiser Gypsum Co., Inc. (2002) 98 Cal.App.4th 1098, 1106 [party
“cannot manufacture a triable issue of fact through use of an
expert opinion with self-serving conclusions devoid of any basis,
explanation, or reasoning”].) Robinson’s opinion that the CBS’s
accounting practices violated the agency agreement is of course
entitled to no weight. (Kasem v. Dion-Kindem (2014) 230
Cal.App.4th 1395, 1400-1401 [expert opinion is incompetent on as
to the legal interpretation of contracts].) Robinson made no effort
even to mention Sheindlin’s demands, much less explain how
they fit into her theory or would customarily be handled in the
television industry. It therefore raised no triable issue.
       Rebel argues CBS acted in bad faith by failing to ask
whether Sheindlin would accept her demanded compensation in
some form of a high-level participation percentage, such as a
first-dollar gross participation, which Rebel argues would be just
as reliable as a salary. It argues that no evidence established
that Sheindlin would have rejected such an arrangement.
       Assuming for the sake of argument that some form of non-
production compensation would have been as reliable as a salary,

                                    13
                                       3
a matter on which the record is silent, the undisputed evidence
was that Sheindlin brooked no counterproposals, but instead
made demands on a take-it-or-leave-it basis, saying, “This is not
a negotiation.” The only time she was presented with a
counterproposal, she rejected it unread. No principle or authority
obligated CBS to cajole Sheindlin into considering
counterproposals.
      Rebel argues it was unreasonable for CBS to “permanently
manipulate[] Costs of Production.” But there is no evidence CBS
did so. The agency agreement provided that amounts paid for the
services of performers constituted production costs. Sheindlin
demanded payment for her services. That payment was therefore
made a production cost by the agreement, not by CBS.
      Rebel argues that CBS failed to follow the television
industry’s customary practices by “combining Judge Sheindlin’s
existing salary with what would ordinarily be a contingent
participation.” But again, no evidence suggests CBS did so. The
undisputed evidence was that it paid Sheindlin for her services,
and that the agency agreement deemed this type of payment to
be a production cost.

      3
        And a matter which Rebel itself apparently does not
believe is possible, as it acknowledges that “[t]he highest level of
contingent participation is a percentage of gross receipts—the
compensation comes right off the top, ahead of the studio’s
profits. . . . That was effectively the position in which CBS placed
Judge Sheindlin—although actually Judge Sheindlin’s position
was even better, since her salary was guaranteed even before any
revenue arrived.” Rebel also acknowledges that “[t]he effect of
CBS’s allocation was that (a) Judge Sheindlin’s compensation
was no longer subject to any contingent risk.”

                                 14
       Finally, Rebel argues CBS breached the covenant of good
faith and fair dealing by injuring Rebel’s right to receive benefits
from the agency agreement. For reasons discussed above, we
disagree. Rebel lost benefits under the agency agreement not
because of any action by CBS but because Sheindlin demanded a
large salary, the agreement provided that the salary of a
performer constitutes a cost of production, and the agreement
further provided Rebel’s benefit would be reduced by the costs of
production.
                          DISPOSITION
       The judgment is affirmed. Respondents are to receive their
costs on appeal.
       NOT TO BE PUBLISHED

                                                 CHANEY, J.

We concur:

             ROTHSCHILD, P. J.

             BENDIX, J.

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