Allison Gollust’s New Legal Edge

CNN
Photo by Justin Sullivan/Getty Images
Eriq Gardner
February 21, 2022

Happy Presidents Day. Welcome to the first edition of my yet-to-be-named weekly column—see below—where I will empty my notebook and share all the legal news that I’ve been paying attention to at the intersection of Hollywood, Washington, Silicon Valley and Wall Street. The law, lawyers, and litigation, after all, are the true operating code for these centers of power. I’ll endeavor to share an insiders’ view of what’s happening in the courts, regulatory agencies, and backrooms where policy is crafted, payouts are made, and winners and losers are decided. I’ll also highlight overlooked filings, gesture toward significant calendar events, and provide updates on big cases that will impact industry, finance, and politics.

This week, I deliberate on the idiosyncratic judge who oversaw Sarah Palin v. New York Times; Warner Bros.’s attempt to hush up a lawsuit that’s got everyone in Hollywood talking; and when we’ll learn Bill Cosby’s fate at the Supreme Court. I also have some interesting details on how the threat of another extended Major League Baseball work stoppage could spur action in D.C.

Got an idea for the name of this column? Send me a note at eriq@puck.news. I also welcome feedback (both good and bad), tips, and suggestions.

First thing’s first, though… The story that’s been on the lips of many, especially lawyers, these past couple weeks—what’s been happening at CNN. I have a wildly different perspective on the ongoing controversy surrounding Jeff Zucker’s departure, and it begins with a piece of paper that’s just about to get President Joe Biden’s signature.


It often feels as though no federal law is passed unless both heaven and stars align perfectly, and even then, big corporations effectively get a veto. So it’s quite remarkable that both the House and Senate this month managed to pass a “sweeping overhaul of workplace sexual misconduct law,” to borrow CNN’s characterization. Assuming Biden signs the bill, it’ll mean that allegations of sexual assault and harassment can no longer be forced into arbitration.

But what is actually within the scope of this anti-arbitration law? That’s what attorneys will soon game, as many will likely take any opportunity to leverage public shame and embarrassment into strategic advantage. The law itself doesn’t define “sexual harassment,” and if there are questions about whether a situation falls into the anti-arbitration zone, this new law allows a judge, rather than an arbitrator, to determine applicability. That detail, in particular, will become quite important in the years ahead.

Want a topical example? Let’s say that Allison Gollust decides to file a legal claim against WarnerMedia after being forced to leave CNN as its chief marketing officer. (As my partners Matt Belloni and Dylan Byers have noted, Gollust appears to be weighing her options.) Her departure came after belatedly disclosing a romance with former CNN president Jeff Zucker, a relationship that was also the proximate cause for his ouster. No one seems to be claiming sexual harassment here, but WarnerMedia alleged that they should have disclosed the consensual relationship. Why? Well, it was a violation of company policy, for one. But the reason such policies exist is presumably to assess potential conflicts of interest and prevent sexual harassment by more powerful people within the organization. And that policy, combined with this new law, might just be enough to give Gollust the space she needs to move any claim (she’s already accused WarnerMedia of an attempt to “retaliate”) into a public court where she could detail more background about her situation and lay out why her former employer’s actions were unlawful. 

Typically, Gollust would make such a demand at a venue like JAMS or AAA, the two most prominent arbitration outfits, which don’t afford access to reporters. But the new law provides a way that she can dodge arbitration if she so wishes. Even if Gollust’s contract has an arbitration clause, she’d be able to argue that it’s unenforceable. A judge will then make a determination about jurisdiction.

If WarnerMedia attempts to compel arbitration, that fight within a fight would take months, but what’s crucial is that Gollust’s attorney would first have an opportunity to submit a verified pleading for public consumption. She could unload on WarnerMedia, CNN, and C.E.O. Jason Kilar with the stamp of public record—and, for good reasons we’ll leave aside for now, reporters tend to confer significance and the suggestion of truth to any embarrassing facts alleged in such documents. A public court action would also bring the possibility of discovery, the fruits of which would be showcased in motion papers or aired at trial. Eventually, Gollust might be able to play on the sympathies of jurors. Arbitrators, by contrast, have been known to favor corporate clientele.

Would any argument that this case belongs outside arbitration succeed? It’s impossible to know, because the law is ambiguous and there haven’t been any precedents yet, but either way it could give Gollust incredible leverage towards striking a favorable settlement. If WarnerMedia calls her bluff, this CNN situation might even become a test case for the new law.


Jason Kilar’s Other Headache

Speaking of WarnerMedia and arbitration, the Jason Kilar-run company is working hard to button-up a high-profile dispute at a different division—Warner Bros.’ fight with long-time financial partner Village Roadshow over who owes what for December’s Matrix Resurrection flop. In short, Village Roadshow argues that Kilar destroyed the value of its Matrix franchise by putting the fourth movie on HBO Max, and it’s now refusing to pay Warners its share of the budget. Warners filed an arbitration claim calling that a clear breach of contract. 

Matt Belloni recently broke down the dispute, which has serious implications for how entertainment law treats “derivative” works like Wonka, which may or may not be based on Warners’ previous adaptation of Roald Dahl’s classic book, Charlie and the Chocolate Factory, depending on your view of the origin of Oompa Loompas (yes, really). Since then, there have been some new developments—including the first ruling in the case.

Earlier this month, as a follow-up to the lawsuit, Village Roadshow sought the judge’s permission to file a motion for a preliminary injunction on an expedited schedule. (The private equity-backed production company has a limited carve-out in the arbitration agreement for injunctive or non-monetary relief.) The supposed emergency? Warner Bros. could commandeer other jointly-owned works—including developing sequels to Sherlock Holmes, Ocean’s Eleven, Miss Congeniality, Analyze This, San Andreas, I Am Legend, Get Smart, Where the Wild Things Are, and Yes Man—and then releasing them on HBO Max. Yes Man? Yes, man.

Warners responded that Village Roadshow sat on its hands for more than eight months without rushing to court, that there was already an arbitration initiated over the $100 million that Village Roadshow allegedly owes, and that its partner-turned-legal-adversary was posturing to avoid an expansive agreement to arbitrate. There’s no definitive word yet on whether this case will play out in public or behind closed doors, but Los Angeles Superior Court judge David Cunningham just rejected Village Roadshow’s bid for a preliminary injunction motion. That’s not necessarily a sign about which way this case is ultimately going to go, but Warners has to feel just a tad more confident about avoiding a public showdown. 

Up next: A decision on whether this case will be arbitrated. And more often than not, judges defer such calls to arbitrators.


Rakoff in His Progress

Sarah Palin’s trial against The New York Times was very, very, very public. Not only was the New York federal courtroom a hot ticket for a bunch of attorneys who weren’t working the case and merely wanted to attend it out of professional curiosity (hello, Charles Harder), but anyone could dial up the court’s toll-free party line (888-363-4735) and listen live. That gave plenty of remote-working reporters the opportunity to cover the trial, and then, adding to the frenzy, plenty of media-hungry lawyers were willing to hype the stakes by saying that the “actual malice” standard set in New York Times v. Sullivan was on the line. (Actually, it wasn’t.)

The whole Palin v. NYT spectacle was classic Jed Rakoff—the 78-year-old judge with enough of a colorful history to earn single-name status among those who follow legal matters. Rakoff, after all, is the guy who once made Russia’s naughty list and Matt Taibbi’s hero list while doing things like declaring the death penalty unconsitutional and redefining insider trading on Wall Street. If you want to get an idea of who Rakoff is, and why he’s made it a judicial mission over the years to cut through the sort of bullshit that delays cases by years, let me recommend this podcast interview that Preet Bharara conducted with him a few years ago.

Of course, when your brand is being idiosyncratic, there’s a real risk of stumbling, and the Palin trial was a vivid example. For starters, Rakoff needn’t have sent this case to trial. He could have ruled on summary judgment that a reasonable juror couldn’t find actual malice in the evidence of how the newspaper published its editorial. But to trial this case did go! And when jurors started deliberating, Rakoff couldn’t help himself. On a motion by the Times for a directed verdict, Rakoff announced that he’d soon dismiss the case, but only after the (suddenly pointless) jury verdict came. He could have waited. He didn’t. Instead, the jurors started getting news alerts on their phones about what Rakoff was doing in the next room—which the judge would soon sheepishly admit—in what will go down as an object lesson for all others on the judicial bench throughout the nation. Are there grounds for reversal on appeal? Probably not, although Palin will likely argue as such. Nevertheless, there were smoother ways for Rakoff to have dispensed with Palin’s case.


The Cosby Circus

I’ve circled March 7 on my calendar as the day the U.S. Supreme Court is most likely to announce whether it will or won’t review the Bill Cosby case. As you’ll recall, the Pennsylvania Supreme Court overturned Cosby’s conviction for sexually assaulting Andrea Constand at his home in 2004. The state’s top justices concluded that it would violate the entertainer’s due process rights to overlook how the former Montgomery County D.A. once stated in a press release that Cosby wouldn’t be charged—a statement that paved the way for Cosby to then testify in a civil case. Later, when someone else became Montgomery County D.A., and Cosby was charged, his civil case testimony was used in the criminal case. Following his conviction, Cosby successfully argued that he relied upon a promise of no criminal charges when he forfeited his Fifth Amendment rights against self-incrimination.

It’s not often that prosecutors seek review at the Supreme Court, but Pennsylvania is indeed pushing for reinstatement of Cosby’s conviction. If left to stand, a cert petition argues, decisions not to prosecute across the nation may be transformed into “effective grants of immunity.” (Frankly, Cosby’s opposition to a high court review makes the dispute no less enticing.) 

This case is hardly a slam dunk for review. For starters, some of the usual indicia— like a circuit split and outside interest groups filing friend-of-the-court briefs—are lacking. Nevertheless, I think the procedural issues will be alluring for the Roberts Court, so don’t be surprised if this one indeed lands oral arguments next term.


Manfred vs. The Machine

Will the nation’s political leaders do anything about a lockout that threatens the upcoming Major League Baseball season? That’s what I’ve been wondering after reading what MLB told a New York federal judge on Friday.

Back in December, commissioner Rob Manfred and several teams were sued by four minor league clubs that lost their respective big-league affiliations in a 2020 reorganization. The reason this case is a must-watch is because the plaintiffs, represented by the white shoe firm of Weil, Gotshal & Manges, seem to be on a collision course toward testing the MLB’s vaunted antitrust exemption. Indeed, responding to the suit for the first time this past week, MLB’s lawyers said that its antitrust exemption, which dates back to the 1922 Supreme Court ruling, Federal Baseball Club of Baltimore v. National League, “remain[s] settled law for a century and clearly covers the claims in this case.” MLB added, “It also fails because Congress effectively codified an antitrust exemption, through the 1998 Curt Flood Act.”

That’s certainly one way to read the 1998 law. What happened, for those who need a refresher, was that professional baseball players went on strike in 1994. As part of the deal to play ball again, owners and players agreed they’d both appeal to Congress for a legislative change—basically, a partial repeal of the antitrust exemption. The resulting 1998 Curt Flood Act states that antitrust laws explicitly apply to labor matters at the major league level. (The law also states that the application of antitrust laws to MLB doesn’t change in other contexts. Hence, MLB claiming codification of an exemption.)

For this reason, now that MLB owners are locking players out of spring training, there’s a decent chance that the MLB Players Association votes to decertify as a union (to avoid arcane rules on what unionized members can and can’t do), and then someone like star pitcher Max Scherzer files an antitrust lawsuit against Manfred and MLB teams for collusively denying them employment. Both sides are meeting, and now the National Labor Relations Board is watching the dispute after players charged owners with violating the National Labor Relations Act by not bargaining in good faith this past week. On Feb. 16, a case opened at the federal agency, offering the prospect of a repeat of what happened in the 1990s, when the N.L.R.B. sided with the players and brought a case before future Supreme Court Justice Sonia Sotomayor, then a district court judge in New York. Her decision to restore the status quo has been credited with ending the 1994 strike.

At the moment, there’s not much optimism for a new agreement in time for the 2022 season. Baseball is no longer the “national pastime” it once was, but the sport still attracted an estimated 68.5 million fans during the 2019 season (before the pandemic), and any canceled games may capture lawmaker attention just as they’re preparing for the midterm elections and there are bipartisan groups working on updates to federal competition laws. The intersection of antitrust and labor is also pretty hot at this moment inside the Biden administration. Regulators are looking for good vehicles to push back against monopsonies—markets where there’s only a single buyer of labor services.

In short, D.C. intervention here will be awfully tempting. Everything might be on the table, from a full repeal of MLB’s antitrust exemption to the Department of Justice getting involved in litigation between players and owners.

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