Charlie Sheen Sues for $100,000,000: But What About the Arbitration Clause in His Employment Contract?

Charlie Sheen has officially filed a lawsuit against a number of defendants regarding the controversy over his CBS TV series Two and a Half Men, and you can read the entire pleading here on TMZ.com.

So, what does this mean in view of the arbitration clause that is contained in his contract?

As discussed in an earlier post, there was an agreed-upon arbitration clause in the contract Charlie Sheen signed regarding the show as referenced in the Warner Bros' lawyers' letter responding to Sheen's initial written demands.

While the contract has not been made available, it's probably safe to assume that it exists, since it was quoted by Warner Brother's counsel (as shown in the earlier post).

That doesn't mean it's written in stone, though.

You may find an arbitration clause in the contract you have for your cellular phone service, or in your new car loan, or in your checking account agreement. Buy any major appliance and check the language in the sales agreement: odds are high that there will be language in there about arbitrating any dispute that arises from the deal.

Doesn't mean that you can't fight that arbitration provision. Many have. Many do.

Just last year, for example, a Florida court nixed an arbitration clause in an employment agreement involving Carnival Cruise Lines (Carnival Corporation), where the agreement stated:

"any and all disputes arising out of or in connection with this Agreement, including any question regarding its existence, validity, or termination, or Seafarer's service on the vessel, shall be referred to and finally resolved by arbitration."

In this Florida case, the employee committed suicide while on board the cruise ship, and the personal representative of his estate sued Carnival for negligence. Carnival asserted that the case had to be arbitrated. The Florida federal judge ruled that this contract provision (above) was null and void because it violates language found in the Jones Act. Result? No arbitration. (See Ruiz v. Carvinal Corporation)

The Fight On Where the Battleground Will Be

Now that Sheen has filed a lawsuit, doesn't mean that arbitration won't be the result. A "motion to compel arbitration" can be filed, for example, and then the lawsuit goes into limbo and the fighting moves to the arbitration forum if the motion is granted.

Of note: not all of Sheen's lawsuit involves that contract, though. He's got allegations against parties that may not be a party to the agreement -- and he's alleging tortious conduct that involves activity outside of the contract. Personal injuries that he and others have sustained as a result of the bad acts of another, which Sheen can argue are outside the scope of the contract provision.

Charlie Sheen is educating lots of people through his example, in more ways than one.

Charlie Sheen may be suffering from mental illness. Charlie Sheen may be addicted to any one or more substances. However, one thing is obvious: Charlie Sheen has worked well with his legal counsel, as all clients are smart to do, and together, a solid (and yes, perhaps #winning) strategy is revealing itself to all of us.

It's very clear that CBS and Warner Brothers, et al., have a big legal fight on their hands.

By Bryant Esquenazi on March 10, 2011 2:12 PM