Stephen Dickstein has filed suit in Los Angeles Superior Court against his former employer, bicoastal/ international Propaganda Films, and three other defendants. Dickstein, who’s credited with playing an integral role in the success of Propaganda Films’ commercial operation as its president, was fired from the company last year. Regarding that termination, his lawsuit alleges fraud, breach of an employment contract, breach of contract to terminate only for good cause, and failure to provide severance pay.
The other defendants named in the lawsuit are Gary Beer and two firms—SCP Private Equity Partners, Wayne, Penn.; and RUST Capital, Austin, Texas—that were part of the Beer-led group that bought Propaganda’s spot, music video and talent management holdings from Universal in 1999 (SHOOT, 4/16/99, p. 1).
Dickstein currently serves as president/partner of bicoastal/ international Partizan Entertainment, a role he assumed last year (SHOOT, 9/10/99, p. 1), just a couple of months after his dismissal from Propaganda.
A Propaganda spokesperson said that the company has no comment on the litigation at this time.
Dickstein’s attorney, Ben Whitwell of Beverly Hills-based law firm Whitwell & Emhoff, stated that Propaganda has been served with the lawsuit. At press time, yet to be formally served with a copy of the suit were Beer, SCP and RUST Capital, according to Whitwell. Once served, the defendants have 30 days to respond via documents filed with the court. After that, the discovery process begins. Generally in such cases, barring an out-of-court settlement, it takes anywhere from a year to a year and a half for a trial to begin.
According to the lawsuit complaint filed by Whitwell and his partner, attorney Douglas Emhoff, Dickstein is seeking damages in excess of $5 million. But Whitwell said that figure should only be regarded as a reference point and could change significantly, based on the findings of the jury.
Whitwell contended that Dickstein was "deceived" by Beer and his group, a key point of contention being Beer’s alleged promise to serve as CEO of the overall Propaganda. Based on that and other promises, Dickstein decided in early April ’99 to join with the Beer-led group in its bid to buy Propaganda’s commercial, music video and talent management divisions. In order to make that commitment, Dickstein severed ties to a management group—led by Propaganda co-chairman Steve Golin and president James Tauber—that also wanted to acquire the Propaganda spot, music clip and talent management operations.
In mid-April ’99, the Beer-led group reached an agreement in principle with Universal to purchase the Propaganda holdings. But Dickstein alleges that over the next month or so, the commitments made to him by Beer, RUST and SCP started to unravel. For one, Beer apparently had not committed contractually to being Propaganda’s CEO. Then sometime in late May or early June ’99, according to his lawsuit, Dickstein was told that Beer would not be Propaganda’s CEO and had instead opted to accept a position [CEO of Smithsonian Business Ventures] at the Smithsonian Institution in Washington, D.C. Dickstein said in his suit that he had supported the Beer group’s takeover of Propaganda, based on Beer’s earlier representations that Beer would serve as Propaganda CEO. Dickstein had written letters and had met with Propaganda’s directors to persuade them to stay with the company, and had not pursued other potentially lucrative opportunities.
According to Dickstein’s Los Angeles Superior Court complaint, Beer then tried to convince Dickstein to become CEO of Propaganda. Since he wasn’t an expert in the other divisions (Internet, movies, short film and TV), Dickstein didn’t feel comfortable with that proposition. But he agreed to serve as CEO as long as the company would agree to provide the appropriate management support with expertise in those areas.
In his lawsuit, Dickstein contends that he kept on working for Propaganda, based on Beer’s "continued representations that everything would be okay … and that SCP and [RUST principal Jack] Crosby knew and understood they would have to make personnel investments." As related in Dickstein’s suit, a conference call and meeting to seemingly seal the deal were set for the morning of July 7. That a.m. session was postponed. Dickstein then contacted Beer, who told him they should meet for breakfast later that morning. At that breakfast meeting, Beer informed Dickstein that he had been terminated. That ended Dickstein’s 13-year tenure—the last 10 as a staffer—at Propaganda.
According to Dickstein’s attorneys, that termination breached an oral contract that Propaganda and Dickstein had entered into on or around May 25, ’99, whereby Dickstein agreed to provide services as president of the commercial and music video division, reporting only to CEO Beer. Per that alleged oral contract, Propaganda agreed to a compensation package that included a $250,000 signing bonus, a base annual salary of $550,000 as well as a guaranteed performance bonus based on gross revenue, and options equal to five percent of Propaganda’s outstanding shares. Propaganda breached this oral contract by failing to retain Dickstein under these terms, according to Dickstein’s court filing.
Additionally, the lawsuit relates that Dickstein had a written contract with Propaganda that expired on Dec. 1, ’97. Thereafter, Dickstein continued to work for Propaganda under an oral contract, and Propaganda continued to pay Dickstein under the terms of that agreement. The lawsuit read that Dickstein had an oral agreement that "he would not be terminated absent good cause. Propaganda breached this oral agreement on July 7, 1999, when it wrongfully terminated Dickstein without good cause."
Dickstein also contended in his lawsuit that while he was being courted to put his support behind the Beer-led group’s bid to acquire Propaganda, he received assurances that "he would be taken care of and not be fired," and that the Beer Group "would not purchase Propaganda without him."
The suit also alleges that Dickstein did not receive severance pay that per company policy would have amounted to more than $400,000.
At the time Dickstein was fired, Propaganda had generated more than $90 million in annual revenues, according to the lawsuit. During his tenure, the company won three Palme D’Ors.
Dickstein issued a statement to SHOOT which read, in part, that he was fired from Propaganda "without cause, explanation or severance … It was a complete shock and an incredibly traumatic experience of which I am fortunate to have come out of with my dignity, no less, a career."
