Entertainment experts say the company is vulnerable to investor and victim lawsuits and some board members are believed to be pushing for a sale
The Weinstein Company, the production outfit behind cinemas including The Kings Speech, Carol and The Butler, has little chance of surviving allegations of sexual assault and rape that have engulfed co-founder Harvey Weinstein even if it gets a new name, entertainment industry lawyers have warned.
The company, they say, is vulnerable to potential investor and victim suits despite claims by the board- which includes Harvey’s brother, Bob Weinstein- that it “havent had” knowledge of any misconduct.
In a statement, the company said the allegations had” come as an utter surprise to the board. Any suggestion that the board are all aware of this conduct is false .”
In a further statement published after the New Yorker detailed allegations regarding rape, the TWC board said it was ” shocked and dismayed” and” committed to assisting with our full energies in all criminal or other investigations of these alleged acts “.
Weinstein has now been accused by more than a dozen women working in attaining unwanted sexual advances or of touching them sexually without their permission. He has said many of a detailed description of those public reports are inaccurate and he has denied the allegations of criminal sexual harassment, rape and sexual assault.
Sallie Hofmeister, a spokeswoman for Weinstein, said:” Any allegations of non-consensual sexuality are unequivocally been rejected by Mr Weinstein. With regard to any women who have made allegations on the record, Mr Weinstein believes that all of these relationships were consensual .”
Claims by TWC directors that they knew nothing of Weinstein’s activities have been severely undermined by David Boies, who represented Weinstein in his 2015 contract negotiation. Boies has said the board was aware at the time of three or four settlements with women.
” I would be surprised if the board isn’t talking seriously about,’ What are our options for extermination ,'” said Eric Talley, prof of corporate statute and finance at Columbia University.” Investors in the company may already be consulting their legal advisers what their assertions might be, so of course it makes appreciation for the members of the commission to say,’ This is the first we’ve heard of it .'”
Under US law, stockholders could argue that continuing a known serial harasser on the board was a breach of their fiduciary obligations to the company.They could, Talley said, argue: “‘ Listen, you were the ones supposed to be look out for the assets of this corporation and in the end you were reckless and negligent in doing so and in fact actively helped to cover it up and that imperilled the wellbeing of this company ,’.”
Aside from questions of liability in connection to what the board did or did not know, “the worlds largest” issue for the board is whether the scandal has permanently besmirched TWC’s potential to be profitable.
” Given how central Harvey Weinstein was to the company, and how much its lucks were tied up with him personally, to what magnitude can it go forward ?” Talley asked.” These are real issues not easy to content with .”
On Friday, the Wall Street Journal reportedthat the company was investigating a sale or shutdown. Interested buyers have approached board members, the report said.
In a statement reported by the Journal, Bob Weinstein said:” Our banks, partners and stockholders are fully supportive of the company and it is untrue that the company or committee is exploring a sale or shutdown .”
The cost of the scandal will start to emerge. Hours after defending Weinstein at cinema festival in South Korea, director Oliver Stone pasted a message on Facebook saying he would “recuse” himself from Showtime’s Guantanamo series” as long as the Weinstein Company is involved “.
Amazon Studios- now under its own sexual harassment cyclone with studio brain Roy Price placed on leave of absence– is trying to buy out TWC’s interest in two drama series- The Romanoffs and an untitled David O Russell programme starring Julianne Moore and Robert De Niro. But the actor Rose McGowan, who has said Weinstein raped her in 1997, has blamed Amazon for is available on business with TWC and called on chief executive Jeff Bezos to cut ties with the company.
Rival production homes are circling a TWC musical, In The Heights . On Wednesday, writer Quiara Alegria Hudes tweeted her desire to remove the project from TWC, a message composer Lin-Manuel Miranda then retweeted.
Promotional schemes tare also being affected. Michael Mitnick, novelist of The Current War, a Weinstein-distributed image, drew out of a New York film festival panel to avoid the issue of the scandal, according to Variety .
The company, which is around 45% owned by the Weinstein brothers, has valuable assets including a movie library of around 525 names and a TV division that includes Project Runway and its spinoffs, and which Harvey Weinstein calculated was worth” anywhere between $500 m and $900 m” in an interview with Deadline.
In 2015, though, a $950 m bargain to sell TWC’s TV assets to the British network ITV came unstuck after Manhattan district attorney Cyrus Vance announced its term of office was looking into a claim by an Italian framework, Ambra Battilana Guttierez, that Weinstein sexually assaulted her. Vance fell the instance, a controversial decision that is now coming under renewed scrutiny.
A house divided
According to Variety, TWC co-chair Bob Weinstein and chief operating officer David Glasser think the firm should try to ride out the blizzard while its own lawyers investigate the allegations. The other board members, Lance Maerov, Ben Ammar and Richard Koenigsberg, are believed to be pushing for a sale.
According to Jonathan Hyman of law firm Meyers, Roman, Freidberg& Lewis, the best recent example of a board of directors sued for failing to remedy sexual harassment by its chief executive involved American Apparel and Dov Charney .
Charney has consistently denied sexual harassment accusations made against him by his own employees. Several assertions were settled by American Apparel’s insurers; others were settled only on allegations that did not relate to sexual harassment. Claims against American Apparel’s board were dismissed because the plaintiffs failed to make a settlement demand.
Charney challenged his dismissal, but the case was thrown out of court.
According to TMZ, Weinstein’s contract included a clause preventing his dismissal on harassment grounds so long as he paid the rules of procedure and evidence and penalties. The website also reported that he is planning to challenge his firing at members of the board meet on Tuesday.
A criminal case against Weinstein may be difficult to build but TWC could still be liable for civil lawsuits. That track, though, would also be far away from straightforward. Under California law, the company could be liable. But in California the statute of limitations for civil sexual assault is two years. In New York, where the Battilana Guttierez assault is alleged to have taken place, it is three.
” If the claims come from Weinstein employees, some of the more recent could flow through Harvey Weinstein to the company for the harassment ,” said Hyman.” If they were independent contractors like the actors who are coming forward, that’s more tricky. A company is simply to be liable for acts by an employee to a third party does so with the scope of employment.
” Most employers would tell you that because they don’t condone harassment, it’s outside the scope of employment so[ they] should not be liable for his intentional harassing acts .”
But, said Hyman, if there are things the company knew, or “shouldve known” but discounted, or if it find pays going out but did not ask what they were for, “theres been” liability issues.
TWC’s board could have reason to be anxious, especially given the the high public profile of the situation, Hyman said.
” If I was a director, I would be concerned about what I knew, or what should I have known, and[ if I] did nothing but sign off on payments to various people, sure .”