Saturday, December 01, 2012

"The whole issue here is whether the heirs can terminate their rights." - DC Comics & Marc Toberoff Argue In The Appeals Court



Just because I know quite a few people are still very much interested in this case, and this does save them the expense of finding and then buying this material – here’s the Oral Argument that the 9th Circuit Appeals Court recently heard in the never ending court case between DC Comics and Marc Toberoff and the Siegel family.  And it’s a doozy!  In this brief summary of the case you’ll read about some skulduggery, the usual accusations and back and forth.  The usual banter you’d expect is absent as the 9th Circuit allots a certain amount of time for each side to stand, make their case and then sit back down, with some rebuttal if needed, but there’s none of the standard verbal fights and objections that you’d expect to see.  The interesting things that leap out from this argument are the claims that Toberoff was soliciting work, as is his right, when he first contacted the Siegel family.  DC counter this by claiming that Toberoff first contacted the Siegels, not as a lawyer, but as an investor wanting to purchase some, if not all, of the Siegels claim in Superman.  There’s the usual claims of cover-ups, documents being produced at the last minute that have their veracity called into question – the kind of things that people have come to expect in this case.  However an interesting aspect touched upon is the contentious contract negotiations between DC and the Siegels – the Siegel side have always said that they never agreed to any contract in 2002 and had indicated this before they heard of Marc Toberoff, DC contend that the Siegels had agreed to terms and had indeed already pocketed the non-recoupable $250,000 advance – which DC will never see again – and then cancelled the deal upon meeting Toberoff.

Now this is interesting because each time Laura Siegel cries poor and states that DC Comics have never paid her, or her late mother, what they owe and thus have forced them to live in abject poverty, DC then point to payments that have been made – usually six figure annual payments.  It would be hard to live in poverty when the average person is in receipt of payments of in excess of $125,000 per year.  DC also point the court toward money being held in trust for the Siegels, as per the terms of the deal that they either did or didn’t strike in 2002, the amount being an estimated $20,000,000+.  It may be chicken feed to DC Comics and Warner Brothers and it is certainly nowhere near what should and could have been paid for the Superman character, but to the rest of the world, it’s not an amount to be taken lightly.

I ask you this – would you have settled?  Toberoff says that DC have shown no signs of settlement in his court filings, DC say that each time they’ve tried to settle Toberoff and the Siegels have refused to entertain any offers. Somehow I feel that the truth lies somewhere in the middle of this mess.  In the meantime, have a read of what grown men of intelligence have to say before Judges of the Court of Appeals. Despite all of the stuff about SLAPP, this does offer a great summary of where each side see the case, as it stands and how it’s unfolded.  And, as usual, there’s a lot more to come.

Appeal No. 11-56934

IN THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

PACIFIC PICTURES CORPORATION ET AL., Defendants and Appellants,
v.
DC COMICS, Plaintiff and Appellee.

ON APPEAL FROM THE UNITIED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA
THE HONORABLE OTIS D. WRIGHT II, JUDGE CASE NO. CV-10 3633 ODW (RZx)

ORAL ARGUMENT

HEARD BEFORE NINTH CIRCUIT PANEL: REINHARDT, THOMAS, SEDWICK
NOVEMBER 5, 2012

PASADENA, CALIFORNIA

NOVEMBER 5, 2012

RICHARD B. KENDALL, ESQ.:  May it please the Court.  Richard Kendall on behalf of the Defendants and Appellees.
The first issue on this appeal is whether the California anti-SLAPP statute applies to DC Comics' state law claims.
They allege that Mr. Toberoff induced and assisted the heirs of the Superman authors to breach their agreements and instead to pursue their termination rights.
These claims of breach of disruption and damage all flow from the heirs' very efforts to terminate DC's copyrights.
If you delete those allegations from this complaint, there would be no claim, there would be no harm, there would be no breach, there would be no interference because there would be no breach.
The anti-SLAPP law therefore covers the conduct that is alleged, and the District Court was wrong to fail to appreciate that this is protected activity.
The policy of the anti-SLAPP statute is to prevent defendants who have bottomless pockets from bankrupting -- from litigating to the death a plaintiff who simply wants to pursue her government given rights.
And what's happened here is that two years and six months into this litigation we are still litigating a case that has never addressed the lack of merit because of the very clear affirmative defense of the Statute of Limitations and very clear affirmative defense of liquidate -- litigation privilege and other defenses as well that this Court de novo as a matter of law and the District Court should as a matter of law have determined about this case with no merit.
The argument that is made by the other side is, "No, no, no, this case is not about pursuing termination rights."
But I ask the Court, if you took out all of the places in the complaint, and there are many, where the termination rights pursued by these heirs as referenced, what would be left?  Why would we be here?
Do we think that Warner Bros. and the subsidiary DC Comics has brought year upon year of litigation 1n this case, in the case you're about to hear in Siegel simply because they are fine with termination?
No.  The whole issue here is whether the heirs can terminate their rights.
And it is Mr. Toberoff's assistance, inducement, whatever they want to allege that it is, that they're complaining about, but only because it resulted in first the Shuster heirs and later the Siegel heirs deciding they did not want to accept what DC was offering; instead they wanted to pursue the rights that Congress enacted for them to level the playing field.
The fourth claim, which is the claim that DC alleges that Mr. Toberoff interfered with the 1992 contract, alleges a breach of a contract that they claim means that the Shuster heirs had given away their termination rights in 1992 and therefore were not allowed to pursue termination when they met up with Mr. Toberoff.  Mr. Toberoff provided financial assistance and legal assistance to enable them to pursue those rights.
The pursuit of those rights, as in the Mindys Cosmetics case, which is a trademark case, and as in all the other cases that we cited where there is an effort by a litigant to pursue rights either through settlement or through litigation, that's protected activity.
Script that protected activity out, as I've said, and there's no case left.
The only breach, the only possible breach that was induced here, the only possible disruption that could be claimed here of the 1992 agreement is the pursuit of termination rights.
As a matter of law, their argument is wrong, but there's no question in addition to that that it's protected activity.
Now move on to the fifth claim.  That's the claim as to the Siegel heirs.
In this case the Siegels have been arguing with DC about the termination that they had filed in 1997.  From 1997 until 2002, for all that period of time, without Mr. Toberoff being involved at all.  All of those arguments, all of their dealings with DC occurred against the backdrop of threatened litigation because when the Siegels had in 1997 terminated, they were immediately met with a threat by DC to go after them, to  invalidate their termination.
And there was a tolling agreement in 1999, again showing that this was a matter that was inevitably going to go to litigation if they didn't settle.
The complaint that is made is that after the Siegels had rejected the long form settlement agreement that was proposed-- and of course you'll be hearing more about this in the companion appeal -- and after they had gone off looking for replacement counsel, as it says in the record, they were searching for counsel even in March of 2002, they had gone after Jerry Spence to see whether Jerry Spence would represent them, there was very angry  correspondence written by the very elderly Mrs. Siegel, who unfortunately is not with us today because this endless battle finally ended with her dying before she could see the end of it, and what happens then is that they allege that Mr. Toberoff in the fall of 2002 and late summer induces the Siegels not to settle, not to take what DC is offering but to try for something better.
That is protected activity.  Solicitation of a client is protected activity.  We cited cases on that proposition.  The leading one is the Taheri Group case.
Funding litigation is protected activity.  Engaging in settlement discussions is protected activity.
And all of these challenged activities, in addition to being protected, are barred by the Statute of Limitations.  The three-year Statute of Limitations is the one that governs the fourth and fifth claims for interference.
Now, it is clear on the face of the pleadings and it is certainly clear in the record that in 2006 at the very latest DC was on inquiry notice of all of its claims in the fourth and the fifth claims for relief.
The fourth claim, DC received in discovery in 2006 the agreements between the Toberoff corporate entities Pacific Pictures and the Shuster heirs that allegedly interfered with DC's rights.
They had what they're complaining about in 2006.  They did not bring this case until May of 2010.
They sat on that.
Why did they sit on it?
Well, we can only speculate, but it may have had something to do with Judge Larson's summary judgment decision in the companion case you're about to hear and their desire to keep this litigation going as long as they could to have something else to do to make it difficult for the Siegel heirs to…
JUDGE REINHARDT:  The Statute of Limitations bars their case.
Have you made a motion to dismiss on the basis of -- or summary judgment on the basis of the Statute of Limitations?
RICHARD B. KENDALL, ESQ.:  Well, that was part of our anti-SLAPP motion, your Honor. And the anti-SLAPP statute works like a reversal.
JUDGE REINHARDT:  Why do you need -- even need an anti-SLAPP motion if you've got a clear basis for dismissal or judgment on the Statute of Limitations?
RICHARD B. KENDALL, ESQ.:  Because -- we could do that, your Honor, and in fact we had a motion to dismiss that was pending.  But the anti-SLAPP statute is supposed to go quickly and it's supposed to go first.
And in fact, although the State Court rule does not bind the Federal Court, you know, in State Court it's 90 days it has to be decided.  We expected that this would move much more quickly.
And then after the District Court denied the anti-SLAPP statute, there is case law that says that all matters on the merits should then be brought to a halt while the immunity that's supposed to be conferred by anti-SLAPP goes up on appeal.
Again, in the State Court the appeal is an automatic stay.
In the Federal courts, as in the qualified immunity cases, when there's a denial of qualified immunity, that brings to a halt the merits reviews.
And also we had a desire to -- Since we fully recognized these issues were going to all end up going up on appeal, because the nature of this litigation, not to have piecemeal appeals.
JUDGE SEDWICK:  Let me just see if I understand it.  If -- if you were unsuccessful with your arguments about the anti-SLAPP statute, then this would go back to the Court and you feel you would win on the Statute of Limitation grounds, as least as to the fourth and fifth claims?
RICHARD B. KENDALL, ESQ.:  We believe that that's what should happen, but we do not believe we should have to wait for that to happen, your Honor, because the policy of the anti-SLAPP statute is to bring the matter to an end.
And in this case, unlike the last case where Judge Thomas was asking -- the District Court didn't decide that issue, should we remand to the District Court, here we have a de novo issue that should be decided by this Court in the first instance.  And in fact, that is routinely what happens in the courts, the California courts and the Federal courts.
So even though the District Court has not decided the matter, we cited a Fifth Circuit case to the Court, Henry against Lake Charles American Press, in which this Court -- a Court of Appeal, owing to the fact that it's a de novo issue, there's no need to – to to have any more discovery.  There's no need for anything other than a resolution of the very simple question on both the fourth claim and the fifth claim and also the sixth claim, that owing to when it is indisputable that DC had all the information necessary to know it had a claim, maybe not all the facts that have piled up since, but that's not the issue because the claim accrues when you're on inquiry notice.
JUDGE SEDWICK:  So are you saying then that we could simply rule in your favor based on the Statute of Limitations, that this Court could do that?
RICHARD B. KENDALL, ESQ.:  Yes, absolutely.  There's no question whatsoever about that.  You could also do it on the basis of other pure issues of law that are presented here, including the litigation privilege, and with respect to the 1992 agreement, the misreading as a matter of law of the copyright statute.  But you needn't go to those other issues because the Statute of Limitations disposes of all of the claims here.
JUDGE SEDWICK:  The sixth claim as well as the fourth claim?
RICHARD B. KENDALL, ESQ.:  The sixth claim -- now, there is some vagueness in the pleading.  There are potentially three agreements at issue in the sixth claim.
Now, first of all, the sixth claim is a four-year Statute of Limitations, but under the unfair competition law in California, that's -- there's no discovery rule whatsoever.
So with respect to the claims in the sixth claim relating to the 2001 and 2003 agreements between the Shusters and the Toberoff entities, those claims accrued no later than 2003, and they had expired by 2007.  They were long gone when this case was filed.
There's also a claim relating to the 2008 so-called consent agreement, which is the, or what the magistrate described as the sort of Koufax/Drysdale collective negotiation agreement.
The argument that is made is that that agreement is somehow unlawful under the copyright statute because of the way that the termination windows work.
That is clearly wrong as a matter of law.
There's no question that they have misread Section 304(c)(6)(d).  You don't need to dig into the record at all to determine that that provision did not give DC any exclusive and enforceable right that would have prohibited the Shuster and Siegel families from banding together and decide that neither one would settle without the other.
The statute does no such thing.  The statute doesn't compel the terminating parties to negotiate with the terminated grantee, here DC Comics, and it doesn't forbid those terminating parties from negotiating with anyone else.
All it requires is that before the Shusters and the Siegels could have actually transferred the copyright, which there's no basis whatsoever to think occurred in these 2008 consent agreements, they couldn't transfer the copyright, but banding together there's -- there's absolutely nothing in the copyright statute that prevents that.
As to that, though, even if the Court didn't want to reach that pure issue of law, it's also clearly litigation privileged for the two families to band together for purposes of a mediation, which is what they did, and for the ongoing purposes of these litigations, which they've done.
Your Honor, I am seeing that I'm just about out of time.
 If I can reserve at least a minute or two for rebuttal.
JUDGE REINHARDT:  We'll give you a minute or two.
RICHARD B. KENDALL, ESQ.:  Thank you very much.
MATTHEW T. KLINE, ESQ.:  Good morning, your Honors. 
May it please the Court.  My name is Matt Kline.  I represent DC Comics.
The SLAPP statute does not apply here for one simple reason.
The focus of California law in analyzing a SLAPP claim is whether the claim at issue targets is based on or arises out of protected activity.
And I'd like to walk you through the three claims here.
The fifth claim is based on the following allegation.  Marc Toberoff makes a false representation to the Siegel heirs in August of 2002 that he has a $15 million hard offer in hand from a billionaire investor, and if the Siegels take that offer, they can sell their rights to him and his company, Marc Toberoff, Ari Emanuel, a business agent, and IPW Worldwide and this unnamed investor.
That was not the solicitation of a legal client.  That was not a request that litigation be initiated.  That was not done in the context of litigation.  There was no litigation between the Siegels and DC.  They had an existing contractual relationship.
And Mr. Kendall says to you, "Please read out from the complaint all of the later conduct, all the later litigation and all the later settlement.  Please do so."
How were we harmed when that happened?  How was DC harmed in 2002 when that happened?
Well, for one, it had paid $250,000 to the Siegels as a good faith advance payment in connection with that settlement agreement.  That $250,000 was gone.
And what have we learned from the California cases about whether that's protected activity or not?
The cases of Haneline and Newport Builders are directly on point.
Newport Builders holds that if two parties are in a settlement conference and there the defendant was a former party to that litigation, the defendant shows up at their two-party settlement conference and makes fraudulent business offers, actually to both parties, trying to get one of them to sell him valuable rights, he later is sued for those fraudulent business offers, and he's even injected in actual court -- court-appointed settlement process, the California Court of Appeal holds that that intervention in that settlement process is not protected by SLAPP or the litigation privilege.
Why is that?
Because we don't want people intruding on these types of processes and then using the cloak of the litigation privilege or even their role as a lawyer, as Mr. Toberoff has done, to say that that conduct is protected.
And to be very clear, if you look at the offer that he's made, and it's testified to in Mr. Marks' deposition and the Marks memo that we've asked you to review in connection with this appeal, he's not saying to them, "Please hire me as a lawyer."  He's saying, "Please sell me your rights for $15 million."
And under the clear case law, Haneline is another classic example, you have two part- -- a party, a buyer and a seller.  The seller is about to sell a valuable piece of property to the buyer.  A third party comes along and says, "Hey, don't sell that property to the buyer.  Let's go out and initiate some litigation. In fact, I have a lawyer here.  Please come hire my lawyer, and we'll go out and we'll file a lawsuit and our rights will become much more valuable and we can find another buyer."  That's the Haneline case.
And they say in their appeal, "Hold on a second.  DC, you haven't been harmed."
Again, let's look at the fourth claim, the Shuster claims.
We have been paying the Shusters $600,000 over the course of years.  We would have been damaged had Marc Toberoff never filed a termination notice.  We would have been damaged had they never initiated litigation.
And to be clear, the Shusters never did initiate litigation.
And what does the Haneline case say?
The Haneline case says, "You can get the" – in a tortious interference case like this where somebody says, "Hey, don't honor your existing deal.  Come with me.  Initiate litigation," what does the Haneline case say?
It says two things.  Number one, you can recover the delta between the original contract you had and this new contract you had to go out and enforce.
There is $425,000.  And it says a second very important thing.  It says you can also get as consequential damages in that case the attorneys' fees that you've spent having to pursue your rights.
And Mr. Kendall urges you, he says, "Read out all of the so-called protected activity," the probate action that they filed, none of which would ever accuse Mr. Toberoff, is the basis for our fourth, fifth and sixth claims.  He says, "Read all that out."
That's fine.  Under the well-established California case law, we prevail in this case.
And they say, "Well, hold on a second.  You do seek attorneys' fees and costs as one form of damages, and you can't do that under California law."
Well, the Cozen O'Connor case, 192 Cal.App. 4th 1392 says, and I quote, "The remedy sought does not affect whether the claim is based on protected activity."  The Marlin case says the exact same.  And the Sutter case says the exact same.
And why is that?
Because California has a special pleading doctrine called "the primary right of action," and the remedies you seek do not affect what the primary right
And here under the fourth claim-- I'm sorry under the fifth claim, we are suing Mr. Toberoff for this fraudulent business offer.
And discovery in the case has proven this fraudulent business offer occurred.
 It has proven that there is no billionaire investor; it has proven that there was no $15 million.
And looking at the fourth claim, for example, they say SLAPP applies because in this joint venture agreement in which Mr. Toberoff made the choice, "I don't only want to serve as your lawyer.  I want you to give me 50 percent of your copyrights," they say the litigation privilege should apply, they say that SLAPP should apply because down the road he actually in fact did act as their lawyer.
Well, that's not what the case law holds.
The case law holds that when you have an admittedly illegal contract -- this is their own case.  
This is the Huntington Life Sciences case.  
That case holds when you have an admittedly illegal act, when the conduct complained of was illegal, then as a matter of law the defendant cannot make a prima facie showing that SLAPP applies.
Now, where do we have those admissions in this record?
You have Mark Peary, one of the defendants in this case, one of the signatories to the PPC agreements; he testifies under oath that Marc Toberoff told him -- this is at SER 512 -- the Pacific Picture agreements were illegal.
In their first filings in this case, defense counsel and defendants admitted this is at and I'm flip-flopping these -- the Peary admission is at SER 322.  The defendant's admissions and briefing is at SER 512.  They admit that those Pacific Pictures agreements were unlawful.  Again, under their own case, Huntington Life Science, SLAPP may not apply when there's an admission that the act complained of is illegal.
The Flatley case also says that.
And why is that?
I'd like to give you an example.
If I came to you - if all of my friends and I decided we wanted to go out and vote tomorrow and I  came to you and we didn't have a way to get to the polling station, if I came to you and I said, "I have this special set of magic beans I want to sell you and it's going to make you rich, and if you could trade me your car and I give you these magic beans, will you do that?"
You’d do that.  I then go out and I take the car and I take all these people to go vote.  And clearly my purpose in getting the car was I wanted to get out to vote tomorrow, a very important protected right.
That wouldn't stop any one of you from suing me for defrauding me with your car.
And that's where the California courts focus like a laser on "What is the protective conduct being challenged here?"
And in each one of our causes of action, we are focused on admittedly illegal conduct.
Mr. Kendall ascribes all sorts of negative motives to DC Comics.  But Cotati holds very clearly, as does In re Episcopal Churches, our motives are irrelevant.
Our motives were also pure.
The District Court has held based on their own admissions that their contracts were illegal.
Mr. Toberoff told us, this Toberoff timeline document is "a pack of lies."  One evidentiary ruling after another has confirmed that he made the $15 million bogus billionaire investor fraudulent statements to induce the Siegels to do business with him.
Now as to the prong two questions -- this is whether there's minimal merit to our claims, the Statute of Limitation issues you don't need to reach those questions because we win on prong one, and you don't get to prong -- prong two unless we do not prevail on prong one.  And again it's their burden on prong one.
On prong two, the burdens are split.  To show that there's minimal merit to our claims affirmatively, it's our burden.  For them to prove the viability of their affirmative defenses, their Peregrine case holds that it's their burden.
And here we have a very open factual issue.
You asked, "Why didn't they get their Statute of Limitations issue ruled on below?"
The District Court issued a ruling saying, "I will shortly on your Rule 12 motions."
These Rule 12 motions raise the Statute of Limitations arguments, the litigation privilege arguments.
Apparently afraid that the ruling wasn't going to come out their way, they withdrew the motion.  They have never filed a Rule 56(f) motion-- a Rule 56 motion in the intervening years.
And most importantly, most importantly for this Court that's going to look at the second prong in the SLAPP test, we have a pending Rule 56(d) motion, which under this Court's Garrett decisions, we said, "We need more discovery, including on the litigation privilege."
And if you look at the Edwards case, if you look at the Mindys case, if you look Bylin case, that's a highly fact-bound inquiry.
And what they're saying is, "Well, everything we did we did with the intent to litigate."
Not so.  The documents that have come out, the Toberoff timeline documents, the deposition admissions show that between 2002 when the fraud occurs and 2004 Mr. Toberoff and Laura Siegel never entered into a litigation agreement.
The record that has emerged in discovery has shown that between 2001 when Mr. Peary and Mr. Toberoff signed their business joint venture and 2010 no litigation was initiated.
And so we told the District Court on each one of these defenses, on each one of these contested fact issues, "We need further discovery."
And because the District Court ruled in our favor on prong one, he never had the opportunity to exercise his discretion whether to permit further discovery to -- to confront their Statute of Limitations and litigation privilege arguments.
And to me the key case on the Statute of Limitations issues is really two.  One is Judge Thomas' opinion in the Living Designs against Dupont case.  This is a fungicide case out of Hawaii from the 1990s.  And the issue there was whether fraudulent concealment of evidence trumped the inquiry notice rules.  And the answer there was "yes" because Dupont had made false representations to opposing counsel to obtain a settlement agreement.
And here we have the exact same thing.
If you look at Mr. Toberoff's representations in the District Court about whether the Toberoff timeline was accurate or not, he called it "a worthless piece of garbage."  He called it "an inaccurate hit piece."  He called it "a pack of lies."  He actually chastised counsel for relying on that document and filing this lawsuit and pursuing discovery.
One discovery ruling in this case after another, exactly as in your Honor's Dupont case, has proven those representations to be absolutely false, and each one of those false representations has tolled the running of the Statute of Limitations.
That's an intensely fact-bound issue, as your Honor recognized in that case, that cannot be decided on the cold record here and cannot be decided before the District Court in its own discretion evaluates whether further discovery is warranted under Rule 56(d).
Moreover, the consent agreement, as Mr. Kendall conceded, is well within the statutory period.  But what Mr. Kendall did not tell you is if there's a pending discovery motion to obtain a copy of the consent agreement or that Judge Wright in his ruling last – a couple weeks ago, the summary judgment ruling invalidated all of their consent agreements, the earlier PPC ones and the later consent agreement.
And so it's DC Comics' submission that this case must fail and the District Court's ruling must be affirmed because defendants have come nowhere close to meeting their -- their burden on prong one to prove that the SLAPP statute applies.
When you actually look at, as the courts require, what conduct we're challenging, this is not protected activity.
And what is the best example of this?
The best example of this is a long line of cases in California courts, including the Robles case, including the -- and I apologize, your Honors -- including the Aguilar case, including the Baharian-Mehr case where it's actually conduct in the litigation itself that's being challenged.
In the Robles case it was an expert witness testifying during his deposition.  And the litigants, as here, said, "Well, hold on a second.  You're challenging his classically protected speech.  He's --he's giving a deposition answer as an expert in a case.   You can't possibly sue him."
And the court dug under that and said, "Hold on a second.  They're not suing him for giving a deposition answer.  They're suing him for negligence and a failure to disclose conflicts of interest in connection with that testimony.  The two are separate and distinct."
 A similar case is the Baharian-Mehr case.
There you had officers and directors who chose outside counsel to initiate litigation on behalf of the company and the shareholders who questioning that decision.
And, as here, the defendants say, "Hold on a second.  This is a litigation choice.  We're choosing our lawyers.  We're choosing litigation strategists.  How dare you sue us."
And the Court said, "Hold on a second. That's not what you're being sued for.  You've being sued for corporate waste, and this is a pattern and practice consistent with those acts of corporate waste."
And if you look at the Episcopal Church case, there the complaint is littered with references to the very serious ecclesiastical dispute between a local parish and the national parish concerning gay marriage.
And the Court said, "You know what?  We understand that.  We understand that that's a big political issue.  We understand that's the reason why you're all fighting.  But guess what?  This is a property case, and so SLAPP doesn't apply."
And perhaps the most important case to take a look at is the Cotati case.
In the Cotati case a group of mobile home owners challenge a new city regulation governing their homes in Federal Court.  The city runs right out and files for declaratory relief in State  Court, admittedly trying to gain a tactical advantage against the -- the other side.
The California Supreme Court held, "We understand that the city's complaint referenced page, chapter and verse" -- the Cotati court case -- "but what's really going on here?  The city ordinance is being challenged.  That's the issue in controversy.  That's what the complaint is really challenging."
And it's the same thing here, your Honors.
It's illegal rights tying agreements that we're challenging.  It's acts of interference through fraud that cases like Haneline, Newport Builders and a long line of cases say are not protected by SLAPP.  And all of these -- I'd especially encourage you to read Judge Fletcher's opinion ln the Mindys case.  If you ever get to the second part of the test, Mindys holds, SLAPP may apply to certain conduct, but the litigation privilege, that's the much tougher bar.  It didn't apply to the trademark registration filings there.
Read the Edwards case.  It's the seminal case in California talking about the litigation privilege.
It has absolutely no application to acts of fraud two years prior to litigation or illegal business agreements ten years prior.
I see my time is over, your Honor.  I'll sit down.
Thank you.
JUDGE REINHARDT:  Thank you, Counsel.
RICHARD B. KENDALL, ESQ.:  All of the cases that Mr. Kline just referred you to are cases in which the essential elements of the claim of damage were satisfied by unprotected activity.  The difference between this case and all of those cases is that there is no damage here other than the damage from protected activity.
Protected activity is the pursuit of termination rights.
I call the Court's attention to the damage allegation in the complaint, which is Paragraph 186, which says, "As a result of Toberoff's misdeeds, the Siegel heirs repudiated the DC Comics' agreement and ended all further discussions, causing DC Comics to lose the value of the agreement, to lose their ongoing business relation with the Siegels, and incur subsequent legal fees in legal disputes."
All of that results from the pursuit of termination.  Similar allegation as to what happened as a result of the alleged interference with the Shuster agreement.  It is all because of the pursuit of the termination rights.  And that's why all of these cases are distinguishable.
One other point.
The argument that is made that the PPC Shuster agreements were illegal and therefore not within SLAPP is just completely wrong.  The cases they cite involve criminal conduct, and criminal conduct is not protected under the SLAPP statute.  Extortion is not protected.
Hate speech is not protected.
But there is nothing actually illegal about the agreements that were made between Mr. Toberoff and the Shusters.  It's just that they are unenforceable because of the operation of the copyright law window.  They're unenforceable.  They are not illegal.  There is no public policy whatsoever that would say that the anti-SLAPP statute doesn't apply on account of those agreements.
Thank you very much, your Honor.
JUDGE REINHARDT:  Thank you, Counsel.  The case just argued will be submitted.

No comments: