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Burden of Proof

'Who Wants to be a Millionaire' Insurers Take Disney to Court: Who Will Have the Final Answer?

Aired February 16, 2000 - 12:30 p.m. ET



STEVEN GOLDSTEIN, INSURANCE INFORMATION INST. INC.: What Goshawk is basically saying is that the information that was provided to them was incorrect or that Buena Vista is not fulfilling the contract. And so either they want to make the questions harder to make sure that the pay-out is not as great, or else they want out.

NORMAN PAYNE, FMR. MILLIONAIRE CONTESTANT: In the last month or so, I think they've gotten significantly harder. I think for a while there they were easier, back in November, maybe early January, but I don't know if it's in response to complaints or what, but it does seem like it's significantly harder now.


GRETA VAN SUSTEREN, CO-HOST: Today on BURDEN OF PROOF, the producers of "Who Wants to be a Millionaire" are taken to court. Will the British justice system have a final answer on whether the Americanized quiz show is a dumbed-down version of its English counterpart?

ANNOUNCER: This is BURDEN OF PROOF with Roger Cossack and Greta Van Susteren.

VAN SUSTEREN: Hello and welcome to BURDEN OF PROOF.

In just a few short months, ABC's "Who Wants to be a Millionaire" has become a ratings success, but the U.S. quiz show has lost its luster overseas, where the company which insures the program has filed a lawsuit.

ROGER COSSACK, CO-HOST: Now, when Buena Vista bought the American rights to the popular British game show, it sought insurance from Goshawk Syndicate, a group of brokers at Lloyd's of London. Insuring programs against monetary winnings is a common practice for American game shows.

VAN SUSTEREN: In a lawsuit before the British high court of justice, Goshawk claims U.S. producers have made the questions too easy, enabling more winners. It also states that the program, unlike the British program of the same name, has a qualifying procedure for contestants. Incidentally, the British version of the show doesn't have insurance for big winnings. Unlike the American version, it charges a fee to potential contestants who call into a random selection phone system.

COSSACK: And joining us today from London is Peter Teare, solicitor of the Supreme Court of England and Wales. In Los Angeles, we're joined by television critic, Ray Richmond. And also in L.A., lawyer Pierce O'Donnell.

VAN SUSTEREN: Joining us here in Washington are Cristy Gobel (ph); contract litigator Andrew Marks (ph) and Lecisha Car (ph). In our back row, Kathy Burgess (ph) and Brett Grayson (ph).

Ray, first to you. What is the problem that the "Who Wants to be a Millionaire" show is having?


VAN SUSTEREN: Yes, Ray. What's the dispute about?

RICHMOND: Oh, well I think -- well, the dispute is, of course, that the questions are too simplistic and that I guess the insurer is claiming, oh my gosh, we're going to -- we're going to be busted, we're give to have to give up all five, six million of our indemnity, here, because of this, because the questions are akin to, you know, what popular dancer is also a condiment: mayonnaise, mustard, salsa or curry, you know, and so it's sort of...

UNIDENTIFIED MALE: It's curry, isn't it?

RICHMOND: I think it is curry.

And, you know, the point is well taken. I mean, you know, a picture is worth blank words. I mean, you know, you sit there kind of -- sometimes that's the earlier questions, but even the ones that have won a million dollars, the question was, I think, how many miles is the Earth from the sun, which is something that kids learn in grade school science. And, you know, what president was on -- what American president was on "Laugh-In." I mean, those were the ones that won them a million dollars. So, I can understand. I mean, I'm -- you know, I sit back there astonished. But I don't imagine they have a case for getting out of this simply because it's so subjective what's difficult, what's not.

COSSACK: All right, let's find out how difficult it is to become a contestant.

Joining us now is our crack cameraman Paul Miller, who actually called up and answered the questions and was able to at least qualify for the show.

Paul, what happened?

PAUL MILLER, CAMERAMAN, BURDEN OF PROOF: Well, this is how it happens. You call up the 1-800 number and you get three questions in levels of difficulty. You can only call up from 6:00 p.m. to 2:00 a.m. The first question: pretty easy. The second question: a little harder. And the third question: still harder but not as hard as like a "Final Jeopardy" question.

COSSACK: All right, well, like, what was the toughest question?

MILLER: The toughest question I got was a geology question. They gave me four cities and had to go East Coast to West Coast: Albany, Buffalo, Walla Walla and Evansville, and I got it right.

COSSACK: You got that right?

VAN SUSTEREN: So what happens -- if you get it right, what happens?

MILLER: Then you need to be randomly selected. I don't know how many people answer the questions right, but you give them your name, you give them your Social Security number, the last four digits, and you give them a number to call back on. And if you get lucky enough to get called back, then you get a chance to be ready for a second round. Second round, they call you, you compete against, I think, around 10 other people, and if you win that you get to go to New York and talk to Regis.

VAN SUSTEREN: What's your -- what are your odds? I mean, how far are you?

MILLER: Well, I didn't get called back. And my wife got them right and she didn't get called back. Another guy I know did get called back, he competed and now I'm waiting to find out if he's going to actually be on the show.

COSSACK: Paul, our legal advice to is to keep your day job and not wait for you to get called back.

MILLER: Thank you.

VAN SUSTEREN: Well, let's go to London.

Peter, it sounds a little bit like this insurance company may just have made a bad deal.

PETER TEARE, SOLICITOR OF THE SUPREME COURT OF ENGLAND AND WALES: Well, the heart of the dispute is what representations were made by the broker to the lead underwriter at the time the contract was made. And the proceedings have been filed in the high court of justice here in London. And in the context of those pleadings, the plaintiffs, the Goshawk Syndicate Management, which are representing the lead underwriters, they're saying that it was an agreement between them and the brokers that the brokers -- that the Buena Vista would take action to stop -- to do something to stop -- to stem the losses that were flowing from the dumb questions. And so the core issue in the court here in London was what was said to whom, when this contract was made, and when the underwriters accepted the risk.

VAN SUSTEREN: Andy, if there's an issue of what we call in contracts a material misrepresentation, which will void a contract, how do you define material misrepresentation? What does that mean? ANDREW MARKS, CONTRACT LITIGATOR: Well, you have to start by looking at what the contract says. Peter is right, I mean, the question is what was said to whom at the time the contract was made. Typically...

VAN SUSTEREN: But don't you look at the writing contract, I mean, instead of what is said?

MARKS: Absolutely.

VAN SUSTEREN: I mean, isn't that -- isn't the written word the important part?

MARKS: Absolutely. The starting point and often the end point is what's in, what they say, the four corners of the contract. And it's a very unusual case where someone is allowed to go outside the four corners of the contract. I haven't seen the complaint here, I don't know exactly what was said, but one would think that it would have to be a very substantial misstatement, misrepresentation, about what was -- what the understanding was going to be at the time. And even then, under American law at least, it would be a tough road to hoe for the insurance company. Now, whether there are different standards that might apply under British law, I'd have to defer to my colleague, Mr. Teare, there.

COSSACK: Pierce, let's talk about the licensing agreement. Now, there's obviously differences between shows that would be popular, for example, in Great Britain and perhaps even the same show that may be popular in the United States. Is that kind of thing taken into consideration when the licensing agreement is prepared?

PIERCE O'DONNELL, ENTERTAINMENT LAWYER: I think so, and I think that, stepping back from the technicalities of British contract law, the real issue here is do we have seller's remorse. There's an old saying in Hollywood that litigation is just another form of negotiation. My sense is this lawsuit is really an attempt either to get out of the deal or to increase the premiums. I'd be very surprised if the contract said, you should have very difficult questions as measured by British standards. Maybe the British are dumber than we are, I don't know the answer, but I think the fact of the matter is that this is all just an attempt by the Lloyd's syndicate to get out of a bad deal, and I think under American law they would probably be held to the four corners of the contract. I agree with the other fellow.

But I think the important thing to see from an entertainment law perspective is we have a hit television show, and the truth of the matter is, Buena Vista can pay for these proceeds themselves and pay whatever licensing fees they owe to the British company that licensed them. The final analysis is that ABC will do whatever it takes to keep this show in the number-one spot. I think the lawsuit -- I'm a little cynical, you know, about Hollywood. For all I know, this could have been cooked up by Disney and the solicitors to get more publicity, just like the Rosie O'Donnell deal.

COSSACK: All right, let's take a break. Up next, a look at how the British Legal system will handle this lawsuit against an American company and how the courts could affect ABC's hit quiz show. Stay with us.


Tuesday in Washington, a federal judge ruled Iran "in default" for its failure to appear at a hearing for a lawsuit filed by former hostage Terry Anderson. Anderson is suing the nation of Iran for $100 million under a 1996 law designed to compensate American victims of terrorism. No plaintiff has ever collected damages based on the act.



VAN SUSTEREN: Good news for our Internet-savvy viewers: You can now watch BURDEN OF PROOF live on the Worldwide Web. Just log onto We now provide a live video feed, Monday through Friday, at 12:30 p.m. Eastern time. If you miss that live show, the program is available on the site at any time via video-on-demand. You can also interact with our show and even join our chat room.


A Canadian woman who was linked to a group of Algerians believed to be plotting a bomb in the U.S. was ordered freed on her own recognizance Tuesday after pleading guilty to two immigration charges. Lucia Garofala was arrested December 19 at the Vermont border. She faces up to 10 years in jail for transporting an alien into the United States and conspiring to transport aliens. A federal terrorist probe continues.


COSSACK: Last week, the London-based insurer of "Who Wants to Be a Millionaire" filed a lawsuit with the British high court of justice. Goshawk Insurance Holdings wants the American producers of the hit program to make the questions more difficult. It also wants the British courts to prevent Buena Vista from qualifying potential contestants, opting for a random search used by the game show's English counterpart.

Well, Peter, walk us through this court suit. What's going to happen? It will be filed in the British court. What will happen next, and what's the procedure?

TEARE: Well, the proceedings have been filed in the English courts, and the U.S. civil justice system has its origins in the English civil justice system, so the process is something that you're largely going to be familiar with. There are two principal distinctions, though. In England, first of all, we have no juries in the cases. The case will be tried to a professional judge and the judge will simply closely scrutinize the contracts and listen to the witnesses, but won't be swayed by any emotive arguments that might otherwise sway a jury as if the case had been tried in the United States.

VAN SUSTEREN: Peter is there...

TEARE: The other big difference...

VAN SUSTEREN: Go ahead, I'm sorry.

TEARE: The other big difference is that we have no pretrial oral depositions in the English system. The parties will exchange their documents, but the judge will only hear, and the parties will only hear, the evidence, and the key evidence is what was said to whom at the time this contract was made at trial.

And the big distinction between a U.S. employment -- insurance contract and an English insurance contract is that this contract was placed on the floor of the Lloyd's Insurance Market, which is largely a paperless exercise. And there's simply a meeting at a desk between an individual who represents the underwriters and the broker who represents the company seeking to cover the risk. And the underwriter will ask certain questions and the broker will answer those questions.

And the dispute here is what was said by whom at that time that contract was made and what representations were made.

VAN SUSTEREN: Peter, there's a heavy emphasis in this country -- in the United States in contract law that you look at the four corners of the document and you don't go to what people said unless there's a special situation. So my question to you is twofold: Number one, is there a heavy emphasis on the four corners of the document under British law? And secondly, under American contract law, you construe any ambiguities against the person who actually wrote the contract. Is that also a principle of British law?

TEARE: Well, that's certainly -- the principle that the ambiguities are construed against the party seeking to rely upon them, that is also an essential principle of English contract law. The big difference is that there isn't a large, written contract here. The contract is something called the slip, and the slip is simply a slip of paper which has only the very basic contract terms: Who is the insured? What is the risk seeking to be insured? How big is that risk and what is the nature of that risk and are there any conditions?

And the broker seeking to cover that risk goes to a lead underwriter who asks the questions. The lead underwriter accepts 10 percent or 25 percent of the risk, and then the broker will then hawk that slip around to other desks and other underwriters -- other underwriting syndicates will then draw a line, say, we'll take 10 percent of that, we'll take 10 percent of that, and then the broker walks out of the room when he's got 100 percent of the risk covered. We don't have a tradition in our insurance market of 50 or 60 paid contracts. It's very much based upon honesty and good faith.

VAN SUSTEREN: Andy, how unusual is it to have a British insurance company underwriting an American television show? Is that unusual? MARKS: I don't think it's unusual. The London market does a lot of underwriting of all kinds of risks and tends to be a heavy market for more unusual kinds of risks. So, I don't know specifically what percentage of shows, game shows, quiz shows, might be underwritten by the London market. It wouldn't surprise me if it was quite a high percentage.

COSSACK: Ray, the claim here is that the questions that they ask in the American version are just too easy. Compare the questions that are being asked on this show as to, perhaps, other popular quiz shows of the past?

RICHMOND: Well, I mean, compared to -- even today, even compared to, say, "Jeopardy" of today, "Who Wants to be a Millionaire" -- I mean "Jeopardy" is like rocket science comparatively. In the past, I've done some research with the old "Twenty-One" show, you know, which, of course, produced the Charles Van Doren quiz show scandal. But they still did ask incredibly difficult questions on "Twenty-One," on "$64,000 Question". I mean, the categories were United Nations, the Lincoln Administration, you know, the Civil War. You'd have them -- a typical question might be: How many -- you know, who was the secretary of war in the Lincoln administration? Who was -- you know, who was the -- who was his vice president? Who were his vice presidents? Who were -- you'd have to answer four or five different people's names you'd have to provide.

Here, comparatively, I mean, they're that close on "Who Wants to be a Millionaire" to asking what color is an orange? What year was the War of 1812 fought? And what's your mother's maiden name?

VAN SUSTEREN: Pierce, what's been the reaction of the host on this show, Regis?

O'DONNELL: Well, I saw a quote in the press the other day that he said that the British insurers were chicken. Now, that's a pretty high-brow comment from Regis. I think one of the ironies is that a show that's considered to have dumb questions has Regis as the host. And I thought that was a pretty appropriate comment from our friend Regis who may be the big winner in this whole battle that's going on since his contract could end up being a million dollars a week.

RICHMOND: If I may add, there's actual strategic reasons behind the simplicity of these questions, you know. I've heard it explained that the reasons there were so many difficult questions in the past on the quiz shows in the '50s were that not everyone in America had a TV. TVs were generally purchased by the intelligencia and people who were upper middle class. I mean, you didn't have everyone who -- everyone in America who couldn't even afford electricity having a TV. Whereas now, of course, everyone does and so they have to appeal to the lowest common denominator.

VAN SUSTEREN: All right, we're going to take a break. Up next: ABC's hit program has spawned a series of prime-time copycat quiz programs. But legal hot water in the British courts could poise Buena Vista to change its format. Stay with us.



Q: What witness testified in a wrongful imprisonment lawsuit that Sam Sheppard believed his wife had been unfaithful and theorized she was killed by a jealous wife?

A: Fmr. Sheppard lawyer F. Lee Bailey.


VAN SUSTEREN: Since debuting just a few months ago, ABC's "Who Wants to be a Millionaire" has climbed into the top 10 in American television ratings, but its London insurer has filed a lawsuit against the producers of the program, claiming it's too easy to win.

Peter, lawyers don't get to choose this very often, but if you could, which side would you choose to be on: on this side the producers or the people on the other side who run the show?

TEARE: Actually, I like the chances of the underwriters here. I think that the producers probably think that they can do anything they like with the show, and it's likely that the underwriters, who are pretty smart fellows, and you'll remember that the Lloyd's insurance market has been around since the 17th century and for most of that time it's been pretty profitable, so they're no -- they're no fools. I suspect that when it...

VAN SUSTEREN: So your money is on the -- your money is on the underwriters in this case?

TEARE: Absolutely.

COSSACK: Pierce, let's suppose the underwriters win. What exactly will they win? Can they force the quiz show to change the way it asks questions or make the questions easier or can they just get out of the contract?

O'DONNELL: No, I think they want to get out of the contract. They're trying to void the contract, what we call seller's remorse. They're saying that at the time they entered into the agreement there was a representation of a statement that the questions would be of the same degree of difficulty, presumably, as the British show, trying to set up some sort of a standard to gauge the actual performance of the show. And they're saying this was a material fact, an important fact to us, who would never have written this policy but for that representation. Therefore, here's your premium back, whatever, and we have damages, but they basically want out of the deal. And I think that this is a tempest in a teapot in once sense, and I don't think it's going to get Disney to change the format of the show at all. They can write this out of their loose change. They're making a -- a lot of money from the show.

And I think that what you're seeing is that the Lloyd's people are taking advantage of home court, they're British courts, as Peter said, and I think that you're going to -- they may very well prevail. I think in America they would lose. I think in a California courthouse they would lose the case.

VAN SUSTEREN: Andy, can you -- can you see a...

RICHMOND: They would no more change the format of the -- I'm sorry.

VAN SUSTEREN: Andy, can you see a situation in writing a contract here in the United States? Is there a way you can avoid this problem, i mean, what kind of language you could use?

MARKS: Well, sure, but particularly if you have sophisticated underwriters who have done game shows before, they would know the risks, one would think, of rigging it for easy winnings, and one could easily write a contract that would build in some kind of control on the questions, that would deal with the question of whether you would screen contestants. So, I think it's interesting to hear Peter say that about his thinking about the chances of the underwriters in the British system, because I agree that in an American system a court would be very skeptical, I think, of these claims unless something really remarkable was said at the time of the negotiation, because a court would say, well, you could have thought of these things, why didn't you write them to the contract.


VAN SUSTEREN: Which means it's always construed against the people who write the contract.

MARKS: No, not so much that as a matter of, you could have -- you could have thought of this. Why are you thinking of it now?

COSSACK: Ray, are they going to change the way they do the business on this program?

RICHMOND: I mean, this is the top-rated show in television. I mean, they'll change the show like "Seinfeld" would become a show about something. I mean, it's just, you know, it ain't going to happen, no way. I mean, this is -- the three nights of "Who Wants to be a Millionaire" are the top three ranked nights in -- from Nielsen in prime-time, so, I mean, this is the ultimate if-it-ain't-broke- don't-fix-it. So, as Pierce said, this could very well just be a good publicity stunt. Here we are doing it for them.

COSSACK: All right, that's your final answer, because that's all the time we have for today. Thanks to our guests and thank you for watching.

As the presidential candidates stump in South Carolina, voters across America can weigh in on the race to the White House. Tune in to "TALKBACK LIVE" today at 3:00 p.m. Eastern, noon Pacific for the latest in campaign 2000.

VAN SUSTEREN: And we'll be back tomorrow with another edition of BURDEN OF PROOF. We'll see you then.


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