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.