Buchwald Decision Gets Mixed Reviews : Courts: The $900,000 combined judgment in favor of Art Buchwald and his partner Alain Bernheim is seen as low by some. Others question whether Paramount Pictures won or lost.

By ELAINE DUTKA

March 18, 1992 12 AM PT

TIMES STAFF WRITER

If Art Buchwald won the first two phases of his breach-of-contract trial against Paramount Pictures, many Hollywood insiders agree that he fared poorly in the third.

Given Judge Harvey A. Schneider’s determination that “Coming to America” was based on Buchwald’s treatment and the judge’s conclusion that the studio’s net profit formula is essentially unfair, the award of $150,000 to Buchwald and $750,000 to his producing partner Alain Bernheim was seen as surprisingly low.

“I was shocked,” said entertainment attorney David Colden. “The size of the award reflects substantially less than those of us in the legal community expected to see.”

Some interpret the decision as a bit of an about-face on Schneider’s part. “In phase one, the judge decided not to limit damages to literal language of the contract,” noted entertainment litigation attorney James Tierney. “Having said that, he found that the pound of flesh equals 16 1/2 ounces. I think that the judge was sensitive to criticism that his decisions had generated. The right hand took away what the left hand had given.”

Observers pointed out that, while $150,000 for a 2 1/2-page story treatment is a pretty fair deal--far better than Buchwald could probably have cut with the studio--it’s particularly disappointing in light of the massive legal tab. Buchwald’s attorney Pierce O’Donnell took the case on a contingency basis and his cut of the $900,000 combined settlement won’t make a dent in the estimated $2.5 million the case has cost his firm.

“When I heard the $150,000 figure, I thrust my fist into the air and said to myself: ‘Hooray! They’ve just sent the proper message to people like Pierce O’Donnell who are out to break the piggy bank,’ ” said producer Don Simpson, who was president of film production at Paramount in the early ‘80s and has produced “Beverly Hills Cop” and “Top Gun.” “One hundred and fifty thousand dollars won’t even pay his lunch bills. Buchwald was actually lucky to get that. He and his producer friend don’t deserve a dime. His treatment was thin, simplistic--not a movie but a fleshed-out ‘notion.’ ”

Sources speculate that Paramount--and the industry as a whole--must be breathing a collective sigh of relief. “I’m sure there’s some gloating behind certain studio doors,” said producer Mark Johnson (“Bugsy”). “Less than $1 million in Hollywood above-the-line terms is nothing. It’s a clear studio victory.”

Not so, insists one studio executive. “Paramount lost this case a long time ago when the judge ruled that they breached their contract,” he said. “This case reinforces the theory that studios steal--and they don’t. This was the definition of profits that was negotiated by William Morris (Buchwald’s agency), a knowledgeable and experienced company. (“Coming to America” director) John Landis and Eddie Murphy had more clout than Buchwald so they had better ‘definitions.’ When writers have that kind of clout, they get it too.”

According to entertainment attorney Michael Donaldson, the settlement should have a chilling effect on other such suits down the road. “The ruling will discourage lawyers from taking contingency cases and writers from pursuing it,” he observed.

“But, as I said early on, no matter how this case turned out, it will be fairly inconsequential to writers. If Buchwald had won, the studios would have figured out another way to underpay them. Studios must make substantial profits to stay in business--there’s a huge machinery there--and one of the easiest places to keep costs down is in the area of talent.”

Some said that Paramount, which has vowed to appeal earlier parts of the decision, should think twice before doing so. If the studio leaves things as is, they point out, the case is not a precedent-setting one. Should it appeal the case and lose, however, the negative ramifications would be far greater.

“If Paramount loses on appeal, it will encourage anyone who has a similar financial situation with movies to file a lawsuit,” said attorney Peter Dekom. “And if the appellate ruling is certified for publication (permitted to be cited), it will set a precedent for other courts to follow that the net profit definition is inherently suspect.”

Tierney agreed: “The fate of the net profit formula depends on whether Paramount appeals. The studio would only appeal if ego gets in the way of common sense.”

Barring that, said attorney Colden, the current ruling probably won’t have much impact on future deals. “Given the small size of the award,” he concludes, “Paramount should pay the judgment, fold up the tent and go away.”

Producer Freddie Fields (“Glory”), a top agent in the ‘70s and studio chief of MGM in the early ‘80s, believes the case has had some import, nevertheless. “The suit has opened up a keg of worms,” he stated. “It makes everyone look at things from both angles. The judge has said that there’s something wrong with our definition of profits. Unless studios can show that net participants can make money, they’re inviting more gross participants--so it’s in their interest to change, to scrutinize definitions of what constitutes ‘profits.’ ”

Eddie Murphy’s ex-manager Robert Wachs, for one, expects the net profit formula to endure. “If a studio elects to have a definition of profits that prevailed for 40-50 years, they’ll continue to do so,” he said. “It’s about what you have to offer and how much the studio wants it--the American system of supply and demand. This is a rough playground. You do have to fight. But you can win . . . within the studio system.”

Times Staff Writers Alan Citron and Robert W. Welkos contributed to this report.