'House of Cards' Producer Sues Insurer: The Kevin Spacey Dispute

A high-stakes trial is currently underway involving Media Rights Capital (MRC), the production company behind 'House of Cards,' and its insurer, Fireman’s Fund. MRC is seeking over $100 million in damages related to financial losses incurred during the show's sixth season following the removal of actor Kevin Spacey.

The core dispute centers on whether Spacey's departure resulted from a medical condition, as MRC claims, or from a business decision influenced by public allegations, as argued by Fireman's Fund.

Background of the Dispute

MRC has previously pursued legal action against its insurer regarding these claims, with earlier submissions being dismissed by the court. The current proceedings represent a third opportunity for MRC to present its case.

Kevin Spacey, who had been subject to an arbitration award of over $31 million in favor of MRC for breaching his contract due to anti-harassment policy violations, subsequently reached an agreement with the production company. In exchange for a reduction of this arbitration award to $1 million, Spacey agreed to provide medical records and a court declaration.

The declaration reportedly included a statement suggesting Spacey might have considered suicide if he had been required to return for the final season. This agreement and admission significantly influenced the framework of MRC's subsequent case against Fireman’s Fund.

Core Arguments and Insurance Policy

MRC asserts that Spacey's unavailability for the sixth season was a direct consequence of a "sickness" related to sex addiction, which it states led to his entry into a rehabilitation facility. The production company argues that Spacey’s conduct, his necessity for treatment, and the associated risks were direct manifestations of this sickness.

Conversely, Fireman’s Fund contends that Spacey’s removal constituted a business decision made in response to widespread media coverage following allegations of sexual assault against him.

The insurance policy at the center of the dispute provides coverage for losses attributed to a "sickness." The specific definition and interpretation of "sickness" within the contract are key elements of the trial. The jury's primary task will involve determining if MRC's losses from the sixth season were "solely" caused by Spacey's illness, as stipulated by the policy.

Timeline of Events

• October 29, 2017: A BuzzFeed report detailed allegations of sexual abuse and assault against Spacey.
• October 31, 2017: MRC halted production on 'House of Cards.'
• November 2, 2017: CNN published a report accusing Spacey of sexual assault involving crew members. On the same day, Spacey entered a rehabilitation facility.
• November 3, 2017: MRC suspended Spacey, based on the belief that he would be unable to participate in the sixth season. Prior to this, the initial two episodes of the sixth season, featuring Spacey, had already been filmed.
• November 4, 2017: Spacey’s lawyer, Todd Rubenstein, informed MRC that Spacey was "available, willing and able to provide all of the services" required by his contract. This statement reportedly contradicted an earlier communication from Spacey’s agent, Matt DelPiano, who had told MRC CEO Scott Tenley that Spacey was "sick" and would be unavailable for an extended period, potentially six months.
• Following these developments, MRC proceeded to rewrite the script, removing Spacey’s character entirely from the series.

Role of Netflix

Fireman’s Fund argues that Netflix, which possessed "tiebreaker" rights over aspects such as scripts, storyline, and casting, influenced MRC's decision to remove Spacey. Court filings suggest that Netflix reportedly threatened not to air new 'House of Cards' episodes if Spacey remained involved. Pauline Micelli, MRC's former president of TV Legal and Business Affairs, testified that these tiebreaker rights were integral to the decision to remove Spacey's character.

MRC, however, maintains that Netflix never formally exercised these rights. MRC CEO Scott Tenley stated in a deposition that he made the decision, acknowledging Spacey's alleged conduct and referencing an unspecified complaint against the actor during the first season of the show.

The jury may be required to consider whether Netflix's alleged threats constituted an effective exercise of its tiebreaker rights. A finding that they did could support Fireman’s Fund’s argument that Spacey's suspension was a business decision rather than solely a result of illness.

Spacey's Expected Testimony

Kevin Spacey is anticipated to testify during the trial. He is expected to state that he was unable to work when the sexual assault allegations initially emerged, despite earlier public statements, and that his condition required ongoing treatment. MRC has presented evidence to support its position that Spacey could not have returned to the set during that period.

Legal Implications

The outcome of the trial could have broader implications for production insurance coverage within the entertainment industry. Courts have previously recognized that a medical condition can be an underlying cause of problematic behavior central to an insurance dispute.

A judgment in favor of MRC on this point could prompt insurers to re-evaluate the language and terms of their production insurance policies concerning actor availability and conduct.