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Dc Comics v. Pacific Pictures Corp.

April 4, 2013


The opinion of the court was delivered by: Otis D. Wright, II United States District Judge



On October 17, 2012, this Court ruled in Plaintiff DC Comics' favor on its first and third claims for declaratory relief, effectively nullifying the termination notices Joe Shuster's heirs had filed and served on DC. While that order is pending on appeal, Defendants now move for summary judgment on DC's remaining state-law interference claims. In response, DC has cross-moved for summary judgment on its sixth claim for declaratory relief under California's unfair-competition law. The Court GRANTS Defendants' motion as to DC's fourth and fifth claims and DENIES the parties' cross-motions on DC's sixth claim pending resolution of Defendants' appeal.*fn1


Writer Jerome Siegel and illustrator Joe Shuster joined forces in the 1930s to create the character that would eventually become Superman. In 1937, they surrendered their copyright interests in Superman to DC Comics when they joined DC as independent contractors. Factually, this action weaves together the separate but often-convergent tales of the Siegel and Shuster heirs' attempts-with the help of producer and attorney Marc Toberoff-to regain those Superman rights over the last 16 years. DC's fourth claim focuses on the Shuster heirs' efforts, while its fifth claim confronts the Siegel heirs' dealings.

A.The Shuster Termination

On October 2, 1992, following Joe Shuster's death earlier in the year, DC entered into an agreement with Shuster's surviving siblings, Frank Shuster and Jean Adele Peavy (the "1992 Agreement"). (Undisputed Fact ("UF") 1.) Under the Agreement, Frank and Jean agreed to "settle[] all claims to any payments or other rights or remedies" they may have had "under any other agreement or otherwise" in exchange for DC's "agreement to pay [them], collectively, a total of $25,000 a year." (Adams Decl. Ex. A.)

In 1998, Congress amended the 1976 Copyright Act to provide an author's estate, "[i]n the event that the author's widow or widower, children and grandchildren are not living," the right to recover the author's copyright by statutorily terminating the author's old copyright grants. See 17 U.S.C. § 304(c)(2)(D). In November 2001-possibly as a result of the 1998 amendment-Jean and her son Mark Peary (Shuster's nephew) entered into an agreement with Toberoff's loan-out company, Pacific Pictures Corporation (PPC) (the "2001 PPC Agreement"). (UF 2.) The purpose of this agreement was "to investigate, retrieve, enforce and exploit" Shuster's copyrights in the Superman works through "establishment of Joe Shuster's estate" and the estate's exercise of its termination rights under § 304(c). (Id.)

On October 7, 2003, the Los Angeles County Superior Court appointed Mark Peary to serve as executor of Shuster's estate. (UF 3.) Then on October 27, 2003, Mark (as executor) entered into another agreement with Pacific Pictures signed by Jean, Mark, and Toberoff (the "2003 PPC Agreement"). (UF 4.) Through this second PPC agreement, the Shuster estate "engage[d] PPC as the exclusive advisor for the purpose of retrieving, enforcing and exploiting all of Joe Shuster's, and his estate's rights, claims, copyrights, property, title and interests in and to Joe Shuster's creations." (Id.) Among the rights contemplated in the 2003 PPC Agreement was the Shuster estate's "termination interest in 'SUPERMAN' pursuant to Section 304(d) of the U.S. Copyright Law." (Id.)

On November 10, 2003, Toberoff (acting as attorney for the Shuster estate) served on DC Comics a notice of termination under 17 U.S.C. § 304(d). (UF 5.) This termination notice was the subject of DC's first, second, and third claims in this action.

On September 10, 2004, Toberoff, Jean, and Mark purported to voluntarily cancel the 2001 and 2003 PPC Agreements. (UF 6.*fn2

On October 17, 2012, this Court held that the 1992 Agreement constituted a post-1976 revocation and re-grant of Shuster's Superman rights. (ECF No. 507.) As a result, that revocation pulled the Shuster heirs' November 2003 termination notice from the grasp of Congress's 1998 extension of an author's termination rights. (Id.) That ruling is now on appeal before the Ninth Circuit.

B.The Siegel Termination

In 1997, Jerome Siegel's widow, Joanne Siegel, and his daughter, Laura Siegel Larson, filed and served on DC notices of termination of Siegel's Superman copyright grants to DC. (UF 8.) DC contested the termination on April 15, 1999, and the Siegels thereafter began negotiating a settlement with DC through Kevin Marks, their attorney at the time. (UF 9--10.)

On October 19, 2001, Marks sent DC a letter outlining and accepting what he believed were the terms of an oral offer DC had made on October 16, 2001. (UF 11.) On October 26, 2001, DC responded to Marks with what it believed was a "more fulsome outline" of the deal's terms. (UF 12.) On February 1, 2002, DC's outside counsel followed up with a draft long-form agreement. (UF 13.)

On May 9, 2002, Joanne Siegel-angered by DC's February draft-sent a letter to DC's parent company, AOL Time Warner, Inc., objecting to the draft and declaring that "[a]fter four years we have no deal and this [February 1] contract makes an agreement impossible." (UF 14.)

Meanwhile, in February 2002 Toberoff formed a joint venture called IP Worldwide, LLC with Ariel Emanuel, then-CEO of the Endeavor Talent Agency. (UF 15; Adams Decl. Ex. G.) In late July or early August 2002-several months after Joanne's May 9 letter objecting to the February 1 draft-Toberoff informed Marks that he was working with Emanuel and inquired whether the Siegels might be interested in licensing their rights to them. (UF 16.*fn3

On August 8, 2002, Marks, Toberoff, and Emanuel participated in a conference call where Toberoff and Emanuel made a formal offer to purchase the Siegels' rights for $15 million. (UF 17.) DC contends (and Toberoff and Emanuel vehemently dispute) that this August 2002 offer also included false representations that Toberoff

(1) had an unnamed "billionaire investor" ready to fund the $15 million offer and

(2) could help the Siegels produce a Superman movie to compete with DC. (Pl.'s Statement of Genuine Disputes ("SGD") 17.) The following day, Marks sent a letter conveying the offer to the Siegels, but he cautioned them that he believed the Siegels had an agreement with DC that was subject only to documentation. (ECF No. 500-5, at 338--39.)

On September 21, 2002, the Siegels sent a letter to Marks, with a copy to DC, terminating Marks as their legal representative and reaffirming their intent to discontinue "all negotiations with DC Comics." (UF 19.)

On October 3, 2002, the Siegels entered into an agreement with IP Worldwide (the "IP Worldwide Agreement") whereby the Siegels "grant[ed] IPW the exclusive right to represent [them] and the Rights throughout the world in negotiating and assisting [them] to arrange and negotiate the sale, lease, license and all other dispositions or exploitations of the Rights." (UF 20.) Also under the Agreement, IP Worldwide would "furnish and provide the legal services of Marc Toberoff, Esq., and the business services of Ariel Emanuel and IPW's support staff . . . to market and negotiate" exploitation of the Superman rights. (Id.) Defendants characterize this agreement as a representation agreement, while DC maintains it was in reality "an unlawful, rights-tying agreement." (SGD 20.)

C.Siegel Litigation and the Toberoff Timeline

On October 8, 2004, after renewed negotiations with DC failed to result in a settlement, Toberoff filed suit seeking to validate the Siegels' termination notice. (UF 23.) In response, DC asserted several counterclaims, including one arguing that the October 19, 2001 letter from Marks to DC created a legally enforceable agreement between the parties, notwithstanding the Siegels' later protestations. (UF 24.) The Ninth Circuit has since held that the October 19 letter constituted a binding agreement between the parties, Larson v. Warner Bros. Entmt., Inc., Nos. 11-55863, 11-56034, 2012 WL 1113259, at *1 (9th Cir. Jan. 10, 2012), and this Court subsequently confirmed that the ...

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