The crucial charges in Springsteen's suit against Appel were fraud (representing himself as a knowledgeable and experienced businessman), undue influence and breach of trust. In the legal parlance of Springsteen's lawsuit, Appel, as an artist manager, had a "fiduciary" duty – a constant obligation, by the trust Springsteen placed in him, to act first and honorably in the best interests of his client.
But the Laurel Canyon management, according to claims made by Springsteen's lawyers in the lawsuit, formalized a massive conflict of interest that ran directly counter to that fiduciary obligation. The agreement provided that Appel's managerial responsibility was suspended in any of Springsteen's dealings with Laurel Canyon companies; it also denied Springsteen the right to retain any advisers other than Appel. In other words, in dealings with Appel's nonmanagement companies, Springsteen was on his own.
The recording agreement between Springsteen and Laurel Canyon gave Springsteen about 18¢ per album sold; the agreement between Laurel Canyon and CBS gave Appel's firm a minimum royalty of 40¢ per record. In addition, the CBS agreement itself was a boondoggle. It stated that Laurel Canyon would provide CBS with ten Springsteen albums; Laurel Canyon's production deal with Springsteen, however, called for only five LPs. Springsteen said he was never advised of his rights in these matters. He also said he had seen only one page of the CBS-Laurel Canyon agreement, which he signed, appropriately enough, on the hood of a car in a New Jersey parking lot.
Appel replied to Springsteen's suit two days later, July 29th, by seeking a permanent injunction in New York State Supreme Court barring Springsteen and Landau from entering the recording studio together. Only Laurel Canyon had the right to appoint a producer, Appel said in an affidavit, and that producer would be the "winning combination," as he put it, of himself and Springsteen. The threat of a permanent injunction had been underestimated by Springsteen's legal team. The case was assigned to Judge Arnold Fein, who has a reputation for taking the phrase "unique and exclusive" services in personal-management contracts at face value until otherwise demonstrated. Fein issued the injunction, and Appel suddenly gained the upper hand.
Appel had made Landau the issue in the case, charging in his affidavit that Landau saw in Springsteen "a potential gold mine," and that he had engaged in "a campaign to sabotage the relations between Springsteen and myself." Appel termed it "a classic example of bad faith and piracy." Consequently, Landau became the pivotal figure in the ensuing injunction battle. "The real issue appears to be whether Landau may act as the producer over the plaintiff's objection," wrote Fein in his decision granting the preliminary injunction. "Landau has no rights under these agreements."
Although CBS had been named as a defendant in Appel's state action, the company's policy of staying out of artist-manager disputes forced it into a neutral position during the early stages of the case. In an August 6th affidavit, Bruce Lundvall, president of CBS Records, said CBS intended to exercise its contractual right to Springsteen "without taking a position on the side of Mr. Springsteen or the plaintiff." As late as September 7th, CBS executive vice-president Walter Dean still characterized CBS as an "innocent third party."
When Fein upheld Appel's injunction at a second hearing on September 15th, Appel was clearly in a position to do just what CBS Records Group president Walter Yetnikoff says Appel told him he would: " . . . to fight and possibly destroy, through legal means, that which he had created, namely Springsteen's career."
By this time Springsteen knew he was "fighting for my life," as he told Judge Fein. Appel was not compelled to settle out of court; he was winning at every turn. Although Springsteen was no longer generating income for him, Appel had received a sizable royalty payment from CBS in May 1976 – he could wait years, letting the suit run its course. And even if the issues at hand came to trial, they were so marginal that there would have to be another trial to finally settle the issues of the validity of the contracts.
In October Springsteen switched from Mayer, Nussbaum and Katz, primarily contract negotiators, to Peter Parcher, a highly skilled litigator and former law partner of Michael Tannen, who was retained at about the same time as a contract negotiator.
From the moment Parcher entered the case it began turning in Springsteen's favor. Earlier, Springsteen had given a deposition so damaging to his own case that Appel mailed portions of it to the press. For example, Leonard Marks asked Springsteen if Appel had not in fact computed his commission at 20% – rather than 50% – in all financial statements. Springsteen responded that Appel had, but did not explain that Appel had given him only one financial statement in their entire legal relationship. (Leonard Marks explains: "Springsteen was constantly in the red for his first three albums. Financial statements were meaningless.")
But with the benefit of Parcher's advice, Springsteen's performance at deposition proceedings, according to insiders, was akin to his stage act. Colorfully and authoritatively, he parried each of Marks' allegations that Appel, not Springsteen, was the real architect of his success. If he was fighting for his life, he was adding to his battle all the considerable knowledge of stagecraft at his command. Friends said Bruce was proud of himself; he knew he was beating a fine attorney at his own game. As the record began to roll back, rumors of a settlement began circulating.
In his decision, Fein had left an opening for a trial to resolve the "underlying issue" in the case. Parcher took this to mean Appel's alleged breach of fiduciary duty – the issue on which Springsteen had filed his original federal complaint. On November 18th Parcher submitted an affidavit which in effect asked that the federal and state issues be linked into one trial. The affidavit was bolstered by affidavits from both Jim Cretecos, who noted he was considering suing Appel, and a former Appel employee, Robert Spitz. They alleged that Appel had reneged on promises he had made to Springsteen at the outset of their relationship. Moreover, Spitz claimed that "on numerous occasions Appel stated to me that he hoped Springsteen never became aware of those agreements. Appel also expressed to me on numerous occasions that he was aware that a court of law would find them unconscionable."
The key affidavit in the case was submitted by Springsteen himself on December 8th. First, he asked that he be allowed to record an album (for which CBS had agreed to advance recording costs), with Landau producing, and have it placed in the court's possession pending the outcome of the trial. Fein denied this request.
But Springsteen also detailed the potential damage the enforced absence from recording was doing to his career. Included in this account is a ringing defense of Landau, which was a forceful rebuttal to Appel's charge that he and Bruce were the "winning combination": "Landau has brought to the studio higher qualities which have given tremendous stride to my creative development. Specifically, with respect to the writing of musical compositions, I enter the studio with virtually millions of scattered ideas to which Landau, through his unique ability to communicate with me . . . has been able to provide the focus and direction necessary to shape my thoughts into finished musical compositions. Landau's ability to communicate with me stems from the simple fact that I trust him.
"[Appel's] interest in this action is strictly financial," Springsteen said in closing. "My interest is my career, which up until now holds the promise of my being able to significantly contribute to, and possibly influence, a generation of music. No amount of money could compensate me if I were to lose this opportunity."
On March 22nd, 1977, Springsteen won the motion to submit an amended answer to Appel's complaint. Thus, he was able to assert a fiduciary defense, join the issues in the federal and state cases and take the offensive once more. For the first time since the injunction was issued, Springsteen was in a position to win if the case came to trial. And at this point a settlement became imminent; a little over two months later the parties came to an agreement and the books were closed.
But Springsteen, in his own way, will have the last word. It's in a song which he sang on his last couple of tours. Though it's not necessarily about his relationship with Appel, it might as well be. Its crucial phrase, sung straight from a broken heart, is: And when the promise was broken, I cashed in a few more dreams. At the end of the song, there's a line that tells what might have been. It's so touching that you almost wish he and Mike Appel could still share it. "We were gonna take it all," he sings defiantly, "and throw it all away."
This story is from the August 11th, 1977 issue of Rolling Stone.
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