Broadway Journal

SpotCo Drops ‘Lehman’ from Rudin Lawsuit

May 21, 2021

by Philip Boroff

EXCLUSIVE: The company producing The Lehman Trilogy on Broadway has been removed from a lawsuit by the advertising agency SpotCo, simplifying the show’s return to New York after the Covid-related industry shutdown.
Adam Godley in Lehman Trilogy

SpotCo said Monday in a filing in New York State Supreme Court that it “wishes and intends to discontinue” the suit against Three Brothers Broadway LLC, which is presenting Stefano Massini’s acclaimed play about the now-defunct investment bank Lehman Brothers. In an Aug. 5, 2020 complaint against producer Scott Rudin and companies he managed, SpotCo alleged that it was owed $319,000 by Three Brothers Broadway for work done on behalf of the play.

SpotCo said in the May 17 filing that it’s continuing to litigate against Rudin, his Scott Rudin Productions and eight limited liability companies he controlled to recover $6.6 million in fees and expenses it said it’s owed, including from the LLCs presenting West Side Story and the planned revival of The Music Man, starring Hugh Jackman and Sutton Foster.

SpotCo filed its suit months before The Hollywood Reporter and other outlets reported allegations that Rudin bullied and assaulted staff. The stories prompted the producer to “step back” from the entertainment industry.

A person familiar with Lehman Trilogy told Broadway Journal that it will return to the Nederlander Theatre, where it had four previews, before being suspended along with other Broadway shows. Another American producer will take over Rudin’s role as partner of the National Theatre and Neal Street Productions, which presented the play in London in 2018 and in New York at the Park Avenue Armory the following year.

Jonathan Zavin of Loeb & Loeb, who represents Rudin and the LLCs, declined to comment, as did a Lehman Trilogy production spokesman. SpotCo’s lawyer, Brooke Haley of Michelman & Robinson, didn’t return emails. The court papers don’t shed light on how Rudin is stepping back from Broadway or whether he will retain stakes in shows.

The $6.6 million allegedly owed to SpotCo is offset by $562,000 credited to Atticus LLC, the To Kill a Mockingbird Broadway company, for services rendered but which had “not yet been used.” Producer Orin Wolf, who’s overseeing a national tour of To Kill a Mockingbird (according to a 2020 Securities and Exchange Commission filing) declined to discuss whether he’s involved in trying to bring it back to Broadway. Rudin’s name has been scrubbed from The Music Man on the Internet Broadway Database. That musical is slated to begin previews on Dec. 20 at the Winter Garden Theatre.

Rudin engaged SpotCo to place advertising in television, print and digital outlets, according to court papers. The ad agency alleged in its complaint that the producer, a longtime client, made partial payments on bills as he simultaneously booked additional services — incurring new debts while paying off the oldest ones. SpotCo claimed that the delinquency came to a head when Rudin paid $3 million directly to The New York Times for ad space.

“Rudin and [Scott Rudin Productions] exert control, domination, and authority over decisions, including in relation to SpotCo’s services,” the company said in its complaint, citing daily contact with Rudin, via phone calls and as many as 50 emails a day. SpotCo referred repeatedly to the LLCs as Rudin’s “alter egos” in arguing that he and Scott Rudin Productions “agreed to be financially responsible for any monies owed to SpotCo by any of the Theatrical LLCs.”

“Rudin” appears 124 times in the SpotCo complaint, while his name is absent from a countersuit filed by 11 Rudin-affiliated LLCs. According to a filing by Rudin’s lawyers, the shows he produced “are not ‘his theatrical productions,’” but rather are owned and operated by the production companies themselves.

“Even though they’re ‘his theatrical productions,’ legally they’re not,” said Richard Roth, a litigator and Broadway co-producer, in an interview. (Roth isn’t involved in the cases.) “The reason you form a production company is to insulate everyone. The companies are generally liable for the obligations.”

Courts have shown a strong presumption toward insulating individuals from a corporation’s liabilities, unless there’s evidence of serious misconduct, according to Cornell Law School’s Legal Information Institute.

Rudin and the production companies with which he’s associated denied in court papers that they owe money to SpotCo. In the countersuit, the Rudin LLCs accuse the agency of repeatedly overcharging and billing for advertising that the productions never authorized, and failing to disburse funds to outlets such as the Times for advertising that the LLCs previously paid for.

Both sides allege breach of contract. Complicating the issue is that the contracts are oral and “implied” — not written, according to SpotCo.

Rudin generally settles litigation — eventually. A lawsuit that Shuffle Along LLC filed against its insurer related to the pregnancy and exit of star Audra McDonald from Shuffle Along dragged on for four years — more than 10 times longer than the musical ran on Broadway. If Rudin aims to return to the industry after rehabilitating himself and his image, he has an incentive to settle SpotCo vs. Rudin quickly.

“No one wants this to go to trial,” Roth said. “It’s expensive, risky and ugly.”