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Mar 14, 2011

By John A. Gallagher

We have examined both Warner Brothers’ March 7, 2011 termination letter and Charlie Sheen’s March 10, 2011 lawsuit, and have come to two conclusions:

  1. In many ways, this case will boil down to garden-variety employment contract principles; and,
  2. Charlie Sheen may have more “winning!!” arguments than does Warner Brothers.

Between the termination letter, the lawsuit, the statements of the parties and public records and/or media coverage of various events, many (but not all) of the facts essential to this lawsuit appear fairly well-established.

Just the facts, Ma’am

Due to Sheen’s ability and the popularity of the show, Warner Brothers had tolerated a lot of problems over the years with Sheen’s off-screen antics; indeed, in May 2010 the WB signed him up to a new contract even though he had felony charges pending against him.

Up until 2011 Sheen was, with rare exception, able to provide Grade “A” performances when performing his job duties. Thus, while Warner Brothers had over the years repeatedly asked Sheen to get help for his apparent substance abuse issues, Sheen was either unable or unwilling to overcome them, and the show continued to flourish with little interruption.

Sharing the epicenter of this maelstrom with Sheen is Chuck Lorre. He co-created Two and a Half Men, and is its head writer. He and Sheen are two of only three people whose refusal to render services can justify a decision by Warner Brothers’ to reduce the number of shows it is obligated to produce. In essence, Sheen and Lorre are the two most irreplaceable men in Two and a Half Men.

It was Lorre who was responsible for the “vanity cards” you would see at the end of the show, which made frequent oblique references to Sheen’s off-screen problems over the years – like the one that said “We employ a highly-paid Hollywood professional who has years of experience with putting his life at risk. And sadly, no, I’m not talking about our stunt man.” Sheen takes great offense at these cards in his lawsuit, while the WB asserts that he approved some of them.

In employment law, timing is everything

In its termination letter, Warner Brothers makes frequent mention of Sheen’s pre-January 2011 problems, his messy divorce from Denise Richards, the Aspen incident in 2009, the Plaza Hotel incident in 2010. Yet, it is clear that these are all largely red herrings – Warner Brothers made no efforts to cease production of the show due to any of these situations.

Why red herrings? In employment law, timing is everything. It is very, very difficult for an employer to justify a termination decision based upon incidents that occurred months or years before the firing. “If his conduct was so bad, why didn’t you fire him then?” Employee-side employment litigators frequently seize on such “timing malfunctions” to prove that the stated reason for the termination is a pretext for the “true” reason, i.e. discrimination, retaliation, etc.

Yet, this case is not that easy.

In January 2011, things escalated. Warner Brothers contends that Sheen came to work having lost 20 pounds and under the influence, missed another rehearsal and was late for two others (“Practice. We’re talking about practice”). Then, on January 27, Sheen was rushed to the hospital following a two-day marathon party that commenced, according to the WB letter, with the delivery of a “briefcase full of cocaine.”

According to Warner Brothers, Sheen agreed to enter a rehab in late January, causing a hiatus of the show. He never rehabbed, though, curing his problem “in a nanosecond, with the blink of the eye.” Sheen then asserts that Lorre unilaterally reduced the number of shows for the balance of the season from eight (8) to four (4), and that no episodes were ready to be shot on February 14, when shooting was supposed to commence (the WB addresses neither of these contentions in its March 7 letter – these are among the most critical of the facts that appear to actually be in dispute).

On February 24, just days before shooting these final four episodes was to resume, Sheen went on the first of his lengthy, public rants, criticizing Lorre on the Alex Jones radio show, wherein he referred to Lorre “a stupid stupid little man,” “a turd” and other adjectives too salacious to print here. The interview also contained what some have labeled anti-Semitic discourse. Although Sheen never actually said that he would not perform in these final four episodes, on February 24 the WB announced that it was cancelling production on them on the grounds that Sheen was “demonstrably unstable” and that the relationship between the key players had become “untenable.” You think?

Could things have been worked out?

At this point, it is possible that things could have worked out…

However, the cancellation of the season’s episodes really got Sheen’s goat and, somehow, he was actually able to muster the wherewithal to actually step up his assault on Lorre.

On February 25, Sheen in an interview said he would do the show the following season, “but not with the turds in place.” On Monday February 28, he gave his classic interview to ABC’s Andrea Canning, in which many of his most memorable lines were uttered.

Then on March 7, the WB cancelled the entirety of its May 2010 contract with Sheen. It cites the contract’s “Incapacity” and “Morality” clauses to justify its decision. A cursory review of the cited clauses makes clear that a very strong argument can be made that Sheen violated the Morality clause, since he publicly “confessed” to “banging 7 grams of rock, because that’s how I roll.” Last time I checked, cocaine was illegal in America!

As for the Incapacity clause, well, I think Warner Brother’s has a tougher argument there. It had in the past cancelled shows to accommodate the aftermath of Sheen’s follies, and there is scant evidence that it could not have done the same here. In this connection, it is notable that Sheen passed a drug test in late February (Sheen’s no dummy, why do you think he volunteered for a drug test at this critical juncture?), thereby demonstrating that he likely was sober and ready to go when shooting was to commence in late February. Warner Brothers also cancelled production for next year, citing these same clauses, and the “not with the turds in place” statement from Sheen’s February 25 interview, categorizing it as an “anticipatory breach of contract.”

The rhetoric: the “Usual Suspects”

At stake in the lawsuit is the money Sheen/WB would have earned had the final eight episodes been shot, and the revenue that would have been generated from next season’s 24 episodes, as well as the back end yield from such shows via sales of DVDs, syndication etc. In short, a whole lot of money!

Although Sheen contends that the WB’s termination letter suggests that it intends to renege on its obligation to pay Sheen “the back end compensation he earned through his hard work on 177 episodes,” the letter does not expressly state as much. Such an argument, it seems, would be very difficult for Warner Brothers to sustain. The arguments concerning the final eight episodes for 2011, however, are much closer.

In a nutshell, they boil down to this: Sheen contends that the Lorre initially refused to write the remaining eight episodes due to a conflict of interest (asserting that Lorre was more interested in seeing his other shows, such as Mike & Molly, succeed because he got a bigger cut of the action from those shows), and that WB ultimately cancelled production on the last four shows because he criticized Lorre publicly. Warner Brothers contends that it had to cancel production because Sheen was incapacitated, that his public comments violated the contract because they made the relationship between Sheen and the show’s creators/writer “untenable,” and because he violated the contract’s morality clause.

Who wins?

This will be a close case. Sheen was sober and ready to perform on February 14, and if in fact the show was not ready to be shot at that time, it could be a problem for Warner Brothers. On the other hand, Sheen’s very significant health and behavior problems in January 2011 provide a reasonable justification for why the WB was not ready to start filming. The show was on hiatus because of Sheen’s problems in the first place, and the WB clearly attempted to assist him resolving same. The same could be said for Lorre’s failure to write only four of the eight required scripts.

Yet, Warner Brothers had tolerated, and indeed enabled, so many of Sheen’s past episodes that one has to wonder, what was the true motivation for the February 24 cancellation of the remaining episodes for this season. Well, if timing is everything, all signs seem to point to the diatribe against Lorre on the Alex Jones show earlier that day.

As for the March 7 termination of Sheen, what evidence did Warner Brothers have on that date that would prove that Sheen could not provide services for the balance of the 2011 episodes, and for the final 24 episodes that were to be shot next season? Not a whole lot. Sheen was sober on the date he was terminated, and a mere statement about something that was months away is not enough to prove an anticipatory breach of contract.

On balance, the axiom “no good deed goes unpunished” may come into play here. Warner Brothers clearly tried to help Charlie Sheen for years. His failures are not its failures. Yet from a legal perspective, it may have been much better off firing him immediately after one of his past episodes truly incapacitated him from doing his job.

His drug addiction likely would not have been entitled to protection under the Americans With Disabilities Act (because he was still using), and the WB would have evidence that he was unable to perform his job. However, it may have waited too long. Sometimes, productive employees are allowed to “get away” with too much in the interest of profit, and this might just be such a case.