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It's one ugly feud

Cathy Schulman was a low-profile studio executive whose rocky business dealings ended up making a high-profile enemy.

August 16, 2004|Rachel Abramowitz and Scott Collins | Times Staff Writers

Although high-profile feuds and power struggles are almost a rite of passage in Hollywood's executive suites, Michael Ovitz has waged an unusually large number of them. Over the years, the onetime super-agent has accumulated a list of powerful enemies, including network chiefs, billionaire business partners, and -- perhaps most famously -- his former boss, Walt Disney Co. chief executive Michael Eisner.

But when it comes to sheer nastiness, documented in exhaustive and now public detail, it's tough to beat Ovitz's latest battle -- this time against Cathy Schulman, a former employee who's scarcely known outside the film business. Through a series of twists, a seemingly routine contract dispute has blown up into more than two years of legal proceedings, with multimillion-dollar attorney bills and 5,000 transcript pages, featuring testimony from dozens of Hollywood figures, including Universal film boss Stacey Snider and directors Martin Scorsese and Richard Donner. Recently, the Creative Artists Agency cofounder won a decisive victory. Case closed? Not quite. It's a measure of his hold on Hollywood's imagination that even now industry insiders are buzzing about this latest adventure in Ovitziana.

As difficult as it may be to recall now, Ovitz was during the 1980s and early '90s a genuine Hollywood colossus -- transforming talent agents from behind-the-scenes string-pullers into Armani-clad powerbrokers. After a catastrophic stint as Eisner's top lieutenant in the mid-'90s, Ovitz set out to revive his status with a daring new business plan.

For The Record
Los Angeles Times Friday October 01, 2004 Home Edition Main News Part A Page 2 National Desk 5 inches; 189 words Type of Material: Correction
Ovitz-Schulman dispute -- An article in the Aug. 16 Calendar section about Michael Ovitz's arbitration victory against Cathy Schulman, a onetime employee of his Artists Production Group (APG), said the movie "Timeline" was a joint venture of APG and Studio Canal. In fact, the movie was co-produced by APG and Donners' Co.; Paramount Pictures, Cobalt Media Group and Mutual Film Co. presented the picture. In addition, under the subheadline "Bad to worse," the article said that Schulman wasn't the only former employee to sue Ovitz, and referred to a lawsuit by the former head of Artists Television Group, Eric Tannenbaum, that was "quietly settled." A review of court records shows that Ovitz prevailed on a motion to strike Tannenbaum's defamation claim; the court also awarded Ovitz attorneys' fees related to that action. Tannenbaum appealed and the parties reached an out-of-court settlement for the entire case in April 2003. Also, the article's reference to APG as "largely defunct" did not take note of the ongoing activities of APG and its affiliates, which include movie projects, such as "Red Rabbit," "Rainbow Six" and "Without Remorse," in active development at Paramount Pictures.

The plan went awry, and the dispute with Schulman provides perhaps the most complete narrative thus far of what happened and why. The feud also offers a rare look inside the dream factory: what can happen to an ambitious young executive caught in a crumbling empire, as well as the painful realities faced by a once powerful titan who's faded into a bit player.

Schulman, the 39-year-old former president of Ovitz's largely defunct Artists Production Group, was ordered in early July to pay a $3.6 million judgment to APG after an arbitrator found that she had attempted to steal confidential documents, interfered with Ovitz's business dealings by falsely claiming rights to film projects, and planted inaccurate and deliberately damaging stories in the media. The details of the case were made public late last month when Ovitz's lawyers filed a legal motion to confirm the award. Schulman has since filed papers to set aside the ruling; that motion is pending.

Ovitz and the remnants of his businesses have seen a great deal of negative press in recent years, some of it generated by Ovitz himself. Against that backdrop, the Schulman case has counted as a rare vindication in which the ex-agent once known as the most powerful man in Hollywood could play victim rather than instigator.

This was Ovitz vanquishing not an industry titan such as Eisner but rather a low-profile film executive who has told friends she'll have to file for bankruptcy if the arbitration award stands. Such is the antipathy toward Ovitz that on the day the arbitrator's award became public, flowers and commiserating calls poured into Schulman's new office at Bull's Eye Entertainment, a production company in which she's partnered with multimillionaire financier Bob Yari.

Yet private sympathy in Hollywood is relatively cheap. Virtually none of two dozen individuals contacted by The Times would comment, including some who testified during the arbitration proceeding, such as Snider, Fox executive vice president Hutch Parker and former studio chief and former APG boss Mark Canton. One exception is Yari, who in a statement to The Times described Schulman as a person of "integrity and [with] a sincere commitment to her projects."

Schulman declined to comment, citing the confidential nature of the ongoing proceedings. A source close to Schulman said she "clearly has disputes" with the arbitrator's findings and will address them in legal proceedings. Ovitz also declined to talk, although James Ellis, APG's counsel and spokesman, issued a statement to The Times: "This was a private dispute that was properly adjudicated in a neutral and confidential forum. It is now the subject of a pending court confirmation proceeding. In light of the foregoing, APG declines to comment."

The arbitrator, retired judge Campbell Lucas of Long Beach, said his award "speaks for itself" and that he would not answer further questions.

Legal questions aside, the public record in the case, along with private observations from those involved, sketch an unflattering picture of executive life in Hollywood, where truth is often "Rashomon"-like.

The way they were

Virtually the only thing both sides can agree on in Ovitz vs. Schulman is that the relationship began with hope.

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