Happy Monday, I’m Eriq Gardner.

Welcome back to The Rainmaker, a private email about money, power, fame, and their intersection with the law.

In today’s edition, the legal sagas of Cher and Kelly Clarkson, and why there’s always a novel and creative way to screw someone out of money in show business—especially in an era where copyright law and talent agent licensing have been weaponized. (P.S. If someone else forwarded you this email, and you’d like to continue receiving this newsletter, click this link.)

But first…

• Antisemitism on trial: Top colleges are under fire for not doing enough to stem antisemitism on campus—University of Pennsylvania president Liz Magill resigned over the weekend after a disastrous congressional hearing—and the contentious issue is now spilling into courtrooms on both coasts.

  Among the most notable legal actions is a lawsuit against New York University brought by Jewish students represented by Marc Kasowitz, who spearheaded the pressure campaign against UPenn. (Notably, Kasowitz’s former partner, David Friedman, served as an ambassador to Israel during the prior administration.) N.Y.U., in response, is enlisting star litigator Dan Petrocelli, known for representing Ron Goldman’s family, former Enron C.E.O. Jeffrey Skilling, and numerous Hollywood studios. Petrocelli will hope to do a better job than WilmerHale, which prepared Magill for her testimony last week.

• And speaking of Petrocelli…: The O’Melveny rainmaker is also racking up billable hours in Hollywood, where he just helped Disney settle a Spider-Man copyright termination war (an outcome I saw coming, although this case spent way more time on comic book shell companies than anyone could have predicted). While I don’t know the precise terms of the deal, I have an inkling that a low ten-digit figure is being paid out by Disney. Meanwhile, Petrocelli isn’t done with Marc Toberoff, the copyright-termination specialist on the other side, as the two are also battling it out over Top Gun: Maverick.

  As a refresher, Toberoff represents the family of Ehud Yonay, whose 1983 California magazine story is credited as source material for the original Tom Cruise classic. A few years ago, Yonay’s heirs terminated Paramount’s right to adapt the story and are now contending that Maverick is an infringement. Paramount insists the sequel is not substantially similar to Yonay’s story, but the fallback argument is provocative. Basically, it’s that an early cut of Maverick was prepared before termination. Toberoff has called foul because this evidence came late, and he didn’t get a chance to depose director Joseph Kosinski about it. Incidentally, Kosinski gave a declaration in this legal battle (read here) that showcased how indebted Maverick is to the U.S. Navy, which apparently contributed plot and character points. Hmm, maybe the government has a copyright claim?

And now for another termination story…

Nearly a half-century ago, when Sonny and Cher divorced, Sonny assigned her a 50 percent interest in royalties from songs he wrote that they both recorded, such as “I Got You Babe” and “The Beat Goes On.” Around that same time, however, Congress passed a law allowing authors and their heirs, after several decades, to terminate grants and reclaim control of their works late in the copyright term. Ironically, Mary Bono actually co-sponsored the law to extend that copyright term by several decades while serving in Congress, in 1998, the year Sonny died in a skiing accident. But as the widow of a famous songwriter, she also wanted all the money she believed she was entitled to. In 2019, Mary instructed the royalty administrator to halt Cher’s usual payments. Years of litigation have ensued.

The issue is now before a California federal judge, who is expected to issue a decision soon. But the ruling is likely to have a much bigger impact than simply determining how much money will flow to Mary, and to Sonny’s four children. Cher also has a score to settle, tied to previously withheld royalties. And plenty of other members of the creative community will be closely watching the outcome, too. After all, at the heart of the dispute is an unresolved legal debate over how copyright termination intersects with an even messier issue: divorce.

In many ways, this fight is especially personal for Mary. From her vantage point, the ability of an artist to terminate a grant and recapture copyrights isn’t just a fundamental aspect of the law, but one that is inalienable. After all, these rights are intended to provide creators with a fresh opportunity to fully benefit economically from their works. If creators can be coerced into prematurely forfeiting profits from regained copyrights, it potentially opens the door for publishers to exploit young artists who lack bargaining power, which undermines the core purpose of termination. Copyright law addresses that risk by allowing creators to terminate a copyright grant “notwithstanding any agreement to the contrary.”

This is at the core of Mary’s legal argument with Cher: According to Mary’s lawyers at Donahue Fitzgerald, she has the right to end Cher’s royalties because Sonny couldn’t have bargained away something in his divorce that hadn’t yet come to fruition—i.e., the money from his future ability to recapture copyrights. Put a slightly different way, Mary is arguing (read more here) that the newly recaptured copyrights aren’t encumbered by old agreements.

But Cher’s legal team at Davis Wright Tremaine highlights a key distinction: Termination rights involve the transfer of copyright-related rights (like the ability to adapt a movie from a script), whereas divorce agreements concern a division of marital property. The 1978 divorce settlement between Sonny and Cher specifically dealt with a split of record and composition royalties coming from third parties. The right to royalties hasn’t expressly been terminated, and Mary really can’t nullify the divorce agreement. Therefore, Cher perceives Mary’s withholding of royalties to be a breach of her obligations as the administrator of Sonny’s estate.

U.S. District Court Judge John Kronstadt is set to preside over a hearing on this issue in February. Previous rulings indicate that Cher should be deemed the favorite. But all of Hollywood will be watching closely to see how broadly Kronstadt rules. While copyright terminations may continue to create ripples within the creative sphere, federal judges will aim to avoid unnecessary encroachment upon state laws governing asset division during divorces and posthumous estates.

Here’s why: Back in the 1970s, California lawmakers, in their infinite wisdom, decided to combat the scourge of unscrupulous and conflicted agents by mandating that they all be licensed, like doctors or lawyers. Under the state’s Talent Agencies Act, becoming a licensed talent agent involves posting a $50,000 bond and submitting an affidavit of character.

I’m dubious that this law genuinely protects artists from exploitation, but what the law has achieved is a now-familiar legal kabuki dance: An artist fires their manager, leading to a lawsuit over unpaid commissions. The artist then halts the litigation by complaining to the California Labor Commissioner’s Office that the manager violated the Talent Agencies Act. More often than not, the artist wins, triggering exasperated managers to send me lengthy diatribes at odd hours of the night about the perceived injustice (yes, Rick Siegel, I’m talking about you).

Clarkson is the latest to go this route. A fortnight ago, she persuaded a special hearing officer that Blackstock unlawfully solicited the singer’s work as a judge on The Voice, among other gigs (excluding her position as host of The Kelly Clarkson Show). The hearing officer rejected Blackstock’s primary defense that he merely collaborated with CAA at the licensed agency’s behest during the negotiation of these deals. However, the officer acknowledged that Blackstock mostly focused on management duties rather than job procurement, a significant factor in determining penalties. So instead of losing all his commissions, Blackstock only lost $2.6 million. (Don’t ask me why a 15 percent commission is better than a split of community property during the marriage. I suppose this says something about the divorce terms.)

Although this dispute has followed the standard routine—Blackstock’s attorney, Bryan Freedman, is now petitioning for a new trial in Los Angeles Superior Court—it’s bonkers that anyone can face consequences for securing work for a spouse. Has the law crossed the line? I know that’s been the sentiment of many within the entertainment community for a while. That includes lawyers who worry about losing their own fees when negotiating deals for clients. Even Clarkson’s attorney, Ed McPherson, shares this concern.