Thursday, October 21, 2021
“D” is for Dead Hand Control (Part 2)
As discussed in yesterday's post, contract alone cannot achieve Grafton’s goal of post-mortem control of her copyrights. Suppose that students in their third year of law school were given the same problem:
“You are counsel to Sue Grafton. She wants to make sure that none of her alphabet series is ever adapted for the screen after her death. What solutions can you suggest and how confident are you that they will work?”
How would they advise Grafton to prevent post-mortem owners of her copyrights from licensing her books for dramatization in film? Copyright is intellectual property which, like real property, can be conceived as a bundle of rights, a bundle that can be disaggregated into separate “twigs” by its owner. Students who have studied copyright might suggest splitting off the screen rights from the rest of the copyright. To assure that those rights will be enforced against infringers, the rights could be assigned to an institutional owner who will have incentives to prevent unauthorized filming. The owners of the balance of interests in the copyrights, whether her family or third parties, will be able to profit from the copyrights without violating Grafton’s injunction.
But even though Grafton has strong views about how her work is to be exploited, she may be reluctant to part with any of her control while she is alive. After all, she may change her mind. She may prefer to retain the potential to license screening while she is alive but wish to extinguish it only after death.
The attempt to control the post-death use of one’s property is a familiar objective in the law of trusts and estates, where lawyers are trained to devise ways to achieve dead hand control for their living clients but are also trained in the difficulties that such devices may raise. Students who have studied trusts might suggest transferring Grafton’s copyrights to an inter vivos trust, administered by a trusted person or an institutional trustee who will be instructed exactly how to manage the copyrights, including the prohibition against ever licensing them for filming. The trustee would collect royalties and other income generated by the copyrights and disburse it to the income beneficiaries, presumably Grafton’s family. The trust would last for the statutory duration of the copyrights. There would seem to be no residual interest at the end of the trust.
But an immediate transfer of her copyrights to a trust might not be acceptable to Grafton. Most clients active in businesses want to retain complete control of their business property and are reluctant to transfer their property to a trust before they die. If sufficient control cannot be achieved by an inter vivos trust, the best trust solution might be a testamentary trust that arises only upon the death of the settlor but that would otherwise provide the same protection.
The trust seems to be the best solution to Grafton’s problem. An inferior option would be to make conditional testamentary gifts of the copyrights, subject to conditions that would effectively prevent the copyrights from being licensed for prohibited purposes. This strategy invokes some of the principles of future interests that are studied in property law. But conditional testamentary gifts are very difficult to enforce against disobedient heirs for a host of reasons, both practical and theoretical. Indeed, the chief advantage of trusts is to avoid such problems. This may lead most students of trust law to resent all the effort they expended memorizing the law of future interests in Property class.
All of the students who have studied decedents’ estates would warn Grafton that if she dies intestate having failed to dispose of her copyrights in life, the copyrights will simply descend to her heirs under the laws of intestate succession, and subject to any special provisions of The Copyright Act.
But contract, copyright, and trust law are not by any means the only relevant fields. Students who have taken family law would caution that any attempt by will to divest a spouse of an interest in a copyright might fail on two grounds. The copyrights may be community property in which the surviving spouse owns 50% regardless of the decedent’s will. In a non-community property state, then, depending on the value of the copyrights in relation to the rest of her estate, they may be property as to which the disinherited spouse has an elective share, e.g. of 33%. Elective share rights can usually be defeated only by inter vivos transfers. These rights may also complicate the attempt to transfer the copyrights to a testamentary trust.
As noted above, to transfer ownership of the copyrights directly to the family will also subject them to the claims of creditors of the family members and possibly result in their transfer to those creditors or to a bankruptcy trustee. Those new owners of the copyrights will of course be free to exploit them in any way they choose. This risk also argues for a trust solution to the problem, where creditors will be able to attach only the beneficial interests of the heirs and not the trust property itself.
The attempt to enforce promises relevant to a copyright might need to be secured by a security interest in the copyright, whose validity will be determined by Article 9 and the Copyright Act.
And always waiting in the wings are students who have studied tax law, especially estate and gift taxation. They will caution that all of these transactional solutions to Grafton’s problem may have favorable or unfavorable tax consequences to Grafton and her heirs. Both income and gift and estate tax considerations may be relevant. Failure to consider tax consequences is a common form of estate planning malpractice and might equally be malpractice even by the lawyer who never studied tax in law school because she thinks of herself as practicing contract law rather than estate planning.
Finally, class discussion of Grafton’s case should also invite comment from students of jurisprudence. I believe that it shows that law, like art, can sometimes permit a person to achieve a form of immortality, or at least to cheat death for a bit. Ars may be longa, and vita may be brevis, but copyright lasts for vita+70 years.
Lessons of the Case for Law School Curricula: Students who are taught to take a client-centered, transactional approach to the practice of law will soon learn that a negotiated, contractual agreement is only one of many legal mechanisms or tools that can be used to achieve a client’s goals. Often it is not the best one. In the bloom and buzz of practice, client problems will usually not come neatly siloed in ways that conform to the law school curriculum divisions.
Creating the best solution for even the simplest client problem requires an understanding of many different legal domains. The ability to spot the myriad legal issues involved must come from knowledge the lawyer has when the problem is presented. At the issue spotting stage, there is no time to learn tax law or trust law when on an “as needed” or “just in time” basis. A lawyer unfamiliar with the entire gamut of private law will be unable to give good advice. In this age of “curriculum reform” in which students are studying less and less “doctrinal” law before graduation (sometimes with the misleading assurance that they can learn it later), that is particularly worrisome.
To a hammer everything looks like a nail. A lawyer engaged to resolve Grafton”s problem would naturally proffer a legal solution using one of the strategies mentioned above. But what if the lawyer went beyond a legal solution and asked Grafton why exactly she wanted to prevent the dramatization of her characters. The lawyer could remind her not only of the income that movies could generate but also of the vastly broader audience for her work and likely stimulus for her book sales.
And dramatization need not lead to disappointment with the product. Many great mystery writers have seen their characters brought to the screen with great success. The literary reputations of Agatha Christie, Erle Stanley Gardner and John Mortimer have only been enhanced by actors’ distinctive representations of Hercule Poirot, Jane Marple, Perry Mason, and Horace Rumpole. In some of these cases, the authors had significant input into the filming of their work.
Grafton’s experience as a screenwriter had taught her that a novel could be butchered by Hollywood ending up unrecognizable to the author. What if there was a way that she could supervise the video representation with approval not only of the script but the actors? Perhaps she could make a deal with someone she trusted to bring her work to life with fidelity to her conceptions.
Any lawyer who is asked to provide a legal solution to Grafton’s problem should have this discussion. But where in law school does a fledgling lawyer learn to ask such questions or to make such suggestions? Aside from courses in estate planning, where such interrogation of a testator may be common, law school rarely trains lawyers to look for non-legal solutions to client problems. Perhaps, like medical schools, law schools should become more oriented toward representing the whole client. Law students should be taught not only to look for non-legal solutions to problems but to draw on their knowledge and experience in helping their clients.
And even when the solution to a client’s problem might be clear, there remains uncertainty. Before his death, Franz Kafka sent a letter to his friend and publisher Max Brod commanding him to burn all of his unpublished manuscripts when he died. Both men were lawyers. After Kafka died, Brod ignored his friend’s injunction and arranged for the completion and publication of The Trial and The Castle and other works that Kafka hoped would never see the light of day. Brod rationalized his disobedience by arguing that Kafka must surely have known that, as his greatest admirer, Brod would never be able to bring himself to burn any of Kafka’s work. Therefore, Brod reasoned, Kafka must not have really intended his order to be obeyed.
Whether this was a subtle and impressive interpretative strategy or a slick piece of self-justifying rhetoric, whether it was an act of fidelity or betrayal, the world seems not to care: we are all indebted to Brod for frustrating his friend’s last wish and so share in his guilt. The world of mystery fans may similarly profit from the frustration of Grafton’s wishes for dead hand control of her work.
Monday, August 2, 2021
INDUCING BREACH OF CONTRACT: A STUDY IN SCARLETT
The tort of inducing breach of contract continues to fascinate. In Periwinkle Entertainment Inc. v The Walt Disney Co., Scarlett Johansson (left), the star of Black Widow sued Disney for tortiously inducing Marvel Studios, a subsidiary of Disney, to breach its contract with her. The complaint alleges that Marvel entered into a contract with Johansson to act in Black Widow. Because Johansson’s compensation was largely to be determined by box office receipts, the contract required Marvel to make an exclusive “wide theatrical release” of the film for a period of time, “the standard exclusive theatrical window.” Instead, citing the COVID pandemic, Disney caused its subsidiary Marvel to release the movie simultaneously with Disney’s release of the movie through its streaming service, Disney+. Viewers were permitted to watch the movie without going to theaters, which Johansson alleges diverted revenues from theaters, costing her millions.
The complaint provokes several questions. Johansson sued only Disney, not Marvel. Normally, claims of tortious inducement against a third party are joined with claims for breach of contract against the contract breacher. Various reasons relating to preclusion on factual and legal issues dictate that the all defendants should be bound by the same action. Then why did Johansson not sue Marvel as well as Disney? Did its contract contain a mandatory arbitration clause (and if not, why not?)? If it did, then the arbitration clause, if well-drafted, should have included claims against Marvel’s parent, Disney. That shoe may drop later.
The complaint pleads two counts of tortiously inducing breach. Normally a parent company should not be liable for causing a subsidiary to breach a contract. A court usually ignores the separate identities of parent and sub in claims that have concerted activity as an element (cf. the “bathtub conspiracy” cases in antitrust). But here it seems that the parent had an economic motive to divert revenue from the sub to its streaming services and away from Johansson by causing the sub to delay theater release of the film, in violation to its contractual obligation to Johansson. That seems to justify treating Disney as a separate, third-party who is a stranger to the contract with the sub.
A final question concerns remedies. Perhaps because it was hastily drafted, the complaint is sparse on its remedial prayers, seeking only punitive damages in the separate counts, but adding a catch-all ad damnum for all money damages caused by the tort. Damages for inducement usually equal the expectation damages for breach of the underlying contract. But these expectation damages may be speculative, given the uncertainties of the imaginary box office receipts that would have occurred with a weeks-long exclusive theater release.
But the tort claim, if established, should also justify a restitutionary remedy against Disney, measured by its unjust enrichment resulting from its wrongdoing. That calculation too, may be complex, however if one must determine how much of its streaming revenues were caused by its wrongdoing.
If another reminder were needed, Periwinkle demonstrates anew that Contracts and Remedies students should be familiarized with the tort of wrongfully inducing breach of contract as another weapon in their litigation arsenal.
Friday, May 14, 2021
Thanks again to @NY_Contracts
There are many things about 136 Field Point Circle Holding Co., LLC v. Razinski that I do not understand. For example, why would one pay $9 million for the option to purchase a property for $19 million? And why would one do that if one were not absolutely certain that one could put together the necessary financing so as not to lose the $9 million plus $1 million in liquidated damages? Fortunately, that is not a contracts law issue.
The issue that matters to us is whether the $1 million liquidated damages provision is enforceable, and it is. The liquidated damages were not "grossly disproportionate" in relation to the failure to sell a property valued at between $20 and $30 million. The Razinskis were proceeding pro se in the matter after the court granted their attorney's motion to withdraw. That may explain why, although they raised what looked plausible legal theories, the court summarily rejected them as lacking factual support.
I think I do understand the facts underlying Crown Jewels Estate Jewelry, Inc. v Underwriters at Interest at Lloyd's London, and what great facts they are. Crown Jewels thought it loaned $2 million worth of jewels to Sony International films so that Jennifer Lopez (pictured) could wear them for a shoot in Miami. In fact, the jeweler was working with an agent for James Sabbatino, a member of the Gambino organized crime family who engineered the heist from his prison cell! The jewels were never recovered, and Sabbatino was convicted of RICO violations and sentenced to 240 months in prison. Prison guards uncovered the scheme when they went to his cell looking for the jewels (or perhaps Jennifer Lopez) and found Sabbatino talking on one of his cell phones! I'm imagining a scene that ends with the words, "Uh, I'm gonna have to call you back."
Anyway, the contracts issue was whether the jeweler's insurance would cover the loss. It didn't because of something called the dishonest entrustment exclusion. The rule applies when "[t]he loss of plaintiff's jewelry resulted from theft or an act of dishonest character on the part of the persons to whom the jewelry was entrusted. It is irrelevant to whom or for what purpose the jewelry was actually or intended to be entrusted." Harsh.
Thursday, April 22, 2021
Today is my last day of teaching for the year. So it seems appropriate to start the celebration a bit early. I must have been in college when I saw this PSA before a film, perhaps a European film, perhaps even a double feature. I haven't forgotten it.
Monday, December 28, 2020
This article in the Baltimore Sun, and other similar articles, tell of a realtor who is trying to get out ahead of the story by posting signs outside of the houses she is trying to sell advertising that the houses are verifiably "Not Haunted."
How can the realtor, Joy Sushinsky, be so sure? She interviews the sellers, and if they say the house isn't haunted, that's all the evidence Sushinsky needs. After all, she reasons, "People know if they’re living in a haunted house. And they’ll tell you.” Would they? Under Maryland law, they are not required to do so.
The scene in which the prior owners of the house at issue in The Amityville Horror (right) warn the new owners that the house is haunted must have landed on the cutting-room floor. Similarly, in the Academy-cward-winning short film, The New Tenants, nobody told the eponymous couple of the triple homicide that had occurred in their new apartment and explained its sudden availability (complete with "dead guy chips"). They didn't even get a break on the rent.
Nonetheless, Sushinsky is convinced based on personal experience. She lived in a haunted house, as her cat, the Instagram influencer Killer, would attest, were he still alive. Unfortunately, the odd bumps in the night ended with Killer's death, so Sushinsky cannot introduce reporters to her ghost, although she insists that her dog will back her story. In the alternative, Sushinsky also suggests that the "Non Haunted" signs are a joke, as we can all use a good laugh.
Monday, October 26, 2020
We're a bit late to this party, but since a second Borat film has just come out, it seems timely enough. We covered the first Borat release obsessively here (and also here, here, here and here), since it actually generated a contract dispute that was resolved in Sacha Baron Cohen's favor. For those interested in a more sober take on the affair, Russell Korobkin has that angle covered here.
Cohen (pictured as Ali G, left) is in trouble again for having broadcast his encounter with Alabama politician Roy Moore for a television show called "Who Is America." Mr Cohen induced Mr. Moore into a purported demonstration of a device that a disguised Mr. Cohen touted as a pedophile detector. To Mr. Moore's dismay, the device seemed to identify him as a pedophile.
Moore and his wife sued, alleging defamation per se, intentional infliction of emotional distress, and fraud. The fraud claim is crucial. Mr. Cohen was able to defend himself against false light claims in earlier cases based on releases that the plaintiffs had signed. Mr. Moore signed a similar release, but despite Mr. Cohen's lawyers' insistence that the release clearly covered any allegations of fraud in the inducement, the District Court is allowing the case to proceed, perhaps because there is some question as to the identity of the parties to the release. Cohen's joke of acting through alter egos may backfire if a court can't even tell whether he and his co-defendants are parties to a release.
But Moore's case (and Rudy Giuliani's inevitable case) seems distinguishable from the suit against the first Borat movie. Moore and Giuliani are public figures, and First Amendment protections for ridiculing public figures are very generous.
Two cents on the movie. Cohen's shtick is getting old and predictable. His accents are terrible. Also, I know it is supposed to be a low-budget movie made by a Kazakhstani agency, but the production values are ridiculously poor. The entire film is in terrible taste, but every once in a while, it's really, really funny. Maria Bakalova is the breakout star of the movie. She manages to induce suspension of disbelief when such suspension no longer seems possible.
Mr. Cohen is also being sued by the estate of a Holocaust survivor, Judith Dim Evans, who appeared in a completely gratuitous scene. The scene wasn't funny, even by the Cohen standard, under which cringe-inducing awkwardness is supposed to be funny, and it didn't advance the plot. Still, the suit is confusing, Ms. Evans appeared as an embodiment of empathy and humanitas, ignoring Mr. Cohen's preposterous anti-Semitic costume and literally embracing him. Yes, the film invites us to laugh at anti-Semitism and Holocaust denial, but haven't we been doing that at least since The Producers? I'm not sure that being surprised that one has been used as a hallmark of Jewish menschlichkeit in a film that satirizes racial and religious bigotry provides the basis for a cause of action.
Sunday, May 24, 2020
Building on the runaway success of yesterday's frivolity (silence is not necessarily ridicule), today was invite our remaining readers to share ideas for movies (or films if they are fancy) on the theme of contagion and confinement.
We'll get things rolling with two picks:
The Andromeda Strain tops the list for being about contagion within the necessarily confined quarters of an isolated lab.
And then there's World War Z, which is just fun, even though I usually hate zombie movies. Also, the zombies' "fleetness of foot" reminds me of my favorite dialogue from Breaking Bad:
Friday, August 9, 2019
Many contracts have arbitration clauses these days, and parties consistently challenge their enforceability, and consistently get told they have to arbitrate. The challenges make some sense in consumer contracts where we might not expect the consumer to grasp all of the ins and outs of the legalese. However, I'm always a bit confused by arbitration clauses being challenged by more sophisticated parties in contracts that were negotiated. They were part of those contract discussions, much more so than consumers ever are. If they didn't want to have to arbitrate, they didn't have to put that clause in. Once it's in, though, they're bound by it.
A recent case out of the District of Arizona, Gravestone Entertainment LLC, v. Maxim Media Marketing Inc., No. CV-19-03385-PHX-GMS (behind paywall), is yet another case reminding us of this. The plaintiff produces horror films and licensed the defendant to distribute those films. Eventually, the relationship between the parties deteriorated and the licensing agreement was terminated. The plaintiff, however, alleged that the defendant went on distributing the films, thereby infringing on the plaintiff's copyright.
The defendant moved to dismiss and arbitrate the claims, and the court agreed, based on the terminated licensing agreement's arbitration clause, which was worded broadly enough to cover these claims and to survive the termination of the agreement. Nor, the court found, was it unconscionable.
Wednesday, May 29, 2019
Was Leaving Neverland a breach of contract by HBO based on its airing of a 1992 Michael Jackson concert?
HBO's Leaving Neverland documentary, detailing the allegations of sexual abuse leveled at Michael Jackson, has resulted in an interesting lawsuit in the Central District of California, Optimum Prods. v. Home Box Office, CV 19-1862-GW(PJWx) (behind paywall).
Because Jackson is dead, there is no defamation claim to be brought; therefore, this lawsuit is grounded in a contract between Jackson and Optimum's predecessor entity and HBO regarding televising one of Jackson's concerts from his Dangerous world tour, which HBO aired in October 1992. The contract contained a provision prohibiting HBO from making "any disparaging remarks concerning" Jackson. Optimum alleges that HBO has breached this provision by airing the Leaving Neverland documentary.
Naturally the contract also contained an arbitration provision, which provided that the parties would choose an arbitrator and, if they couldn't agree, eventually the Superior Court of the State of the California for the County of Los Angeles would select the arbitrator. Optimum initially filed its complaint in state court, but HBO removed it to federal court based on diversity jurisdiction. Optimum does not dispute the existence of diversity jurisdiction but argues that the arbitration provision also acts as a forum selection provision requiring the litigation be heard by California Superior Court in Los Angeles County.
The court declines to construe the arbitration provision as conferring exclusive jurisdiction to California state court. The arbitration provision does not discuss exclusive jurisdiction at all. The plain language of the provision only provides the state court with one responsibility: choosing an arbitrator if the parties can't agree on one. That is not a conferral of exclusive jurisdiction.
There is also a dispute between the parties over whether the suit needs to be arbitrated. The court is torn on that issue. The American Arbitration Association's rule that arbitrability of a contract be decided by the arbitrator came into effect after the parties had signed the 1992 contract, and the court is hesitant to apply it retroactively. There is precedent to support retroactive application but the court thinks it doesn't make sense to pretend that the parties "clearly and unmistakably" agreed to be bound by rules that did not even exist. None of the precedent provided to the court was binding, so the court requests that the parties discuss the issue further at an upcoming hearing.
Monday, December 10, 2018
I got really excited when I saw this case because it's always nice to have a recent parol evidence case to look at, and this one involves movies!
It's a recent case out of Mississippi, Rosenfelt v. Mississippi Development Authority, No. 2017-CA-01120-SCT (you can listen to the oral arguments here). The MDA had communications with Rosenfelt regarding his movie studios' attempt to make movies in Mississippi, eventually guaranteeing a loan through a term sheet signed by the MDA and by Rosenfelt on behalf of his two movie studios. When Rosenfelt wanted to make another movie and applied for another loan under the terms of the agreement, the MDA turned down the request. Rosenfelt then sued for specific performance and damages. Rosenfelt initially triumphed on a motion for partial summary judgment but then, during the specific performance debate in the case, the MDA filed a summary judgment motion challenging Rosenfelt's standing, which resulted in dismissal of Rosenfelt's complaint.
Rosenfelt appealed, alleging that there was an agreement between him personally and the MDA. However, the court noted that all communications from the MDA were directed explicitly to Rosenfelt as president of the relevant movie studio. The court's decision came down to contract interpretation: All of the written documents in the case unambiguously referred to Rosenfelt in his official corporate capacity or were signed by Rosenfelt in his official corporate capacity. Given the lack of ambiguity on the face of the documents, the court refused to consider parol evidence as to whether Rosenfelt was personally a party to any of the agreements. Because all of Rosenfelt's allegations concerned his personal agreement with the MDA, the court dismissed the suit.
This case serves as a reminder that, once you have set up corporate entities, you need to be careful to remember how those corporate entities impact not just your legal liabilities but also your legal rights.
Wednesday, August 1, 2018
Yet another contract aspect has emerged to the Harvey Weinstein situation, beyond the NDAs with the accusers, the contracts between lawyers and private investigators, and the complicated situation with the National Enquirer. Now insurance policies have stepped into the fray. According to this article, Weinstein's insurance companies are denying coverage based on alleged exclusions of "blatantly egregious and intentionally harmful acts." Weinstein, as his defense has stated, denies the accusations against him and counters that the insurance companies are siding with the accusers in order to get out of paying their obligations.
According to the insurers, Weinstein is facing eighteen lawsuits and other claims that have been filed in the past year. Naturally, Weinstein's defense is costing a great deal of money. Whether the insurance companies need to pay out under the policies (and which insurance companies need to pay out) probably depends on the exact wording of the policies, which seem to all be slightly different. For instance, one carrier was providing "crisis assistance" in the event of "significant adverse regional or national media coverage." Another was apparently a policy for legal defense that according to Weinstein explicitly included criminal investigations.
Wednesday, June 20, 2018
Recently a video went viral showing a 2016 altercation around an umpire ejecting Mets pitcher Noah Syndergaard after he threw a fastball behind the Dodgers' Chase Utley. Umpires wear microphones during Major LeagueBaseball games, and the resulting (often loud and profane) discussions with Mets players and especially Mets manager Terry Collins was recorded.
The video recently surfaced in an apparent leak, because MLB has announced its intention to try to scrub the video from the internet. MLB's reason for this is that it violates a "commitment" that "certain types of interactions" involving umpires during baseball games would not be made public, claiming it was "in the collective bargaining agreement" and that there was "no choice" but to scrub the video from the internet. Indeed, according to one report it had already been scrubbed.
Not so fast, though, because I found it still embedded in news reports about it. It's hard to get anything to vanish from the internet, especially once it's gone viral, but it's not that difficult to locate this video at all.
And it's not hard to see why it went viral. It's a fascinating glimpse into a part of the game fans seldom get to see. As others have pointed out, the umpire does a fantastic job in the clip, so it's hardly like he's being cast in a bad light. The manager doesn't even come across all that poorly. In fact, in my opinion, the party that comes out of the clip looking the worst is Major League Baseball and its confusing way of handling the explosive Chase Utley situation.
It's unclear what "interactions" were agreed to be withheld from the public, but this one is certainly an interesting one. I'd love to know what the contract terms actually are.
Sunday, April 1, 2018
Lots of people have been discussing the recent Central District of California ruling, Disney Enterprises v. Redbox Automated Retail, Case No. CV 17-08655 DDP (AGRx) (those links are a random selection), a lawsuit brought by Disney against Redbox's resale of the digital download codes sold within Disney's "combo pack" movies, which allow instant streaming and downloading of the movie. There is an obvious copyright component to the dispute, but I thought I'd highlight the breach of contract portion of the decision.
The DVD/Blu-Ray combo packs were sold with language on the box reading "Codes are not for sale or transfer," and Disney argued that Redbox's opening of the DVD box formed an enforceable contract around that term, which Redbox breached by subsequently selling the codes. However, the court found no likelihood of success on the breach of contract claim, based on the fact that the language on the box did not provide any notice that opening the box would constitute acceptance of license restrictions. The court distinguished other cases that provided much more specific notice. Redbox's silence could not be interpreted as acceptance of the restrictions. This was especially so because the box contained other language that was clearly unenforceable under copyright law (such as prohibiting further resale of the physical DVD itself). Therefore, the court characterized the language as "Disney's preference about consumers' future behavior, rather than the existence of a binding agreement."
The court ended up denying Disney's motion for preliminary injunction.
Saturday, February 24, 2018
The Weinstein Co. has had yet another lawsuit filed against it for breach of contract over the Canadian distribution rights of “Paddington 2.” Prior to the allegations against co-founder Harvey Weinstein, the company had an agreement with Toronto-based EOne to distribute the film throughout Canada. In their lawsuit, EOne is seeking to recover $7.8 million that it advanced to Weinstein to obtain the rights to distribute the film throughout Canada. Amidst the controversy surrounding Harvey Weinstein, the company sold the rights to Warner Bros. After Weinstein broke the agreement, EOne terminated the distribution deal. The original contract provided for post-termination repayment of the advance.
Beyond the $7.8 million advance that EOne paid the Weinstein group, an action for lost profits may be available. The movie has so far grossed $192 million. The U.S. and Canadian box offices opened at $11 million. However, if EOne does decide to try to recover lost profits, it had better act fast. Since the allegations of misconduct were levied against Harvey Weinstein, the company has been on the verge of bankruptcy. The sale of “Paddington 2” to Warner Bros was enough to keep the company afloat until January. According to Reuters, the company is $375 million in debt. Killer Content and Abigail Disney have said that bankruptcy may be the best option for Weinstein Co.
Also found in the complaint is an allegation that Bob Weinstein telephoned the EOne division president to apologize for the sale to Warner Bros and to acknowledge that they would have to compensate EOne. It will be interesting to see if this argument is permitted. Further, the term “compensate” could be construed to include further damages. While only time will tell what the fallout will be from the ongoing Weinstein court battles, it is clear that the bucket is draining quickly.
Friday, February 9, 2018
I teach many Beyonce cases in entertainment law, but usually in an intellectual property context. The New Orleans Advocate reports that Beyonce has been sued in connection with her single Formation, but the lawsuit is contractual in nature. The plaintiff, Kimberly Roberts, is alleging that she entered into a contract with Beyonce to use footage from her documentary in exchange for a lump-sum payment and royalties. Roberts is alleging that Beyonce has breached the contract by failing to pay royalties. Roberts also alleges that Beyonce has exceeded the scope of the license that Roberts granted.
Wednesday, January 17, 2018
Those posting ideas to the internet, in tweets or YouTube trailers or other websites: take note. This is an older decision, but one worth recounting on this blog I think. Out of the Central District of California, Alexander v. Metro-Goldwyn-Mayer Studios, Inc., CV 17-3123-RSWL-KSx, warns you that making your ideas available for free can mean that you forfeit the right to pursue compensation if someone else uses them.
The case concerns the movie "Creed," which the plaintiff Alexander alleged he came up with. He sued the defendants for misappropriation of his idea, breach of implied contract, and unjust enrichment. The misappropriation of idea claim fails in California, so the court moves on to the breach of implied contract claim, where Alexander also faltered because he failed to allege that he ever offered the "Creed" idea for sale. In tweeting the idea at Sylvester Stallone, the court read the allegations as portraying a gratuitous offer of the idea to Stallone.
Alexander argued that he thought he would be paid for the idea based on industry custom, and that the defendants understood that he tweeted the idea at them with the expectation of payment. But the court disagreed. All Alexander did was tweet the idea at Stallone and post it all over the internet; those actions were not compatible with expecting compensation, since the idea was widely available for free. There was never any communication between Alexander and the defendants, so the court found that it "strain[ed] reason" to imply an agreement for compensation from an unanswered tweet and the posting of the idea in other places on the internet.
Finally, the unjust enrichment claim also failed. Alexander could not allege how the defendants benefitted from his idea, since he never alleged how the defendants accepted the idea. At any rate, since the idea was available for free all over the internet, the court stated that it was "unclear" why the defendants should be expected to compensate Alexander.
Wednesday, September 13, 2017
The other day, I happened to re-listen to "Rent." The 20th Anniversary Tour is coming to town next month, and I have my ticket in hand, and, excited about the upcoming show, I pulled the original Broadway cast album up on Spotify for a re-listen. The thing about "Rent" is its one of those shows that I find it difficult to be rational about. It has its flaws, but I was in high school the first time that I heard "Rent," and it blew me away then, and it still stays fresh to me. Even when I think it should have aged, I hear the first notes of "One Song Glory," and they get me every time, and by the end of my re-listen I'm sitting in floods of tears on my living room and thinking, ...Huh, this whole musical is about a breach of contract.
Because it is!
If you don't know the plot, it's loosely a re-telling of "La Boheme" that revolves around a number of young New York artists struggling to survive in an age when AIDS is ravaging their community. The titular "Rent" is the first major song in the musical, and it's a reaction to one of the characters, Benny, going back on a promise he made to the main characters, Mark and Roger. Benny used to be roommates with Mark and Roger but now (with his rich bride's money behind him), he's become their landlord. However, when he bought their building the year before he told Mark and Roger they were "golden". Nonetheless, at the beginning of the play, he shows up and demands all of the previous year's rent, which Mark and Roger allege he led them to believe they didn't have to pay (and which Benny never really refutes).
There are a lot of critiques of the characters of "Rent" and how annoying it can be to listen to the show as an "adult." Yes, you do find yourself asking why Mark can't just rake in some dough for a little while to pay off the debt. Isn't this what all adults have to do? We all have to go out and get jobs to pay for the roofs over our heads. But Mark and Roger shouldn't have been in the rent-money debt in the first place, because they had an agreement with Benny. Are there issues with the formation of this contract? Yes. It's pretty informally done, after all, because of their friendship. And it probably suffers from a consideration issue, because it seems like a gift from Benny to Mark and Roger (the musical doesn't spend a whole lot of time on the details of the transaction, tbh, but it seems like he made the offer because he was feeling generous toward his friends). But I think it could be saved by promissory estoppel. Benny made that promise to Mark and Roger, and he's got to know them well enough to know they were going to rely on it by not worrying much about a source of income for the year, which in fact Mark and Roger did. And now Benny is demanding an entire year's worth of rent all at once, which would be a lot for anyone to come up with, never mind starving artists with uncertain sources of income.
So it's not entirely Mark and Roger's fault that they owe a year's rent. They were led to believe they didn't. But, more than that, the more I think about the critiques of "Rent," the more I think that actually that's the point of rent. Mark and Roger are annoying and entitled, yes, not just because they don't want to have to pay rent that their friend told them they wouldn't have to pay, but because they don't want to have pay rent going forward, because the payment of rent pushes them into making compromises regarding their art and the type of life they want to live. When you listen to "Rent" as a sixteen-year-old, it's different than listening to it as a thirty-six-year-old, and that difference is that yes, I grew up, and I realized that suddenly I'm no longer on the side of the artists who want to create and live their lives. And then that makes me think about the fact that I'm on the side of people not following dreams because I grew up and I compromised and I paid my rent. And I don't think it's a failing in "Rent" that it makes me pause to think about that, that there was a teenager in me who believed in La Vie Boheme who became an adult who didn't. I think that's the point. The story takes place in the middle of the AIDS epidemic, when these people are losing friends left and right, and so it makes sense that they don't feel like they have time to pretend to be other than what they are. Maybe the joke's on all of us that we feel like we do have time.
Because, let's face it, for all of "Rent"'s enduring genius as a musical achievement--and there's a lot of it--"Rent"'s story is also the story of all the music that its composer never got to write. Jonathan Larsen died suddenly and unexpectedly the night before the musical's Off-Broadway premiere. He left far too early and left us with just this one perfect masterpiece, about people with uncertain lives clinging stubbornly to their dreams. It's hard for you to reach the end of "Rent" without an appreciation for how lucky we are that some people live that way and give it their all in their time here on Earth. Jonathan Larsen only wrote the one masterpiece, and that's a tragedy, and he didn't live to see the huge success it became, which is an even bigger tragedy, but at least he got to write one, which meant he got to leave a legacy behind him that you've got to think he'd be pretty happy with. And how lucky we all are that he stuck with his art.
None of which has anything to do with contracts law, oops. EXCEPT EVERYTHING HAS TO DO WITH CONTRACTS LAW. Including the entire plot of "Rent." The end, back to regularly scheduled cases, here, have a song:
Friday, June 30, 2017
Denise Daniels of Minnesota, who says that she has worked with children’s social and emotional development for more than four decades, claims that she pitched her idea for what became the 2015 animated box office success "The Moodsters" to Disney-owned Pixar a number of times between 2005 and 2009 with the understanding that she and her team would be compensated if Disney used her idea.
Ms. Daniels just filed a complaint in federal court in the Central District of Los Angeles stating that she had an implied-in-fact contract that obligated Disney to compensate and credit her if the studio used her idea. Ms Daniels also argues that "The Moodsters" would have featured five color-coded, anthropomorphic characters, each representing a single emotion: happiness, sadness, anger, love and fear. The characters would reside in an abstract world within a child. The movie "Inside Out" features five characters based on the emotions joy, sadness, anger, fear and disgust. The characters reside in the mind of a young girl named Riley, who must learn to adjust to a new life when her family moves to San Francisco.
In March, Disney was also sued over 2016's "Zootopia." In that lawsuit, a screenwriter claimed that the studio stole his original idea and copied his designs for the movie's animal characters.
So, how would you advise your students to best take care of the interests of clients seeking advise in pitching ideas to major entertainment companies? “Get a contract in writing ahead of time” is easier said than done. If you really have a good idea for a movie or the like, how do you even get to talk to a studio about it without at least revealing something about your idea? - And if you do, might it then not already be too late? For example, it seems odd to seek to discuss potential ideas with an entertainment company simply saying “I have a good idea, but first, let’s talk legal details.” Wouldn’t the company just tell you to get lost, if you even got a response at all? On the other hand, so many of these suits seem to take place that at least some sort of preliminary writing seems to be a good idea for both parties.
In 2004, Disney lost a case over profits for ABC’s “Who Wants to be a Millionaire,” which resulted in a $320-million verdict against Disney in favor of a British licensing company.
Is Disney just too risk-willing in these types of cases, or are private individuals people egged on by the chance of winning some “big money”? It’s hard to tell. Asked why Daniels waited two years before filing her lawsuit against Disney, Daniels’ attorney says “you don’t file these cases lightly” and that such time gaps are not unusual in these types of cases.
Thus, the moral of this story might simply be: get something in writing and if anything goes wrong, take legal action as soon as possible to be on the safest side possible.
Thursday, June 22, 2017
An article on CNN Media posted on June 21 reads, in part: “A contract for the current season of ‘Bachelor in Paradise,’ which CNNMoney … has confirmed as authentic, provides a rare window behind the scenes of reality shows, in the ‘Bachelor’ franchise and beyond, revealing how they are able to manipulate ‘reality’ and create drama where none actually exists….” Shocker! More surprising, perhaps, is the extent to which the companies producing these types of TV shows seek to avoid liability in potential legal proceedings.
Whereas the “Bachelor in Paradise” contract requires participants to “refrain from unlawful behavior or harassment” and to acknowledge that the producers “do not encourage intimate or sexual contact with other contestants on the show,” the contract also tries to free the producers from any responsibility if a contestant is injured, even if that injury comes from “unwelcome/unwanted sexual contact or other interaction among participants.” Participants will also have to agree that the producers are not liable for almost anything that happens to them in the course of filming, whether they are injured, suffer emotional trauma, or catch a sexually transmitted disease.
Furthermore, the producers of the show can do nearly anything they want to the participants and their reputation, including filming them naked, airing the details of any part of the life they think is relevant, or flat out lying about them and things they have done. Nicole Page, a New York-based entertainment attorney with Reavis Parent, said that the contract means, from the producers' perspective, "I can basically take your image and do whatever I want with it and I own it and you have no recourse." Contracts like these are common in reality TV, she said. They "have been around since reality TV began," she added. Needless to say, should participants wish to pursue civil legal action, they will have to arbitrate.
Why would contestants want to agree to such far-reaching contracts? For their chance at 15 minutes of fame, of course. If a contestant tries to renegotiate the contract, plenty of other people are ready to take their place.
The contracts, however, may be so broad that they are not legally enforceable, according to one CNN/HLN legal analyst. Another commentator says that these contracts are “so one-sided it seems absurd, but this is the price people are willing to pay to be on television for whatever it is.” “It's not a two-sided contract," the CNN/HLN attorney says. "A contract is supposed to be what they call 'at arms length,' which means there is leverage on both sides and it's freely entered into and freely negotiated. But this is clearly a contract that is one-sided.”
With all due respect to the CNN/HLN attorney, the mere argument that the contract is “one-sided” is, of course, not very strong unless the contracting procedure reaches the level of unconscionability. Yes, this might be a “take-it-or-leave-it” type of contract, but those are, as we all know, also widely used in numerous other industries and companies where courts have upheld them. I think it highly unlikely that contestants on a famous TV show will prevail on an argument that their contracts were so one-sided as to reach the level of unconscionability under contract law. After all, the TV contestants really don’t need to be on these shows at all; they choose to do so on their own free volition, typically for a rather vain chance at fame and fortune (I know that that is not a legal argument, but we all know what this would look like in court…).
Much worse are the alleged attempts by the companies to have the participants sign away their rights under criminal law. That they might very well not be able to do. "If the contract requires you to release any claims you have that you were sexually assaulted, which is a crime, then the contract may or may not be enforceable under the public policy of the state of California [where this contract was drafted]," said entertainment litigator Josh Schiller of Boies Schiller Flexner. "Law enforcement could get involved and bring charges ... would we want to enforce a contract that no one would be liable if they were filmed being sexually assaulted? That would create a real problem." No kidding. In other cases, contestants should closely consider what this type of deal really involves.
For the rest of us, we live in times when lines between fact and fiction are blurred significantly. It seems that an increasing amount of people are comfortable dismissing facts as “fake” when the converse is true. I’ve encountered that numerous times after the most recent presidential election myself, both in South Dakota and even “liberal California.” In addition to the usual climate change denial in the Midwest, I encountered a “crazy cat lady” in Los Angeles the other day claiming that highly established Audobon studies and Smithsonian studies demonstrating how feral cats kill numerous birds and other small wildlife is “not true”! Sigh.
We should consider how we best teach our students to account for this new reality in contract and other law. I think we also need to increasingly point out to them that what they see in the media is not necessarily true. Granted, with reality TV shows, that is obvious, but I have had to undertake rather serious discussions with my own students recently about what “news” really is and what it is not! What we have taken as granted as law professors even in recent years may no longer be the case or may be changing.
Thursday, May 4, 2017
Sometimes rights can get passed along like a game of telephone. A recent case out of California, M.U.S.E. Picture Productions Holding Corp. v. Weinbach, B261146 (behind paywall), deals with a mistake that voids the original contract for those rights.
Muse agreed to develop a film based on the book and screenplay "The Killer Inside Me," which Weinbach claimed to own the rights to. After about a decade during which Muse did not produce the film, Muse sold its rights to Windwings, and then Windwings sold its rights to Kim, who eventually produced a movie. In the meantime, Muse sued Weinbach for intentional misrepresentation during the original negotiation for the right, and Weinbach cross-claimed for breach of the agreement stemming from Kim's production of the movie. (Windwings and Kim were also involved in litigation with Weinbach, not relevant to this blog entry, but you can find a ruling from it here.)
Basically, Muse contended that Weinbach did not have the right to produce the film based on the novel at the time that he transferred those rights to Muse. Weinbach contended, however, that this was not a mistake of fact but rather one of judgment because it relied upon a later court interpretation of the extent of Weinbach's rights. The court agreed with Muse, however. Weinbach had repeatedly told Muse that he had the right to produce a movie from the book and never wavered from that, so it wasn't like Muse ever thought it was negotiating for a dubious right; Muse thought Weinbach had the right, because that's what Weinbach asserted. A later court ruling raised doubts, but Muse had had no reason to ever expect a later court ruling on the question. This mistake was material because Muse would not have entered into the contract if it had thought Weinbach didn't possess the right in question. And there was no evidence that Muse assumed the risk that Weinbach didn't have that right. Therefore, this mistake justified rescission of the contract.