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Jordan-Benel v. Universal: Ninth Circuit Rules "Failure to Pay" Not Protected Activity Under California Anti-SLAPP Law

by Daniel B. Lifschitz

Jordan-Benel v. Universal, No. 15-56045 (June 20, 2017)

The Purge

Disclosure: The author of this post, Daniel Lifschitz, was formerly an attorney at Lowe & Associates, counsel for plaintiff Douglas Jordan-Benel, and worked on the case at the district court level.

Much has been written over the years about the "death of copyright" in the Ninth Circuit - specifically, how major motion picture and television studios seemingly never lose copyright lawsuits that claim they stole material from a writer to produce a hit film or program. To get around the hurdles imposed by copyright claims, many plaintiffs have turned instead to implied contract claims (sometimes referred to as "idea theft" claims), which require an "extra element" beyond what copyright provides to not be preempted by federal law. Most typically, this "extra element" is satisfied through a promise by the defendant that the writer would be paid if any of his material was ultimately used.

However, because contract claims are governed by state law (rather than federal law, as copyright claims are), they are vulnerable to one of the most potent weapons in a California defendant's arsenal: the anti-SLAPP law, California Code of Civil Procedure § 425.16, which provides an expedited method to dispose of claims "arising from any act of [the defendant] in furtherance of [its] right of petition or free speech under the United States Constitution or the California Constitution in connection with a public issue[.]" In the recent case of Benel v. Universala major motion picture studio tested out applying § 425.16 to an implied contract claim, arguing that the plaintiff' had targeted their right to make and distribute a film, which are acts in furtherance of free speech. The Ninth Circuit has now rejected that argument, holding that chasing the right to be paid under a contract does not implicate issues of free speech.

Factual Summary

In July of 2014, Douglas Jordan-Benel sued the creators of the horror film franchise The Purge for both copyright infringement and breach of implied contractholding that the defendants had based The Purge's storyline off a screenplay Jordan-Benel wrote entitled Settler's Day, in which a family must withstand a siege of its fortified home on the one night of the year that killing is legal. The defendants responded by challenging the implied contract portion of Jordan-Benel's complaint with an anti-SLAPP motion, arguing that it impinged upon their free speech rights by encumbering the creation and distribution of expressive media.

The district court, however, saw things differently, noting that Jordan-Benel had never once challenged the defendants' ability to produce or distribute The Purge films. Instead, he only challenged their refusal to pay him for the use of his ideas and work in the films -- the extra element of his implied contract claim. The mere fact that Jordan-Benel's lawsuit was filed after the defendants engaged in protected activity under the anti-SLAPP statute (i.e., making and distributing a film) did not automatically mean the action "arose" from that activity; rather, the critical consideration was whether the implied contract was based upon that activity. The judge held that Jordan-Benel's claim did not arise from the defendants making and distributing films, but rather was based upon their failure to afterwards pay Jordan-Benel for his ideas contained in the film.

The Ninth Circuit's Opinion

After the defendants took an automatic appeal of the denial of their anti-SLAPP motion, the Ninth Circuit Court of Appeals issued an opinion upholding the findings of the district court. The Ninth Circuit agreed with Jordan-Benel that his implied contract with the defendants did not arise from an act in furtherance of their rights of free speech:

We agree with the district court that the conduct or act underlying Jordan-Benel’s breach of implied-in-fact contract claim is Defendants’ failure to pay for the use of the screenplay idea. This conclusion is compelled by the fact that the failure to pay was the specific act of wrongdoing alleged by Jordan-Benel to give rise to a legal claim. Defendants are correct that the creation of The Purge films was not collateral to the principal purpose of the transaction between Jordan-Benel and Defendants. But Jordan-Benel’s claim does not challenge the activity of filmmaking at all. In fact, he desperately wanted the film to be made. Because the 'overall thrust of the complaint' challenges Defendants’ failure to pay for the use of his idea, we hold that the failure to pay is the conduct from which the claim arises.

The defendants had attempted to get around the "arising from" problem they faced in the district court by putting forth a "but for" argument to tie Jordan-Benel's claims and their protected activity together -- in other words, by noting that "but for" their making and distributing of the film, there would have been no requirement to pay Jordan-Benel, the defendants believed Jordan-Benel's payment claim should be held to "arise from" their film-making activity.

The Ninth Circuit rejects this argument, reiterating the California Supreme Court's longstanding position that § 425.16 only applies when the specific wrongful act complained of is an act in furtherance of free speech, and Jordan-Benel never complained about the defendants putting out the film. "In fact," the Ninth Circuit writes, "he desperately wanted the film to be made." Accordingly, because there was nothing "wrongful" about the defendants making The Purge, the Ninth Circuit readily distinguished Jordan-Benel's claims from those in prior Ninth Circuit anti-SLAPP decisions where some aspect of the defendant's expressive conduct itself was wrongful:

  • In Doe v. Gangland, for example, the plaintiff sued over a failure to obscure his identity during a television show, thereby alleging a defect with the protected broadcast itself.
  • Similarly, in Mindy Cosmetics v. Dakar, the plaintiff sued an attorney for filing a trademark application in a specific individual's name, thereby alleging a defect with the protected act of filing such an application.

"Here," the Ninth Circuit writes, "unlike in Doe and Mindys Cosmetics, the alleged protected free speech activity—creation and distribution of major motion pictures—was not the specific wrongful act that gave rise to the claim." And as a result, applying a 'but for' analysis would extend the purview of § 425.16 well beyond actually-protected activity:

By way of example, the district court considered a hypothetical newspaper company that agreed to pay a columnist a fee for each article published by the newspaper. If the newspaper company went on to publish one of the columnist’s articles without paying her, and the columnist brought suit seeking payment of her fee, the newspaper company could subject the columnist to an anti-SLAPP motion, relying on Defendants’ theory to argue that anti-SLAPP applies because “but for” the newspaper’s publication of the article, the columnist would have no claim. Similarly, if a recording artist’s pay was tied to the number of records sold, and the artist sued the record label for breach of contract for non-payment, the record label could argue that “but for” the creation and distribution of the record, the artist would have no claim.

Because the Ninth Circuit holds that Jordan-Benel's complaint does not target the defendants' film-making activities, it is able to swiftly dispense with the defendants' motion, as "Defendants do not even argue that their failure to pay Jordan-Benel was free speech activity, and they cannot cite a single case in which the anti-SLAPP statute has been applied to an 'idea theft' claim in which failure to pay is the alleged breach." The case will now be remanded back to the district court for Jordan-Benel to proceed with discovery and further pursuit of his claims.

Conclusion

While implied contract claims have themselves run into quite a few hurdles in recent years, the Ninth Circuit's decision in Benel v. Universal has soundly rejected one defendant's attempt to further circumscribe such claims through California's anti-SLAPP law. So long as a plaintiff's complaint is a defendant's mere failure to pay them, § 425.16 should not serve to frustrate their efforts.

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