Lawyers in Charlie Sheen Fracas Lay out Strategies

By Matthew Belloni

LOS ANGELES (Hollywood Reporter) - When attorney Marty Singer received a phone message last Friday from Warner Bros. litigator John Spiegel, who said he was calling to discuss Charlie Sheen, Singer thought perhaps Spiegel wanted to talk about a possible settlement of the public standoff that had ground CBS' "Two and a Half Men" to a halt.

After all, two days earlier, Singer had fired off one of his infamous letters demanding that the studio immediately resume production of his client's hit sitcom or risk a multimillion-dollar breach-of-contract lawsuit. So Singer left Spiegel his own message, saying he was ready to chat.

"He never called me back," Singer told The Hollywood Reporter.

Instead, on Monday, Warners' legal team messengered to Singer's office a bombshell 11-page letter abruptly terminating Sheen's services and pre-emptively initiating an arbitration proceeding against him. The star's "dangerously self-destructive behavior" -- including the "disturbing rampage" at the Plaza Hotel in New York last year, the "banging 7-gram rocks" of cocaine and the all-night parties with porn-star "goddesses" that caused him to have "difficulty remembering his lines and hitting his marks" -- rendered Sheen incapable of working on the show, Warners said, and, thereby, in default on his contract.

Studio lawyers also wrote that Sheen could be dropped if executives believed he committed a "felony offense involving moral turpitude," which he had all but admitted to during his bizarre, 24/7 media blitz.

Within minutes of its delivery, the letter had been leaked to the website TMZ, owned by WB parent Time Warner, and Singer promised to file his own lawsuit against Warners and "Men" co-creator Chuck Lorre, whom Sheen claims conspired to shut down the show.

The aggressive move by the studio has set up a legal showdown featuring some of Hollywood's top attorneys, with potentially hundreds of millions of dollars from TV's top comedy on the line. The case will likely play out over weeks or years regardless of whether Warners recasts the show, as sources say it is planning to do.

"This is only the beginning," Singer said, previewing his argument. "You know how many times Charlie has had drug and rehab problems in the past? This is about the hostility between Chuck and Charlie that has gone on for years. This is Chuck conspiring with Warner Bros. (to get rid of him)."

Singer also claimed Lorre had a financial interest in Sheen's termination. "We believe Chuck Lorre has a better deal and stands to make more on his other shows ('The Big Bang Theory' and 'Mike & Molly') than on 'Two and a Half Men,' so he has an interest in making those shows flourish at the expense of my client's show," Singer said.

Spiegel, in his first interview since taking on the case with partner Ron Olson, countered, "This is not about Chuck Lorre. It's about a serious health issue that has rendered Charlie Sheen unable to perform the essential duties of his position."

Meanwhile, Lorre has signed his own lawyer, Howard Weitzman, a veteran of Hollywood disputes. Asked about Singer's position, Weitzman said, "That's not a 'winning' argument.

"The conspiracy theory is a pure fantasy," Weitzman added. "Chuck is very concerned for Charlie's health. We all believe Warner Bros. did the right thing given the situation Mr. Sheen created."

The concern for Sheen's health -- rather than his violation of the "moral turpitude" clause in his deal -- is expected to be the centerpiece of Warner Bros.' legal argument. Sheen has been giving the studio more fuel for its case as his public behavior becomes even more bizarre. Since being fired, Sheen has declared himself "free at last," climbed to the top of a Los Angeles building brandishing a machete and smoked a cigarette through his nose during one episode of his increasingly disquieting Internet talk show dubbed "Sheen's Korner." He has also moved to cash in on his new notoriety, making deals to put new catchphrases such as "fools and trolls" and "winning" on T-shirts though a licensing deal with Live Nation.

Lawyers for WB and Sheen are likely monitoring his behavior closely; the studio's termination letter included a 10-page list of links to news articles chronicling Sheen's behavior, some of which will likely become exhibits in the coming case.

Whether the dispute is litigated in public or private will likely be the next battleground. Sheen's contract includes a broad arbitration clause, so Warners on March 4 submitted the fracas to dispute-resolution company JAMS, which informed both sides March 7 that it had officially opened a case. The sides have 14 days to submit their first written arguments, and, once a neutral arbitrator is chosen, the case would proceed privately. There's a wrinkle, however. Sheen's contract is with Warner Bros., not Lorre, so Singer could sue the showrunner for interfering with Sheen's contract (a separate cause of action in California).

Singer would like the case to be heard publicly. "Our preference is to go before a judge and jury," he said.

Sheen's recent public spectacles aside, juries tend to favor well-known figures, and Singer would be able to lob grenades at WB and Lorre in open court in front of what would likely be a rapt media -- and, more likely, use that threat to settle the matter before it gets to a messy trial.

But it is far from clear whether a Sheen lawsuit against Lorre would proceed separately from the arbitration. Warners would likely file a motion to compel arbitration, a legal maneuver designed to consolidate the entire mess into one tidy -- and private -- proceeding. Lorre is said to support such a move. Despite being called a "clown" and a "turd" by Sheen, Lorre is said to prefer that any legal dispute be hashed out in private.

And while the lawyers duke it out, Warner Bros. is busy figuring out its next step. Sources close to the show say reports of John Stamos or Rob Lowe joining the cast are untrue but that Lorre and Warners execs are telling people "Two and a Half Men" will likely return in the fall. Existing deals with CBS and syndicators require both Sheen's and Lorre's participation in the show, but Warners execs believe those pacts could be renegotiated if Lorre agreed to return and the right cast came together. And one thing is certain: At least the initial ratings next season would be huge.

But with the nasty legal dispute likely still unresolved, would Lorre want to keep "Men" going?

Said an insider, "If you're Chuck Lorre, who has been smeared, isn't there part of you that wants to say, 'I'm going to show this mother------,' and in Episode 1 of the next season show what he could do to write this guy out of the show?"