Case 2:16-cv-04543-JAK-SK Document 229 Filed 01/08/18 Page 1 of 19 Page ID #:5912 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Theodore E. Tsekerides (admitted pro hac vice) theodore.tsekerides@weil.com Randi W. Singer (admitted pro hac vice) randi.singer@weil.com Allison M. Brown (admitted pro hac vice) allison.brown@weil,com David Yolkut (admitted pro hac vice) david.yolkut@weil.com WEIL, GOTSHAL & MANGES LLP 767 Fifth Avenue New York, NY 10153-0119 Telephone: (212) 310-8000 Facsimile: (212) 310 8007 Scott A. Edelman, State Bar No. 116927 SEdelman@gibsondunn.com Nathaniel L. Bach, State Bar No. 246518 NBach@gibsondunn.com GIBSON, DUNN & CRUTCHER LLP 2029 Century Park East, Suite 4000 Los Angeles, California 90067 Telephone: (310) 552-8500 Facsimile: (310) 551-8741 Attorneys for Defendant and Counterclaim Plaintiff DISCOVERY COMMUNICATIONS, LLC 15 UNITED STATES DISTRICT COURT 16 CENTRAL DISTRICT OF CALIFORNIA 17 18 19 20 21 22 23 24 25 26 27 28 LMNO CABLE GROUP, INC., a California corporation, and LMNO ENTERTAINMENT GROUP, LLC, a California limited liability company, Plaintiffs, v. DISCOVERY COMMUNICATIONS, LLC, a Delaware limited liability company, Defendant. ________________________________ DISCOVERY COMMUNICATIONS, LLC, a Delaware limited liability company, Counterclaim Case No. 2:16-cv-4543-JAK-SK COUNTERCLAIM PLAINTIFF DISCOVERY COMMUNICATIONS, LLC’S OPPOSITION TO PLAINTIFF-INTERVENORS’ EX PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER The Honorable John A. Kronstadt Hearing date: n/a Hearing time: n/a Location: Courtroom 10B COUNTERCLAIM PLAINTIFF DISCOVERY COMMUNICATIONS, LLC’S OPPOSITION TO PLAINTIFF-INTERVENORS’ EX PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER Case 2:16-cv-04543-JAK-SK Document 229 Filed 01/08/18 Page 2 of 19 Page ID #:5913 1 2 3 4 5 6 7 8 9 Plaintiff, v. LMNO CABLE GROUP, INC., a California corporation, and LMNO ENTERTAINMENT GROUP, LLC, a California limited liability company, Counterclaim Defendants. ________________________________ WILLIAM KLEIN, an individual; JENNIFER ARNOLD, an individual; and CANDU ENTERPRISES, INC., a Texas corporation; 10 Plaintiff-Intervenors, 11 v. 12 LMNO CABLE GROUP, INC., a California corporation; ERIC SCHOTZ, an individual; and EDWARD HORWITZ, an individual, 13 14 15 Defendants. 16 17 18 19 20 21 22 23 24 25 26 27 28 COUNTERCLAIM PLAINTIFF DISCOVERY COMMUNICATIONS, LLC’S OPPOSITION TO PLAINTIFF-INTERVENORS’ EX PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER Case 2:16-cv-04543-JAK-SK Document 229 Filed 01/08/18 Page 3 of 19 Page ID #:5914 TABLE OF CONTENTS 1 2 3 4 5 6 7 8 9 10 11 12 Page INTRODUCTION .....................................................................................................1 FACTUAL BACKGROUND ....................................................................................2 A. The Unraveling Of A Business Partnership Between Discovery And LMNO And Ensuing Litigation Involving Sixteen Television Programs ..........................................................................................................2 B. Plaintiff-Intervenors Seek Untimely Relief To Frustrate Resolution Of The Thirty-Eight Claims Between Discovery and LMNO ............................. 4 ARGUMENT .............................................................................................................5 A. Plaintiff-Intervenors Are Not Likely To Succeed On The Merits Of Their Declaratory Judgment Claim ................................................................. 7 B. Plaintiff-Intervenors Have Not Identified Any Irreparable Harm They Will Face And Will Not Suffer Any Harm In The Absence Of A TRO Because They Retain Other Legal Claims And Rights .................................10 C. The Balance Of Equities Does Not Favor Plaintiff-Intervenors’ Application For A TRO .................................................................................12 D. The Issuance Of A TRO Would Affect The Public Interest .........................13 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 i COUNTERCLAIM PLAINTIFF DISCOVERY COMMUNICATIONS, LLC’S OPPOSITION TO PLAINTIFF-INTERVENORS’ EX PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER Case 2:16-cv-04543-JAK-SK Document 229 Filed 01/08/18 Page 4 of 19 Page ID #:5915 TABLE OF AUTHORITIES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Page(s) Cases All. for the Wild Rockies v. Cottrell, 632 F.3d 1127 (9th Cir. 2011) ..........................................................................5, 6 Angle v. United States Fid. & Guar. Co., 201 Cal.App.2d 758 (1962) .................................................................................. 9 Cmty. For Creative Non-Violence v. Reid 490 U.S. 730 (1989) ..............................................................................................8 Dunn v. Stringer, 41 Cal.App.2d 638 (1940) .................................................................................8,9 Edge Games, Inc. v. Elec. Arts, Inc., 745 F. Supp. 2d 1101 (N.D. Cal. 2010) ..............................................................13 First Franklin Fin. Corp. v. Franklin First Fin., Ltd., 356 F. Supp. 2d 1048 (N.D. Cal. 2005) ..............................................................12 Flexible Lifeline Sys., Inc. v. Precision Lift, Inc., 654 F.3d 989 (9th Cir. 2011) ..............................................................................11 Garcia v. Google, 786 F. 3d 733 (2015).............................................................................................8 Gill v. Rich, 128 Cal. App. 4th 1254 (2005) ............................................................................. 9 Gould v. Escondido Valley Poultry Ass’n, 56 Cal.App.2d 681 (1943) ................................................................................8, 9 Jefferson v. US Bank Nat'l Ass'n, No. LA CV12-03350 JAK (MRWx), 2012 WL 12883615 (C.D. Cal. May 30, 2012) .....................................................................................................................6 Miller v. Busby, 101 Cal.App.2d 83 (1950) .................................................................................8,9 27 28 ii COUNTERCLAIM PLAINTIFF DISCOVERY COMMUNICATIONS, LLC’S OPPOSITION TO PLAINTIFF-INTERVENORS’ EX PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER Case 2:16-cv-04543-JAK-SK Document 229 Filed 01/08/18 Page 5 of 19 Page ID #:5916 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 MWS Wire Industries, Inc. v. California Fine Wire Co., Inc., 797 F.2d 799 (9th Cir.1986) ..........................................................................13,14 Playmakers LLC v. ESPN, Inc., 376 F.3d 894 (9th Cir. 2004) ........................................................................12, 13 Reuters Ltd. v. United Press Int'l, Inc., 903 F.2d 904 (2d Cir. 1990) ...............................................................................10 Robinson v. Vivendi Universal, No. CV 04-09722 WMB (MCX, 2005 WL 5748318 (C.D. Cal. Nov. 22, 2005)13 Schaffer Family Inv’rs LLC v. Sonnier, No. 2:13 CV-05814-SVW(JEM), 2016 WL 6917269 (C.D. Cal. July 5, 2016) .. 9 Shapiro v. Hasbro, Inc., No. CV 15–02964–BRO, 2015 WL 13357442 (C.D. Cal. Sept. 24, 2015), aff'd, 653 F. App'x 568 (9th Cir. 2016)........................................................................13 Starlight Sugar, Inc. v. Soto, 114 F.3d 330 (1st Cir. 1997) ..........................................................................10,11 Strategic Diversity, Inc. v. Alchemix Corp., 666 F.3d 1197 (9th Cir. 2012) .............................................................................. 9 Taggart v. WMAQ Channel 5 Chicago, No. CIV.A. 00-4205-GPM, 2000 WL 1923322 (S.D. Ill. Oct. 30, 2000) ............ 8 Turtle Island Restoration Network v. U.S. Dep’t of Commerce, 672 F.3d 1160 (9th Cir. 2012) ............................................................................13 21 Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7 (2008) ..............................................................................................5, 6 22 Statutes 23 17 U.S.C.A. § 201(a)..................................................................................................7 24 17 U.S.C. § 102(a) .....................................................................................................7 25 26 27 28 Other Authorities Fed. R. Civ. P. 65(b)(2)..............................................................................................6 iii COUNTERCLAIM PLAINTIFF DISCOVERY COMMUNICATIONS, LLC’S OPPOSITION TO PLAINTIFF-INTERVENORS’ EX PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER Case 2:16-cv-04543-JAK-SK Document 229 Filed 01/08/18 Page 6 of 19 Page ID #:5917 1 Counterclaim Plaintiff Discovery Communications, LLC (“Discovery”) 2 respectfully submits this Opposition to the Ex Parte Application for Temporary 3 Restraining Order and accompanying Memorandum of Points and Authorities (the 4 “Application,” “App.” or “TRO”) filed by Plaintiff-Intervenors William Klein, 5 Jennifer Arnold, and Candu Enterprises, Inc. (together, “Plaintiff-Intervenors”) 6 (Dkt. No. 228). 7 INTRODUCTION 8 Plaintiff-Intervenors apply to the Court for emergency relief more than 9 seven months after they joined this lawsuit, and more than one-and-a-half years 10 after this lawsuit was first filed by LMNO, seeking to frustrate advanced settlement 11 discussions between Discovery and LMNO by freezing assets which would be part 12 of such settlement. But, there is no emergency and no extraordinary circumstances 13 here that warrant Plaintiff-Intervenors’ request for a drastic, extraordinary, and 14 untimely temporary restraining order. Indeed, from the outset, this lawsuit has 15 always included a dispute between Discovery and LMNO regarding ownership of 16 various television programs including The Little Couple, and Plaintiff-Intervenors 17 cannot now claim—simply because Discovery and LMNO are engaged in 18 advanced settlement discussions—that there is some new exigency of which they 19 just became aware which would warrant the emergency relief they seek. 20 The law is clear that Plaintiff-Intervenors are not entitled to a temporary 21 restraining order. First, Plaintiff-Intervenors are not likely to succeed on the 22 merits of their declaratory judgment claim. Plaintiff-Intervenors never owned any 23 copyrights in The Little Couple as a matter of law. Specifically, Plaintiff- 24 Intervenors played no role in fixation of the final episodes of the program, nor can 25 they have a specific copyright in their performance. Rather, at most, Plaintiff- 26 Intervenors have a contract claim against LMNO, for which legal damages would 27 be sufficient. Moreover, the equitable remedy of contract rescission is a drastic 28 1 COUNTERCLAIM PLAINTIFF DISCOVERY COMMUNICATIONS, LLC’S OPPOSITION TO PLAINTIFF-INTERVENORS’ EX PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER Case 2:16-cv-04543-JAK-SK Document 229 Filed 01/08/18 Page 7 of 19 Page ID #:5918 1 remedy, and is unavailable where it affects the rights of third parties, particularly 2 where conditions have so changed since the contract sought to be rescinded was 3 entered. Second, Plaintiff-Intervenors cannot demonstrate any irreparable harm if 4 the temporary restraining order is not entered. Should the intellectual property 5 rights to episodes of The Little Couple be assigned to Discovery as part of a 6 settlement, Plaintiff-Intervenors remain free to seek leave to add Discovery as a 7 defendant, as they have always been aware of Discovery’s claim against LMNO 8 for ownership of The Little Couple. Third, the balance of equities does not tip in 9 Plaintiff-Intervenors’ favor. Whereas Plaintiff-Intervenors have unnecessarily 10 delayed bringing this Application and have not shown any harm that they would 11 suffer as a result of any potential transfer of copyright rights from LMNO to 12 Discovery, LMNO and Discovery would be harmed by a grant of a TRO because 13 they would be forced to litigate claims they are otherwise working to resolve. 14 Fourth, granting a TRO to Plaintiff-Intervenors would undermine the public’s 15 interest in promoting resolution and settlement between litigants as well as a 16 litigant’s ability to go about carrying out their business in the normal course free of 17 entanglement in litigation. 18 Plaintiff-Intervenors’ untimely and groundless Application should be seen 19 for what it is: gamesmanship to frustrate a settlement that would resolve all thirty- 20 eight claims between Discovery and LMNO (as well as the claims against the 21 recently added twenty-one broadcaster defendants), which involve a total of 22 sixteen programs (of which The Little Couple is but one). 23 FACTUAL BACKGROUND 25 The Unraveling Of A Business Partnership Between Discovery And LMNO And Ensuing Litigation Involving Sixteen Television Programs 26 This lawsuit stems from the unraveling of a more than decade-long business 24 27 28 A. relationship between Discovery Communications, LLC (“Discovery”), a global 2 COUNTERCLAIM PLAINTIFF DISCOVERY COMMUNICATIONS, LLC’S OPPOSITION TO PLAINTIFF-INTERVENORS’ EX PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER Case 2:16-cv-04543-JAK-SK Document 229 Filed 01/08/18 Page 8 of 19 Page ID #:5919 1 media company, and LMNO Cable Group, Inc. (together with its affiliate LMNO 2 Entertainment Group, LLC, “LMNO”), a television production company that 3 produced a number of television programs with or for Discovery. See Dkt. No. 17 4 at ¶¶ 1, 15, 16. Discovery exercised its contractual rights to terminate its 5 agreements with LMNO on June 17, 2016. See id. at ¶ 104. 6 On June 22, 2016, LMNO sued Discovery for various claims related to three 7 programs LMNO had produced for Discovery, including The Little Couple, which 8 features Plaintiff-Intervenors as the talent. See generally Dkt. No. 1. During the 9 earlier seasons of The Little Couple, Plaintiff-Intervenors contracted directly with 10 LMNO. See id. at ¶¶ 78-79. Later, in 2014, LMNO assigned the talent’s 11 contractual relationship to Discovery, and Discovery has maintained a contractual 12 relationship with Plaintiff-Intervenors ever since. See id. at ¶ 79; see also App. at 13 6. On August 1, 2016, Discovery filed twenty-one counterclaims against 14 15 LMNO involving sixteen programs in total (including The Little Couple). See 16 generally Dkt. No. 17. Among its claims, Discovery seeks a declaratory judgment 17 to confirm that Discovery, not LMNO, is the copyright owner of fourteen of the 18 programs at issue, including The Little Couple, based on clear language in the 19 various contracts between Discovery and LMNO. See id. at Eighteenth Claim for 20 Relief; see also id. at ¶ 43.1 21 Over the course of the next year, Discovery and LMNO engaged in 22 extensive party and third-party fact discovery. See Dkt. No. 88 (joint stipulation 23 detailing extensive fact discovery as related to LMNO’s claims and Discovery’s 24 counterclaims). For example, more than a year ago, in December 2016, Discovery 25 26 27 28 LMNO’s partial motion to dismiss was denied, including as to Discovery’s declaratory judgment claim. See Dkt. No. 126. 1 3 COUNTERCLAIM PLAINTIFF DISCOVERY COMMUNICATIONS, LLC’S OPPOSITION TO PLAINTIFF-INTERVENORS’ EX PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER Case 2:16-cv-04543-JAK-SK Document 229 Filed 01/08/18 Page 9 of 19 Page ID #:5920 1 served Plaintiff-Intervenors with a document subpoena. See Dkt. No. 122-7, 2 Declaration of William Klein dated May 17, 2017 at ¶ 3. 3 4 B. Plaintiff-Intervenors Seek Untimely Relief To Frustrate Resolution Of The Thirty-Eight Claims Between Discovery and LMNO 5 Nearly a year after LMNO sued and Discovery countersued, Plaintiff- 6 Intervenors sought to intervene in this Action by way of an ex parte application in 7 mid-May 2017. See Dkt. No. 103. The crux of Plaintiff-Intervenors’ Complaint in 8 Intervention boils down to contract issues: generally, that over the years, LMNO 9 falsely represented that The Little Couple “had substantial losses and that LMNO 10 was not therefore receiving any contingent compensation and/or distributable 11 proceeds” “from which [Plaintiff-Intervenors] could be paid their contractual 25% 12 entitlement.” See Dkt. No. 213 at ¶¶ 56, 57. 13 Since August 1, 2016 when Discovery filed its Counterclaim (several 14 months before Plaintiff-Intervenors intervened), it has been abundantly clear that 15 the copyright rights in The Little Couple were at issue in this litigation. And there 16 can be no doubt that Plaintiff-Intervenors were specifically aware of this fact, as 17 Discovery repeatedly reserved “all rights with respect to the [Plaintiff-Intervenors’] 18 claims, including regarding the ownership of intellectual property at issue in this 19 action” in responding to Plaintiff-Intervenors’ ex parte application for an earlier 20 hearing date (see Dkt. No. 107) and Plaintiff-Intervenors’ motion to intervene (see 21 Dkt. No. 127). 22 By the time Plaintiff-Intervenors joined this lawsuit, all fact discovery 23 between Discovery and LMNO had largely been completed (see Dkt. Nos. 106, 24 107, 127), except narrowly focused discovery pertaining to new claims alleged in 25 LMNO’s Second Amended Complaint. See Dkt. No. 177. Over the course of the 26 next six months, efforts were largely devoted to fact discovery as among Plaintiff- 27 28 4 COUNTERCLAIM PLAINTIFF DISCOVERY COMMUNICATIONS, LLC’S OPPOSITION TO PLAINTIFF-INTERVENORS’ EX PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER Case 2:16-cv-04543-JAK-SK Document 229 Filed 01/08/18 Page 10 of 19 Page ID #:5921 1 Intervenors, LMNO, and the other Intervenor-Defendants (Mr. Eric Schotz and Mr. 2 Ed Horwitz). See, e.g., Dkt. No. 218. 3 On December 18, 2017 at the hearing regarding Mr. Horwitz’s partial 4 motion to dismiss, the Court asked all parties whether further efforts had been 5 made to settle the lawsuit. See Dkt. No. 225. LMNO and Discovery confirmed 6 that they had previously participated in a mediation session, and LMNO informed 7 the Court that it had submitted a settlement offer the previous week to Plaintiff- 8 Intervenors. See id. The Court subsequently ordered all parties to file a joint 9 report by January 12, 2018, setting forth their views as to whether an additional 10 11 mediation session would be beneficial. See id. A few days later, on December 21, 2017, as a matter of courtesy, Discovery 12 informed Plaintiff-Intervenors that Discovery and LMNO were engaged in 13 settlement discussions to resolve all claims between them. See Declaration of 14 Jennifer J. McGrath dated December 28, 2017 at ¶¶ 2-3; see also Declaration of 15 Neville L. Johnson dated January 5, 2018 (“Johnson Declaration”) at ¶¶ 5, 7 & Ex. 16 3. The next day, Plaintiff-Intervenors’ counsel sent Discovery’s counsel a letter in 17 which he threatened “to amend [Plaintiff-Intervenors’] complaint and add 18 Discovery as a defendant.” See Johnson Declaration at ¶ 6 & Ex. 2. 19 ARGUMENT 20 “A preliminary injunction is an extraordinary remedy never awarded as of 21 right.” All. for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131 (9th Cir. 2011) 22 (quoting Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 24 (2008)). A plaintiff 23 seeking preliminary injunctive relief must establish four elements: (1) that the 24 plaintiff is likely to succeed on the merits; (2) that the plaintiff is likely to suffer 25 irreparable harm in the absence of preliminary injunctive relief; (3) that the balance 26 of equities tips in the plaintiff’s favor; and (4) that preliminary injunctive relief is 27 in the public interest. Winter, 555 U.S. at 20. “The standard for issuing a 28 5 COUNTERCLAIM PLAINTIFF DISCOVERY COMMUNICATIONS, LLC’S OPPOSITION TO PLAINTIFF-INTERVENORS’ EX PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER Case 2:16-cv-04543-JAK-SK Document 229 Filed 01/08/18 Page 11 of 19 Page ID #:5922 1 temporary restraining order parallels that for issuing a preliminary injunction, and 2 courts have applied the tests as articulated for preliminary injunctive relief to 3 applications for temporary restraining orders.” Jefferson v. US Bank Nat'l Ass'n, 4 No. LA CV12-03350 JAK (MRWx), 2012 WL 12883615, at *1 (C.D. Cal. May 5 30, 2012) (Kronstadt, J.) (denying ex parte application for temporary restraining 6 order in part because “any emergency justifying ex parte injunctive relief would be 7 one of Plaintiff’s own making”). The Ninth Circuit has described the sliding scale “serious questions” test for 8 9 a preliminary injunction in which ‘“serious questions going to the merits’ and a 10 balance of hardships that tips sharply towards the plaintiff can support issuance of 11 a preliminary injunction, so long as the plaintiff also shows that there is a 12 likelihood of irreparable injury and that the injunction is in the public interest.” 13 Cottrell, 632 F.3d at 1135 (emphasis added). Plaintiff-Intervenors invoke the 14 “serious questions” test to support their Application, but they cannot demonstrate 15 “serious questions going to the merits” of their declaratory judgment claim 16 (opposed to a likelihood of success on the merits), because they have not shown 17 that the balance of hardships tips “sharply” in their favor and that they have 18 satisfied the other Winter elements of likelihood of irreparable injury and that the 19 TRO is in the public interest. As detailed below, because Plaintiff-Intervenors fail 20 to “make a showing on all four prongs,” they are not entitled to the extraordinary 21 and drastic relief they seek. See id.2 22 23 24 25 26 27 28 Further, Plaintiff-Intervenors seek a temporary restraining order lasting through trial, currently set for June 19, 2018 (see App. at 5-6). Even when such orders issued without notice are appropriate, which is not the case here, they may not last longer than 14 days. See Fed. R. Civ. P. 65(b)(2). 2 6 COUNTERCLAIM PLAINTIFF DISCOVERY COMMUNICATIONS, LLC’S OPPOSITION TO PLAINTIFF-INTERVENORS’ EX PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER Case 2:16-cv-04543-JAK-SK Document 229 Filed 01/08/18 Page 12 of 19 Page ID #:5923 A. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Plaintiff-Intervenors Are Not Likely To Succeed On The Merits Of Their Declaratory Judgment Claim. Plaintiff-Intervenors are not likely to succeed on the merits of their declaratory judgment claim against LMNO because they do not own any copyrights in The Little Couple as a matter of law. While there is no dispute that Plaintiff-Intervenors’ contribution to The Little Couple is critically-important to the success of the program, and no dispute that they should be fairly compensated for it, as a matter of law, their contribution does not result in any copyright rights in the various final fixed episodes of the many seasons of The Little Couple or in their “performances on each and every episode” of The Little Couple. 3 See Dkt. No. 213 at ¶ 142. There is no dispute that LMNO and Discovery co-produced The Little Couple. See App. at 6. While LMNO and Discovery dispute whether LMNO financed its share of the production costs for The Little Couple or whether Discovery funded the costs alone, there is no question that Plaintiff-Intervenors did not co-produce The Little Couple, did not fund any of the production costs, and were not responsible for the myriad tasks required to translate the idea of the program in general or for any particular story into a completed episode. Under the Copyright Act, copyright ownership generally vests in the author of the work. 17 U.S.C.A. § 201(a). And, “[c]opyright protection subsists . . . in original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device.” 17 U.S.C. § 102(a). While individual producers, directors, and the like may make some creative contributions to a work of authorship, copyright law does not fragment one work (such as a television program episode) into numerous Plaintiff-Intervenors have no claim for trademark rights in the mark “The Little Couple.” See generally Dkt. No. 213. 3 7 COUNTERCLAIM PLAINTIFF DISCOVERY COMMUNICATIONS, LLC’S OPPOSITION TO PLAINTIFF-INTERVENORS’ EX PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER Case 2:16-cv-04543-JAK-SK Document 229 Filed 01/08/18 Page 13 of 19 Page ID #:5924 1 copyrightable works or else “Swiss cheese of copyrights” will result. See Garcia 2 v. Google, 786 F. 3d 733, 742 (2015). Therefore, it is the “party who actually 3 creates the work, that is, the person who translates an idea into a fixed, tangible 4 expression” who is “entitled to copyright protection.” Garcia, 786 F. 3d at 744 5 (citing Cmty. For Creative Non-Violence v. Reid, 490 U.S. 730, 737 (1989)). Here, 6 Plaintiff-Intervenors played no role in “translat[ing] an idea into a fixed, tangible 7 expression,” and thus have no claim to copyrights in the final fixed episodes of The 8 Little Couple. Plaintiff-Intervenors also do not have separate copyrights in their 9 performances within The Little Couple. See Garcia, 786 F. 3d at 740-43 (holding 10 that an actress cannot claim a separate copyright in her performance within a film); 11 Taggart v. WMAQ Channel 5 Chicago, No. CIV.A. 00-4205-GPM, 2000 WL 12 1923322, at *4 (S.D. Ill. Oct. 30, 2000) (dismissing copyright infringement claim 13 alleging prisoner’s performance copyrightable because “utterances made during an 14 interview are not an expression of an idea for the purpose of copyright law, they 15 are simply an idea, and thus not subject to copyright protection”). Moreover, to even reach the copyright ownership issue, which they would 16 17 lose for the reasons discussed above, Plaintiff-Intervenors first must prove LMNO 18 fraudulently induced Plaintiff-Intervenors into entering the talent contract in the 19 first place, and that, as a result, Plaintiff-Intervenors can rescind that contract with 20 LMNO. See App. at 13. Even then, the result would not be Plaintiff-Intervenors 21 gaining ownership over episodes of The Little Couple. To date, the only support 22 Plaintiff-Intervenors have advanced involving contract rescission are three 23 inapplicable cases, the most recent of which is nearly seventy years old. In any 24 event, those cases, Miller, Gould, and Dunn 4 do not involve circumstances 25 26 27 28 The inapposite cases Plaintiff-Intervenors cite essentially pre-date commercial television and do not lend any support that they are likely to succeed on the merits on their declaratory judgment claim. In Miller v. Busby, the court rescinded the sale of a motel where the seller induced the sale by making false representations 8 4 COUNTERCLAIM PLAINTIFF DISCOVERY COMMUNICATIONS, LLC’S OPPOSITION TO PLAINTIFF-INTERVENORS’ EX PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER Case 2:16-cv-04543-JAK-SK Document 229 Filed 01/08/18 Page 14 of 19 Page ID #:5925 1 remotely similar to those here, where talent was allegedly fraudulently induced to 2 enter into a deal with a production company based on representations about future 3 profit participation. 4 Further, rescission itself is an equitable remedy which is inappropriate in 5 many circumstances, including where it is impracticable to undo a contractual 6 relationship given the passage of time, and particularly where the rights of third 7 parties would be affected. See Schaffer Family Inv’rs LLC v. Sonnier, No. 2:13 8 CV-05814-SVW(JEM), 2016 WL 6917269, at *10 (C.D. Cal. July 5, 2016) 9 (finding that “the passage of time has rendered the complete restoration of the 10 parties to the status quo ante difficult if not impossible”), citing Strategic Diversity, 11 Inc. v. Alchemix Corp., 666 F.3d 1197, 1207-08 (9th Cir. 2012) (finding rescission 12 “neither feasible nor practical” because “the passage of time has rendered the 13 complete restoration of the parties to the status quo ante difficult if not 14 impossible”); Gill v. Rich, 128 Cal. App. 4th 1254, 1265 (2005) (“when the rights 15 of others have intervened and circumstances have so far changed that rescission 16 may not be decreed without injury to those parties and their rights, rescission will 17 be denied and the complaining party left to his other remedies”) (citations and 18 quotation marks omitted); Angle v. United States Fid. & Guar. Co., 201 19 Cal.App.2d 758, 763 (1962) (“[T]here can be no rescission where the rights of 20 third parties would be prejudiced.”). Here, not only would Discovery be impacted 21 22 23 24 25 26 27 28 concerning, inter alia, the rental income earned from a previous season. 101 Cal.App.2d 83, 84-89 (1950). In Gould v. Escondido Valley Poultry Ass’n, a buyer aiming to make a living off land was fraudulently induced to enter into a contract for the sale of land by the seller’s false representations regarding the character and depth of soil. 56 Cal.App.2d 681, 683-88 (1943). In Dunn v. Stringer, the plaintiff was able to rescind a contract of association because the defendant procured the contract by falsely representing that he possessed facts and materials for stories. 41 Cal.App.2d 638, 642-43 (1940). 9 COUNTERCLAIM PLAINTIFF DISCOVERY COMMUNICATIONS, LLC’S OPPOSITION TO PLAINTIFF-INTERVENORS’ EX PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER Case 2:16-cv-04543-JAK-SK Document 229 Filed 01/08/18 Page 15 of 19 Page ID #:5926 1 by rescission, but so too would potentially innumerable other parties who have 2 participated in the production and airing of The Little Couple. At bottom, Plaintiff-Intervenors have not demonstrated that they are likely 3 4 to succeed on the merits of their declaratory judgment claim. At best, Plaintiff- 5 Intervenors have a breach of contract claim against LMNO for LMNO’s alleged 6 failure to share in profit participation from international distribution of The Little 7 Couple. See Dkt. No. 213 at First Claim for Relief. Plaintiff-Intervenors will 8 maintain that breach of contract claim against LMNO no matter what may happen 9 regarding the intellectual property rights in The Little Couple as part of any 10 potential settlement between Discovery and LMNO. B. 11 12 Plaintiff-Intervenors Have Not Identified Any Irreparable Harm They Will Face And Will Not Suffer Any Harm In The Absence Of A TRO Because They Retain Other Legal Claims And Rights. 13 Plaintiff-Intervenors will not suffer irreparable harm in the absence of a 14 temporary restraining order. First, most glaringly, Plaintiff-Intervenors have failed 15 to identify any irreparable harm they would face resulting from a transfer of 16 copyrights in The Little Couple. Indeed, Plaintiff-Intervenors do not cite a single 17 case to support the notion that transfer of copyright rights causes irreparable harm 18 to a third party that does not have any copyrights in the underlying work or that 19 discusses any harms resulting from the transfer of intellectual property rights.5 20 21 22 23 24 25 26 27 28 The cases Plaintiff-Intervenors do cite involve types of harms that are unquestionably not at issue here. The court in Reuters Ltd. v. United Press Int'l, Inc., found that irreparable harm to a major American wire service’s good will and reputation would result if that service was not otherwise able to supply foreign news photographs to its newspaper and news magazine subscribers. See 903 F.2d 904, 909 (2d Cir. 1990). Additionally, in Starlight Sugar, Inc. v. Soto, the court affirmed the issuance of a preliminary injunction barring the enforcement of a Puerto Rico regulation that prohibited importation of refined sugar intended for consumer sale not pre-packaged in certain sized units. 114 F.3d 330, 331 (1st Cir. 1997). There, the court found the potential for irreparable harm for plaintiff sugar 10 5 COUNTERCLAIM PLAINTIFF DISCOVERY COMMUNICATIONS, LLC’S OPPOSITION TO PLAINTIFF-INTERVENORS’ EX PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER Case 2:16-cv-04543-JAK-SK Document 229 Filed 01/08/18 Page 16 of 19 Page ID #:5927 1 And, the Ninth Circuit has made clear in the copyright context that there is no 2 presumption of irreparable harm in issuing preliminary injunctive relief. Flexible 3 Lifeline Sys., Inc. v. Precision Lift, Inc., 654 F.3d 989, 998 (9th Cir. 2011). 4 Second, Plaintiff-Intervenors choose to ignore other readily available legal 5 remedies and claims. In their Application, Plaintiff-Intervenors persist that they 6 will be robbed of their ability to recover their purported copyrights in The Little 7 Couple if LMNO transfers such rights to Discovery before trial in this lawsuit. See 8 App. at 14-15. However, no matter who holds the copyrights in the various 9 episodes of The Little Couple following any settlement between Discovery and 10 LMNO, it is entirely within Plaintiff-Intervenors’ control to pursue claims for 11 relief (meritless as they might be) against the copyright holder, whether Discovery 12 or LMNO. Indeed, Plaintiff-Intervenors are already well-aware that they can 13 attempt to add Discovery as a defendant as their counsel previously threatened to 14 do if copyright rights are transferred to Discovery as part of any settlement. See 15 Johnson Decl. Ex. 2. Plaintiff-Intervenors cannot now be heard to complain that 16 they will be irreparably harmed if the status quo is not maintained—and in any 17 event, the status quo is already such that Plaintiff-Intervenors do not hold the 18 copyrights in the episodes of The Little Couple. 19 Moreover, far from “flying the coop,” Plaintiff-Intervenors and Discovery 20 have an ongoing business relationship as Discovery currently holds the talent deal 21 with Plaintiff-Intervenors and produced the most recent season of The Little 22 Couple. Discovery’s potential dismissal as a party to this lawsuit will not impact 23 Plaintiff-Intervenors’ ability to seek relief from Discovery should Discovery be 24 granted certain rights in The Little Couple as part of a settlement resolution 25 between it and LMNO. 26 27 28 importers because “the potential value of an evanescent business opportunity may be extremely difficult to measure, after the fact.” Id. at 332. 11 COUNTERCLAIM PLAINTIFF DISCOVERY COMMUNICATIONS, LLC’S OPPOSITION TO PLAINTIFF-INTERVENORS’ EX PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER Case 2:16-cv-04543-JAK-SK Document 229 Filed 01/08/18 Page 17 of 19 Page ID #:5928 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 C. The Balance Of Equities Does Not Favor Plaintiff-Intervenors’ Application For A TRO. As Plaintiff-Intervenors have utterly failed to demonstrate that they would suffer any irreparable harm, the balance of equities favors denying PlaintiffIntervenors’ request for injunctive relief. After more than a year of fact discovery and multiple motions, Plaintiff-Intervenors now seek to frustrate a settlement agreement that would, once finalized, resolve all thirty-eight claims between Discovery and LMNO (including as to the twenty-one broadcaster defendants). There can be no dispute that Plaintiff-Intervenors have been fully aware of Discovery’s and LMNO’s claims and arguments in this litigation, including as relates to ownership of The Little Couple. See Dkt. No. 17. Plaintiff-Intervenors offer no explanation for why they chose to delay seeking any relief until LMNO and Discovery were on the brink of resolving this dispute. This unwarranted delay and gamesmanship to frustrate a settlement of complex claims involving millions of dollars tips the balance of equities away from Plaintiff-Intervenors, and in LMNO’s and Discovery’s favor. See First Franklin Fin. Corp. v. Franklin First Fin., Ltd., 356 F. Supp. 2d 1048, 1055 (N.D. Cal. 2005) (finding that balance of hardships tipped in defendant’s favor where “plaintiff’s alleged delay in enforcing its intellectual-property rights undercut[] its claims of urgency and irreparable harm” and that defendant would incur “significant costs” if injunctive relief was granted). Moreover, a grant of Plaintiff-Intervenors’ Application would undoubtedly and unnecessarily lengthen this litigation and result in the additional expenditure of millions of dollars by parties who, while desirous of settling, would be compelled to try the case to verdict. Indeed, it is undisputed that LMNO and Discovery, and not Plaintiff-Intervenors, co-produced The Little Couple and that PlaintiffIntervenors took no part in funding any of the production costs. App. at 6. This weighs heavily against granting Plaintiff-Intervenors’ Application. See 12 COUNTERCLAIM PLAINTIFF DISCOVERY COMMUNICATIONS, LLC’S OPPOSITION TO PLAINTIFF-INTERVENORS’ EX PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER Case 2:16-cv-04543-JAK-SK Document 229 Filed 01/08/18 Page 18 of 19 Page ID #:5929 1 Playmakers LLC v. ESPN, Inc., 376 F.3d 894, 898 (9th Cir. 2004) (defendant’s 2 “significant financial investment” in its show warranted a finding that the balance 3 of hardships tipped in favor of defendant); Edge Games, Inc. v. Elec. Arts, Inc., 4 745 F. Supp. 2d 1101, 1118 (N.D. Cal. 2010) (finding that plaintiff’s delay in 5 seeking injunctive relief while allowing defendant to invest millions of dollars and 6 develop its product “would be plainly inequitable and highly prejudicial to 7 defendant.”). 8 Finally, granting Plaintiff-Intervenors’ request for a TRO would also disrupt 9 the status quo. Shapiro v. Hasbro, Inc., No. CV 15–02964–BRO (AJWx), 2015 10 WL 13357442, at *6 (C.D. Cal. Sept. 24, 2015), aff'd, 653 F. App'x 568 (9th Cir. 11 2016) (“In considering a request for a preliminary injunction, a court must remain 12 mindful that such relief is aimed primarily at preserving the status quo pending 13 trial.”). A settlement between LMNO and Discovery would not change Plaintiff- 14 Intervenors’ position as to its claims in this litigation nor would it create any risk of 15 destruction or spoliation of Plaintiff-Intervenors’ purported intellectual property 16 rights or ability to seek monetary damages. In contrast, preventing Discovery and 17 LMNO from entering into a settlement agreement would have a substantial 18 economic impact on the parties and thus alter the status quo. 19 D. The Issuance Of A TRO Would Affect The Public Interest. 20 Awarding Plaintiff-Intervenors a TRO would have a negative impact on the 21 public interest. Courts have consistently maintained that the public has an interest 22 in the settling of lawsuits. See, e.g. Turtle Island Restoration Network v. U.S. 23 Dep’t of Commerce, 672 F.3d 1160, 1167 (9th Cir. 2012) (noting that settlement of 24 a dispute is “to be encouraged”); Robinson v. Vivendi Universal, No. CV 04-09722 25 WMB (MCX, 2005 WL 5748318, at *6 (C.D. Cal. Nov. 22, 2005) (“The Ninth 26 Circuit has recognized an ‘overriding public interest in settling and quieting 27 28 13 COUNTERCLAIM PLAINTIFF DISCOVERY COMMUNICATIONS, LLC’S OPPOSITION TO PLAINTIFF-INTERVENORS’ EX PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER Case 2:16-cv-04543-JAK-SK Document 229 Filed 01/08/18 Page 19 of 19 Page ID #:5930 1 litigation.’”) (citing MWS Wire Industries, Inc. v. California Fine Wire Co., Inc., 2 797 F.2d 799, 802 (9th Cir.1986)). 3 Any settlement between Discovery and LMNO would serve the public 4 interest as it would resolve all thirty-eight claims between these two parties, 5 including complex claims against the twenty-one broadcaster defendants, without 6 limiting Plaintiff-Intervenors’ pursuit of their claims for relief. Thus, it is clear that 7 the issuance of a TRO would be against the public interest. CONCLUSION 8 9 Discovery respectfully requests that the Court deny Plaintiff-Intervenors’ 10 application for the issuance of a temporary restraining order and a preliminary 11 injunction restraining and enjoining LMNO from transferring any rights, including 12 copyrights, in The Little Couple to any other person or entity, including Discovery. 13 14 Dated: January 8, 2018 GIBSON, DUNN & CRUTCHER LLP 15 16 17 18 19 20 21 22 23 24 25 26 By: /s/ Scott A. Edelman Scott A. Edelman, State Bar No. 116927 Nathaniel L. Bach, State Bar No. 246518 2029 Century Park East, Suite 4000 Los Angeles, California 90067 (310) 552-8500 SEdelman@gibsondunn.com WEIL, GOTSHAL & MANGES LLP Theodore E. Tsekerides Randi W. Singer Allison M. Brown David Yolkut 767 Fifth Avenue New York, New York 10153 (212) 310-8000 theodore.tsekerides@weil.com Attorneys for Defendant and Counterclaim Plaintiff 27 28 14 COUNTERCLAIM PLAINTIFF DISCOVERY COMMUNICATIONS, LLC’S OPPOSITION TO PLAINTIFF-INTERVENORS’ EX PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER