''Buchwald vs. Paramount'' (1990), , was a breach of contract lawsuit filed and decided in

California California is a state in the Western United States, located along the Pacific Coast. With nearly 39.2million residents across a total area of approximately , it is the most populous U.S. state and the 3rd largest by area. It is also the m ...

in which humorist and writer

Art Buchwald Arthur Buchwald (October 20, 1925 – January 17, 2007) was an American humorist best known for his column in ''The Washington Post''. At the height of his popularity, it was published nationwide as a syndicated column in more than 500 newspaper ...

alleged that Paramount Pictures stole his script idea and turned it into the 1988 movie ''

Coming to America ''Coming to America'' is a 1988 American romantic comedy film directed by John Landis and based on a story originally created by Eddie Murphy, who also stars in the lead role. The film also co-stars Arsenio Hall, James Earl Jones, Shari Hea ...

''. Buchwald won the lawsuit and was awarded damages, and then accepted a settlement from Paramount before any appeal took place. The decision was important mainly for the court's determination in the damages phase of the trial that Paramount used "

unconscionable Unconscionability (sometimes known as unconscionable dealing/conduct in Australia) is a doctrine in contract law that describes terms that are so extremely unjust, or overwhelmingly one-sided in favor of the party who has the superior bargaining ...

" means of determining how much to pay authors, which is widely called "

Hollywood Accounting Hollywood accounting (also known as Hollywood bookkeeping) is the opaque or creative accounting methods used by the film, video, television and music industry to budget and record profits for creative projects. Expenditures can be inflated to re ...

." Paramount claimed, and provided accounting evidence to support the claim, that despite the movie's $288 million in revenues, it had earned no

net profit In business and accounting, net income (also total comprehensive income, net earnings, net profit, bottom line, sales profit, or credit sales) is an entity's income minus cost of goods sold, expenses, depreciation and amortization, interest, ...

, according to the definition of "net profit" in Buchwald's contract, and hence Buchwald was owed nothing. The court agreed with Buchwald's argument that this was "unconscionable" and therefore invalid. Fearing a loss if it appealed, and the subsequent implications of the unconscionability decision across all its other contracts, Paramount settled for $900,000. The case was the subject of a 1992 book, ''Fatal Subtraction: The Inside Story of Buchwald v. Paramount'' by Pierce O'Donnell, the lawyer who represented Buchwald, and ''Los Angeles Times'' reporter

Dennis McDougal Dennis McDougal (born November 25, 1947) is an American author and newspaper journalist. He has been called "L.A.'s No. 1 muckraker." His book, ''Privileged Son'', was described as "illuminating reading for anyone interested in 20th-century Los ...

Timeline

In 1982, Buchwald wrote a screen treatment titled "It's a Crude, Crude World" (later renamed "King for a Day") that was pitched to

Jeffrey Katzenberg Jeffrey Katzenberg (; born December 21, 1950) is an American filmmaker, animator, and media proprietor. He became well known for his tenure as chairman of Walt Disney Studios from 1984 to 1994. After departing Disney, he was a co-founder and C ...

Paramount Paramount (from the word ''paramount'' meaning "above all others") may refer to: Entertainment and music companies * Paramount Global, also known simply as Paramount, an American mass media company formerly known as ViacomCBS. The following busin ...

, with the intention of starring Eddie Murphy, who was under contract to Paramount at the time. According to the court documents, the synopsis for "King for a Day" was: Paramount

optioned In the film industry, an option is a contractual agreement pertaining to film rights between a potential film producer (such as a movie studio, a production company, or an individual) and the author of source material, such as a book, play, or s ...

the treatment in early 1983 and commissioned several unsuccessful scripts from several screenwriters.

John Landis John David Landis (born August 3, 1950) is an American comedy and fantasy filmmaker and actor. He is best known for the comedy films that he has directed – such as ''The Kentucky Fried Movie'' (1977), ''National Lampoon's Animal House'' (1978 ...

was considered as the director from time to time. After two years of development hell, Paramount decided to abandon the project in March 1985. In May 1986, Paramount's rival

Warner Bros. Warner Bros. Entertainment Inc. (commonly known as Warner Bros. or abbreviated as WB) is an American film and entertainment studio headquartered at the Warner Bros. Studios complex in Burbank, California, and a subsidiary of Warner Bros. D ...

optioned Buchwald's treatment. In the summer of 1987, Paramount began to develop a movie that was credited as being based on a story by Eddie Murphy, and which was to be directed by

. The story outline was similar to Buchwald's story idea, and to the failed Paramount scripts that had been based on it. In January 1988, Warner Bros. canceled their version of Buchwald's project, citing the Paramount project. When the movie ''

'' was released by Paramount in 1988, Eddie Murphy was given sole story credit. Buchwald was not paid, or even credited as the story writer. Buchwald sued Paramount for breach of contract, as his contract with Paramount stated that he would be paid a certain amount if his treatment were made into a film.

Decision

The California Superior Court decided in 1990 that Buchwald had demonstrated by a

preponderance of the evidence In a legal dispute, one party has the burden of proof to show that they are correct, while the other party had no such burden and is presumed to be correct. The burden of proof requires a party to produce evidence to establish the truth of facts ...

that his story treatment and Paramount's unsuccessful scripts based on the treatment were "similar" to that of the ''Coming to America'' movie. Together with the evidence that Murphy and Landis previously had access to Buchwald's treatment, the court determined that the movie's story was indeed "based upon" Buchwald's treatment. Since Paramount never paid Buchwald, as the option agreement specified would occur if a movie based on his treatment were ever released, Paramount did indeed breach the contract. In the second phase of the trial in which the court determined the appropriate amount of damages to be paid to Buchwald, Paramount testified that despite the movie's $288 million in ticket sales, it had spent so much money on the movie's development and

marketing Marketing is the process of exploring, creating, and delivering value to meet the needs of a target market in terms of goods and services; potentially including selection of a target audience; selection of certain attributes or themes to emph ...

that, according to the formula specified in Buchwald's contract, Paramount had made no "net profit". The court then found that the formula was "unconscionable" and that Buchwald therefore could pursue a separate

tort A tort is a civil wrong that causes a claimant to suffer loss or harm, resulting in legal liability for the person who commits the tortious act. Tort law can be contrasted with criminal law, which deals with criminal wrongs that are punishable ...

lawsuit against the company. Fearing a loss on appeal and, presumably, a wave of lawsuits by authors claiming they, too, had been wronged by the unconscionable net profit formula, Paramount settled with Buchwald and his producing partner for $900,000. As part of the settlement, the "unconscionability" decision was vacated.

Implications

The accounting formulas used by the studios have allegedly been designed specifically to ensure that it is mathematically impossible for almost any movie to show a net profit. Specifically, the net profit formula in authors' contracts does not correspond to the net profit formula of

generally accepted accounting principles Publicly traded companies typically are subject to rigorous standards. Small and midsized businesses often follow more simplified standards, plus any specific disclosures required by their specific lenders and shareholders. Some firms operate on th ...

that the movie studios use when creating their

financial statements Financial statements (or financial reports) are formal records of the financial activities and position of a business, person, or other entity. Relevant financial information is presented in a structured manner and in a form which is easy to un ...

that are reported to the

U.S. Securities and Exchange Commission The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary purpose of the SEC is to enforce the law against market ...

and to the investing public. What the court described as an "unconscionable" formula in Buchwald's contract effectively double-counts many costs borne by the movie studio. Some commentators have claimed this lawsuit was a watershed that would affect Hollywood's payments to anyone who enjoyed "profit participation" by forcing a change to the net profit formulas. However, a ruling by the California Superior Court in '' Batfilm Productions v. Warner Bros.'' regarding the 1989 ''Batman'' movie stated that a similar formula was not unconscionable. To date, there has been no review of this type of claim by an appellate court, meaning that the superior courts cannot look to an appellate court's decision for guidance. Still, the case has caused nearly all studios and production companies to be more careful about how they handle scripts. Concerned that "similarities" between future script drafts and movies could cause lawsuits, nearly all studios and production companies now return unsolicited scripts to their authors unopened.

Response from John Landis

In the retrospective interviews included on the 2007 DVD release of ''Coming to America'', John Landis and screenwriters Barry Blaustein and David Sheffield make no mention of Art Buchwald's lawsuit, and maintain that the film's story originated with Eddie Murphy, with Blaustein and Sheffield writing the screenplay from Murphy's 25-page treatment. In an interview filmed around the time of the film's theatrical release, and included on the DVD, Murphy himself claims that he came up with the idea for the movie while on tour. In Giulia D'Agnolo Vallan's 2008 book ''John Landis'', Landis is quoted as saying that Art Buchwald's case against Paramount was "without merit," going on to state the following: Landis also provided the following response as to why Buchwald's lawsuit received more attention in the press than other similar lawsuits:

Timeline

Decision

Implications

Response from John Landis

See also

References

Further reading