Image Credit: Paradigm
Most industries are taking a hit due to the economic impact of the coronavirus pandemic, and the entertainment industry is no exception. Talent agencies have begun implementing widespread layoffs. Paradigm Talent Agency was the first to lay off employees of every rank, including top music, motion picture, and TV agents, totaling 250 people.
In an interesting development stemming from Paradigm’s layoffs, an ex-partner of the agency is suing her former employer, alleging that she was fired after she raised questions about the company’s accounting practices and inappropriate conduct by CEO Sam Gores. Debbee Klein, a former agent and partner at Paradigm who was with the company for over 23 years, has filed a breach of contract and whistleblower lawsuit in Los Angeles County Superior Court. Klein contends that Paradigm broke an oral employment contract by firing her without cause. She is seeking more than $1.8 million in damages.
In a complaint submitted to the court, Klein alleges that she was ousted from the agency after she confronted Gores when she “learned that Mr. Gores had forced his executive assistant to hire prostitutes to service him and others, and that Mr. Gores had directed his executive assistant to pay for these prostitutes through Paradigm’s bank account.” In addition, Klein alleges that Gores mismanaged the company’s finances and made “vast personal gains by running Paradigm as his personal piggybank.”
Klein’s suit makes further incendiary allegations against Gores, including that he kept his personal driver and chef on the payroll, even as the agency fired staff, blaming the current pandemic for the cuts. While Paradigm said it would only temporarily lay off employees, with the hope of rehiring them no more than six months later, Klein claims that Gores used the coronavirus pandemic to institute a “March Massacre,” during which he allegedly used the virus as a cover for his “long-planned, ruthless job cuts.”
In an anonymous statement to Billboard, a terminated Paradigm employee says that the agency invoked a force majeure provision in the person’s employee agreement caused by the spread of the coronavirus when suspending this person’s contract. However, the former employee noted that the contract’s language regarding force majeure includes a 90-day notice requirement that was not given.
In Klein’s lawsuit, she claims that Paradigm’s decision to terminate her contract without cause during the pandemic was a breach of an oral employment contract she entered into with the agency in December. The employment contract allegedly covered her employment through 2021. As evidence of this new employment agreement, Klein’s attorney points to changes in her compensation in the month after her original contract expired.
Paradigm has responded to Klein’s lawsuit against the agency and CEO Gores by alleging that “it is littered with false, frivolous and scurrilous allegations, which, fortunately for her, are protected by the First Amendment, otherwise she would be facing a defamation suit.” Both Paradigm and Gores “expect to be 100 percent vindicated.”
Klein’s lawsuit against Paradigm should be a warning to the other talent agencies instituting mass layoffs that many coronavirus breach of contract claims may be on the horizon. In fact, legal experts have stated that some of these agencies are setting themselves up for legal fights by cutting agents before their contracts expire. Stay tuned for updates regarding the ongoing litigation.
Liz Costello, University at Buffalo School of Law, Class of 2020. Liz is the Treasurer of the Buffalo Sports and Entertainment Law Society, an Articles Editor of the Buffalo Law Review, and an anticipated associate at Rupp Baase Pfalzgraf Cunningham LLC. Having grown up in Los Angeles with an entertainment attorney mother, Liz is especially interested in the legal issues surrounding music, film, television, and sports. Her favorite activities include going to local live music and sporting events.