Does a Reporter's Promise of Confidentiality Constitute an Oral Contract?

Posted by Eriq Gardner

Three years ago, about the time that Judith Miller went to jail to protect a source in the Valerie Plame leak case, an in-house lawyer at The American Lawyer gave a seminar to the publication's reporters on how to handle sources. One bit of advice stood out: "Never ever promise a source confidentiality unless you're prepared to go to hell and high water protecting that source," he said.

The lawyer wasn't being high-minded about journalism ethics in this world. Rather, he had a theory that making such a promise could constitute an oral contract between the parties. It was an interesting legal theory. Was he right?

Last week, a jury at the U.S. District Court in Seattle ruled that a BusinessWeek reporter didn't breach an oral contract by naming a Microsoft employee in an article after agreeing to an interview on the condition of anonymity. Peter Tilton, the director of IT audit at Microsoft, had sued McGraw-Hill Companies, owner of BusinessWeek, for at least $1 million for medical expenses, lost wages, and suffering after the published article caused him to lose his job and wife.

An unfortunate situation, of course, but BusinessWeek claimed there was no understanding of confidentiality. The jury agreed, saying no promise existed.

"We do not give a promise of confidentiality lightly," said Steve Weiss, a spokesman for McGraw-Hill. "But we always honor confidentiality agreements when we make them. As the judge and the jury determined, we did not make a promise."

In this age of hostility toward the media, the case certainly doesn't close the door to other claims. The court didn't refute the legal theory that a promise of confidentiality constitutes an oral contract, it ruled only that there wasn't such an understanding in this particular case. Of course, as this case shows, it will be tough for plaintiffs to prove a case. Sources speaking to reporters may wish to bring their own tape recorders to the interview table.

The case wasn't a clear win for the media either. If promises of anonymity imply contracts, that might open the door for journalists who are called upon to provide court testimony under subpoena (like Judith Miller or the reporters in the Barry Bonds BALCO case) to sue the government for tortious interference. Well, that's just one theory anyway.

MPAA Wins File-Sharing Case Against Torrentspy

Posted by Eriq Gardner

The Motion Picture Association of America just announced that a federal judge in Los Angeles has terminated a case against Valence Media, the parent company of file-sharing service Torrentspy.com. The ruling moves the case straight to the penalty phase, where a judge will determine how much Valence owes for copyright infringement.

The development is an unusual one in an unusual case. After the MPAA accused Torrentspy of concealing evidence, Valence accused MPAA's legal team of paying a Canadian hacker $15,000  to illicitly gain information.

In its decision today, the Los Angeles federal court ruled that “although termination of a case is a harsh sanction appropriate only in extraordinary circumstance, the circumstances of this case are sufficiently extraordinary to merit such a sanction.”  The court found that Torrentspy's evidence was “not deleted or modified negligently, but intentionally in direct response to the institution of this lawsuit.” 

John Malcolm, executive vp and director of worldwide anti-piracy operations for the MPAA, said in a statement that “The court’s decision is a significant victory for MPAA member companies and sends a potent message to future defendants that this egregious behavior will not be tolerated by the judicial system.”

"This is not a ruling on the merits of the case," says Ira Rothken, the attorney representing Valence. "Because (Torrentspy) is a search enging and private, it disagrees with the sanction and believes it is disapproportionate and will be overturned on appeal."

Rothken says that search engines have an obligation to protect consumer privacy. "It's ironic for the MPAA to tout the inappropriateness of shielding evidence when the organization paid a hacker," says Rothken.

Also: Our sisters over at THR's Reel Pop blog are on the story too.

Universal Music Drops Innovative Lawsuit Against XM's Inno

Posted by Eriq Gardner

A closely-watched case that promised to clarify one of the most uncertain areas of copyright law could be indefinitely paused.

Yesterday, XM Satellite Radio and Universal Music Group announced a multiyear deal that allows XM to continue selling "all XM radios with advanced recording functionality, including both those currently available as well as future product releases." As part of the deal, Universal has dropped out of a lawsuit against XM.

In May, 2006, in New York federal court, UMG, Warner Music Group, EMI Group and Sony BMG sued XM, alleging that its XM2go service and portable "Inno" device constituted "massive infringement." At the time, many in the copyright community salivated at the prospect of getting a court's take on the legality of the "Inno" player, a device that allows users to digitally record songs and save them in searchable archives.

It was hoped that the outcome of the case could become a major legal reference point in the development of time-shifting media devices. In the lawsuit, the recording industry argued that XM needed to negotiate separate license agreements, whereas XM argued in response that it was shielded by the Audio Home Recording Act that protected equipment makers and consumers who make digital music copies for private use.

Yesterday's deal will surely disappoint many who had hoped to watch a huge legal brawl between two well-heeled sides. Unfortunately, neither company has revealed what sort of financial arrangement would prompt a struggling record major to agree to relinquish its copyright claims against the Inno, not to mention all future XM product releases. Reuters is also reporting that XM and WMG are also talking settlement, potentially spelling the end of the Inno case.

If the case is deleted from the docket, will anyone challenge time-shifting and place-shifting devices? Hollywood and the advertising community seem to have warmed to Tivo. Maybe Major League Baseball or some other company will take on Slingbox. Stay tuned. Or set your recorders to do them for you.

New Line and Peter Jackson Settle 'Rings' Litigation

Posted by Eriq Gardner

Lots of successful films become well-litigated films. Then there's "Lord of the Rings." The trilogy garnered nearly $3 billion in theaters and almost as many lawsuits over New Line's accounting. Just last week, for instance, The Saul Zaentz Co., which bought film rights for the Tolkein trilogy and licensed them to Miramax (which sublicensed them to New Line) sued New Line for the second time, demanding to see its books.

But at least one case seems to have been put to bed — and this one may be the most important for New Line. The company today announced a deal with director Peter Jackson over the filmmaker's profit participation on "Rings." The deal clears the way for Jackson to executive produce (but not write or direct, apparently) two films based on Tolkein's other book, "The Hobbit," for New Line and MGM to jointly distribute.

Considering the nastiness of the litigation, this is a remarkable development. The two sides have fought bitterly for years. In September, Jackson won a key discovery ruling, entitling him to documents based on the audit provisions of his contract. He also got $125,000 in sanctions against New Line, an embarassment for the studio and its lawyers at the O'Melveny & Myers firm. That ruling may have given Jackson and his litigation team at Irell & Manella some leverage to pursue the deal announced today.

Regardless, a settlement is a big accomplishment for both sides. Jackson, his longtime manager Ken Kamins and lawyer Peter Nelson, had dug in for a long fight. And Jackson's suit was based on only the first "Rings" film, so any settlement presumably covered any future claims on the other films (it's hard to believe New Line would leave itself open to another Jackson lawsuit...or two).

Jackson better get started on "The Hobbit" quickly. In 2006, Saul Zaentz  pointed out that film rights to the book will revert back to his holding company in 2009. That same year, Zaentz told the New York Times that he wanted Jackson to direct "The Hobbit." Perhaps Jackson's deal with New Line will satisfy Zaentz, but then again, was the timing of Zaentz' lawsuit last week and Jackson's deal this week merely a coincidence?

UPDATED: Media outlets are saying the "Rings" settlement only includes the first film, meaning Jackson is free to audit and sue over profits from the other two "LOTR" blockbusters. That seems like New Line is just asking for trouble, but maybe the studio wanted to move forward so badly they agreed to leave it open.

Comcast Goes Deep WIth Lawsuit Against NFL in Carriage Dispute

Posted by Eriq Gardner

Cable giant Comcast has pulled an audible in its ongoing skirmish with the NFL. It sued the league in NY Supreme Court today, claiming that NFL officials (the executives, not the refs) are violating a contract and waging a "multimillion dollar marketing campaign to drive Comcast's customers to its competitors."

The two sides have been embroiled in a year-long dispute over whether Comcast should carry the NFL Network as part of its basic programming, as satellite service DirecTV does. Comcast wants to charge its customers an additional monthly fee for access to the channel. In May, the NFL Network lost a challenge to Comcast's fee when the New York Supreme Court ruled Comcast was within the rights of its contract and "entitled to distribute the NFL Network on a sports tier under the agreements between the parties." (The NFL Network is appealing.)

The NFL broadcasts eight regular-season games exclusively on its NFL Network. The league recently blitzed the media (sorry, last football reference) with a marketing campaign aimed at those upset fans without current access to the NFL Network. In response, Comcast sent the league a cease-and-desist letter, noting the league's iwantnflnetwork.com "violates the contract between the network and Comcast," by telling customers to "switch to a TV provider that will bring you NFL Network, not hold you hostage."

In Comcast's latest suit, the giant cable operator is asking for unspecified damages for lost customers and a permanent injunction that forces the NFL to end its campaign.

The dispute has also revived talk about a new law that would require à la carte programming, where customers get to decide which networks they want to pay for, rather than being forced to accept them in bundled tiers.

Nicole Kidman Emerges from Defamation Suit Smelling Like Roses

Posted by Eriq Gardner

Nicole Kidman is sniffing victory after accepting damages from The Daily Telegraph to settle an oddly sweet-smelling defamation lawsuit. Last month, the British newspaper reported that even though Kidman has an exclusive contract with perfume brand Chanel No. 5, the actress was seen carrying a bottle of a rival fragrance.

Kidman's lawyer John Kelly at top UK libel firm Schillings issued a statement at the time saying the item was "entirely untrue" and "grossly defamatory." Kelly now says the newspaper had determined the source of the report had invented the story. In the U.K., the burden of proof in a defamation case lies with the defendant to show an allegedly false statement to be true (which is why so many of these cases are filed there rather than in the press-loving US).

Paris Hilton 'That's Hot' Case Is Heating Up

Posted by Matthew Heller

A federal judge in Los Angeles may be forced to watch an episode of the reality show "The Simple Life" before he decides whether a Paris Hilton greeting card is entitled to the free-speech protections of California's anti-SLAPP statute.

As we previously posted, the hotel heiress and frequent litigator sued Hallmark Cards in September, claiming a card that depicts her as a waitress misappropriates her name and likeness and violates her trademark in the phrase "That's hot." Hallmark contends Hilton is trying to squelch a parody that constitutes a "transformative" fair use.

Documents filed in connection with Hallmark's motion to dismiss the case -- which U.S. District Judge Percy Anderson is due to hear Dec. 17 -- feature radically different comparisons of the card and an episode of "The Simple Life" in which Hilton works as a waitress. "[T]here is nothing 'transformative' about Hallmark’s greeting card," Hilton attorney Brent Blakely of the Blakely Law Group in Hollywood insists in an opposition brief. "... Indeed, the card is a rip-off of the episode Sonic Burger Shenanigans."

Blakely cites the publicity rights precedent of Comedy III Productions v. Sarderup, 25 Cal.4th 387 (2001), for the proposition that

when, as here, “artistic expression takes the form of a literal depiction of a celebrity for commercial gain, directly trespassing on the right of publicity without adding significant expression beyond that trespass, the state law interest in protecting the fruits of artistic labor outweighs the expressive interests of the imitative artist.”

Hallmark attorney Lincoln Bandlow of Spillane Shaeffer Aronoff Bandlow in Century City counters in a reply brief that the card adds "significant creative elements." While the TV segment features Hilton in red shirt, yellow baseball hat and "acting as a car hop at a fast food restaurant,"

the Card shows a hatless Hilton in a light blue shirt, white apron and oven mitt serving a plate of food to a customer seated at a counter in a sit-down restaurant.

Regrettably perhaps, neither lawyer discusses whether the phrase "fruits of artistic labor" should be applied to an episode of "The Simple Life."

Steroids in Baseball: The Legal Implications of the Mitchell Report

Posted by Eriq Gardner

Former Senator (and DLA Piper partner) George Mitchell has finally released his report detailing the use of performance-enhancing drugs in Major League Baseball.  A few thoughts from the legal perspective :

(1) Who knows whether the report will actually rid steroids from the game of baseball...But based on the noise we hear, the Mitchell Report may be one of those moments (like the OJ Simpson trial) where everyone suddenly becomes interested in legal arcana like the admissibility of certain types of evidence in determining guilt. How many more e-mails will cross our e-mail box like this one: "What a completely irresponsible report. Total heresay! Clemens should sue!!"? (Then again, maybe we know too many over-caffeinated Yankees fans.)

(2) Clemens lawyer, Rusty Hardin, should review his law school torts casebook. In reaction to the news, Hardin said, ""(Clemens) is left with no meaningful way to combat what he strongly contends are totally false allegations. There has never been one shred of tangible evidence that he ever used these substances and yet he is being slandered today." (emphasis ours).

To review: "Slander" equals oral defamation. "Libel" equals written defamation. The Mitchell Report is written.

(3) Hardin is also wrong. Clemens does have a meaningful way to combat false allegation. He's a public figure with tremendous access to the media. Because of this, a defamation case would be very difficult to make, absent some showing of "actual malice." Jack Balkin has an excellent post on his blog describing these high standards that follow celebrities in bringing defamation cases.

Finally: (4) Albert Pujols, call your lawyer. Although celebrities have tough thresholds to cross to prove defamation, journalists must avoid "reckless disregard for the truth." Yesterday, several media outlets including CNBC and Deadspin ran a false list of baseball players named in the report. That could lead to something. (But probably won't.)

'Riverdance' Star Michael Flatley Becomes Lord of the Defamation Suit

Posted by Eriq Gardner

Irish-American "Riverdance" star Michael Flatley has 11 million new reasons to dance. Flatley sued a woman who accused him of sexual assault for $100 million, alleging defamation and intentional infliction of emotional distress. According to Flatley's lawyers Bert Fields and Ricardo Cestero of Greenberg Glusker, the woman and her lawyer threatened to go public with allegations of sexual assault unless the Lord of the Dance paid her millions of dollars.  Flatley went after both, and the California Supreme Court ruled last year that the lawyer, D. Dean Mauro, committed extortion (he then settled the case).

Now the woman, Tyna Marie Robertson, has failed to contest Flatley's defamation suit, so Los Angeles Superior Court Judge Michael Stern awarded $11.1 million to Flatley in a default judgment.

"This case proves that it never pays to try to extort money by making up false accusations," says Flatley, who is promising to give any recovered money to charity.

WGA Strike: The Official NLRB Complaint

Posted by Eriq Gardner

Today comes news that the WGA has filed charges with the National Labor Relations Board against the AMPTP "for its refusal to bargain in good faith" during the ongoing work stoppage.

According to the WGA, producers issued an "ultimatum" and threatened to break off talks if AMPTP didn't take certain issues, such as reality TV and animation jurisdiction, off the table. As evidence, the WGA offers this letter by Nick Counter, president of the producers’ alliance. In the letter, Counter references the fact that AMPTP wants the WGA to pull back certain demands -- "six issues" -- before "negotiations can proceed further."

In the cover letter to its official charge document, WGA West general counsel (and THR Power Lawyer!) Tony Segall writes "The NLRB has long held that an employer may not require a union to resolve specific proposals as a precondition to discussing other subjects."

Simple, right?

Not so fast. In its statement, the AMPTP blasted the WGA for "pounding the table" with a "baseless, desperate NLRB complaint." The statement didn't include any rationale for declaring the NLRB complaint as such.

Let's take a gander at what producers might argue: Negotiators are only required by the NLRB to meet and bargain in good faith on "mandatory" issues. Parties are not required to meet on non-mandatory issues. One issue that falls under the latter category is so-called "recognition clauses" that establish who the union is representing. (see Labor Board v. Borg-Warner Corp.) The WGA's demand that it cover reality and animation writers could fall under this type.

In any case, it could take 45 days for an  NLRB hearing to be scheduled before an administrative law judge, and many more months for an appeal. Could it be that the NLRB complaint is a showy act of brinksmanship more than anything else.