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MCGHAN v. EBERSOL

April 15, 1985

JOHN McGHAN, Plaintiff, against DICK EBERSOL and NO SLEEP PRODUCTIONS, INC., Defendants


The opinion of the court was delivered by: SWEET

SWEET. D.J.

Plaintiff John McGhan ("McGahn") brought this suit against defendants Dick Ebersol ("Ebersol") and No Sleep Productions, Ltd. ("No Sleep") alleging violation of a joint venture agreement and misappropriation of ideas. The defendants have now moved for summary judgment, and McGhan has cross-moved for partial summary judgment. For the reasons discussed below, the defendants' motion is granted and McGhan's motion is denied.

Facts

 This action arises out of the creation of a popular television series called "Friday Night Videos" ("FNV"), a music video show broadcast over the NBC Television Network on Friday nights. FNV is owned by No Sleep, of which Ebersol is an officer and sole owner. Ebersol is a well-known television producer who has established a reputation for his success with late night television programming, in particular for his efforts with the variety and comedy show "Saturday Night Live" and the rock music show "Midnight Special." McGhan has been involved in the radio and music industry for over a decade, in particular as creator and producer of a youth radio network called "The Source" owned by NBC radio, as director of Rolling Stone Magazine Productions, a radio syndication company, and a creator of the successful radio show Rolling Stone Magazine's Continuous History of Rock & Roll.

 FNV was first conceived in August of 1982, when Ebersol approached Brandon Tartikoff ("Tartikoff"), NBC's president of Entertainment, to try to persuade him to replace a failing late night comedy show called "SCTV" with a music video show. Although Tartikoff expressed some interest he was not prepared to take action at that time. In late November, 1982, Ebersol's interest in the project was revived after observing a network news broadcast on the success of Music Television Video ("MTV"), a cable television channel which broadcasts music videos on a 24-hour basis. He again approached Tartikoff with the concept of a music video show.

 During the course of conversations over the next few days, Tartikoff expressed considerable interest in the project and suggested that Ebersol come up with a written presentation laying out those elements that would distinguish the NBC show from MTV. Tartikoff subsequently obtained approval to replace SCTV with Ebersol's series, although the parties dispute whether any binding commitment was made at that time. According to Ebersol, they also decided that even though no pilot was needed because the series would use MTV as a pilot, the series would fulfill a commitment that NBC had earlier made to Ebersol to fund any future pilot he might propose.

 Ebersol then contacted McGhan, whom he had met while Ebersol was at Saturday Night Life and McGhan was at The Source and with whom he had discussed the possibility of a simulcast of a musical performance on "Saturday Night Live." Ebersol described the proposed show as including top videos and interviews and asked McGhan if he would be capable of producing the show. After McGhan said he was, Ebersol asked him to put together a document incorporating any ideas for the show. Several days later, McGhan presented Ebersol with a document entitled "Loose Thoughts" in which he set forth various ideas for the show, and a few days after that an expanded proposal entitled "video Rock." McGhan an Ebersol have differing recollections as to the degree of enthusiasm with which these documents were received by Ebersol. They also contest the degree to which these documents reflected McGhan's original concepts for the video show rather than Ebersol's initial proposals.

 McGhan concedes that he and Ebersol never specifically discussed ownership of FNV, but contends that Ebersol conveyed to him the understanding that McGhan would be an owner of FNV. Ebersol asserts that it was his understanding that McGhan had agreed on an employment relationship when Ebersol asked him if he could produce the show. Neither party has referred to any specific discussion concerning the nature of their relationship to each other or to the show.

 In mid-January 1983 Ebersol and McGhan had a series of meetings to prepare a final proposal to be sent to NBC. As a result of these meetings, a document entitled "A New Late Night Project" was prepared and sent to Tartikoff which incorporated the ideas laid out in "Video Rock" and included several additional ideas. In mid-February, Ebersol and McGhan met with Tartikoff and other NBC executives to discuss the show. According to McGhan, the question of whether or not NBC would own the show was raised at the meeting but not resolved because of a concern about union payments. McGhan contends that following the meeting Ebersol told McGhan that there would be more profit if they owned the show as opposed to NBC, and also assured him that the show would be very lucrative for both of them.

 In the weeks following the meeting, a variety of changes and deletions were made before the final format used in the July 29, 1983 premiere was agreed upon. McGhan worked for Rolling Stone until his position was eliminated in February of 1983. After that he worked exclusively on FNV. McGhan contends that he turned down other offers of employment to work on FNV. The quality of work performed by McGhan from February on is disputed. According to Ebersol, problems developed between McGhan and Ebersol right from the start. Ebersol claims that although he specifically instructed McGhan not to negotiate or discuss money with record companies, McGhan entered into commitments with David Benjamin ("Benjamin") of CBS Records that later had to be renegotiated.

 According to Ebersol, by May of 1983 Ebersol was convinced that McGhan was not qualified to be the producer of a network television show, and offered the job to Benjamin. At that point, McGhan was told that he could be the coordinating producer. According to McGhan, Ebersol told him at this time that McGhan had no ownership interest in the show. McGhan states that despite this, he chose to stay with the show because of his financial position and the time he had already put in. McGhan informed Ebersol that his friend Dennis Somach ("Somach") would negotiate his position on the show for him.

 Somach first informed Ebersol's attorney, Michael Rudell ("Rudell"), that McGhan wanted a salary of $10,000 for each show and $25,000 for all of McGhan's pre-production services. On June 3, 1983, Somach agreed to $2,750 salary for each new show. According to Ebersol, he also agreed to $3,500 for all of McGhan's pre-production efforts. The parties dispute whether Somach ever sought to obtain an ownership interest in the show for McGhan. Somach did seek profit participation for McGhan in "ancillaries" (spin-offs) and merchandising, but Rudell advised him the Ebersol would not agree to it. Rudell then arranged for a draft of a contract entitled the "Coordinating Producers Agreement" and incorporating the agreement reached between Somach and Rudell to be sent to McGhan's attorneys, Stephen Rodner ("Rodner") and Alan Siegel ("Siegel"). After speaking with McGhan his attorneys requested an ownership interest but were rebuffed. Rudell disputes that this request was ever made. In any event, McGhan subsequently instructed them not to press the issue and to continue to negotiate for him, and made various suggestions and request that were transmitted to Rudell. During this time period McGhan accepted $2,750 for each of the two shows produced. He also accepted $3,500, an amount Ebersol claims was intended to cover all of McGhan's pre-production efforts but which McGhan asserts was merely a share of the pre-production money paid by NBC. This payment was made following receipt of an invoice from McGhan to Ebersol in which McGhan asked for payment for "services rendered during January 1983 for your company's new project." Def. Ex. 11. McGhan testified that he arbitrarily selected that month to avoid any problems with his having collected unemployment insurance during the following months. He stated that he performed no services in January 1983.

 On August 16, 1983, before any employment agreement had been signed, McGhan was informed by Benjamin that he had been dismissed. On that same day, his attorneys telephoned Ebersol's attorneys and said that McGhan was asserting a "proprietary" interest in FNV. Six months later, McGhan filed the complaint in this action asserting an ownership interest in both the show and in the original ideas he contends he contributed to the show, and charging Ebersol with violating a joint venture agreement and with misappropriating McGhan's original ideas.

 Discussion

 In this motion, Ebersol has moved for summary judgment on the grounds that McGhan has not provided sufficient evidence of the essential elements of a joint venture, that McGhan has not established the existence of a legal relationship that would entitle him to ownership of any ideas he may have contributed to FNV, and that in any event, none of McGhan's ideas were sufficiently original to allow him to assert a proprietary interest.

 Joint Venture

 Under New York law, a "joint venture" is defined as "an association to carry out a single business enterprise for profit; a common enterprise for mutual benefit; a combination of property, efforts, skill and judgment in a common undertaking." U.S. v. Standard Oil Co., 155 F. Supp. 121, 148 (S.D.N.Y. 1957), aff'd, 270 F.2d 50 (2d Cir. 1959); see Chalmers v. Eaton Corp., 71 A.D.2d 721, 419 N.Y.S.2d 217 (3d Dept. 1979). "The ultimate inquiry is whether the parties have so joined their property interests, skills, and risks that for the purpose of the particular adventure, their respective contributions have become one and the commingled properties and interest of the parties have thereby been made subject to each of the associates on the trust and inducement that each would act for their joint benefit." Hanlon v. Melfi, 102 Misc.2d 170, 423 N.Y.S.2d 132 (Sup.Ct., Suffolk County 1979). In order to find a joint venture, "[t]he crucial factors to be considered are the intent of the parties, express or implied, whether there was joint control and management of the business, whether there was sharing of profits and losses, and whether there was a combination of property, skill or knowledge." Sherrier v. Richard, 564 F. Supp. 448, 457 (S.D.N.Y 1983), citing Ramirez v. Goldberg, 82 A.D.2d 850, 439 N.Y.S.2d 959 (2d Dep't 1981). The most important element in a joint venture is the existence of a contract or agreement; "An agreement between the parties to create a joint venture is essential and whether or not a ...


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