Planet Hollywood vs. Hard Rock Cafe
Planet Hollywood vs. Hard Rock Cafe -- With celebs like Bruce Willis and Steven Spielberg taking sides, the owners of the two restaurant franchises are embroiled in an ugly legal battle
Planet Hollywood. New York City. Lunchtime. Arnold Schwarzenegger’s two little girls are eating anonymously a few tables over. Salads, veggie burgers, and pizzas whiff by. Movie memorabilia, the restaurant’s gimmick, dangle from the ceiling and creep along the walls. Billy Crystal’s City Slickers saddle hovers overhead. Across the room, encased in its own glass shrine — Judy Garland’s dress from The Wizard of Oz. And there by the door is Planet Hollywood’s most valuable piece of kitsch — Arnold himself. Flashbulbs. Autographs. His bionic smile lights his way through the crowd. As one woman aims her Instamatic at Arnold, the bag full of Planet Hollywood merchandise dangling from her wrist bops a stern-looking black-haired woman in the head. Meanwhile, back by the door, there’s a 45-minute wait for a table.
It has been a year and a hince the doors of Planet Hollywood blew open, on Manhattan’s West 57th Street, with a $750,000 premiere starring investors Schwarzenegger, Sylvester Stallone, and Bruce Willis, whose collective knack for promoting the place makes P.T. Barnum seem subtle. Now the principle owners, restaurant mogul Robert Earl and movie producer Keith Barish (Sophie’s Choice), are ready to duplicate this miracle the world over. Planet Hollywood franchises have already opened in Orange County, Calif., and Cancun, Mexico. By year’s end, Barish and Earl plan to invade Minneapolis,Washington, D.C., and London. Next stop, Hong Kong, then Singapore, maybe Indonesia. It seems that nothing can stop them.
Except for one fly — a huge, Jeff Goldblum-size fly — in their ointment. In an ongoing legal battle that includes a $1.5 billion lawsuit, Peter Morton, the formidable restaurateur who owns Morton’s in Los Angeles and all the Hard Rock Cafes in the western half of the U.S., could put a severe wobble in Planet Hollywood’s orbit.
Morton is accusing Earl of stealing trade secrets, creating a ”lower-quality knockoff” of the Hard Rock, and conspiring to invade his Hard Rock territories — a move that will not only take a bite out of the burger business but eat into lucrative merchandise sales. Recently a California judge refused Planet Hollywood’s plea to dismiss the case. Now, as the two sides await their day in court, their legal costs are soaring into the millions and Planet Hollywood’s superstar spokesmen might face potentially unflattering financial disclosures.
”The whole thing is bulls—,” says Earl. ”It’s just a normal piece of competition — McDonald’s and Burger King. It’s about as close a similarity, if that!” But the rivalry between Morton and Earl is far from normal; even under ideal circumstances these two gentlemen would never be drinking buddies.
This is Robert Earl, 41: Effusive. Fond of loud silk shirts and baroque sweaters. Grew up around England’s vaudeville houses and beach resorts, riding on the trunks of his pop singer father — also named Robert Earl — whom he calls the British equivalent of Eddie Fisher. Starting at age 7 he was enlisted to count heads in the theaters where his father performed, making sure Pop wasn’t cheated out of his 10 percent cut of the house. Asked how many siblings he has, Earl replies, ”None. I killed them all at birth.”
This is Peter Morton, 45: Gentlemanly. Reserved. Hip. Favors white shirts and loafers. Following his parents’ divorce, he grew up in a tony section of West L.A. with his mother and twin sister. His father, Arnold Morton, is a famous Chicago restaurateur. Known for his philanthropy, Peter adopted two slogans for Hard Rock early on: ”Love All, Serve All,” and, rather ironically, ”Save the Planet.”
Earl has called the legal wrestling ”a real bloodbath.” In his camp are Schwarzenegger, Stallone, and Willis. Morton has his own legion of celebrities standing on his side of the battlefield. Steven Spielberg, Tom Cruise, Barry Diller, and Henry Winkler are among the investors in the Los Angeles Hard Rock, the cornerstone of Morton’s empire. ”It’s an investment for them,” says Bob Brown, executive vice president of Morton’s Hard Rocks, ”not a platform for publicity.”
How did this fracas start? Until January, Earl served as CEO of Rank Leisure USA, which owns the East Coast Hard Rock Cafes. Barish dreamed up Planet Hollywood, but Earl made it a reality by pouring considerable Hard Rock resources into it.
Earl lured away a generous helping of Hard Rock employees to staff the flagship Planet Hollywood, which opened just a block away from the New York Hard Rock, and long stretches of the Planet Hollywood employee manual seem to have been copied verbatim from the New York Hard Rock’s manual.
Earl contends that any Hard Rock resources he used belonged to his Hard Rocks, not Morton’s (for example, Morton’s side uses a different manual). He says the suit is the result of a ”personal vendetta.” Morton says he’s simply protecting his business. But the alliance between the two has been uneasy for years. ”You’ve got one guy who spent 20 years of his life nurturing the Hard Rock concept,” says one of Morton’s employees. ”Now Earl comes along and rips it off.” So to truly understand Morton versus Earl, you have to know the history of the Hard Rock Cafe.
June 14, 1971: Morton and Isaac Tigrett, two well-heeled American kids, open the Hard Rock Cafe in London. Its loud music, tasty burgers, and rock memorabilia (Eric Clapton’s guitar was the first) catch on. Today there are 36 Hard Rocks worldwide, grossing about $300 million a year.
1979: Morton and Tigrett begin a long divorce. The 1985 settlement: Morton gets the West (Hard Rock America), Tigrett gets the East (Hard Rock International), and they divide up the rest of the world and agree to stay out of each other’s way.
1988: With Earl negotiating the deal, Pleasurama, a British company, takes over Tigrett’s interests and puts Earl in charge. ”So little Robert comes along from nowhere and steals it from Morton,” says Earl. ”So now you have a guy who’s crazed. Robert has become Mr. Hard Rock.”
Sept. 13, 1988: Morton and Earl meet for the first time. Morton refuses to shake Earl’s hand. ”Instant animosity,” says Earl. They now awkwardly share control of Hard Rock Licensing Corp. to protect the trademark. This will become their primary arena for conflict.
1989: Showdown No. 1. Earl wants to produce a TV cartoon called the Hard Rock Rascals. Morton opposes the idea, calling it ”a cheap form of commercialism.”
1990: Morton tries once again to gain control of the entire Hard Rock operation, this time with a $160 million cash offer. But the deal is squashed when Rank swallows Earl’s Hard Rocks in toto in a corporate takeover. Rank not only inherits Earl as CEO but also his ironclad contract that allows him to open Planet Hollywood. Rank also inherits a 37.5 percent share in Planet Hollywood, which it eventually sells to Earl and Barish.
1991: Showdown No. 2. Earl and Rank try to derail Morton’s planned $75 million hotel and casino in Las Vegas, calling it, in effect, a cheap form of commercialism. Earl claims the casino connection would tarnish the Hard Rock image. Morton says that Earl was just saving Vegas for himself. Indeed, while fighting the casino Earl was laying groundwork for a Planet Hollywood there.
Oct. 23, 1991: The first Planet Hollywood opens. It feeds 2,500 fans a day, at $15 to $20 a pop (not including merchandise).
February 1992: Morton files his $1.5 billion suit after seeing Planet Hollywood’s ”copycat” design elements and after Suzanne MacNary, then Earl’s Hard Rock spokesperson, announces in Rolling Stone that her boss is ”probably going to put a Planet Hollywood in every one of Morton’s territories.”
Spring 1992: Both sides vie for space in Newport Beach, Calif. Morton files another $200 million suit, charging Earl and his franchisees with trying to tie up his site. Earl denies any wrongdoing but moves down the road a piece to Santa Ana. Morton and Earl stage their grand openings two weeks apart.
Dec. 31, 1992: Earl’s contract as Hard Rock International CEO and president expires.
Jan. 28, 1993: U.S. District Judge Richard A. Gadbois throws out Morton’s charges that Planet Hollywood violated antitrust laws. But the judge also refuses Earl’s plea to dismiss Morton’s suit, finding that Earl and Rank might have breached their Hard Rock Licensing Corp. obligations.
February 1993: Both sides dispatch press releases claiming victory.
Things are getting stickier: Earl’s quest to conquer Morton’s territories continues. Planet Hollywoods in Phoenix and Chicago are planned to open within a block or two of Hard Rock sites.
The players seem to be getting increasingly edgy. Schwarzenegger, Stallone, and Willis refuse even to listen to questions about lawsuits. And they may have good reason to be nervous. Although they all posture as partners in Planet Hollywood, rumors have long circulated that their investment is actually much, much smaller than they let on. The impending lawsuits, say the rumors, could show that Planet Hollywood’s three star names are, in effect, paid front men. Earl calls the rumors ”a load of nonsense, but it will not bait me to tell you what the stars’ financial arrangements are. If they have a shareholding or a profit participation, it’s no one’s business but their own.”
Besides embarrassing the other side, can Morton actually win in court? His confidence is bolstered by last year’s Supreme Court decision to award damages in a similar trademark case, Two Pesos v. Taco Cabana, which held that copying a restaurant’s distinctive decor could be a trademark violation. Morton wants Planet Hollywood to remove all Hard Rock-esque elements: ”museum display” of memorabilia, such as celebrities’ motorcyles, and merchandise touting a logo and a location. Not only that, Morton is asking that all of Planet Hollywood’s profits be turned over to him — a move that would, in effect, put Earl, Barish, Planet Hollywood, Sly, Bruce, and Arnold out of business.
”The one thing about Peter is, he loves the Hard Rock,” says producer-director Jon Avnet (Fried Green Tomatoes), a Hard Rock investor and longtime Morton friend. ”’The Hard Rock Cafe’ aren’t just words to him. It’s a place where you get food, you listen to music, and you try to do good things. He’s really a child of the ’60s.”
Welcome to the ’90s.