Paul Newman's daughters sue Newman's Own Foundation for breach of fiduciary duty

It's a court battle that's been brewing for years. Two of actor Paul Newman's five daughters are suing the "Color of Money" Oscar winner's Newman's Own Foundation, alleging a breach of fiduciary duty by those who seized control of the organization shortly after the actor's death.

The lawsuit — filed Wednesday in Connecticut by Susan Newman and her sister Nell — revolves around an annual $400,000 payment earmarked for each of Newman's five daughters, for benefit of their own foundations. The daughters were supposedly allowed to take a "reasonable salary" from that money and to direct the balance to charities of their own choosing. However, in 2000, after 11 years of full funding, NOF decided unilaterally to cut that payment to $200,000.

The lawsuit alleges the foundation was granted rights to Paul Newman's publicity and intellectual property rights on the condition that it continue the $400,000-a-year disbursement. It also alleges that numerous changes were made to the actor's will in the final months of his life, a time when Newman admitted in writing that he was experiencing memory issues as he battled cancer.

At that time, the lawsuit alleges, Robert H. Forrester and another member of the three-person NOF board, the actor's business manager Brian Murphy, "had taken decisions, including about Mr. Newman’s estate planning, out of Mr. Newman’s hands and into their own."

"The years since Mr. Newman’s death consist of a long and consistent pattern of disregard, by those in control, of Mr. Newman’s specific intentions and direction, coupled with mismanagement, scandal, and questionable practices," the lawsuit alleges.

Newman, who died in 2008, had three daughters with his second wife, fellow actor Joanne Woodward: Nell, Lissy and Clea. He had two daughters and a son with his first wife, the late model Jackie Witte: Stephanie, Susan and Scott.

Scott Newman died in November 1978 from an accidental drug and alcohol overdose. In 1980, Paul Newman pledged $1 million to open a center in his son's name to combat drug abuse, but Newman's Own Foundation cut off further funding in 2011. The center, which was based in Torrance, closed in 2013.

The daughters were charged early on with making donations to charities involved with education, health, the environment, arts and culture, international affairs, emergency relief, animal welfare and religious, scientific and human services. Those donations were to continue after their father's death.

A Newman's Own Foundation spokesperson called this week's filing a "meritless lawsuit based on this faulty wish" that the foundation establish perpetual $400,000-a-year funding allotments to the daughters. Such a request, the spokesperson said, "would only divert money away from those who benefit from Paul Newman's generosity."

"The Board’s philanthropic giving decisions vary each year and the importance of our mission requires us to make the best use of our finite resources," the spokesperson continued in a statement. "Best practices surrounding philanthropic organizations do not allow for the establishment of perpetual funding allotments for anyone, including Nell and Susan Newman. ...

"While we expect to continue to solicit Newman family recommendations for worthy organizations, our funding decisions are made each year," the statement continued, "and will continue to reflect the clear aim of Paul Newman and our responsibility to the best practices governing private foundations.”

The "Butch Cassidy and the Sundance Kid" star requested that Newman's Own Foundation — which takes its money from royalties and profits produced by sales of Newman's Own-branded salad dressings, pasta sauces and more — continue to fund his Hole in the Wall Gang camp for seriously ill kids and to select charities in line with what he laid out for his daughters.

In recent years, the lawsuit alleges, the foundation has abandoned its founder's recommendations on the types of charities that should be supported and has essentially eliminated awards focused on the arts, climate change awareness and environmental issues. "These were three areas of lifetime commitment and the charitable sectors that Mr. Newman always felt warranted the most urgent support, second only (perhaps) to helping children in need," the filing says.

In a July 2015 article published by Vanity Fair, Susan Newman said, "Whether my family will go public [with our complaints] or not, there isn’t a single living Newman who respects or has faith in Robert Forrester and his management of my father’s food company, Newman’s Own Foundation, or the continuation and protection of his legacy."

Her father, she said, would not approve of much of what advisor Forrester, who by then had succeeded Paul Newman as chief executive of NOF, was doing.

At the time, Forrester called the characterization "totally untrue." In May 2019, after allegations of improper professional conduct, he was removed as NOF's chief executive, though he stayed on its board through the end of that year. Forrester did not respond immediately Thursday to an emailed request for comment.

"Plaintiffs have brought this suit in their capacities as trustees, and as beneficiaries, of the Living Trust and the various trusts created under its auspices," the sisters' attorneys, Brian S. Cohen and Andrew L. Lee, wrote in the lawsuit.

"Plaintiffs are not seeking any personal compensation in this lawsuit, other than to recover the amounts NOF has withheld from its required funding, which Plaintiffs will give away to charities consistent with Mr. Newman’s long-standing plans."

In addition to the charge of breach of fiduciary duty, the sisters are asking the court to establish a constructive trust to restrict the use of Paul Newman's publicity and intellectual property rights to the ways they were intended, and also to enter a declaratory judgment confirming that NOF is to continue funding the sisters' foundations in the amount of $400,000 a year.

A jury trial has been requested. The Newman women are seeking damages in an amount to be determined, but it's likely more than $1.6 million, the lawsuit says. They also are asking for reasonable attorney's fees and any other relief the court deems appropriate.

This story originally appeared in Los Angeles Times.