By Marina Bogorad, Esq. Legal Perspectives May 14, 2019
A monthly column dedicated to the latest and greatest to come down from the Ninth Circuit Court of Appeals and California appellate courts.
The SLAPPable Case of Local Politics. We start this month in the wonderful land of the California SLAPP statute, which was originally designed to weed out bogus defamation claims at their very inception. Division Five of the First District Court of Appeals thinks that plaintiffs in Sonoma Media Investments, LLC v. Superior Court of Sonoma Cty., 34 Cal. App. 5th 24 (Mar. 15, 2019), brought claims that the statute was meant to bar when they sued a local newspaper for a series of articles about the plaintiff’s run for a local office and his alleged financial backing by his own father-in-law. The court rejected the somewhat clever argument that newspapers do not qualify as a “public forum” because the readers do not get to participate in the discussion—all the statute demands is the public’s ability to access the source. And since plaintiff submitted no actual evidence that the news reports were untrue, he gets SLAPPed out of court, with the direction for the trial court to consider attorney’s fees for both the motion below and the appeal itself. This is SLAPP’s true purpose exemplified, in all of its originally intended glory.
Think Twice Before Filing That Appeal. Continuing with the SLAPP trend, Division Four of the Second District Court of Appeals in Workman v. Colichman, 33 Cal. App. 5th 1039 (Apr. 2, 2019), cautions that once your SLAPP motion gets denied below, it is better to think long and hard before jumping on the appeal bandwagon. The case has amusing facts demonstrating that Los Angeles real estate market is a reality show in itself. Plaintiff had a property with amazing views to sell. During an open house, the neighbors came over, who loved the property but said they could not afford it. Shortly thereafter, the neighbors write a letter to our seller, advising him that they are about to construct a second level to their house that would block the seller’s amazing view. The neighbors insist this needs to be disclosed to any prospective buyers. The seller does so and loses all the attractive offers. And then a much lower offer comes in—from the neighbors’ friends, who apparently concocted this second level story just to be able to afford the house! Plaintiff sues, and the neighbors attempt to SLAPP him out of court, to no avail. The neighbors appeal, and the court slaps them with sanctions, holding that their purported issue of public interest is nothing but a figment of their imagination. Indeed, although the neighbors claimed that the case involves issues of consumer protection in the field of real estate sales, the court countered that “a claim that private communication about a private residence ‘involves a matter of public interest, because millions of Americans live in houses and buy and sell houses’ is ‘absurd.’” Clearly, while the Legislature is taking its sweet time to rail in all the latest SLAPP craziness, courts of appeals are taking the matters in their own hands, and we applaud them for it.
Arbitrate or Quit. California courts really love arbitration. Even where an employee rejects it in writing, Division Seven of the Second District Court of Appeals does not take “no” for an answer. In Diaz v. Sohnen Enterprises, 34 Cal. App. 5th 126 (Apr. 10, 2019), that is exactly what the employee did, yet the court held that the agreement was still valid because the employee continued working and thus impliedly agreed to be bound by the arbitration agreement. So unless you walk out on your arbitration-happy employer, prepare to arbitrate.
Can’t Stop a Valid Copyright Claim. This is not an appellate decision—but since it mirrors the issues that are currently pending on appeal before the Ninth Circuit, in a case where the Firm represents certain songwriters against one Taylor Swift (as reported here), it deserves its spot in our limelight. The court in Flourgon vs. Sony Music Ent., Case No. 18-CV-2238 (S.D.N.Y. Feb. 13, 2019), denied defendants’ motion to dismiss a 300-million-dollar lawsuit against Miley Cyrus for her alleged infringement of exactly seven words in a lyrical phrase allegedly created by the plaintiff back in the 1980s. Plaintiff in this case claims that Cyrus’ usage of a similar phrase in her hit We Can’t Stop infringed on his creation. Rather than resolve factual issues concerning similarity and originality before any discovery took place, the court here made the right choice to deny dismissal on the pleadings, opting to reserve its decision on all the factual disputes until summary judgment. If it was up to us, that is what the trial court in the Taylor Swift case would have done. Dear Ninth Circuit, please take notice.
Is this thing on? Ah, good old SLAAP statute, how we missed you. Unsurprisingly, you do not protect secret recordings. Division Seven of the Second Appellate District tells us as much in Zhang v. Jenevein, 31 Cal. App. 5th 585 (Cal. Ct. App. Jan. 23, 2019). This is because making secret recordings of conversations to introduce them as evidence in an arbitration proceeding does not cut it as a protected activity—after all, arbitration is not a “judicial proceeding” or an “official proceeding authorized by law.” Rather, it is a form of alternative dispute resolution. And just because the statements may be protected by litigation privilege, this does not automatically qualify them for the SLAAP protection—the former is a substantive right, while the latter is a procedural device for weeding out meritless claims. Alas, SLAAP protection finally seems to be getting narrower, just as it should be.
Litigation, Survivor Style. Division Seven of the Second Appellate District voted plaintiff out of court in Britton v. Riggs, No. B272078 (Cal. Ct. App. Dec. 5, 2018), when it decided that he prematurely filed his motion for a new trial below, and thus the new trial order had to be reversed. The case is all about profits derived from the television show Survivor, with plaintiff here claiming credit for consulting on its innovative financial structure. Yet the jury came up with only a small verdict, thus warranting the trial court’s decision to grant a new trial on the grounds that the jury award was inadequate and inconsistent with a finding of liability. But there were other outstanding issues for the judge to decide, which doomed the new trial order ab initio. Rush judgment certainly seems like an adequate hyperbole here.
Litigation, Disney Style. The Ninth Circuit unsurprisingly backs a major studio again when it lets Disney’s board off the hook in Towers v. Iger, No. 17-15770, __ F.3d __, 2018 WL 6786219 (9th Cir. Dec. 26, 2018). The case accused the board of being part of the conspiracy to prevent poaching and thus restrict labor movement in the animation industry. Yet the shareholders that brought this derivative suit on Disney’s behalf failed to introduce any evidence of the board’s knowledge of (let alone participation in) the conspiracy, thus making it necessary for the shareholders to demand that the board bring the suit in the first place. In other words, shareholders lacked any support for their futility-of-the-demand allegations, and Disney gets to ride into the sunset with all of its unpoached animators intact.
Free Speech Does Not Protect Racism. The cable giant Charter must face a lawsuit alleging that its channel lineup is racist, rules the Ninth Circuit in Nat’l Ass’n of African Am.-Owned Media v. Charter Commc’ns, Inc., 908 F.3d 1190 (9th Cir. Nov. 19, 2018). The suit was brought by Byron Allen, an African-American actor, comedian, and entrepreneur, who alleged that Charter exhibited racial bias in its channel choices. Charter moved to dismiss the suit below based on, inter alia, its claim of free speech protection, arguing that courts cannot “force cable companies to accept channels they do not wish to carry.” Its motion was denied, and the Ninth Circuit affirmed, holding that the statute prohibiting racial discrimination “does not seek to regulate the content of Charter’s conduct, but only the manner in which it reaches its editorial decisions — which is to say, free of discriminatory intent.” As such, since the “Supreme Court has regularly emphasized that the prevention of racial discrimination is a compelling government interest,” the First Amendment cannot bar the suit. In other words, free speech has its boundaries, and racism is left outside in the cold. Good call.
When unSLAPPing Happens. Division Five of the Second Appellate District performed the somewhat rare ritual of unSLAPPing in Wei Han v. Kylin Pictures, Inc., No. B282947 (Cal. Ct. App. Nov. 27, 2018), when it reversed the trial court’s grant of SLAPP motion below. This is a defamation case against a Chinese financier, who made projects such as Oscar-nominated Mel Gibson project Hacksaw Ridge come to life. The controversy here is over acquisition rights to a Bruce Lee biopic entitled Birth of the Dragon. During a press conference in China, defendant made certain unpleasant statements about his Chinese competitor for the rights, accusing plaintiff of being shady and unreliable. Since the press conference concerned Hacksaw Ridge, which defendant rightfully argues was a very successful motion picture, the SLAPP motion attempted to milk some public interest out of it based on that fact alone. Too bad the speech at issue had nothing to do with Hacksaw Ridge. Since “there must be ‘some degree of closeness’ between allegedly defamatory statements and the matter of public interest” for the SLAPP statute to apply, the court of appeal unSLAPPed the case and sent it back down to proceed to trial. Lesson learned: bashing your competitors cannot always go unpunished, unless (at the very least) there are some Oscars directly involved.
Stairway Back to Trial. The Ninth Circuit sent back Led Zeppelin’s jury win in Skidmore v. Led Zeppelin, No. 16-56057 (9th Cir. Sept. 28, 2018). The suit over the band’s famous song, “Stairway to Heaven,” will go back for a new trial because the trial court erred in instructing the jury that public domain elements are not copyrightable “even if they are modified in an original manner or included as part of a selection and arrangement.” The Ninth Circuit also noted that once the case is back before the jury, it would be a good idea to instruct that jury on the concept of an “inverse ratio” that unites the showing of the band’s access to Spirit’s “Taurus,” the allegedly infringed song, and the evidence of any similarities thereto. In other words, the jury should know that the more evidence of access one shows, the fewer similarities he needs to demonstrate. For further details, see an excellent summary by GFL’s own Mary Catherine Amerine here.
NFL May Get a Whole New Class. The Ninth Circuit allows a potential class action against the National Football League to proceed in Dent v. Nat’l Football League, 902 F.3d 1109 (9th Cir. Sept. 6, 2018). Dent, a legendary former defensive end for the Chicago Bears, alleges that NFL distributed controlled substances and prescription drugs to its players in violation of both state and federal laws, and that these practices left players with permanent injuries and chronic medical conditions. Round one before the Ninth Circuit was the preemption battle, which NFL lost, as the court held that the claims were not preempted by the Labor Management Relations Act. The case now heads back down to test the certification waters. Stay tuned.
What’s Worse Than Fake News? Try Fake Vocals. Division Two of the Second Appellate District thinks that whether Michael Jackson’s posthumous album Michael contains his real vocals is a matter of opinion. The court holds as much in Serova v. Sony Music Entm’t, No. B280526, __ Cal. App. 5th __ (Aug. 28, 2018). This was a putative class action alleging that the album cover was misleading to the extent it represented that the lead singer on certain tracks was Michael Jackson himself. While the trial court partially SLAPPed the suit out of court, the Court of Appeals held it did not SLAPP it hard enough. After all, reasoned the court, the studio’s statements were the product of its investigation on a hotly contested public issue concerning the authenticity of the vocals. As such, this was not merely commercial promotional speech—rather, this was the type of opinionated speech that the First Amendment fully protects, rendering the entire case fully SLAPPable. On a personal note, Ms. Serova, the named plaintiff in this lawsuit, was once a candidate for the Firm’s summer program, and we are glad to see that she took her claims all the way up to the Court of Appeals. Keep up the good fight, Ms. Serova!
Technology Does Not Equal Creativity. The Ninth Circuit handed a major defeat to a big studio, which is a rare occasion to be celebrated in this Circuit. In ABS Entm’t, Inc. v. CBS Corp., 900 F.3d 1113 (9th Cir. Aug. 20, 2018), the court reversed the summary judgment win scored by the studio below, holding that digital remastering of analog recordings does not necessarily qualify for copyright protection because it probably lacks the necessary degree of creativity. This means that plaintiffs’ claims for misappropriation of their recordings through radio play are not preempted, and they get to continue to trial. More importantly, the court appears to suggest that the issue of sufficient creativity should not have been resolved on summary judgment in the first place, thus seemingly supporting the position taken by the Firm’s clients before the same court, as reported here.
Join the Revolution. This was a sad month for big studios at the Ninth Circuit, since the court also revived a copyright infringement suit against Fox’s Empire series, alleging that the program copied plaintiff’s screen treatment for another series entitled King Solomon. While the majority opinion in Astor-White v. Strong, 733 F. App’x 407 (9th Cir. Aug. 1, 2018), simply reverses for failure to provide the self-representing plaintiff another chance to state his claim, the concurring opinion points out the revolutionary nature of the King Solomon treatment, given that it was written when African-American families were not regularly featured on TV, and thus Empire’s borrowing of the plot was in no way trivial. Additionally, the concurring opinion points out that the Ninth Circuit “has never affirmed the dismissal of a case alleging infringement of a literary work without discovery in a published opinion” and that such a dismissal is highly disfavored. This, once again, is in line with the position taken by the Firm’s clients before the same court in the Shake It Off case, as noted in the preceding entry.
Parlez-vous Français? Oui—but Only for One Year. The droit de suite, which allows visual artists to collect a royalty every time their original works of art are resold, sounds wonderful, says the Ninth Circuit in Close v. Sotheby’s, Inc., 894 F.3d 1061 (9th Cir. July 6, 2018), but U.S. artists get to enjoy its benefits only if their works were resold in 1977. Although California recognized the right by statute in 1976, Congress passed the 1976 Copyright Act the same year, which went into effect on January 1, 1978 and preempted California regulation in the field. Since the Copyright Act limits artists’ royalty rights to the first sale, the works resold before 1977 and after 1977 do not give rise to royalties. As such, the decision creates truly unique statutory gerrymandering, segregating one special year when every American artist could feel slightly French.
No SLAPPs for “Scary” Spice. Those initials in the case caption do not fool anyone, since the facts of this case were splashed across headlines worldwide. In L.G. v. M.B., 25 Cal. App. 5th 211 (July 13, 2018), Division Two of the Second District Court of Appeals affirms denial of the former Spice Girl’s anti-SLAPP motion below in the case brought by her former nanny, who alleges that Ms. Brown defamed her in a court filing. The court filing at issue was Ms. Brown’s declaration seeking a restraining order against her former husband in a dissolution proceeding, wherein “Scary” Spice accused her former spouse of cheating on her with their nanny and fathering a child with said nanny. Alas, the litigation privilege claimed by Ms. Brown appears to have an exception for all the heated things people say to each other in family court. Lesson learned: keep the mudslinging in dissolution proceedings to a minimum—or prepare to face un-SLAPPable lawsuits.
Look, That Retailer Has No Discounts. We now learn that one’s lack of out-of-pocket damages is not a hurdle after all. Division Seven of the Second District Court of Appeals concludes as much in Hansen v. Newegg.com Americas, Inc. (July 31, 2018). In Hansen, a customer brought a class action under various California false advertising statutes, contending that Newegg’s advertised discounts are not real because the retailer uses “fictitious former price and discount information that was intended to induce customers to purchase its products.” In response to Newegg’s standard response that the consumer lacks standing because he did not actually loose any money, the court observed that Hansen “suffered economic injury by having ‘paid more for [a product] than he ... otherwise [would] have been willing to pay if the product had been labeled accurately.’” California law recognizes such an injury, concludes the court. In other words, welcome to court and the wonderful world of class actions, all of you “relying” consumers!
Fox vs. the 13th Amendment, Round One. Fox cannot compel its executives to involuntary servitude and then hide behind the SLAPP statute, concludes Division Five of the Second Appellate District in Twentieth Century Fox Film Corp. v. Netflix, Inc. (June 29, 2018). Fox sued Netflix for poaching two of its executives, and Netflix fired back, accusing Fox of imposing unfair contracts on its employees that illegally limit their mobility. Fox’s attempt to SLAPP those allegations out of court failed below, and the court of appeals affirmed. “No protected activity,” says the court, since enforcing employment contract does not equal litigation, and Netflix does not ground its claims on any speech by Fox. Still, this fight is far from over, and we cannot wait to see whether the streaming giant gets to beat old-school movie-going beyond the battle waged between your iPad and movie theaters.
Get Your Own Crayon. Ear plugs’ bright colors are functional so that one could notice you wearing them—but if you choose the same lime green color as your competitor, you still risk trade dress violation. The Ninth Circuit concludes as much in Moldex-Metric, Inc. v. McKeon Prod., Inc., 891 F.3d 878 (9th Cir. June 5, 2018). Reversing summary judgment granted below, the court observed that “[t]he functionality doctrine is meant to promote free competition by ensuring that patent law remains the only legal source of exclusive rights in utilitarian features.” But, as the court further reasoned, one must “consider the existence or nonexistence of alternative designs as probative evidence of functionality or nonfunctionality.” In other words, there are many bright colors out there, and the functionality doctrine would not shield one from copying the exact same shade of lime green. Notably, the court goes on to observe that “we expressed doubt that summary judgment should be granted on functionality,” thus possibly foreclosing this procedural move for the foreseeable future.
The Sad Tale of Powerless Arbitrators. Alas, Bruce Willis had to lose over $5 million dollars for all of us to find out that even when your arbitration agreement provides for the arbitrator to determine which parties are bound to arbitrate, it is still the court that must decide the issue. This expensive lesson was handed down by Division Four of the Second Appellate District in Benaroya v. Willis, 23 Cal. App. 5th 462 (May 17, 2018). In this case, Bruce Willis sought to recover for a movie he never made, and he sued both the production company and its alleged alter ego individual owner. Trouble is, the owner never signed the arbitration agreement, and it was not up to the arbitrator to decide that he was nevertheless bound to arbitrate. This is despite the fact that the agreement called for arbitration under JAMS, which specifically enables arbitrators to rule on their own jurisdiction. Lesson learned: whatever the arbitration agreement says, you are not bound by it unless you signed it—or until the court rules that you must arbitrate.
The Immoral Landscape of the U.S. Copyright Law. Remember the Jay-Z case we reported back in February 2017? (See Big Pimpin’, Not So Big in Egypt, below.) The Ninth Circuit finally ruled that the moral rights claimed by the original Egyptian author of the song sampled by Jay-Z in his Big Pimpin’ hit are nonexistent in the United States, even if the author objects to the sample being used in a song dealing with “hoes, drugs and spendin’ cheese.” In Fahmy v. Jay-Z, No. 16-55213 (9th Cir. May 31, 2018), the court found that there are no moral rights in U.S.; thus, once the original author struck the deal with Jay-Z, the latter could use the sample any way he chose. In doing so, the court analyzed the Berne Convention and concluded that it cannot afford more protections than domestic law: “Since our federal law does not accord protection of moral rights to American copyright holders as to non-visual art, neither does it recognize Fahmy’s claim to moral rights.” In other words, Jay-Z cannot be constrained by foreign laws when he is big pimpin’.
Can’t SLAPP a hero. In this nasty family feud involving a decorated war hero, General Charles E. “Chuck” Yeager wins the day by staying in court with his legal malpractice action and resisting his former lawyers’ SLAPP motion. In Yeager v. Holt, 23 Cal. App. 5th 450 (May 16, 2018), the Third Appellate District rules that just because the lawyers’ actions at issue took place in court, it does not make them part of the “protected” conduct required by the statute. Moreover, just because General Yeager is famous does not mean that his claim of misappropriation of his name or likeness (apparently included in this malpractice lawsuit for good measure) is itself a matter of public interest. In other words, the court rightfully refuses to expand the SLAPP reach beyond the narrow application meant by the Legislature, which is certainly a cause for celebration in the land of SLAPP jurisprudence.
Monkey Business. Struggling not to entitle this entry as the “Duh!” entry of the month, we are happy to report that monkeys cannot sue for copyright infringement after all. As we reported back in July 2017 (see No Monkeying Around below), the Ninth Circuit undertook this novel question of law and now resolved it in Naruto v. Slater, No. 16-15469, __ F.3d __ (9th Cir. Apr. 23, 2018). Indeed, the caption says it all, as the plaintiff-appellant is designated as “NARUTO, a Crested Macaque, by and through his Next Friends, People for the Ethical Treatment of Animals, Inc.” One has to be a human to have standing to sue under the Copyright Act, boldly concludes the Ninth Circuit, leaving the selfie-snapping monkey without redress. The Ninth Circuit does have a point though, since the statute “does not expressly authorize animals to file copyright infringement suits….” Interestingly, Article III standing to sue in federal court is not completely out of reach for Naruto, as the court relied on Cetacean Cmty. v. Bush, 386 F.3d 1169 (9th Cir. 2004), for its holding that one need not be a human to obtain constitutional standing. Alas, unless Congress specifically provides a right to sue for a non-human under a given statute, Naruto will have to get its banana money elsewhere.
SLAPPing Yourself Out of Court. Sometimes you can plead yourself right into SLAPP coverage, as Vilutis v. NRG Solar Alpine LLC, No. B268092 (Apr. 10, 2018), persuasively demonstrates. In Vilutis, plaintiff attended a townhall meeting with a purpose of trying to get a lucrative contract to provide trees to a solar farm. The meeting ended in a heated exchange, wherein plaintiff was called a “faggot” and ordered out of the meeting. Plaintiff sued, alleging a conspiracy to inflict emotional distress stemming from the conspirators’ desire to keep the lucrative tree contracts to themselves. Public forum and public issue, rules Division Three of the Second Appellate District, upholding the suit’s dismissal under the anti-SLAPP statute. Clearly, if the plaintiff did not overplead his case and came up with simpler and more apparent motivations behind the exchange, the result would have been markedly different. This is a costly mistake, given that the aggrieved plaintiff is now stuck not only with defendant’s attorney’s fees below but also with its costs on appeal.
SLAPPing Ms. Melanie. If you are a fan of Gone with the Wind, you will certainly appreciate our title’s reference. Alas, Ms. Olivia de Havilland, who memorably portrayed Melanie Hamilton Wilks in that movie classic, has just got SLAPPed out of court in her feud with the creators of FX series The Feud: Bette and Joan. The 101-year-old actress contended that the series portrayed her as a vulgar hypocrite and gossip. Free speech is the answer, says Division Three of the Second Appellate District in de Havilland v. FX Networks, LLC, No. B285629 (Mar. 26, 2018). Based on this answer, the court reversed de Havilland’s win below, finding that the series’ portrayal was transformative enough to defeat the actress’ right of publicity claim. The court also concluded that there was nothing offensive in the portrayal to support her false light claim, since discussing Frank Sinatra’s well-known love for drinking or having de Havilland call her sister a bitch instead of a dragon lady, as she actually referred to her in real life, simply does not pass the required threshold of offensiveness. Finally, the fact that de Havilland is “a living legend” and “an internationally-known celebrity” does not excuse her from the required showing of malice on behalf of FX, which she could not prove.
Blurring the Copyright Lines. The Ninth Circuit largely affirms the multi-millions verdict arising from the hit song Blurred Lines in Williams v. Gaye, No. 15-56880 (9th Cir. Mar. 21, 2018). Truly, the only new winner that emerged here was T.I., since the Ninth Circuit ruled that the trial court erred when it overruled the jury’s verdict in his favor based on supposedly inconsistent verdicts. The Gaye family waived any challenge based on such an inconsistency by failing to object thereto prior to the jury’s dismissal, says the court. While T.I. can celebrate, the musical creativity gets stifled by this decision, warns the strong dissent. After all, it essentially allows one to copyright a musical style or “the groove.” The Ninth Circuit, however, can only do so much: “[O]ur decision hinges on settled procedural principles and the limited nature of our appellate review, dictated by the particular posture of this case and controlling copyright law.” In other words, the Ninth Circuit rightfully refuses to play the jury here, and—from the purely appellate standpoint, one cannot help but admire the court for its unwavering principles.
Hear No Evil, See No Evil. What you do not know, can hurt you, right? Not if you are an adult video sharing website operator, rules the Ninth Circuit in Ventura Content, Ltd. v. Motherless, Inc., 885 F.3d 597, 601 (9th Cir. Mar. 14, 2018). If you do not police the content, then you are immune from copyright infringement liability under the Digital Millennium Copyright Act. Here, Motherless qualified for the immunity because it merely stores the content at its users’ direction rather than picks and chooses the content to store. As such, when you are in the adult video sharing business, the less you know as the platform owner, the better. And, of course, once you actually know of the infringement, it is imperative that you act fast to take it down—or lose your immunity altogether. The burden of policing is thus squarely on the copyright owners, and all the website operators can breathe a little easier.
A Goodfella Just Can’t Get a Break. Frank Silvero, an actor who portrayed mob characters in such classics as Goodfellas and Godfather Part II, cannot maintain a lawsuit for “Simpsonization” of his characters, rules Division Seven of the Second Appellate District in Sivero v. Twentieth Century Fox Film Corp., No. B266469 (Feb. 13, 2018). Even though Louie on The Simpsons does resemble Silvero, the “Simpsonization” process itself is just so creative that it transformed whatever Silvero created into a new original work. “Contrary to Sivero’s argument, the fact other cartoon characters in The Simpsons share some of the same physical characteristics does not detract from the point these physical characteristics are transformative. Indeed, Sivero’s observation highlights the very point that the creative elements predominate in the work,” writes Division Seven. Fox thus walks away with the SLAPP win, and The Simpsons fans everywhere can breathe a collective sigh of relief.
Sheikhs, Drugs and SLAPPs All Around. Fox certainly got SLAPP-happy this month when its affiliate, News Corporation, walked away with a win in Bryan v. News Corp., No. B275567 (Feb. 6, 2018). Oh, what a juicy headline this was: Duchess Fergie’s former lover supplied drugs and prostitutes to a mysterious Saudi sheikh! Trouble is, this was about twenty years ago, when News of the World sent a fake sheikh with a news crew to entrap Bryan and make an illegal recording of the encounter. But wait, BBC to the rescue! In 2014, it runs an expose on the whole story, with Bryan now having a nice hook to claim republication of the whole thing. Not so fast, rules Division Seven of the Second Appellate District again, which just seems to hand out SLAPP wins to Fox this month like hot cakes. The republication was not by the original defendants, reasons the court; thus, it does not revive the claims. And while Bryan does go back to trial court with his illegal recording claim intact, his libel and invasion of privacy claims cannot survive. And no, Rupert Murdoch’s 2011 public apology for his company’s hacking practices did not save the day: just a “public relations message,” says the court.
Who Heard That Tree Falling? The Ninth Circuit cannot find an injury and thus rejects constitutional standing for plaintiffs that received a credit card receipt revealing the full expiration date for the card. In Bassett v. ABM Parking Servs., Inc., No. 16-35933 (9th Cir. Feb. 21, 2018), the court concludes that a statutory violation in itself does not confer an injury on consumers just because the receipt is issued and nobody but the consumers sees that receipt. “We need not answer whether a tree falling in the forest makes a sound when no one is there to hear it. But when this receipt fell into Bassett’s hands in a parking garage and no identity thief was there to snatch it, it did not make an injury.” As such, unless the receipt does actual harm, the Ninth Circuit turns a deaf ear to that particular tree.
Even Tinder Can’t Judge. Happy New Year, and welcome to the harsh world of dating apps. Yes, you knew Tinder discriminated based on your age, but what you did not know is that Tinder violated California law by doing so. As Division Three of the Second Appellate District determined in Candelore v. Tinder, Inc., No. B270172 (Jan. 29, 2018), Tinder’s discriminatory pricing model, which charged older customers more because Tinder viewed younger audience as more “budget conscious,” violates the Unruh Act and the Unfair Competition Law. This is because Tinder’s generalizations about its users’ incomes were “arbitrary” and “class-based.” And, of course, the best thing about this opinion is the court’s colorful holding: “Accordingly, we swipe left, and reverse.”
Name That Class Member. If you are an unnamed class member, you cannot appeal the judgment rendered in your class action, say the Supremes in Hernandez v. Restoration Hardware, Inc., No. S233983 (Jan. 29, 2018). But do not despair, unnamed class action members, you’ve got options. One is intervention. Another is filing an appealable motion to set aside the judgment below. In reaching this conclusion, the Supremes went all the way back to 1942 to affirm Eggert v. Pac. States Sav. & Loan Co., 20 Cal. 2d 199 (1942). This, of course, proves that there is nothing new under the sun—or in California jurisprudence, for that matter.
Get Your Documents Here! This is not the most exciting opinion of the year, but ‘tis the season, and we do not get much activity on appellate level this time of year. Still, it is important to know that, as the Ninth Circuit held in CVS Health Corp. v. Vividus, LLC, 878 F.3d 703 (9th Cir. Dec. 21, 2017), your arbitrators proceeding under the Federal Arbitration Act do have the power to bring out-of-state nonparties to the arbitration hearing and make them produce documents at the hearing. While this may sound a tad inconvenient, given that you would have to digest newly produced documents in a short amount of time, one can envision an arbitrator scheduling a hearing just to get the documents produced and then continuing the hearing to another date to let the parties digest the new documents. Surely, that is better than having no document production from third parties at all, as you would have it in some other circuits. Consider it a Christmas gift from the Ninth Circuit.
To Fraction or Not to Fraction. Given the holiday hiatus in California, we will check in with other circuits around the country to find relevant appellate opinions. Case in point is the Second Circuit, which upheld BMI’s power of fractional music licensing in United States v. Broadcast Music, Inc., No. 16-3830-CV, 2017 WL 6463063 (2d Cir. Dec. 19, 2017). This may complicate matters for public music broadcasters, while increasing music publishers’ market powers. Still, the Second Circuit is not bothered by the consequences, pointing out that the Copyright Act contemplates that rights may be transferred in whole or in part. New music services such as Spotify and iHeartRadio, however, may end up passing the added costs to their end users. Stay tuned.
Offend Away, Part Deux. Following on the Supremes’ opinion in Matal v. Tam that dealt with the music band called the Slants (check out our June 2017 entry entitled Offend Away below), the Federal Circuit decided that it will not be offended by the clothing brand fuct in In re Brunetti, 877 F.3d 1330 (Fed. Cir. Dec. 15, 2017). Yes, the mark is “vulgar,” writes the Federal Circuit, but the government has no “substantial interest” in policing vulgarity when it comes to trademarks. “[T]he fact that society may find speech offensive is not a sufficient reason for suppressing it,” concludes the Federal Circuit. As such, free speech is more important than offending certain impressionable consumers, and this is a great lesson to take us into the next year.
The Public Is Not Always Interested Just Because You Are Talking. Our SLAPP bonanza this month opens with a decision from Division One of the Fourth Appellate District in Bonsu v. Rady Children’s Hosp.-San Diego, No. D071076 (Nov. 21, 2017). There, defendant continued in the unfortunate stead of SLAPP-happy employers who attempt to shield themselves from bad-mouthing their employees by invoking the statute that was never meant to protect them in the first place. Even though defendant in Bonsu runs a pediatric emergency care facility, which certainly involves issues of public interest, the court rejected defendant’s SLAPP attack because its statements had nothing to do with the issue of pediatric emergency care. Rather, the statements at issue attacked the plaintiff’s employment status and his interactions with the other staff at the facility. As such, defendant’s “constitutionally protected activity is not implicated, because Plaintiff’s defamation cause of action is not ‘based on’ statements involving pediatric emergency health care…” In other words, to paraphrase Seinfeld’s infamous Soup Nazi, no SLAPP for you.
No Horsing Around Litigation Communications. Our SLAPP extravaganza continues with a decision from Division Six of the Second Appellate District in Tesfamichael v. PMB Stock Co., No. 2D CIV. B279056 (Nov. 21, 2017). (Stay safe, Division Six! It is currently closed due to the wildfires.) The plaintiff here rented a horse and allegedly misrepresented himself as a “good rider.” After sustaining injuries during his horse [mis]adventures, he sued, and defendant countersued, alleging that plaintiff’s statement that he was a good rider caused damages—after all, defendant ended up in a lawsuit because of it. The court here held that SLAPP applies via the litigation privilege. This is because plaintiff’s filing of his complaint is a protected communication under the statute, as it involves plaintiff’s constitutionally protected activity of seeking redress for his grievances. Tesfamichael thus gets to ride into the sunset after all and presumably collect his SLAPP attorney’s fees below.
The Silence Breakers Can SLAPP, Too. The third SLAPP opinion issued on the very same day as the two previous entries comes from Division Five of the Fifth Appellate District in Brenner v. Hill, No. A149758 (Nov. 21, 2017). This one should have been a no-brainer, since it involved professional models who posted an online “blacklist” of photographers who had allegedly engaged in sexually inappropriate behavior in professional settings with models. Alan Brenner, one of those on the list, sued the models for defamation and related torts. The models successfully moved to strike the complaint under the anti-SLAPP law, and the court affirmed. After all, this is the Year of the Silence Breakers, and the issues at hand exemplify matters of public interest. Notably, Brenner also failed his burden on the second prong of the SLAPP analysis because he could not master any evidence to show that the allegations were untrue. His strenuous denials of the allegations in his appellate briefs came too little, too late: it was his burden to introduce sworn evidence below. In other words, if you cannot prove your defamation claims through a simple declaration under oath, do not bother suing in the first place.
Yelpers Can SLAPP, Too. This was quite a day for SLAPP opinions, as the fourth opinion issued on November 21, 2017 comes from Division One of the Fourth Appellate District in Hays v. Gagliardi, No. D070211 (Nov. 21, 2017). The case involved a Yelp review by an unhappy customer of patio construction services. The court confirmed that “comments on a consumer-oriented web page devoted to providing consumers with information about businesses, such as Yelp …, when such comments provide information that could assist others in choosing whether or not to patronize that business, qualify as statements were ‘in connection with ... an issue of public interest….’” On the second prong, the court concluded that Yelp reviews are, for the most part, inactionable since they are opinions after all and do not involve any assertions of fact required for defamation claims to survive. The next time your write a Yelp review, make sure to make it as opinionated as possible—just to be on the safe side.
SLAPP Happy. If you thought November 21 only gave us four SLAPP opinions, you thought wrong! The fifth opinion comes from Division Three of the First Appellate District in Smith v. Cty. of Alameda, No. A149228 (Nov. 21, 2017). SLAPPing here was short and swift, as the plaintiff had already filed 17(!) lawsuits against the county focusing on the allegedly fraudulent recording of a deed of trust relating to certain real property. The latest attack aimed at a litigation document defending the recording of the deed, which the court found to be a privileged communication protected by the statute. It also did not help that plaintiff could not produce any evidence that the document was false. Along with the SLAPP order, plaintiff here was declared a vexatious litigant and precluded from filing any more lawsuits without a special dispensation from the trial court. Certainly, drawing a line at 17 lawsuits seems like a good idea.
No SLAPPing for Cosby. In this sixth and final entry on what should now be known as the SLAPP Day in California jurisprudence, Division Eight of the Second Appellate District in Dickinson v. Cosby, 225 Cal. Rptr. 3d 430 (Nov. 21, 2017), allowed Janice Dickinson’s defamation suit against Bill Cosby to proceed. After Dickinson publicly claimed that Cosby raped her, Cosby’s attorney sent her a demand letter and issued a public release, essentially accusing Dickinson of lying. The court ruled that the letter and the release were not protected by the litigation privilege because defendants never contemplated any litigation in good faith—rather, they were posturing and never actually followed up with any litigation. The court also concluded that the documents at issue were not limited to opinions but asserted contentions of provable fact because they cited certain biographical details in their attempt to demonstrate that Dickinson should not be believed. Finally, Dickerson survived the second prong of the analysis because Cosby could not defend based on substantial truth, as the letter and the release essentially claimed that Dickinson lied about the rape itself and not that she was a liar in general.
Keep Talking, Comic Con. You have an unfettered right to discuss your lawsuit in public according to the Ninth Circuit Court of Appeals. In a suit involving the battle of Comic Cons, In re Dan Farr Prods., No. 17-72682, __ F.3d __, 2017 WL 4837764 (9th Cir. Oct. 26, 2017), the organizers of Salt Lake Comic Con were precluded from speaking out about their trademark dispute with the organizers of San Diego Comic Con based on the trial court’s concern that the potential jury pool would get tainted by the various heated discussions on social media. The Ninth Circuit would have none of that: finding the speech restraint “unconstitutional,” the court concluded that the far-ranging reach of the internet does not justify the gag order. True, the parties involved have “more than 5,200 followers, the Salt Lake Comic Con Twitter feed has more than 30,000 followers, there have been more than 200,000 media articles reporting on the instant case, and in 2014 Salt Lake Comic Con had more than 120,000 attendees.” Yet one’s popularity cannot trump the Constitution, especially where, as here, the jury pool is a “list of approximately 1.75 million registered voters in San Diego and Imperial Counties.” Surely, that large of a pool is perfectly capable of yielding twelve impartial citizens to decide who gets to host your superheroes next year.
Bursting the Arbitration Bubble. Yes, it may be perfectly legal to require your employees to waive their right to a jury trial as a condition of employment. But getting too greedy with arbitration has its consequences. Case in point: Baxter v. Genworth N. Am. Corp., No. A144744 (Oct. 26, 2017), wherein Division Three of the First Appellate District found that the arbitration provisions in question were just too onerous to survive scrutiny. After all, the employer here severely limited the employees’ discovery rights and imposed egregious time limits on pursuing their grievances. Somewhere some arbitration-happy in-house lawyer is probably shaking his fists in anger. But the lesson here is that moderation is the key ingredient in everything, including arbitration clauses in employment agreements.
The Walking Dead Claims. This month, given the dearth of appellate opinions dealing with matters of entertainment law, we will entertain ourselves with zombie claims. That’s not a legal term per se; rather, this is the end result of what happened in F.E.V. v. City of Anaheim, 15 Cal. App. 5th 462 (Sept. 19, 2017). There, Division Three of the Fourth District grapples with an age-old problem of supplemental jurisdiction. Namely, what do you do when you have federal and state law claims, federal claims get dismissed and that dismissal is affirmed on appeal, then state claims are refiled in state court, dismissed because of the federal dismissal, which is then affirmed on appeal, but then the full panel of the Ninth Circuit suddenly reinstates the federal claims? If you are getting a headache just reading this, you are not alone. Fortunately, the F.E.V. court found a cure: when all of the above happens, you get a free-pass on reviving your state law claims under the “exceptional circumstances” exception to claim preclusion. So there they go, dead claims walking.
You are Not in Hollywood Anymore, Harvey. Thankfully, it is a different Harvey this time, as we will take a quick trip to New York, given that California courts seem to have taken a hiatus on relevant opinions this month. This Harvey is Harvey Keitel, and he insists that he had a deal with E*Trade to star in their commercials. Not according to New York courts, as it becomes clear from Keitel v. E*TRADE Fin. Corp., 153 A.D.3d 1181 (N.Y. App. Div. Sept. 26, 2017). The court there rejected the notion that Hollywood napkin-deal practices can substitute for the law of New York. Rather, the court held that just because Harvey’s agent requested a firm offer and the company intended to give it to him, it does not mean that the term-sheet circulated between the parties that specifically presupposed further negotiations became a binding contract. New York courts—just like all the courts around the country—prefer for the parties to actually read what the supposed contract says, which is always a good rule of thumb.
“Star Wars is still Star Wars, even without Princess Leia’s bikini scene,” writes the Ninth Circuit in Disney Enterprises, Inc. v. VidAngel, Inc., 869 F.3d 848, 861 (9th Cir. Aug. 24, 2017), and one cannot help but wonder if the end of summer is to blame for the justices having bikinis on their minds. Famous buns aside, however, the decision is noteworthy for being the first one to interpret the Family Home Movie Act as a defense to copyright infringement. Defendant in this case, VidAngel, came up with an ingenious app that stripped movies of any offensive content. However, the statute, which allows filtering of an authorized copy, did not apply to VidAngel, which sold new movies to its customers for $20 and then bought them back to filter for $19. VidAngel had no luck in the fair use department either, since making the movies non-offensive is not transformative enough for this defense to apply. For now, you will just have to avert your eyes whenever the bikini scene comes on.
Pierce Away. If reverse veil piercing sounds painful, it is actually pretty cool. In Curci Investments, LLC v. Baldwin, 14 Cal. App. 5th 214 (Aug. 10, 2017), Division Three of the First Appellate District held that a limited liability company in which the judgment debtor held interest could be added to the judgment. All one needs to do is to make a proper showing under the alter ego test to have a new and shiny judgment debtor added to one’s judgment. This sounds great in theory but the facts in Curci may make it an outlier, since the judgment debtor there held a 99 percent interest in the company, and his wife, who was also liable for his debts, held the remaining one percent interest. As such, there was “simply … no ‘innocent’ member” of the company “that could be affected by reverse piercing here,” concluded Division Three. It remains to be seen if reverse piercing takes hold on different facts in California.
Choose Your HR Managers Wisely. The Ninth Circuit holds that your company will still be responsible for federal law violations and multiple fines if you start getting letters from the United States, and your human resources director “literally stuff[s] the government’s correspondence in a drawer and never respond[s].” The company in DLS Precision Fab LLC v. U.S. Immigration & Customs Enf’t, 867 F.3d 1079 (9th Cir. Aug. 7, 2017), learned this the hard way to the tune of a $300,000+ penalty based on the court’s holding that there is no good faith defense to failing to check immigration status of its employees and then ignoring repeated warnings of the violations. Ouch.
No Monkeying Around. This case is not new and nothing will happen to it this month, other than oral arguments—but in this otherwise slow appellate month, how about a case brought by a monkey claiming copyright? Meet an Indonesian crested macaque named Naruto, who is currently proceeding as the plaintiff before the Ninth Circuit in Naruto v. Slater, Case No. 16-15469. The case arises out of a selfie taken with a camera momentarily abandoned by a wildlife photographer in an Indonesian forest, which went viral. PETA thinks Naruto owns the rights to the picture. The argument goes that just because Naruto is a monkey, it does not mean that he could not be the author. The district court below disagreed, ruling that Naruto lacks standing to sue in federal court. Undaunted, PETA still contends that Naruto is the copyright owner. How would a monkey even proceed with a lawsuit, one might wonder? There is a little known procedural device entitled the “next friend”—which, incidentally, now is creating its own side-show in the case, since Naruto’s “next friend,” a U.K.-based primatologist that claims to have known Naruto since his birth in 2008, is embroiled in a related legal dispute with PETA. All monkeying aside, however, PETA claims that the case may have long-standing implications for future cases involving works created by artificial intelligence. For now, however, Naruto does not expect to be paid in bananas, as any damages Naruto recovers would be used to protect his species—which is endangered and at risk of extinction. Stay tuned.
Yes, Toto, You Are In Kansas But You Still Cannot Infringe. The Ninth Circuit entered the high-stakes world of furniture sales in Stone Creek, Inc. v. Omnia Italian Design, Inc., 862 F.3d 1131 (9th Cir. July 11, 2017). Stone Creek is a well-developed furniture mark in Arizona, yet Omnia thought the Midwest was remote enough that they could just copy Stone Creek’s logo there on their own furniture. Omnia was quite open about it, contending that they get to hide behind the Tea Rose–Rectanus defense, which essentially absolves one from trademark infringement liability if the infringing area is geographically remote. Where Omnia went wrong, however, is that they lacked in good faith required for the defense, since they knew full well of Stone Creek’s prior use. And let’s face it: calling the Midwest a “remote geographic area” will never carry the day.
The One Time When a Big Studio Actually Lost in the Ninth Circuit. Yes, we have seen the day when the Ninth Circuit actually handed down a loss to a major studio. It happened in Jordan-Benel v. Universal City Studios, Inc., __ F.3d __, 2017 WL 2637350 (9th Cir. June 20, 2017), which is an idea theft suit for the box-office horror smash the Purge. The studio attempted to SLAPP the plaintiff out of court, contending that it exercised its First Amendment rights to filmmaking by making the picture. Not so fast, concluded the Ninth Circuit, since it found that the suit arose out of the studio’s failure to pay for the idea rather than its filmmaking. This suit is also an interesting example of an idea theft suit employing a breach of contract claim rather than a copyright infringement cause of action: plaintiffs’ bar is getting creative, given the difficulty of proving infringement. Truly, it is the innovation that keeps the law alive.
How Fair is Fair Use? The U.S. Supremes might have effectively tripped up dancing babies everywhere by refusing to review the Ninth Circuit’s decision in Lenz v. Universal Music Corp., 815 F.3d 1145, 1150 (9th Cir. 2015), cert. denied sub nom. Lenz v. Universal Music Corp, 2017 WL 2621318 (U.S. June 19, 2017). Lenz is a mother who in 2007 posted a YouTube video of her then toddler dancing to Prince’s 1984 hit, “Let’s Go Crazy.” The video was removed after Universal notified YouTube that it infringed its rights. The Ninth Circuit tipped the balance in Universal’s favor by ruling that fair use of any copyrighted material depends on the copyright owner’s subjective belief. In other words, as long as Universal actually believed that the use was not fair, its takedown notice would stand. The case is now on the way to trial for Lenz to show that Universal actually knew that it was wrong to take down the dancing tyke.
Offend Away. The U.S. Supremes say you have a Free Speech right to offensive trademarks in Matal v. Tam, __ U.S. __, 137 S. Ct. 1744 (June 19, 2017). In this case, the Asian-American frontman for a rock band entitled the Slants argued that he had the right to trademark his band’s moniker in an effort to reclaim a stereotype. Justice Alito writing for the Court agreed, stating that “[s]peech may not be banned on the ground that it expresses ideas that offend.” Aside from potentially alleviating a great deal of confusion at the U.S. Patent and Trademark Office resulting from controversial trademarks, this opinion may also help the NFL’s Washington Redskins down the road, whose own marks were canceled for being disparaging to Native Americans. Clearly, the current landscape of political correctness is about to undergo a significant transformation under this new Law of the Land. Stay tuned.
Good Faith Cannot Rewrite Your Contract. It is almost summer, and the dearth of appellate decisions this month shows it. Division Two of the Second Appellate District seems to be the only one busy with relevant cases this month, ruling that a co-producer of a Jimi Hendrix concert movie did not breach the contract by refusing a distribution offer that would have spelled out a limited release for the film. In Experience Hendrix, LLC v. Last Experience, Inc., Case No. B268414 (May 8, 2017), the court rejected the other co-producer’s argument that the implied covenant of good faith and fair dealing supplies a nonexistent contractual term requiring acceptance of the offer. Similarly, any “reasonableness” limitations should have been written into the contract: “The parties knew how to impose a reasonableness requirement when they wanted one; we must give effect to their decision not to place one in the approval provision.” In other words, put it in writing.
When Speech Does Not Translate Into SLAPP. California State University cannot SLAPP out of court one of its professors who sued for wrongful denial of tenure. The Supremes ruled as much in Park v. Bd. of Trustees of California State Univ., 2 Cal. 5th 1057 (May 4, 2017). The court found that the professor’s claim, which was based on allegations that Caucasian professors with worse records got promoted over the plaintiff, who is of Korean origin, did not actually arise from any protected activity. This is because the claim arises from the tenure decision itself and the motives underlying that decision—not from the various communications surrounding it. The court rejected the University’s arguments that the tenure decision was inextricably linked with the underlying communications and that the decision itself necessarily triggered public interest: public interest alone does not suffice, unless the tenure decision furthered the University’s free speech rights.
Oh Yes They Did! In this Ninth Circuit-centric month, the court held that LiveJournal’s moderators can be the website’s agents for purposes of an infringement suit by notorious paparazzi over a photo of Beyonce bearing the photographer’s watermark. The Ninth Circuit reversed a summary judgment ruling based on this conclusion in Mavrix Photographs, LLC v. LiveJournal, Inc., 853 F.3d 1020 (9th Cir. 2017), finding that the moderators of the popular Oh No They Didn’t! community devoted to celebrity gossip can subject the website to liability for copyright infringement. Although they are volunteers, “LiveJournal relies on moderators as an integral part of its screening and posting business model.” The court concluded that this gate-keeping function makes any takedown notice under the Digital Millennium Copyright Act unnecessary, since the moderators’ knowledge of the infringing material gets imputed to the website. Lesson learned: either get rid of moderators altogether or pay them enough to pay attention.
License to Commission. The Ninth Circuit has no problems with California's Talent Agencies Act (TAA), which leaves unlicensed personal managers in the dust when it comes to collecting commission on their talent’s work. In National Conference of Personal Managers, Inc. v. Brown, No. 15-56388, 2017 WL 1457037 (9th Cir. Apr. 25, 2017), the court rejected a slew of challenges to the statute, ranging from the dormant Commerce Clause to due process. Interestingly, the plaintiff also asserted the First Amendment challenge to the statute, albeit unpersuasively: “We agree with the district court that the TAA regulates non-expressive conduct, not speech …. Because the TAA ‘regulates a professional practice that is not inherently expressive, it does not implicate the First Amendment.’ It is only subject to rational basis review, which it survives."
How To Lose Billions in Claims Against Disney. In Mathew v. Walt Disney Company, No. 15-56726, 2017 WL 1629070 (9th Cir. May 2, 2017), the Ninth Circuit hands a major victory to Disney, finding that the alleged author of the copyrighted material that serves as the basis for Disney’s ever popular Pirates of the Caribbean franchise waited too long to reassert his claims against the company. Although this opinion technically spills into the next month, we simply could not wait to tell you that delay spells doomsday for your claims when Disney keeps making money off your creation and you say nothing for years. This holds true even if you actually asserted your claims in court and then withdrew them, signing a release agreement upon dismissal, as Mr. Mathew did here. Your rescission claims based on fraudulent misrepresentations brought years after the release will suffer the fate of “too little, too late,” as they did here.
Boxing SLAPP-style. As the SLAPP-jurisprudence is still as fertile as ever, the latest opinion on the subject comes from Division Seven of the Second Appellate District, proving that boxers' break-ups are newsworthy, but their newsworthiness has its limits. In Jackson v. Mayweather, Jr., Case No. B266466 (Mar. 27, 2017), the court affirmed what everyone suspected all along: all celebrity gossip is SLAPP-worthy. Floyd Mayweather can thus freely mouth off in public about the reasons he broke up with his girlfriend. But posting a sonogram to prove she had an abortion is going too far, as it “served no legitimate public purpose, even when one includes entertainment news within the zone of protection” and was thus “outside the protection afforded a newsworthy report.” As such, it was not a complete knockout for the former boxing champion, but most of the claims here did get SLAPPed out of court after all.
When the Contract Does Not Mean What It Says. Division Seven also handed a stunning defeat to Disney this month in Wind Dancer Prod. Grp. v. Walt Disney Pictures, Case No. B262426 (Mar. 22, 2017). The case arose out of the hit show Home Improvement. The writers and producers brought claims focusing on their profit participation statements that undervalued their participation rights. The case was dismissed below over the plaintiffs’ failure to abide by the “incontestability” clause in their contracts that set a time limit for bringing claims. Although plaintiffs argued that the studio orally waived the condition, the trial court ruled that the argument was precluded by the contract that required any modifications to be in writing. The court of appeals reversed, holding that Disney’s conduct in delaying the audit process may provide sufficient basis to stop the studio from invoking the “incontestability” clause. Moreover, the “no oral modification” clause itself may be waived by words or conduct, which turns the clause into an empty gesture for any future contract drafting in California.
C-O-P-Y-R-I-G-H-T! The United States Supreme Court thinks cheerleader uniforms deserve protection, finding them to be “two- or three-dimensional work of art” in Star Athletica, L.L.C. v. Varsity Brands, Inc., Case No. 15-866 (U.S. Mar. 22, 2017). Writing for the majority, Justice Clarence Thomas concluded that arrangement of stripes, chevrons and color blocks on cheerleader uniforms is entitled to copyright protection. The main issue here was whether the design could be separated from its utilitarian purpose: would anyone find it aesthetically interesting as opposed to simply useful? The Court ruled that the arrangement was artistic enough to be copyrightable because “when identified and imagined apart from the useful article, it would qualify as a pictorial, graphic, or sculptural work either on its own or when fixed in some other tangible medium.” In other words, go, Supremes, go!
Back in the SLAPP land, all jokes aside. In this relatively quiet month for appellate news, our first entry comes from the ever-prolific anti-SLAPP jurisprudence and involves one of the Wayans brothers. In Daniel v. Wayans, 8 Cal. App. 5th 367 (Feb. 9, 2017), Division One of the Second Appellate District affirmed the trial court’s dismissal of a lawsuit against Marlon Wayans. Plaintiff in this case, an African-American actor, brought claims based on certain (allegedly) offensive racial slurs directed at him by Marlon on the set of Marlon’s movie, Haunted House 2, as well as through Marlon’s tweets. The most notable strain of reasoning here was the appellate court’s determination that Marlon’s speech was SLAPP-worthy just because this was a movie sequel after all. As such, whatever creative process Marlon utilized for this movie, it must have involved a matter of public interest! As for the second prong of the anti-SLAPP analysis, the court essentially concluded that Marlon has a First Amendment right to be funny, thus presumably paving the way for Haunted House 3.
Big Pimpin', Not So Big in Egypt. Jay-Z and Timbaland are still stuck in the Ninth Circuit over their hit Big Pimpin' in a court battle that took over eight years to get to trial below. The case centers on a sample of an Egyptian 1957 song Khosara Khosara, which is the main hook in Big Pimpin'. And while the Egyptian song at issue now appears to have been validly licensed, the heirs of the song writer raise an interesting issue on appeal. In their latest brief filed in Osama Ahmed Fahmy v. Jay-Z (aka Shawn Carter) et al., Case No. 16-55213 (9th Cir.), they argue that the license could not have authorized Jay-Z and Timbaland to turn a chaste romantic ballad into rhymes about “hoes, drugs and spendin’ cheese.” In other words, the song writer’s family now raises moral objections to their family name being associated with Big Pimpin'. It remains to be seen whether this concept gets any recognition from the Ninth Circuit, which would dramatically alter the landscape of music licensing. Stay tuned.
On the mark, ready, SLAPP. In our first entry for this SLAPP-happy month, the Ninth Circuit affirms denial of an anti-SLAPP motion below in Safari Club Int’l v. Rudolph, No. 14-56236 (9th Cir. Jan. 18, 2017). The case involved an award-winning hunter, who had sued his hunting club for exiling him and then lured the club’s president to lunch to discuss the pending lawsuit, all the while surreptitiously recording their conversation so that he could post it on YouTube later. The opinion is remarkable in itself for its many hunting references alone: the Ninth Circuit wrote that “the season opened” with defendant’s own suit, defendant lured the club’s president to lunch “[w]ith his quarry in sight,” the club “fired back … with a barrage of legal claims,” and defendant “seeks to line up the perfect shot” on appeal, although his “marksmanship, apparently on target in the tundra, here is wide off the mark.” The hunting lingo aside, the opinion confirms that winning on the first “public interest” prong of the SLAPP analysis, as defendant did here (since the issues were of interest to a broad segment of society), does not guarantee SLAPPing your plaintiff out of court. Indeed, as the Ninth Circuit confirmed here, there is a reasonable expectation of privacy in a lunch conversation that allowed the club and its president to move forward on their invasion of privacy claims.
No jurisdiction, no problem. The Supremes confirm this month that you can get your attorney’s fees for prevailing on an anti-SLAPP motion even if the court lacks subject matter jurisdiction over plaintiff’s claims in the first place. In Barry v. State Bar of California, 2 Cal. 5th 318 (Jan. 5, 2017), an attorney disciplined by the State Bar sought to set aside the stipulation reached on her disciplinary charges, and the State Bar SLAPPed her out of court for lack of jurisdiction, since the State Bar has exclusive jurisdiction over attorney discipline matters. Reversing the appellate court contrary determination, the California Supreme Court held that if the trial court below had jurisdiction to deny the motion for lack of jurisdiction, it was also empowered to award attorney’s fees to the successful SLAPPer.
Keep your anonymous speakers alive—at least through your SLAPP appeal. James Woods means business. If you call the famous actor a “cocaine addict” online, he will “follow you to the bowels of Hell,” if not beyond. And courts would let him, too. When the anonymous poster’s lawyers attempted to SLAPP Woods’ $10 million defamation suit, the trial court denied the motion. The resulting appeal was dropped because the anonymous speaker died while the appeal was pending, thus eradicating his privacy interests. On January 3, 2017, the anonymous speaker’s attorneys were ordered to reveal their client’s identity in Woods v. John Doe, Case No. BC589746 (Cal. Super. Ct.). Sure, this entry involves no actual appellate decisions, yet we thought you should be warned to stay away from Woods’ Twitter account from now on—just to be on the safe side.
No SLAPP here. Our sole non-SLAPP entry of the month hands a major defeat to Perfect 10, an adult images website, that accused a Usenet provider of contributory copyright infringement when the images surfaced in some of its Usenet posts. The Ninth Circuit in Perfect 10, Inc. v. Giganews, Inc., No. 15-55500 (9th Cir. Jan. 23, 2017), decided that defendant failed to cross the required “volitional conduct” threshold by merely providing a platform for the exchange of the posts in question. Giganews walked away with over $5.5 million in attorney’s fees awarded against Perfect 10 under the Copyright Act, proving that sometimes defending your right not to get involved can be just as important in the whole scheme of copyright protections as protecting your creativity.
No Press Pass for CNN to Discriminate Against Its Employees. Stanley Wilson, a fired African-American Emmy Award-winning producer, gets to proceed with his employment discrimination suit against CNN, and the news station cannot hide behind the SLAPP statute, says Division One of the California Second Appellate District in Wilson v. Cable News Network, Inc., No. B264944 (Dec. 13, 2016). Just because CNN “shapes the news,” it does not mean that it should enjoy special privileges for discriminatory decisions as to who gets to report the news. After all, as the court concluded, “[t]he press has no special immunity from generally applicable laws.” In similar vein, CNN cannot freely bad-mouth its fired employees just because their job relates to issues of public interest: after all, their fitness to shape CNN broadcasts is a private matter that should remain between them and CNN.
American Idol is Still Interesting. On the opposite end of the SLAPP spectrum, Radar Online scores a get-out-of-court-free card from Division Three of the California Second Appellate District in Clark v. Radar Online, LLC, No. B264085 (Nov. 30, 2016). The court found that an American Idol contestant’s disqualification from the show due to reports that he had battered his sister was a matter of public interest. The interest in the show is widespread enough to rebut Clark’s claims that the matter was only relevant to a limited portion of the public (people who watch American Idol). Analyzing the publication as a whole (rather than parsing it out, as the trial court had done), the court also concluded that the publication was likely not actionable as defamatory because Clark failed to show that he never beat up his sister. It seems that if Clark sued to clear his name, it was advisable to make (at least) some showing that the battery allegations were untrue in the first place.
Football Coaches are Interesting, Too. Continuing with this month’s SLAPP extravaganza, Division Three of the California Second Appellate District in McNair v. Superior Court, No. B275282 (Dec. 23, 2016), had to deal with the fallout from its earlier SLAPP decision finding USC assistant coach to be a limited public figure for purposes of proving defamation damages. As a result, some of McNair’s claims were lost on appeal and some went forward. The case came back up when the NCAA attempted to exercise its second preemptory challenge against the presiding judge, and the Court of Appeals rejected that challenge, since the previous SLAPP ruling did not result in a reversal of a “final judgment.” Lesson learned: you do not get to keep changing referees in the middle of a game.
October - November 2016
Caveat Sectorem – “Broker Beware.” A broker missed out on a $925,000 commission on the purchase of a $45-million Bel Air estate for a friend because he failed to get the brokerage agreement in writing as required by California’s statute of frauds, says Division Two of the California Second Appellate District in Westside Estate Agency, Inc. v. Randall, No. B268455 (Dec. 1, 2016). Turns out, even for real estate transactions among friends, you need to get it in writing.
Real estate investors beware. Continuing with the real estate theme, an escrow company did not owe a duty of care to a non-party financier who was not listed as a third-party beneficiary of an escrow agreement in a real estate transaction. The California Third Appellate District in Alareza v. Chicago Title Company, Case No. C075547 (Nov. 16, 2016), says that even though the non-party suffered losses due in part to the escrow company’s admitted negligence in misidentifying an escrow purchaser in some insurance paperwork, the causal connection between this misidentification and the nonparty’s losses was too tenuous to impose liability. Once again, when seeking to create a legal relationship and head off future problems, the rule of thumb is to get it in writing.
Why your doorman matters (and it is not too late to buy him a Christmas gift). In Stroud Prods. & Ents. Inc. v. Castle Rock Ent. Inc., Case Nos. 14–16421 & 14–16422 (9th Cir. Oct. 25, 2016), the wife of Nina Simone's late husband, Andrew Stroud, argued that there was no jurisdiction over her due to, in part, improper personal service. In reviewing the efforts to serve her in New York, the court approved of the diligent efforts to serve her four times (including on a Saturday) and rejected her arguments that the papers needed to be left with the doorman because the doorman did not block access to her unit. As it turns out, if you live in an apartment building and your doorman does not block access at the entrance, then the entrance point is not your “actual dwelling” for purposes of personal service.
Get your alter ego early. Division Four of the California Second Appellate District in Wolf Metals Inc. v. Rand Pac. Sales, Inc., Case No. B264002 (Oct. 25, 2016), says that due process precludes you from adding an alter ego of your defendant to a default judgment. Luckily, if you are trying to add a successor company, it is another matter altogether, as long as the additional proposed judgment debtor is nothing but a “mere continuation” of the original defendant.
How not to lose $3 million in attorney’s fees. After allegedly losing millions of dollars in a hedge fund, investors sued the fund's administrator for breach of contract. The fund administrator won on summary judgment below and got awarded $3,027,237.96 in attorney’s fees under a contractual provision entitled "Standard of Care," which provides the administrator with the indemnity right for losses, including reasonable attorney’s fees pertaining to administration of the fund. Division One of the California Fourth Appellate District says “not so fast” in Alki Partners, LP v. DB Fund Servs., LLC, Case No. D068063 (Oct. 24, 2016). Reversing the award of attorney’s fees, the court explained that because the contractual language relied upon was a third-party indemnity provision, it did not create a right to attorney’s fees in litigation between the parties to the contract. But it was an easy fix for any transactional attorney worth his salt, as the court went on to observe that “[i]t would have been simple for the parties to provide: If any action is commenced to enforce or interpret the terms of this agreement, the prevailing party shall be entitled to recover reasonable attorney fees.”
August - September 2016
Your Class Action Waiver is No Good. The Ninth Circuit says mass employee class action waivers signed as condition of employment violate the National Labor Relations Act in Morris v. Ernst & Young, LLP, No. 13-16599 (9th Cir. Aug. 22, 2016). It is not a problem that the waiver directs the claims into arbitration: as long as employees can proceed by concerted action, they can be compelled to arbitrate. The bottom line is that your employees have a core right to proceed together, unless you are somehow exempted from the Act’s coverage.
Your Arbitration Agreement is No Good. Continuing with the theme of employment relations, your Employee Handbook does not create a binding agreement to arbitrate, says Division Four of the California Second Appellate District in Esparza v. Sand & Sea, Inc., No. B268420 (Aug. 22, 2016). Even if the employee signs the handbook acknowledgement form, this does not create a mutual agreement to arbitrate. The court went on to note that if the policy acknowledgement form provided clear notice that certain handbook provisions would create binding commitment after the employment ends and required all the employees to familiarize themselves with the handbook’s contents before signing the acknowledgement form, the arbitration provisions might have been upheld after all.
Your Suspended Corporation Cannot Defend Itself in a Lawsuit. The San Diego City Attorney learned this the hard way. In City of San Diego v. San Diegans for Open Gov't, No. D068939 (Sept. 22, 2016), Division One of the California Fourth Appellate District stripped him of a quarter million dollars in attorney’s fees for filing an answer on behalf of a suspended corporation. Even if your corporation gets revived along the way, it is its status during the relevant court appearance period that matters.
Keep Your Vogue On, Madonna. Ms. Ciccone’s hit is safe from claims of copyright infringement, but she cannot collect on her $720,000 attorney’s fee award after all. Following the Ninth Circuit’s decision back in June 2016 that the quarter-note single horn hit, full measure containing rests, and double horn hit from musical composition “Ooh I Love It (Love Break)” in Madonna’s Vogue was de minimis usage that does not rise to the level of copyright infringement, see VMG Salsoul, LLC v. Ciccone, 824 F.3d 871 (9th Cir. 2016), on September 23, 2016, the district court judge rained on Madonna’s parade by stripping her of her attorney’s fees award. The decision was based on the court’s finding that the suit was not entirely frivolous, while keeping the award would deter possibly meritorious copy right infringement claims. Lesson learned: while this was admittedly a close case, the district judge’s decision encourages de minimis infringement suits for years to come.