Siegel Heirs Reject 21 Million Dollars

twitter Siegel Heirs Reject 21 Million Dollars10facebook Siegel Heirs Reject 21 Million Dollars17google Siegel Heirs Reject 21 Million Dollars0pinterest Siegel Heirs Reject 21 Million Dollars0tumblr Siegel Heirs Reject 21 Million Dollarsreddit Siegel Heirs Reject 21 Million Dollars3stumbleupon Siegel Heirs Reject 21 Million Dollars0

superman actioncomics301 Siegel Heirs Reject 21 Million DollarsIn keeping with the court’s schedule, yesterday Marc Toberoff filed his response to DC’s summary judgment motion in the Superman/Superboy lawsuits. Toberoff has filed these same arguments before, but the accompanying exhibits do include something new: correspondence in which Laura Siegel Larson and the Siegel estates reject a 21 million dollar payment from DC.

The Siegel case has understandably drawn its fair share of sensational headlines, but the legal arguments in yesterday’s filing aren’t as surprising as some believe. The response is not a new Siegel lawsuit, and all of its arguments were outlined in a joint Warner Bros.-Siegel case status filing on February 25.

We’ll take a look at these arguments in a sec–suffice it to say for the moment that Superman in “The Modern Alice in Wonderland” is no longer just a Golden Age story.

What may be more revealing is the correspondence in which DC attorney Daniel Petrocelli states the company is willing to start honoring the 2001 settlement. Toberoff’s response is typically combative, rejecting DC’s initial 21 million dollar payment. One thing that stands out in regard to this is Toberoff’s claim to be acting on behalf of not just Laura Siegel Larson and the Joanne Siegel estate, but also the estate of Michael Siegel, Jerry Siegel’s late son by his first wife.

As for Toberoff’s legal justifications for rejecting the settlement, while a victory is conceivable it’s not anything close to slam dunk. The arguments rely on semantic quibbles, rehashed losing arguments and new points that have arguably been waived.

Before we get to the details, first we’ll step back to take a look at the broader context of yesterday’s filing. On January 10th of this year, the Ninth Circuit Court of Appeals sent the case back down to the district court for further review based on its opinion. DC argued that the Ninth Circuit’s finding the the 2001 term sheet was a valid settlement ends the Superboy and Superman lawsuits, since, as the Ninth Circuit indicated, the settlement precludes a subsequent challenge.

To sort out the complex web of rulings and claims in the Superman/Superboy/Pacific Pictures lawsuits, the district court ordered the both sides to submit a joint status update, along with what each side thought should be done going forward. In addition, the court set a March 4 deadline for Toberoff to respond in detail to the post-appeal summary judgment motion.

As summarized in the February 25 case update and set out in more detail in the March 4 response, Toberoff argues that the settlement actually isn’t binding. He claims that the court didn’t actually rule that there is a binding settlement agreement–instead, it literally said the term sheet “was sufficient” to create a contract, leaving open the possibility that the actions subsequent to the term sheet could undo it. Similarly, the settlement didn’t say that the Siegels had transferred DC the Superman copyright but “would” transfer the copyright, which Toberoff claims to be invalid as a matter of law.

Toberoff goes on to argue that DC’s failure to pay the Siegels by a set date of March 31, 2002 and its attempt to add additional terms in a long-form contract prove that DC rescinded the 2001 settlement. He goes on to argue that DC’s attempt to resume negotiations after the Siegel heirs rejected the settlement constitutes acquiescence in the Siegels’ own rescission. Finally, Toberoff claims the settlement could not have included the Superboy rights, since it was entered into before the Siegels’ exercised the Superboy termination rights.

None of this is surprising or manifestly game-changing. The notion that the Ninth Circuit didn’t find that there is a contract is, to say the least, a bit of a stretch. The Ninth Circuit has already indicated that the negotiations for the long-form contract after the term sheet did not involve substantial changes–indeed, a good chunk of the filing sounds like a rehash of the long-form contract arguments made and lost in the Ninth Circuit appeal.

In addition, contrary to Toberoff’s assertion there is evidence that DC did act on the 2001 settlement by placing the initial amount owed to the Siegels in escrow pending the long form agreement, which the Siegels themselves delayed and rejected. In regard to the Siegels’ rejection of the settlement term sheet, it’s arguable that the resumption of negotiations to forestall a lawsuit did not constitute acquiescence in the Siegels’ rescission but was instead a continuation of the earlier settlement process.

As for Toberoff’s argument that copyright law prohibited the pre-termination sale of the Superboy rights, this is the same argument that lost in the Pacific Pictures Shuster claims, and even the Lassie case commonly cited re the advance sale prohibition notes that post-1977 negotiated transfers analogous to those in the Superman and Superboy lawsuits are valid. Furthermore, without going into the technicalities, it’s arguable that Toberoff claim as that the Superman transfer is invalid because it takes place in the future rather than the past relies on a misapplication of contract law, much as the critique of DC’s negotiation process bypasses law and standard practice pertaining to term sheets.

Toberoff’s latest filings do have one interesting legal fillip, at least for folks interested in civil procedure. Toberoff emphasizes that DC’s rescission of the contract creates a question of fact that warrants the rejection of DC’s summary judgment motion in favor of a trial. However, arguing that DC rescinded the settlement contract could be more appropriately categorized not as a question of fact but an affirmative defense.

The Federal Rules of Civil Procedure requires a party to present its affirmative defenses in its response to the opposing side’s claims. This keeps a party from unduly prolonging a case by responding to each loss with new “what-about-this?” arguments. DC raised the term-sheet-as-enforceable-contract issue way back in its counterclaims to the Siegel heirs’ original complaint–if the Siegel heirs didn’t raise the DC rescission arguments in their reply (which, alas, is not on PACER), one could argue that it’s too late to throw them in now.

Another inside-baseball aspect of the recent filings comes in the February 25 joint statement, in which DC tweaks Toberoff’s assertion that the lengthy Pacific Pictures litigation should “come to a close” by arguing that the lengthy Superboy/Superman litigation should “come to an end.” This is high-level litigation humor–lawyers love a good legal callback.

Comments

  1. The one says:

    @ Jeff
    What does all this mean in the long run. In example will dc still have the rights to this character because to me it seems as though this dude is grasping for straws, and will try to keep this case going on and on. Also wouldn’t he be the one that delayed the contract since he told the family not to go through with the contract because he could get them a lot more than what was offered. Anyways I’m tried of this case I just want Supe at Dc where he belongs with the rest of the characters. Because it seemed this case was the reason why things slowed down for this character but now things are finally picking back up and here they come again with this stuff.

  2. Jeff Trexler says:

    Assuming the court’s ruling re the Shuster settlement sticks, no matter what happens in the Siegel case DC will have at least half of Superman, which means it’s free to publish/film/license whatever it wants so long as it accounts for the profits to other co-owners, if any.

    DC is taking the position that the Siegel side is responsible for delaying the contract performance after March 31, 2002. It has further stated that it put the appropriate amount of money in escrow pending the final long-form agreement, which, if true, would not exactly help the Siegel side’s effective rescission argument.

  3. The one says:

    @Jeff
    But didn’t the family just lose its rights to the character in the appeal court. It’s like they keep retrying the same case over and over. What is your assumption on what is going to happened based on the evidence tat is given. For instance who do you see having the upper hand in this case and is likely to win this in the long run.

  4. patrick ford says:

    “…typically combative…”
    What should he do do serve his clients? Roll over and expose his belly? Laura Siegel Larson rejected the “generous offer.”

  5. Just want to highlight this particular quote from the prior Siegel counsel on the deal offered:

    “I mentioned that at the DC Comics meeting there was a specific discussion about an American Express ad campaign where Jerry Seinfield, who was in that campaign, specifically requested that the Curt Shaw [sic] version of Superman be used in the campaign. Under this [February 1, 2002] draft the proceeds of that campaign would be excluded, or at least there was an argument that they would be excluded, and that wasn’t the intent. To parse through that language and to get there is very difficult, and I found – I considered that deceptive drafting and a trap door and highly, highly problematic.”

    Just think of that, DC wanted them to sign a contract where the concept of “revenue from Superman” could possibly be used to exclude an American Express ad which featured Superman. And that just to save the paltry 6% of their revenue they’d have to pay the heirs of the co-creator of Superman.

    And Watchmen watches and buttons are “promotional” and not “merchandise”…

  6. Jeff Trexler says:

    @The one that – I chat about this in my previous posts–click on the “The Legal View” or search for my name here for more.

    @Patrick Ford – There’s a kind of belligerence that is commonly seen as rolling over and exposing your belly. At a certain level in law, folks show aggression & power through extreme politeness, even when saying no. Read the Petrocelli letters linked above, for example. Pure steel.

    @BobH Is it really a shock that a corporate contract has trap doors? You expect that in a negotiation — figuring out how to shut ‘em is why you’re there.

  7. SolidCPlus says:

    I’m pretty sure 21 mill is more than Stan has ever gotten for the stuff he helped create.

  8. Sonny Crockett says:

    “21 million dollar initial payment.”
    Sounds like a good starting point, with more to have come…
    They should’ve taken the new deal…

  9. It’s not a shock. As I said, this is the company which did a similar thing with Watchmen merchandise. But that’s a pretty big trap door, down which you could drop any amount of revenue. And maybe a lawyer who’d been dealing with DC for four years just to get to this lowball offer (which always makes me wonder how low DC’s initial offer must have been) might have thought twice about writing “we accept your offer” instead of “we like what we see, but we’ll need to see the final contract terms before accepting your offer”.

  10. @SOlidCPlus – I’m pretty sure you’re wrong about that – in the late ’90s Stan signed a contract with Marvel that paid him $810,000 per year plus $500,000 a year for his wife plus $125,000 per year for doing the Spidey newspaper strip plus 10% of any Marvel movie and TV profits. The salaries alone for the last 15 or so years would add up to more than 21 mil, without even taking his share of the movie profits into consideration. And he was getting $500,000 per year for more than a decade before that!

    Replace “Stan Lee” with “Jack Kirby” and you might be onto something ….

  11. Chris Hero says:

    I hate contract law, but I love civil procedure! Thanks for finding that nugget about the affirmative defense thing. I’ll be interested to see how that plays out.

  12. Al™ says:

    I didn’t read the entire account, or the briefs and discovery sessions etc etc.
    So forgive me for saying that I would have taken $21 million, and said thanks. Okay, I’m just too laid back.

  13. Doug Abramson says:

    @Jeff: Assuming that these maneuvers fail to go Toberoff’s way (like the last several rulings), how much longer can he drag this out? How many more moves does he have before he either runs out of legal road or starts facing sanctions (unlikely I know) for wasting the courts’ time?

  14. patrick ford says:

    Jeff, Was it in turn typically combative when Warner filed a lawsuit against Toberoff?
    Pure steel? http://www.misterkitty.org/extras/stupidcovers/rickles2.jpg

  15. Jeff Trexler says:

    @Patrick Ford First, we’re talking about two different contexts – a court filing versus correspondence. Each has its own rhetorical conventions, and even within each category you’ll find stylized differences.

    The PacPic complaint is by the book for its genre; I’ve seen far more rant-y. The attorneys’ behind the scenes style in talking about the complaint was also not breathlessly angry–again, it was calmly here’s what happened, here’s why we had to do what we’re doing; we hope this can be resolved. A lot of folks see legal argument as a performance directed to an audience; maybe, can be, but it’s participatory in a way that’s more akin to ritual.

    Again, I’m not making personal accusations here. This is more about rhetorical style. The performance/ritual dichotomy can be a big one in law, and this case illustrates it quite well.

  16. Jeff Trexler says:

    @Doug The district court judge waived the summary judgment hearing, so that ruling could come down any time, from today to eternity.

    After that, let’s assume first the Siegel/Shuster side loses the next round and there’s another appeal. Like before, this can take a few months to over a year. Add a few months more if there’s a Supreme Court appeal; another year of so if the Court grants cert.

    If the court rules that the settlement was indeed rescinded and the cases can go on, let’s assume that DC appeals, goes through the same cycle as above and loses all the way. Then we have factfinding and trial(s) on the remaining issues, followed by appeals. A few years, easy.

    The PacPic case is its own summary judgment motion; pretty much same deal re procedure, but since we’re not dealing with so many technical financial financial probably a lot less time if things don’t wrap up soon with a summary judgment.

  17. patrick ford says:

    My feeling from the start was any rulings which went against either Time Warner or Disney would be appealed; all the way to the the Supreme Court of the United States if need be.
    With rulings swinging clearly in corporate favor it will be up to the heirs (and Toberoff) as to how far they want to go. There is an argument that Toberoff has put to much time and money into the cases already that he might not want to continue. I think it’s more likely he would like to bring these issues before the high court. As currently comprised SCOTUS looks like a dead end for Toberoff, but with Obama in the White House for four more years there is always a chance the composition of the high court (a swing of one justice) could change and end up looking like a place where IP rulings might not be easy to predict.

  18. patrick ford says:

    There is no officially ordained legal style. Some people may prefer what they see as subtle high society cocktail party gamesmanship. There are many highly successful attorneys and judges who practice a “bare knuckled” style.
    http://opinionator.blogs.nytimes.com/2011/03/09/justice-scalia-objects/
    While the issues connected to IP are not covered in the Chris Hedges/Joe Sacco book DAYS OF DESTRUCTION DAYS OF REVOLT these IP issues absolutely are part of what Hedges calls “the corporate coup d’état .”
    Most people simply acquiesce to the “inevitable.” If Laura Siegel Larson wants to fight on then I think she ought to be saluted.

  19. Jeff Trexler says:

    I understand that folks differ in style–never said they didn’t. I am talking about rhetorical effects & how things are perceived. If someone doesn’t want to believe that a certain style is perceived a certain way by certain people, hey, it’s their nickel. Or their clients’.

Trackbacks

  1. [...] More new news on the lawsuit from Jeff Trexler over at The Beat: [...]

  2. [...] it needed to make sure that the agreement did indeed transfer the rights,  but as we discussed in my previous post the court found the matter to have been resolved by the Ninth Circuit Court of Appeals [...]

Speak Your Mind

*