PBS hires big guns to appeal verdict in home video suit
Originally published in Current, Feb. 22, 1999
By Steve Behrens
PBS hired a new legal team this month to appeal its $47 million loss in a court battle with its former home-video distributor, Michael Nesmith's Pacific Arts Video.
Lead counsel will be Jonathan Schiller, a prominent litigator, international arbitrator and partner of David Boies, the government's lawyer in its antitrust case against Microsoft Corp. Schiller, who is based in Washington, will be assisted by Terry W. Bird of the Los Angeles litigation firm of Bird, Marella, Boxer & Wolpert.
Schiller succeeds James E. Daniels of the New York firm of Hall Dickler Kent Friedman & Wood, which is assisting in the transition to new counsel, according to PBS General Counsel Greg Ferenbach.
Ferenbach said the verdict--delivered Feb. 1 by a jury in the U.S. District Court in Los Angeles--was "inexplicable," but not unheard-of in trials by jury. "It's self-evident that taking complex civil litigation in front of a jury becomes a crapshoot. It's not unprecedented in American law that a jury can go nuts."
After PBS and the producers dropped Pacific Arts as home-video distributor in 1993, they sued the firm and Nesmith for overdue royalties, prompting a countersuit. The jury decided this month that the producers will get their royalties, but PBS will pay damages to Pacific Arts for concealing plans to pull out of the relationship--until it was too late for the company to protect itself and its video contracts by declaring bankruptcy [earlier article].
PBS had given Pacific Arts repeated written notices that the royalties were overdue--later its basis for pulling out of the contract--but Pacific Arts testified that PBS executives had given verbal assurances that the notices were just formalities.
Ferenbach comments: "It's very difficult for people in the United States to conduct business when extraneous discussions are allowed to modify the written contract that businesspeople rely upon."
In a memo to stations, Ferenbach gave PBS's general reaction to the verdict: "Our position has always been, and continues to be, that Mr. Nesmith's failure to fulfill his contractual obligations to PBS and its producers amply warranted our legal efforts to collect from him. We believe that his countercharges against PBS were, and continue to be, without merit . . ."
The appeal to the Ninth Circuit Court of Appeals may take a couple of years, Ferenbach said. It starts with customary motions before the original court, seeking an overturned verdict, reduced judgments, a new trial, and a delay in paying the judgment until the appeal is done.
The memo concluded with "talking points" for stations, including: "There will be no effect on PBS staffing, operations (including PBS Home Video) or services to member stations, at least in the immediate future."
If PBS ends up having to pay $47 million, it would be a large sum for an organization with a budget of $278 million. PBS is still examining what it might collect from insurance, says Ferenbach, "but we don't have blanket assurance that we have coverage."
New lawyer Schiller "has an outstanding reputation in high-profile, complex litigation" like the Pacific Arts case, Ferenbach said. Last year, he and Boies formed Boies & Schiller, based in Armonk, N.Y., after leaving larger firms. The firm is not only handling litigation in 10 states, with top technology corporations and the Republic of France among its clients, but also initiated a class-action price-fixing lawsuit against vitamin manufacturers. He met Boies while handling a successful defense of Westinghouse Electric in a jury trial. Repping CBS, he got the court to quash a tobacco company's subpeona of Mike Wallace in 1996. Lately, Schiller has been in the news for handling comedian Garry Shandling's suit against his former agent, Brad Grey.
Earlier news: Pacific Arts Video wins jury verdict against PBS, February 1999.
Web page created Feb. 24, 1999
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