8:42am PT by Eriq Gardner
Hollywood's Top 10 Legal Disputes of 2015
This legal blog, recently inducted into the ABA Journal's Hall of Fame, has been providing a Top 10 list for the past five years. The way we'd describe 2015 is eclectic, full of interesting disputes covering a wide range of legal topics including privacy, intellectual property, bankruptcy, antitrust, contracts and defamation.
Our top disputes of 2015 leaves out some long-running ones that came to momentous decisions (see: "Happy Birthday" or Google Books) and shortchanges some new ones that will likely provide plenty to write about moving forward (see: Sean Penn vs. Lee Daniels or the "Bones" lawsuit). There's obviously room for debate about what belongs on the list. Our goal is to spotlight legal controversy both significant and much-discussed within and outside Hollywood. (A separate list for top legal and regulatory matters on the international front is also forthcoming.)
Without further ado, here — in reverse order — are the legal dramas that were most gripping this past year:
10: Gawker steps into the legal ring against Hulk Hogan
Well, the first trial ever over a celebrity sex tape didn't happen. Not yet. After a postponement, Hogan's $100 million lawsuit over the gossip site's posting of a sex tape excerpt, and Gawker's "newsworthy" defense, is now primed to begin trial in March. But plenty of fireworks in the case proceeded nevertheless. Gawker filed a lawsuit against the FBI to uncover documents from the government's investigation of the Hogan tape. As Gawker faced backlash over a separate story about a Conde Nast executive who allegedly was involved with a male escort, other tabloids gained access to and printed an extended transcript of the sex-tape footage that showed Hogan uttering the N-word and making racist comments. A tarnished Hogan has been hunting the source of that leak, blaming Gawker, and a Florida judge in October allowed extensive discovery including an examination of Gawker employee tech equipment. Recently, Gawker announced that it would be switching its coverage to more politically-focused matters.
9. HBO beats defamation claims over a child labor report
Gawker hasn't gone to trial yet over its news practices, but HBO did after a seven-year buildup in a case that examined an episode of Real Sports with Bryant Gumbel where young children in India were shown hand-stitching Mitre-branded soccer balls for pennies or less in order to pay off their parents’ debts. The trial inside a New York federal courthouse lasted a full month! It opened with harrowing images and an attack on HBO's journalism just as the pay network was celebrating documentary hits like The Jinx and Going Clear. HBO fought back against Mitre's defamation claims, and a jury heard conflicting testimony about who was exploitative and who was socially responsible. HBO prevailed, which represented a good outcome for the network, but one that also leaves untouched the judge's controversial decision that the plaintiff — a multinational corporation — shouldn’t be considered a "public figure" for the purpose of figuring out whether defamation occurred.
8. Sony Pictures settles claims by ex-employees over hacked data
A nightmare of the scariest sorts best describes what happened to Sony Pictures when hackers stole the company's most sensitive information and distributed it to the public on the verge of the release of The Interview. The subsequent class actions from ex-employees were just part of the fallout from this situation. Sony's responsibility for safeguarding private data came into examination in the litigation, but the case didn't go far. In October, Sony came to a proposed settlement to pay at least $5.5 million to resolve negligence claims. Some of the provocative issues that came up in the case — for example, how do victims of identity theft prove specific hacks are to blamed for their troubles when hacking has now become commonplace — will await testing in future cases.
7. Sports broadcasting faces a flood of antitrust lawsuits in the wake of a judge's May ruling
The health of over-the-air and cable television is increasingly tied to live sports, the phenomenon that resists ad-skipping and cord-cutting. Thus, an antitrust lawsuit against Major League Baseball over how telecasts of games are packaged and distributed represents a huge deal. In May, a federal judge in New York agreed to certify a class of plaintiffs who aim to cut down territorial restrictions on game telecasts. The following month, the National Hockey League settled its own class action by agreeing to allow fans to obtain price-discounted streams of their favorite teams. These developments encouraged a flurry of similar antitrust lawsuits against the National Football League and their broadcast partners. Those latter cases have now been consolidated. Meanwhile, MLB is now set to go to trial in January. The outcome will be worth the ticket.
6. Hollywood talent agencies go to war
Agents in the entertainment industry have been defecting to rival agencies for decades. There's often a bit of Entourage-like drama that follows such flights, but nothing quite like the lawsuit that resulted when 12 agents at Creative Artists Agency moved over to United Talent Agency and brought with them top clients including Will Ferrell, Chris Pratt and Ed Helms. California usually favors employee mobility, but CAA alleges a "lawless midnight raid" with claims of interference against UTA, breach of fiduciary duty and breach of the duty of loyalty against the agents themselves. Much of the dispute is now playing out in arbitration, but there's a big piece being litigated in open court. Unless settled, the war between CAA and UTA figures to address California's "seven-year rule" limiting lengthy personal services contracts. Typically applied to talent, the arguments on this subject will impact the alignment of stars and their dealmakers for decades to come.
5. Judge stops Aretha Franklin documentary from playing Telluride
In terms of shocking legal decisions, witness a judge's decision in September to grant iconic soul singer Aretha Franklin's emergency injunction motion to stop the film Amazing Grace from premiering at the Telluride Film Festival. Usually judges frown on prior restraints under the First Amendment, but in this instance, the judge determined the Amazing Grace producer had a contractual obligation to get her permission to use old concert footage and thus violated her right of publicity when he didn't. We think the judge got it terribly wrong. The parties in the dispute are still negotiating a settlement in time for Sundance next month. If that doesn't happen, the case could provide an important appellate review squaring a celebrity's publicity rights with free speech.
4. Relativity Media declares bankruptcy
Hollywood's biggest Chapter 11 filing in years hasn't provided a satisfying answer to the core mystery of what went wrong for a studio aiming to bring a Moneyball-type quantitative approach to producing films. The bankruptcy of Ryan Kavanaugh's company did, however, deliver a front row seat to the kind of arm-twisting and jockeying that happens when big financial institutions lend hundreds of millions of dollars only to see debt mature. Besides providing months of vicious legal filings — from accusations of an "unauthorized" bankruptcy to the feud between Kavanaugh and the chief restructuring officer — Relativity's bankruptcy has also dumped a slew of financial projections and contracts that are being read widely by Hollywood lawyers. Now, the case moves toward figuring out whether Relativity has a good plan for reorganizing itself so as to emerge from bankruptcy and become the big studio competitor that the industry surely needs.
3. The piracy wars know no bounds
Hollywood was built on the back of copying and distribution technologies; accordingly, there's always been piracy tensions. The advent of Napster didn't change that. Still, the digital age has presented new problems — this past year was a remarkable one that presented both pain and pleasure to those who favor loose copyright laws as well as those fiercely protective of their creative and commercial endeavors. Seizing on the MPAA's "Operation Goliath" documents exposed in the Sony hack, Google was able to halt a subpoena issued by the Mississippi attorney general who was investigating the web giant for facilitating the distribution of infringing content and goods. The MPAA also experienced a blow when a federal appeals court ruled that the International Trade Commission exceeded its authority by stopping the importation of digital files in the form of a 3D printed design. On the other side of the ledger, the content industry won big decisions (see here and here) in an effort to curtail Popcorn Time, likened to "Netflix for piracy." And then there was a judge's decision to deny safe harbor to Cox Communications over the infringements of its users and the subsequent $25 million jury verdict against the ISP. The piracy wars march on.
2. The line between inspiration and theft is blurred
All bets are off when a dispute gets to a jury's hands. That's why most litigators prefer to settle cases before trial. If they can't, litigators at least like to ensure the best possible trial environment. Headed into the "Blurred Lines" trial, the one where Marvin Gaye's family looked to prove that Pharrell Williams and Robin Thicke infringed Gaye's 1977 hit "Got to Give It Up" to create 21st century powerhouse "Blurred Lines," things weren't looking too good for the Gaye camp. The judge wouldn't let the jury hear the original "Got to Give It Up" sound recording, determining that only the sheet music was protected. The Gaye family doubted they'd get a fair trial. So when a jury came back with a verdict that "Blurred Lines" was indeed an infringement, the multimillion dollar punishment was stunning, and one that prompted many think-pieces in the creative community about whether the verdict was a just outcome or a slippery slope that would cause musicians to err on the side of caution in the studio and take settlements when facing legal action. The lives of the artists in this battle will also never be the same after their deposition testimony came to light. This dispute also isn't over. In a remarkable turnabout, it is now headed to appeal over the question of whether Williams and Thicke got a fair trial. Given the existence of oh so many copyright lawsuits over stolen films, television shows and songs — and yet so very few that ever make it this far — the stakes continue to be high.
1. Bill Cosby faces off against rape accusers in court
The scandal that has tainted Bill Cosby's reputation probably irrevocably has been written about extensively — justifiably so. Rather than rehash the sex abuse allegations hurled against the embattled comedian, let's instead take a moment to point out how the drama is creating all sorts of legal precedent in its path. For starters, a Pennsylvania judge's decision in July to lift the seal on decade-old court filings because Cosby had "donned the mantle of public moralist" was a watershed moment that went well beyond the headliner that the comedian had admitted giving women drugs for sex. The ruling, now on appeal, also undercut the aura of nearly impenetrable confidentiality that often surrounds public figures being hauled into court. Then, in October, a Massachusetts judge refused to dismiss a defamation lawsuit brought by women against Cosby over denials of rape made by the comedian's reps. The decision not only gave Cosby's accusers an alternative path towards pursuing him in court — direct sex assault charges are barred by the statute of limitations — it also should represent a warning shot to lawyers and publicists everywhere about the dangers of responding to allegations showcased in the media. Finally, the Cosby scandal has also impacted the arena of insurance, which often plays a shadowy-but-important backstage role in legal matters. In November, a California judge rejected AIG's argument that when it agreed to cover Cosby for "personal injury," including defamation, this didn't mean a denial of allegations of sexual abuse. Yes, a small victory for Cosby, but also one that could put insurers on the hook for a lot more than they thought they had bargained for. That is, until homeowner insurance policies across the nation get adjusted because a famous entertainer turned into a monster.