New Arena for Entertainment Litigators: Elder Competency

Many attorneys in Los Angeles identify as “entertainment lawyers” or “entertainment litigators.” “Entertainment,” however, is not a body of law unto itself like, say, patents.  Rather, entertainment lawyers market experience with the customs and practice of the industry and the numerous legal issues the industry faces, such as copyright, trademark, contracts and right of publicity.  For those of us who try entertainment cases, being an entertainment litigator means comfort with multiple courthouses, as these issues can arise under federal, state or even bankruptcy law.

I recently had the experience of handling an entertainment case in a specialized world not usually experienced by business litigators, probate.  In state court certain departments are assigned to adjudicate “probate” matters, a term that encompasses not only will and trust cases but also conservatorships, guardianships and competency determinations.  I found the probate department a foreign backwater filled with unfamiliar specialists who all seemed to know one another.  The calendar was monstrously long and filled with short hearings over grandma’s will and whether grandpa could still tie his own shoes.

When Social Security was first established in the 1930’s, the solvency of the program was aided by the fact that Americans on average did not live long past the typical mandatory retirement age of 65.  Now that we know about exercise and good diet and with the advance of medicine, our bodies more frequently outlive our minds.  With mandatory retirement also less common, the competency of aging executives will become more of an issue.

Thus, it seems that entertainment litigators must acquire familiarity with a new arena of law previously the exclusive province of probate specialists: elder competency.  Two of the most famous entertainment cases of late have involved the mental competency of former Clipper owner Donald Sterling and Viacom chief Sumner Redstone.

Donald Sterling’s loss of ownership of the Clippers began when his paramour released a tape of Sterling voicing a racist rant.  At first, the ensuing legal battle was between Sterling and the NBA, which threatened to use league powers to force sale of the Clippers.    The situation took an unexpected turn when Sterling agreed to be seen by two doctors, who declared him mentally incapacitated.  This finding arguably permitted Sterling’s wife Shelly to take over management of the couple’s community assets, including shares of the Clippers, which power she used to negotiate a stupendous $2 billion sale of the Clippers to Steven Ballmer.  The legal battle veered into a probate department in the Los Angeles Superior Court, where the Sterlings tried the issue of Shelly’s powers.  While the sale of the Clippers hung in the balance, the parties tried technical probate law issues of the right of a spouse to proceed under a trust when the other is declared incompetent.  The court found that Shelly Sterling had acted within her powers given the incompetency findings, and sale of the Clippers went through.

The unfolding tale of the competency of 92-year-old Viacom head Sumner Redstone also started with salacious revelations, when Redstone first kicked one of his girlfriends out of his house,, and then did the same with former girlfriend and healthcare agent Manuela Herzer.  Herzer was replaced by Viacom Chief Executive Phillipe Dauman as the person in charge of Redstone’s advance healthcare directive.  Herzer retaliated with a lawsuit, challenging her ouster by claiming that Redstone was incompetent to remove her as his healthcare agent – that he was mentally vacant, unable to speak coherently and prone to frequent crying spells.  The suit, also assigned to a probate department in Los Angeles Superior Court, demanded that Redstone submit to medical examination and a deposition.  Sumner’s representatives countered that the suit was riddled with lies and a thinly veiled grab for Redstone’s wealth.

Thus far the probate judge has ruled that Herzer’s attorneys cannot depose Redstone, a ruling which Herzer’s attorneys are challenging in the Court of Appeal.   The positions of both sides are grounded in Probate Code provisions permitting the courts to hear contested evidence regarding competency to change health care directives.  Herzer’s attorneys have, however, obtained the right to depose CEO Dauman.  At issue will be Viacom’s claim that, while Redstone is showing his age, he is still making the key decisions for Viacom.

Entertainment litigators would be well advised to locate the Probate Code and the probate departments of our state courts.  It appears that valuable entertainment assets will increasingly be under the control of aging owners, whose competency may be challenged.