UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA
April 4, 2013
DC COMICS, PLAINTIFF,
PACIFIC PICTURES CORPORATION; IP WORLDWIDE, LLD; IPW, LLC; MARC TOBEROFF; MARK WARREN PEARY; JEAN ADELE PEAVY; LAURA SIEGEL LARSON; AND DOES 1--10, INCLUSIVE, DEFENDANTS.
The opinion of the court was delivered by: Otis D. Wright, II United States District Judge
ORDER GRANTING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT IN PART  AND DENYING DC'S MOTION FOR SUMMARY JUDGMENT 
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 October 19 agreement remains enforceable. Larson v. Warner Bros. Entmt. Inc., Nos. 2:04--cv--08400--ODW(RZx), 2:04--cv--08776--ODW(RZx), 2013 WL 1164434 (C.D. Cal. Mar. 20, 2013).
On or before June 28, 2006, during discovery in Siegel, Warner Bros. (DC's affiliate) received packages of anonymous documents likely stolen from Toberoff's law firm, including many documents Toberoff maintained were attorney-client privileged. (UF 38.) The packet was also accompanied by an anonymously drafted cover letter titled "Superman/Marc Toberoff Timeline." (Id.) This Toberoff Timeline accused Toberoff of wrongfully interfering with DC's relationships and agreements with the Siegel heirs. (UF 39.) The parties continue to contest when Warner Bros. actually received the Timeline, who at Warner Bros. actually received a copy of the Timeline, and who and to what extent certain people read and fully digested the contents of the Timeline. Suffice it to say for purposes of these cross-motions that the Timeline was ultimately produced in December 2008. (ECF No. 153-15.)
On May 14, 2010, DC filed this action against Pacific Pictures, IP Worldwide, Mark Peary (as representative of the Shuster estate), Jean Peavy, Joanne Siegel, and Laura Siegel Larson. The Complaint asserted six claims: (1) declaratory relief as to the invalidity of the Shuster copyright termination notice; (2) declaratory relief regarding the scope of the Shuster termination notice; (3) declaratory relief with respect to DC Comics' exclusivity period with the Shusters; (4) interference with the 1992 Shuster agreement; (5) interference with prospective economic advantage regarding the October 19, 2001 Siegel-DC Comics agreement; and (6) declaratory relief regarding the invalidity of the Shuster heirs' copyright assignment and consent agreements. As noted, the Court has already ruled on DC's first through third claims, and that order is now on appeal before the Ninth Circuit. (ECF Nos. 507, 541.)
Defendants now move for summary judgment on DC's fourth through sixth claims for intentional interference and unfair business practices under California law.
(ECF No. 577.) In response, DC filed a cross-motion for summary judgment on its sixth claim. (ECF No. 588.) Additional facts will be discussed as necessary.
Summary judgment should be granted if there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). The moving party bears the initial burden of establishing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323--24 (1986). Once the moving party has met its burden, the nonmoving party must go beyond the pleadings and identify specific facts through admissible evidence that show a genuine issue for trial. Id.; Fed. R. Civ. P. 56(c). Conclusory or speculative testimony in affidavits and moving papers is insufficient to raise genuine issues of fact and defeat summary judgment. Thornhill's Publ'g Co. v. GTE Corp., 594 F.2d 730, 738 (9th Cir. 1979).
A genuine issue of material fact must be more than a scintilla of evidence, or evidence that is merely colorable or not significantly probative. Addisu v. Fred Meyer, 198 F.3d 1130, 1134 (9th Cir. 2000). A disputed fact is "material" where the resolution of that fact might affect the outcome of the suit under the governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1968). An issue is "genuine" if the evidence is sufficient for a reasonable jury to return a verdict for the nonmoving party. Id. Where the moving and nonmoving parties' versions of events differ, courts are required to view the facts and draw reasonable inferences in the light most favorable to the nonmoving party. Scott v. Harris, 550 U.S. 372, 378 (2007).
Defendants attack each of DC's state-law claims as untimely. The thrust of Defendants' argument is that these claims challenge Defendants' allegedly tortious conduct between 2001 and 2003, and the record establishes that DC was on notice of this conduct no later than 2006. Further, while the statutes of limitations for these claims range from two to four years, DC waited to file suit until 2010. DC responds that the Toberoff Timeline exposed critical information Toberoff had concealed, and as a result the statute of limitations should have been tolled until (at the earliest) December 2008 when the Timeline was produced. The Court considers each of the parties' arguments in turn.
E.DC Comics' Fourth Claim for Tortious Interference with Contract
DC's fourth claim for intentional interference with contract alleges that Toberoff's purpose in approaching the Shuster heirs in 2001 to enter into a joint venture with Pacific Pictures was "to induce them to repudiate the 1992 Agreement and grant him the rights [the Shuster heirs] had already granted to DC Comics." (FAC ¶ 177.) Defendants attack DC's tortious-interference claim as untimely.
The statute of limitations for tortious interference with contract in California is two years. Kiang v. Strycula, 231 Cal. App. 2d 809, 811--12 (1965); see Cal. Civ. Proc. Code § 339(1). A tortious-interference claim typically accrues "at the date of the wrongful act." Trembath v. Digardi, 43 Cal. App. 3d 834, 836 (1974). But in no event does a claim accrue "later than the actual breach of the contract by the party who was wrongfully induced to breach," because the breach is the culmination of the alleged wrong. Id.
Defendants contend the actual breach at issue in DC's fourth claim occurred when the Shuster heirs entered into the 2001 Agreement with Pacific Pictures. (Mot. 8 (citing ECF No. 337 (finding in the context of Defendants' anti-SLAPP motion that the 2001 and 2003 Pacific Pictures Agreements "essentially gut the 1992 Agreement, purporting to assign to Toberoff those rights which were already assigned to DC Comics")).) Defendants also acknowledge DC's position that two later events could have triggered the two-year statute of limitations: the execution of the 2003 Agreement reaffirming the 2001 Agreement and the service of the Shuster termination notices in late 2003. (Mot. 9; SUF 2, 4--5.) Defendants maintain that regardless the date the Court looks at, DC's fourth claim is time barred because the "alleged 'actual breach' of the 1992 Agreement therefore occurred seven to nine years before DC filed this suit in 2010." (Mot. 9.)
DC responds that its fourth claim isn't based on a single breach occasioned by the 2001 or 2003 Agreements, but rather "a series of contracts Toberoff induced the Shusters to sign" that "violated DC's rights under its 1992 agreement with Joe Shuster's heirs." (Opp'n 6.) According to DC, its FAC also challenged additional consent agreements that remained in effect until October 2012 "when the Court declared Toberoff's agreements invalid." (Opp'n 7--8.) In other words, DC primarily invokes California's common-law continuing-wrong tolling rules. DC alternatively contends that the discovery rule, codified in California Code of Civil Procedure section 339, tolled its fourth claim until December 2008 when it received the Toberoff Timeline. (Opp'n 10.)
1.Continuing-wrong principles do not apply to DC's tortious-interference claims
There are two main branches of the continuing-wrong accrual principals in California: the continuing-violation doctrine and the theory of continuous accrual. Aryeh v. Canon Bus. Solutions, Inc., 55 Cal. 4th 1185, 1197 (2013). The continuing-violation doctrine (or the continuing-tort doctrine, as the Ninth Circuit has referred to it), "applies where there is no single incident that can fairly or realistically be identified as the cause of significant harm." Flowers v. Carville, 310 F.3d 1118, 1126 (9th Cir. 2002) (emphasis added) (internal quotation marks omitted); see Aryeh, 55 Cal. 4th at 1197 ("Some injuries are the product of a series of small harms, any one of which may not be actionable on its own.").
In contrast, "continuous accrual applies whenever there is a continuing or recurring obligation: When an obligation or liability arises on a recurring basis, a cause of action accrues each time a wrongful act occurs, triggering a new limitations period." Aryeh, 55 Cal. 4th at 1199 (internal quotation marks omitted). Unlike continuing violations, where each alleged wrong may not itself create a legal right of action, continuing accrual concerns situations where each alleged action "provides all the elements of a claim-wrongdoing, harm, and causation-[such that] each may be treated as an independently actionable wrong with its own time limit for recovery." Id. Thus, while the continuing-violation doctrine "renders an entire course of conduct actionable, the theory of continuous accrual supports recovery only for damages arising from those breaches falling within the limitations period." Id.
DC concedes that "it remains an open question under California law whether the 'continuing harm' doctrine applies to intentional interference claims." (Mot. 8; see also Reply 6 ("The 'continuing harm' or 'continuing accrual' doctrine has never been applied by a California court to a tortious interference claim.").) Indeed, the parties cite no cases, and the Court has found none, directly applying either of California's continuing-wrong principles to tortious-interference claims.*fn4 Undeterred, DC points to a recent California Supreme Court decision, Aryeh v. Canon Business Solutions, Inc., as reflecting that court's "receptiveness to applying all common-law tolling doctrines to plaintiff's California-law claims." (Opp'n 8 (citing Aryeh, 55 Cal. 4th at 1196--97).) But DC reads Aryeh too broadly.
In Aryeh, the California Supreme Court considered whether to apply common-law tolling doctrines to California's Unfair Competition Law, Cal. Bus. & Prof. Code §§ 17200--17210, where the UCL was silent on "what it means for a UCL claim to accrue." Aryeh, 55 Cal. 4th at 1192--93. The court noted that such silence "trigger[ed] a presumption in favor of permitting settled common law accrual rules to apply" and concluded that "the UCL is governed by common law accrual rules to the same extent as any other statute." Id. at 1193.
Unlike the UCL, California Code of Civil Procedure section 339 (which supplies the statute of limitations for both of DC's tortious-interference claims) expressly provides that a claim on a contract does not accrue until "discovery of the loss or damage suffered by the aggrieved party." Cal. Civ. Proc. Code § 339(1). As the Court in Aryeh noted, a statute must be construed in light of common-law decisions, "unless its language clearly and unequivocally discloses an intention to depart from, alter, or abrogate the common-law rule concerning the particular subject matter." Aryeh, 55 Cal. 4th at 1193. By expressly providing for the common-law discovery rule and no other common-law tolling principles, section 339 appears to reflect the legislature's clear and unequivocal intent to preclude application of common-law tolling mechanisms other than the discovery rule. See Wildlife Alive v. Chickering, 18 Cal. 3d 190, 195 (1976)("Under the familiar rule of construction, expressio unius est exclusio alterius, where exceptions to a general rule are specified by statute, other exceptions are not to be implied or presumed."). The Court therefore has serious reservations about whether continuing-wrong principles could ever toll the statute of limitations on claims for tortious interference with contract.
But the Court need not go so far as to hold that the continuing-wrong doctrines unequivocally do not apply to intentional-interference claims, as neither principle applies on the facts here. With respect to continuing violations, DC contends "Toberoff induced the Shusters to enter into a series of illicit, subsisting, rights-tying contracts that continued to interfere with DC's rights through the filing of DC's lawsuit." (Opp'n 9.) But DC's position now directly contradicts its fourth claim, which alleges that "Toberoff's ultimate purpose in approaching the Shuster Heirs was to induce them to repudiate the 1992 Agreement and grant him the rights they had already granted to DC Comics." (FAC ¶ 177.) DC goes on to allege that Toberoff carried out this purpose by forming a joint venture with the Shusters and Pacific Pictures "for the express purpose of 'exploiting all of Joe Shuster's, and his estate's rights, claims, copyrights, property, title and interests in and to Joe Shuster's creations' through" termination of Shuster's grant to DC under 17 U.S.C. § 304. (Id.)
As this Court has already found, "the Pacific Pictures Agreements essentially gut[ted] the 1992 Agreement, purporting to assign to Toberoff those rights which were already assigned to DC Comics." (ECF No. 337, at 3.) These agreements therefore constituted at least an implied repudiation of the 1992 Agreement-a discrete act for which DC could have filed suit. Then on November 10, 2003, the Shusters served DC with termination notices for the copyrights subject to the 1992 Agreement-another overt act of repudiation for which DC could have filed suit. And so on. The Court need not address each of Defendants' allegedly wrongful actions to convey the obvious: DC's harm was not the result of small harms that may not have been actionable on their own. Rather, each was an independently actionable act. The continuing-violation doctrine therefore cannot apply here.
Neither can continuing-accrual principles apply. In assessing the applicability of continuing-accrual tolling, the court in Aryeh looked "to the nature of the obligation allegedly breached." 55 Cal. 4th at 1200. There, the court found that the defendant, a lessor of copier machines, owed plaintiff, the lessee, a continuing "duty not to impose unfair charges in monthly bills- a continuing one, susceptible to recurring breaches." Id.
In contrast, here the 1992 Agreement-a purported one-time transfer of Shuster's rights to DC-did not create a continuing obligation. And while contracts between parties often are capable of multiple minor, actionable breaches that alone would be insufficient to invalidate the entire contract, DC complains of Toberoff's aim to induce the Shusters' repudiation of the 1992 agreement entirely. (FAC ¶ 177.)
As noted, continuing accrual addresses cases where each allegedly wrongful act provides all the elements of a claim. The elements of a claim for intentional interference with contract are "(1) a valid contract between plaintiff and a third party; (2) defendant's knowledge of this contract; (3) defendant's intentional acts designed to induce a breach or disruption of the contractual relationship; (4) actual breach or disruption of the contractual relationship; and (5) resulting damage." Pac. Gas & Electric Co. v. Bear Stearns & Co., 50 Cal. 3d 1118, 1126 (1990). At the latest, the termination notices the Shuster heirs served on DC in November 2003 evidence the heirs' unequivocal intention to have conclusively repudiated the 1992 agreement. And importantly, DC identifies no other agreements it had with Shuster or the Shuster heirs for which the later Shuster-Toberoff consent agreements could have caused new and separate harms to DC. Thus, the Court cannot find that any of Defendants' actions after November 16, 2003, constituted a new and actionable harm for which a new tortious-interference-with-contract claim could have accrued.
2.The discovery rule does not save DC's fourth claim
DC also invokes section 339's discovery rule. To this end, DC maintains that "Toberoff's misconduct became actionable, at the very earliest, when Judge Larson ordered the Timeline produced to DC in December 2008-17 months before DC filed suit." (Opp'n 10.) Not so.
As noted, California Code of Civil Procedure section 339 expressly provides that a claim on a contract does not accrue until "discovery of the loss or damage suffered by the aggrieved party." Cal. Civ. Proc. Code § 339(1). This so-called "discovery rule" "postpones accrual of a cause of action until the plaintiff discovers, or has reason to discover, the cause of action." Nogart v. Upjohn Co., 21 Cal. 4th 383, 463 (1999). A plaintiff "discovers" the cause of action the moment "he at least suspects a factual basis, as opposed to a legal theory," for the elements of the claim- in other words, when plaintiff suspects "that someone has done something wrong to him." Id. (emphasis added) (internal quotation marks omitted).
DC is correct that "the discovery rule postpones accrual of a cause of action until plaintiff discovers the facts underlying its claims." (Opp'n 10.) But a plaintiff need not suspect facts "supporting each specific legal element of a particular cause of action" to have discovered that cause of action; rather, California courts "look to whether the plaintiffs have reason to at least suspect that a type of wrongdoing has injured them." Fox v. Ethicon Endo-Surgery, Inc., 35 Cal. 4th 797, 807 (2005) (emphasis added). "So long as a suspicion exists, it is clear that the plaintiff must go find the facts; she cannot wait for the facts to find her." Jolly v. Eli Lilly & Co., 44 Cal. 3d 1103, 1111 (1988).
Defendants contend that DC was on inquiry notice of its tortious-interference claim no later than November 10, 2003, when Toberoff filed termination notices on the Shuster heirs' behalf. (Mot. 10; SUF 5.) This is a close call. But the Court need not resolve this issue because DC received actual notice of a potential claim on November 15, 2006, when it received complete, unredacted copies of both the 2001 and 2003 Agreements. (Mot. 10; SUF 25); Eagle Precision Techs., Inc. v. Eaton Leonard Robolix, Inc., No. 03CV352-BEN (WMc), 2006 WL 6544087, at *4 (S.D. Cal. Apr. 6, 2006) (plaintiff in intervention "had sufficient information to 'at least suspect' wrongdoing" when it "received a copy of the [interfering] Agreement"). Thus, by November 16, 2006, DC was equipped with the knowledge that
In November 2001, the Shuster heirs entered into an agreement with Toberoff's production company, Pacific Pictures, "to investigate, retrieve, enforce and exploit" the Superman copyrights via "termination pursuant to Section 304(c) of the U.S. Copyright Law" (SUF 2);
In October 27, 2003, the Shuster estate entered into a second agreement with Pacific Pictures for the same purpose (see SUF 4); and In November 2003, Toberoff served copyright termination notices on DC
Comics (SUF 5).
With this information, DC should have far more than suspected "that a type of wrongdoing ha[d] injured" it. Fox, 35 Cal. 4th at 807.
It does not matter, as DC tries to argue, that it didn't receive the Toberoff Timeline until 2008 or that "important new evidence concerning Toberoff's web of illicit consent agreements has come to light" in discovery in this matter. (Opp'n 10.)
That the Toberoff Timeline supplied additional information supporting one of many elements of its tortious-interference claim does not change the fact that DC had enough information prior to 2008 to have filed suit and opened the door to discovery. And that DC has uncovered important evidence in discovery once it did file suit is wholly unremarkable-that's the purpose of discovery. The point here is that DC had more than enough knowledge by November 2006 to have tickled a suspicion that its business relationship with the Shusters was being tampered with. It was then-and not when DC gathered the smoking-gun evidence supporting each element of its cause of action-that it should have filed suit.
The Court therefore GRANTS Defendants' motion as to DC's fourth claim.
F.DC Comics' Fifth Claim for Tortious Interference with Prospective Economic Advantage DC's fifth claim alleges that Toberoff tortiously interfered with DC's relationship with Joanne Siegel and Laura Siegel Larson when he conveyed an offer to their then-attorney, Kevin Marks, to license their Superman rights in August 2002. According to DC, this offer wrongfully induced the Siegels to end their negotiations with DC (even though the Siegels had called an agreement with DC "impossible" three months earlier in May 2002). (Mot. 1.)
Like DC's fourth claim, DC's fifth claim for intentional interference with prospective economic advantage is governed by section 339's two-year statute of limitations. E.g., Boon Rawd Trading, 688 F. Supp. 2d at 952 (N.D. Cal. 2010). The parties raise similar arguments regarding the applicability of continuous-wrong accruing principles and the discovery rule, albeit applied to a different set of facts, i.e., those facts relating to the Siegel heirs as opposed to the Shuster heirs. For the reasons addressed above, the Court questions whether continuing-wrong principles can even apply to intentional-interference claims but nevertheless finds those principles inapplicable here. The Court therefore confines its discussion of DC's fifth claim to when DC discovered Toberoff's alleged interference with its economic relations with the Siegels.
Defendants insist that DC had actual notice of most of the facts underlying its claim for tortious interference with prospective economic advantage by 2006. Specifically, On September 21, 2002, DC received a letter from the Siegels terminating Marks and formally ending all negotiations with DC. (SUF 19.) By 2003, Emanuel and Toberoff had informed DC that they were representing the Siegel interest and recommenced negotiations with DC. (SUF 22.) On October 7, 2006, DC deposed Marks, who testified that Emanuel and
Toberoff had made an offer in August 2002 to purchase the Siegels' Superman rights for $15 million. (SUF 26--28) By November 15, 2006, DC received a full, unredacted copy of the Siegels'
October 3, 2002 IP Worldwide Agreement, whereby the Siegels retained Emanuel and Toberoff to "arrange and negotiate the sale, lease, license, and all other dispositions and exploitations" of the Siegels' Superman rights. (SUF 20, 25.) This agreement was executed shortly after the Siegels formally fired Marks and terminated negotiations with DC on September 21, 2002. On November 17, 2006, DC deposed Toberoff, questioning him at length about the August 2002 offer and IP Worldwide Agreement. (SUF 31, 34--36.)
Thus, by late 2006, DC knew that Toberoff offered to license the Siegels' Superman copyrights in August 2002, knew that the Siegels had formally terminated negotiations with DC in September 2002, and knew that the Siegels had entered into an agreement with Toberoff and Emanuel in October 2002 to market the Superman rights. This was more than enough to alert DC of a potential claim for intentional interference with prospective economic advantage.
But if any doubt remained, DC's own pleadings in the Siegel case unequivocally reflect DC's notice of a potential claim as of 2007. In May 2007, both sides in Siegel v. Warner Bros. Entertainment Inc., No. 2:04-cv-08400-ODW-RZ, moved for summary judgment concerning, in part, whether the October 19, 2001 letter constituted a binding agreement. In its briefing, DC argued that the effort to reduce the terms of that letter into a long-form agreement "came to naught when Plaintiffs abruptly fired Mr. Marks and terminated discussions with DC shortly after receiving Mr. Toberoff's '$15 million plus' offer." (SUF 47.) Thus, as late as May 2007, DC itself set forth in a submission to this Court sufficient facts to have put it on notice that it may have had an interference claim.
DC disputes Defendants' reference to Marks's and Toberoff's depositions insofar as neither deposition revealed (and thus DC was unable to question either of them on) "the fraudulent business offer concerning a 'billionaire investor' that Toberoff made to the Siegels." (SGD 27--28, 34--36.) DC also argues that its 2007 briefing "contain[ed] no mention of Toberoff's fraud, including his false business offer to the Siegels concerning a 'billionaire investor,' confirming that DC did not know about Toberoff's wrongdoing until it obtained the Timeline in December 2008." (SGD 47.) As it does with its fourth claim, DC insists that it couldn't have "discovered" its fifth claim until December 2008 when it received the Toberoff Timeline revealing the fraudulent nature of Toberoff's business offer. (See SGD 27-- 28, 34--36.)
But DC's Timeline arguments amount to little more than diversionary attempt to draw the Court's attention away from the fact that its fourth and fifth counterclaims are unquestionably time barred. Even without the Timeline, DC had more than enough inquiry-if not actual-notice no later than late 2003 (with respect to its fourth claim) and late 2006 (with respect to its fifth claim) to have piqued a reasonable suspicion that Toberoff may have meddled in its business affairs with the Siegels and Shusters. Armed with this knowledge, DC "could have filed suit, basing its interference claim[s] on known, non-privileged events (e.g., the Siegels' ending of negotiations and their retention of Toberoff / Emanuel shortly thereafter) and included its other allegations on the basis of 'information and belief.'" (Mot. 17.) Further fact investigation-including inquiry into the Timeline-is the very purpose of pretrial discovery for which one files suit. Jolly, 44 Cal. 3d at 1111 ("A plaintiff need not be aware of the specific 'facts' necessary to establish the claim; that is a process contemplated by pretrial discovery.") In short, receipt of the Timeline and digestion of the panoply of facts contained therein was mere surplusage considering the array of facts it had well before 2008 putting it on suspicion of its claims. Statutes of limitation would mean very little if a claim did not accrue until the aggrieved party was in actual possession of all the facts necessary to establish the claim.
For these reasons, the Court GRANTS Defendants' motion with respect to DC's fifth claim.
G.The Court Defers Ruling on DC's Sixth Claim at this Time
DC's sixth claim seeks a declaration that "[t]he various copyright assignments and consent agreements between Toberoff and/or his companies, the Siegel Heirs, and the Shuster Heirs are void and unenforceable, including under California's unfair competition law." (FAC ¶ 188 (citing Cal. Bus & Prof. Code §§ 17200--17210).) As framed, DC's sixth claim (like its third claim) seeks essentially the same relief DC seeks through its first claim, albeit on state-law unlawful-competition grounds and with respect to the Siegels and the Shusters. Compare FAC ¶ 134 (First claim: "A declaration by this Court regarding the validity of the Shuster Termination Notice is warranted . . . to establish the parties' respective rights and obligations with respect to the copyright interest in the Superman material."), with FAC ¶ 188 (Sixth claim: "A declaration by this Court is warranted . . . to establish the parties' respective rights and obligations with respect to the copyright interest in the Superman material.").
First, the Court notes that DC's sixth claim, unlike its first and third claims, brings the Toberoff's dealings with the Siegels within its ambit (although only in passing). But DC's opposition and cross-motion focuses solely on Toberoff's dealing with the Shusters and appears to disclaim the Siegels' role in its sixth claim. (See, e.g.,Opp'n 18 ("The Court's final judgment in DC's favor on its Third Claim . . . compels that judgment enter in DC's favor on its Sixth Claim.").) And in any event, the relief DC seeks vis-a-vis the Siegels-a declaration of the parties' respective rights and obligations with respect to the Superman copyrights-is duplicative of the relief it sought in Siegel v. Warner Bros. Entertainment Inc., No. 2:04-cv-08400-ODW-RZ (C.D. Cal. filed Oct. 8, 2004). The Court has already granted DC's requested relief in that matter, and all that remains is for the Court to define the contours of the relief regarding Superboy and the early Superman ads. Larson v. Warner Bros. Entmt. Inc., Nos. 2:04--cv--08400--ODW(RZx), 2:04--cv--08776--ODW(RZx), 2013 WL 1164434 (C.D. Cal. Mar. 20, 2013). Thus, to the extent DC has not disclaimed the Siegels' role in its sixth claim, that claim is nevertheless moot with respect to Toberoff's dealings with the Siegels.
This leaves the sixth claim as it applies to Toberoff's dealings with the Shusters. DC notes that this claim seeks to void the allegedly "illicit consent agreements that violate the grant-making provisions in § 304(c)(6)(D)." (Opp'n 21.) DC specifically notes that the Court's December 11, 2012 Judgment in DC's favor on its first and third claims "compels that judgment enter in DC's favor on its Sixth Claim." (Opp'n 18 (citing ECF No. 540).) Given the Court's conclusion in the Judgment that "the 2001 Pacific Pictures agreement, 2003 Pacific Pictures agreement, and 2008 consent agreement[ ]are deemed invalid and unenforceable under section 304(c)(6)(D)," Defendants are correct that DC's sixth claim is presently moot. Ordinarily this moot claim should be dismissed because it presents no live controversy between the parties. Am. Rivers v. Nat'l Marine Fisheries Serv., 126 F.3d 1118, 1123 (9th Cir. 1997).
But the Court recognizes that aspects of its order granting DC's motion for summary judgment on DC's first and third claims-the resolution of which is what moots DC's sixth claim-is currently on appeal before the Ninth Circuit. As the parties well know by now, Defendants' notice of appeal "confer[red] jurisdiction on the court of appeals and divest[ed this Court] of control over those aspects of the case involved in the appeal." Griggs v. Provident Consumer Discount Co., 459 U.S. 56, 58 (1982). As a result, this Court currently lacks jurisdiction to pass on the underlying subject matter of DC's sixth claim. Further, to the extent that the sixth claim presents issues distinct from DC's first and third claims, the Court declines to reach those issues at this time, as an affirmance by the Ninth Circuit would obviate the need to reach these issues.
For the reasons set forth above, the Court GRANTS Defendants' motion for summary judgment on DC's fourth and fifth claims, which are barred by the two-year statute of limitations. Defendants' motion with respect to DC's sixth claim and DC's entire cross-motion on that claim are DENIED WITHOUT PREJUDICE pending resolution of Defendants' current appeal before the Ninth Circuit.
IT IS SO ORDERED.