Michael Douglas’s World: More Money More Trouble

Michael Douglas, one of Hollywood’s princes and the star of the romantic comedy The American President has a blockbuster movie in the pipeline Wall Street: Money Never Sleeps. And that’s where his troubles begin. And just like the “money” in his movie the man himself won’t be sleeping easy any time soon.

This past June, his ex-wife, Diandra Douglas, sued Michael Douglas for half of the money he stands to make on the upcoming movie, including royalties. The new movie is a sequel to the earlier Wall Street movie from 1987 where Douglas, playing Wall Street honcho Gordon Gecko famously declared that “greed…is good” and for which he snagged a best actor award.

Putting aside all the jockeying and spin by both sides, it appears that their separation agreement gives Diandra the right to share in any monies that might derive from all the movies Michael made while they were married.

Diandra now seeks a share of the windfall from the upcoming movie on the claim that it is a spinoff of the earlier Wall Street movie. But Michael says the new movie is a sequel rather than a spinoff of the earlier movie. So, what is a spinoff and what is a sequel and could a sequel ever be considered a spinoff? The answers to these questions are worth millions of dollars and lot of legal wrangling in this lawsuit.

But before the questions can even be answered by the court, the parties have to get through the doors of the courthouse and, as another issue gets thrown into the mix, even that is not looking too easy. Now we are talking about “jurisdiction” – a jargon lawyers use to describe the power of a court to hear a case. And we are also talking about “conflict-of-laws” arguments since we are dealing with a lawsuit in New York which seeks to interpret an agreement made in California during a divorce in California. Michael Douglas’ side would like the case to be thrown out of New York for lack of “jurisdiction.”

But, can she even bring the lawsuit in New York? Well, yes, at least since all the parties now live in New York. But when it comes right down to it, this case has California’s fingerprints all over it since both the divorce and the separation agreement itself were made in California. And even if the court in New York accepts the case, it will still have to apply California law to decide what each party would get under the deal.

So, can she win? Well, her odds of winning may not be as good as his but still the relationship between a spinoff and a sequel seem too tricky for any one’s comfort. Spinoff is a large word that corrals all kinds of stuff into itself, like adaptations and other by-products or offshoots of the original work or movie. But a sequel can stand on its own two legs as a complete work except that it continues the story line of the first work. This means that perhaps folks who are masters at logic and who know how to splice and dissect words can manage to show that a sequel is a kind of spinoff.

Except that in the Hollywood experience and perhaps with most ordinary folk, a sequel is not usually understood in the same way as say, a movie adaptation of a book or something of the sort, which is the classic way most folks think of a spinoff.

And this is a big deal because courts in such situations usually give a lot of weight to how people in the industry understand the words used in agreements and they are generally reluctant to bootstrap into it any meanings that folks in the industry would not read into the agreement. Usually, the only way to get the courts to recognize such “unusual” meanings is to write it into the agreement. And that maybe the bad news for her, especially if she was represented by lawyers at the negotiations.

Still, for someone trying to enlarge the meaning of spinoff to include sequels, her chances of winning may be better under California law than under New York law. This is because of the slight difference in how the courts read documents in the two states. California’s approach is a bit more flexible and would let in more outside evidence than New York’s “four corners rule” which can seem like a blunt instrument in the way it sticks to the plain meaning of the document once the courts think they know what the document is saying.

Well, let’s stay tuned for what the courts will tell the dueling ex-couple.

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