Free Trial Brief - District Court of Arizona - Arizona

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Ray K. Harris, # 007408 FENNEMORE CRAIG, P.C. 3003 N. Central Ave., Suite 2600 Phoenix, AZ 85012-2913 (602) 916-5414 Edward R. Garvey, admitted pro hac vice GARVEY McNEIL & McGILLIVRAY 634 W. Main Street, Suite 101 Madison, WI 53703 (608) 256-1003 Attorneys for Defendants Harlem Globetrotters Int'l, Inc. and Mannie L. & Catherine Jackson UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA MEADOWLARK LEMON, et al., Plaintiffs, vs. HARLEM GLOBETROTTERS INTERNATIONAL, INC., et al.; Defendants. Nos. CV-04-0299 PHX DGC and CV-04-1023 PHX DGC DEFENDANTS' TRIAL BRIEF ON CONTESTED ISSUES OF LAW

Defendants GTFM, LLC ("GTFM" or "FUBU"), Harlem Globetrotters International, Inc. ("HGI") and Mannie L. and Catherine Jackson (collectively HGI and the Jacksons are referred to as the "HGI Defendants")(GTFM and the HGI Defendants are collectively referred to as "Defendants") submit this joint brief pursuant to the Court's Order Resetting Final Pretrial Deadlines ¶ 3 (July 26, 2006, Doc. # 436) and Joint Proposed Final Pretrial Order Form § D.1

1

This brief is submitted without prejudice to Defendants in limine motions, Motion to Strike or Opposition to Plaintiffs' Motion for Pre-Admission.

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Plaintiffs' sole remaining claim in this case is a right of publicity claim. To succeed on their right of publicity claim, Plaintiffs must prove all four of the following elements, which are primarily factual: 1) whether Defendants' used

Plaintiffs' identity, 2) whether Defendants' use was to their commercial advantage, 3) whether Plaintiffs consented to Defendants' use, and 4) whether Plaintiffs were injured by Defendants' use. Order, June 27, 2006 at 13 (Dkt. # 425). First, to show an appropriation of Plaintiffs' right of publicity, each Plaintiff must show that Defendants' alleged use of his name, alleged number or caricature was sufficient to identify that Plaintiff. J. McCarthy, Trademarks and Unfair Competition, § 28.7 (4th ed. 2004). Second, each Plaintiff must show that the alleged appropriation was for Defendants' advantage, i.e., that consumers bought the FUBU/HGI Apparel as a result of Defendants' use, and that Defendants profited as a result of that use. McClaran v. Plastic Industries, Inc., 97 F.3d 347, 361 (9th Cir. 1996)(citing Lindy Pen Co., Inc. v. Bic Pen Corp., 982 F.2d 1400, 1407 (9th Cir. 1993)); Maier Brewing Co. v. Fleischmann Distilling Corp., 390 F.2d 117, 124 (9th Cir. 1968); Gucci America, Inc. v. Daffy's, Inc., 354 F.3d 228, 242 (3d Cir. 2003); Pooley v. National Hole-In-One Association, 89 F.Supp.2d 1108, 1112 (D. Ariz. 2000). Third, each Plaintiff must prove that he did not consent to the use of his name and likeness by his actions or inaction, and that his player agreements did not give the HGI Defendants the right to use and license that Plaintiff's publicity rights. Restatement (Third) of Unfair Competition § 46; Pooley, 89 F.Supp.2d at 1112. Finally, each Plaintiff must prove that the use of his name and likeness on the FUBU/HGI Apparel caused him to suffer a direct injury, such as financial harm or lost opportunity. That is, that Plaintiff must show consumer actually bought

FUBU/HGI Apparel because his name or likeness was on it. That Plaintiff must prove that but for the sale of the FUBU/HGI Apparel, he would not have been
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injured. Restatement (Third) of Unfair Competition § 49, cmt. (d) & Rptr's Notes to Cmt. d (stating that defendant's profits are an appropriate measure of relief in right of publicity cases under rules analogous to the recovery of profits in trademark cases); Lindy Pen, 982 F.2d at 1407; Pooley, 89 F.Supp.2d at 1111; McClaran, 97 F.3d at 361; Maier Brewing Co., 390 F.2d at 124; Gucci America, Inc., 354 F.3d at 242. Plaintiffs proof at trial will not prove each of the foregoing elements by a preponderance of the evidence and thus they cannot succeed on their right of publicity claim. In addition to the foregoing elements to a right of publicity claim, a number of disputed issues of law exist in this case that are relevant to Defendants' affirmative defenses and damages: 1) whether the Plaintiffs, through their player contracts with HGI's predecessors and through their conduct, licensed the use of their names and likenesses to HGI in perpetuity; 2) whether Plaintiffs' claims are barred by the doctrine of laches; 3) whether Plaintiffs' claims are barred by the doctrines of waiver and estoppel; and 4) whether Plaintiffs are entitled to punitive damages. Defendants address each of these issues below. I. Plaintiffs Licensed the Use of Their Names and Likenesses to HGI in Perpetuity Through Their Player Contracts With HGI's Predecessors and Through Their Conduct

Plaintiffs, through their player contracts with HGI's predecessors and through their conduct, licensed the use of their names and likenesses to HGI in perpetuity. These licenses defeat the third element of the right of publicity claim (lack of consent) and prove Defendants' affirmative defense of license. Although the law recognizes the right of publicity, it also entitles persons to license their right of publicity. "[A] `license' [of the right of publicity] is a limited permission to use." 5 McCarthy on Trademarks and Unfair Competition § 28.48 (4th
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ed. 2005) ("McCarthy"). For example, in Miller v. Glenn Miller Productions, the court found a 1956 agreement licensed conductor Glenn Miller's right of publicity. 318 F. Supp. 2d 923, 935 (D. Cal. 2004), aff'd, 454 F.3d 975 (9th Cir. 2006) (finding plaintiff licensed right of publicity). Interpretation of a license agreement, as with any contract, is a question of law. Mendler v. Winterland Prod., Ltd., 207 F.3d 1119, 1121 (9th Cir. 2000). Additionally, "a license or consent may be implied from a course of conduct or the total context of dealings which creates a clear message of permission to use one's identity in a certain form and context of commercial use." McCarthy § 28.48. Here, Plaintiffs licensed their rights of publicity to Defendants in two ways. First, Plaintiffs licensed their rights of publicity to HGI's predecessors through contracts they signed as players. All Plaintiffs signed one or more player contracts containing a publicity provision. HGI SOF ¶¶ 15-22 (Doc. # 196). While the language varies somewhat among the contracts, which were signed over a span of more than 40 years, each contract gave the Globetrotters permission to use Plaintiffs' names and likeness for Globetrotters-related promotion and merchandising in perpetuity. (Id.) For

example, the publicity provision in Plaintiff Thornton's 1981 contract read as follows: Player hereby grants HGI exclusive right throughout the world to use and license others to use Player's name, professional name, nickname, recorded voice, biographical material, signature facsimile, protraits [sic] and pictures and likenesses (i) for advertising purposes and purposes of trade, promotion and publicity in connection with any entertainment, product or service, produced or presented, as the case(s) may be, in whole or in part, by HGI, its parent, subsidiary and/or affiliated companies, and its and their successors, assigns and licensees; and (ii) for, or in connection with, the manufacture, production, distribution, sale, advertising and promotion of any and all articles of merchandise, including but not limited to publications, television and radio programs, films, souvenirs, novelties, toys, games, and the like, exploiting HGI and/or Player. Such uses shall be at such times, in such manner and through such media as HGI and its licensees in their sole discretion may determine, and the authorization granted in this paragraph by Player shall not terminate upon the termination of this contract or Player's employment hereunder no
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matter what the reason, but shall continue in full force and effect thereafter. For the purpose of enabling HGI and its licensees to exercise the rights hereby granted, Player shall during the term of its licnesee [sic], participate in live and recorded radio and television programs and commercial announcements, interviews and personal appearances, pose for pictures, record his voice, supply his biographical data and in any way engage in all means and media of advertising, publicity and promotion that will, in HGI's reasonable opinion, contribute to the popularity, success and exploitation of the entertainments, products or services produced or presented, as the case(s) may be, in whole or in part, by HGI, its parent, subsidiary and/or affiliated companies and its and their successors, assigns and licensees. Player shall during the term of this contract, as, when, where, and in the manner required by HGI or its licensee perform and/or participate in live and recorded radio and television programs, and films, of any type, subject to the payment of any applicable minimum AFTRA or other guild fees in any such case where Player acts as a "performer". HGI shall not required Player to appear in "endorsements", as that term is understood in the trade, in order to personally endorse (as distinguished from a team endorsement, even if on an individual basis) a product or service unrelated to HGI, its parent company, and its and their subsidiaries and affiliated companies, without Player's consent it being understood that this shall not in any way diminish any of HGI's rights under this contact. Id. ¶ 20 (emphasis added). Second, Plaintiffs licensed their rights of publicity to Defendants through a course of conduct and total context of dealings with the Globetrotters. For decades, the Globetrotters have used Plaintiffs' names and likenesses for promotion and merchandising, on items from programs to trading cards to cartoons. HGI SOF ¶¶ 2431 (Doc. # 196). Plaintiffs have never complained to the Globetrotters or filed suit regarding how their names and likenesses were used, even after they left the team. Id. ¶¶ 49-52, 54, 58. Moreover, after HGI received its first royalties from FUBU, HGI shared a portion of these royalties with Plaintiffs; four accepted the payment. Id. ¶¶ 85, 87. These actions, taken separately and together, conveyed a license to the Globetrotters of Plaintiffs' publicity rights. II. Plaintiffs' Claims are Barred by the Doctrine of Laches.

Plaintiffs' right of publicity claims are also barred by the affirmative defense of laches. "Laches is an equitable time limitation on a party's right to bring suit, resting on the maxim that one who seeks the help of a court of equity must not sleep on his
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rights." Jarrow Formulas, Inc. v. Nutrition Now, Inc., 304 F.3d 829, 835 (9th Cir. 2002)(citations omitted). To succeed on a laches defense, the party asserting laches must show that it suffered injury or prejudice as a result of the plaintiff's unreasonable delay in filing suit. Jarrow Formulas, Inc., 304 F.3d at 835; Danjaq LLC v. Sony Corp., 263 F.3d 942, 951 (9th Cir. 2001); State ex rel. Dept. of Health Services v. Cochise County, 166 Ariz. 75, 81, 800 P.2d 578, 584 (1990). "A determination of whether a party exercised unreasonable delay in filing suit consists of two steps." Jarrow Formulas, Inc., 304 F.3d at 838. First, the length of

delay is assessed, which is measured from the time the plaintiff knew or should have known about its potential cause of action. Id. Second, a determination should be made as to whether the Plaintiffs' delay was reasonable. "The reasonableness of the plaintiff's delay is considered in light of the time allotted by the analogous limitations period."2 Id. Courts should also consider whether the plaintiff has proffered a legitimate excuse for its delay. Id. Here, the Globetrotters have used Plaintiffs' names and likenesses for promotion and merchandise for decades and Plaintiffs never filed suit against the Globetrotters related to this conduct. Section I, supra. Thus, it is clear that Plaintiffs unreasonably delayed in filing suit against the Globetrotters for the misuse of their names and likenesses. The Globetrotters have been using the names and likenesses of the Plaintiffs for decades, far longer than the applicable two-year (or even four-year) statute of limitations that Arizona law allows. Until the present suits were filed, the Plaintiffs never complained to HGI about the use of their names or likenesses. HGI SOF ¶¶ 49-52, 54, 58.

2

Here, the applicable statute of limitations is A.R.S. § 12-542, the two-year statute of limitations governing tort claims and injuries done to the person of another. In re Dual-Deck Video Cassette Recorder Antitrust Litigation, MDL No. 765, 1990 WL 126500, at *21 (D. Ariz. 1990). However, even if the applicable statute of limitations is the four-year statute of limitations of A.R.S. §12-550 (for all actions other than for recovery of real property), the delay here far exceeds the applicable limitations period.

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Plaintiffs' delay is highly prejudicial to Defendants. First, Plaintiffs' delay is highly prejudicial to HGI and the Jacksons because much of the evidence the team would have used to defend against Plaintiffs' claim, had it been filed earlier, is no longer available. HGI SOF ¶¶ 61-62 (Doc. # 196). HGI and the Jacksons are further prejudiced because the Globetrotters would have to revise their licensing practices and agreements--including those already entered into--if Plaintiffs' claims are successful. Id. ¶¶ 59-60. Second, as a result of Plaintiffs' unreasonable delay, GTFM was prejudiced when it entered into the FUBU/HGI License Agreement. "A defendant may demonstrate prejudice by showing that it took actions or suffered consequences that it would not have, had the plaintiff brought suit promptly." Danjaq LLC, 263 F.3d at 955. This "economic prejudice is sufficient, standing alone, to support a claim of laches." Id. at 956. Here, GTFM did not enter into the License Agreement blindly. GTFM was aware that HGI has been using and licensing the rights to the names and likenesses of players for decades and was not aware of any complaints regarding such uses. When deciding whether to enter into the License Agreement, GTFM relied on the representations and indemnities in the License Agreement, and the fact that no player had ever sued the Globetrotters for misuse of their names and/or likenesses. (GTFM SOF ¶¶ 21-22) (Doc. # 181). If GTFM had been aware of any complaints by former players regarding HGI's use of their names and/or likenesses, GTFM would not have entered into the License Agreement or would have done an alternative line of clothing, which was free of infringement claims. (GTFM SOF ¶ 23). See Jarrow Formulas, Inc., 304 F.3d at 839 (if plaintiff had filed suit earlier, defendant could have shaped an alternative identity for their product); Hot Wax, Inc., 191 F.3d at 813 ("The market position pursued by [the defendant] with respect to the products at issue was uncontested by [the plaintiff]
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for years and courts have held that investments to exploit such a position are sufficient prejudice to warrant the application of the doctrine of laches."); Conopco, Inc., 95 F.3d at 192-93 (finding prejudice because defendant may have chosen an alternative marketing position if the plaintiff had filed suit earlier). For the foregoing reasons, the claims against Defendants are barred by the doctrine of laches. III. Estoppel Similar to the affirmative defenses of license and laches are Defendants' equitable defenses of waiver and estoppel. Waiver occurs when a plaintiff is aware of his rights and intends to relinquish them to the defendant. A&M Records v. Napster, Inc., 239 F.2d 1004, 1026 (9th Cir. 2001)(citing United States v. King Features Entm't, Inc., 843 F.2d 394, 399 (9th Cir. 1988)). Estoppel occurs when a plaintiff commits acts inconsistent with his current position, defendants relied on plaintiff's earlier acts, and defendants were injured by plaintiff's repudiation of his prior conduct. Valencia Energy Co. v. Arizona Dep't of Revenue, 191 Ariz. 565, 576-77 (1998). Defendants will rely on many of the same arguments and facts to show waiver and estoppel as they will for license and laches. IV. Plaintiffs May Not Claim Punitive Damages. Plaintiffs' Claims are Barred by the Doctrines of Waiver and

Finally, Plaintiffs cannot claim punitive damages from Defendants because they cannot meet Arizona's "evil mind" standard. To be entitled to punitive damages, Plaintiffs have the burden of proving by clear and convincing evidence that the wrongdoer acted with an "evil mind." Thompson v. Better-Bilt Aluminum Products Co., Inc., 171 Ariz. 550, 557, 832 P.2d 203, 210 (1992); see also Agilysys, Inc. v. Vipond, No. CV-04-2023-PHX-DGC (D. Ariz. 09/13/2006). In determining whether the Defendants acted with the requisite
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evil mind, courts look at the nature of the conduct, including the reprehensibility of the conduct and the severity of the harm likely to result, the harm that has occurred, the duration of the misconduct, the degree of awareness of the harm or risk of harm, and any concealment of it. Id. Additionally, punitive damages are unavailable unless the alleged wrongdoer is consciously aware of the wrongfulness or harmfulness of his conduct and yet continues to act in the same manner in deliberate contravention to the rights of the victim. Thompson, 171 Ariz. at 556, 832 P.2d at 209; Rawlings v. Apodaca, 151 Ariz. 149, 161, 726 P.2d 565, 577 (1986). Thus, the evidence needed to support an award of punitive damages must reflect something more than reckless disregard. Farr v. Transamerica Occidental Life Ins. Co., 145 Ariz. 1, 8, 699 P.2d 376, 383 (Ct. App. 1985). The wrongdoer must intend to injure the plaintiff or deliberately interfere with the rights of others, consciously disregarding the unjustifiably substantial risk of significant harm to them. Rawlings, 151 Ariz. at 161, 726 P.2d at 577. While the necessary "evil mind" may be inferred, it is still this "evil mind," in addition to outwardly aggravated, outrageous, malicious, or fraudulent conduct, that is required for punitive damages. Linthicum v. Nationwide Ins. Co., 150 Ariz. 326, 330-31, 723 P.2d 675, 679-80 (1986). Plaintiffs cannot obtain punitive damages because their evidence does not approach the "evil mind" standard. Defendants have consistently shown that they believed they had the rights to use Plaintiffs' names and likenesses at the time the license agreement was signed. HGI SOF ¶¶ 4, 70; GTFM SOF ¶¶ 21-22. Plaintiffs have claimed only that Defendants were negligent, but this cannot satisfy the evil mind standard. Additionally, punitive damages are unavailable in Arizona when Plaintiffs have no actual damages. Quinonez v. Anderson, 144 Ariz. 193, 198, 696 P.2d 1342, 1347 (Ct. App. 1984). Defendants will show at trial that even if Plaintiffs prevail on

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liability, they have little or no actual damages and thus cannot obtain punitive damages. Based on the foregoing, Plaintiffs cannot claim punitive damages from Defendants under Arizona law. RESPECTFULLY SUBMITTED this 15th day of November, 2006. By: s/ Ira S. Sacks_______________ Ira S. Sacks, admitted pro hac vice Safia A. Anand, admitted pro hac vice DREIER LLP 499 Park Avenue New York, NY 10022 Telephone: 212-328-6100 Facsimile: 212-328-6101 [email protected] By: s/ Edward R. Garvey____________ Edward R. Garvey, admitted pro hac vice Christa R. Westerberg, admitted pro hac vice GARVEY McNEIL & McGILLIVRAY, S.C. 634 W. Main St. #101 Madison, WI 53703 Telephone: 608-256-1003 Facsimile: 608-256-0933 [email protected] Ray K. Harris, (No. 007408) FENNEMORE CRAIG PC 3003 N. Central Ave., Suite 2600 Phoenix, AZ 85012-2913 Telephone : 602-916-5000 [email protected] Attorneys for Defendants Harlem Globetrotters Int'l, Inc. and Mannie L. & Catherine Jackson

Joel L. Herz State Bar No. 015105 Law Offices of Joel L. Herz 3573 East Sunrise Drive, Suite 215 Tucson, AZ 85718 Telephone: 520-529-8080 Facsimile: 520-529-8077 [email protected] Attorneys for Defendant GTFM, LLC

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1856662/43458.007

CERTIFICATE OF SERVICE 1. I hereby certify that on November 15, 2006, a true and correct copy of Defendants' Trial Brief on Contested Issues of Law was electronically transmitted to the Clerk's Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to the following CM/ECF registrants: Safia A Anand [email protected] Florence M Bruemmer [email protected] Edward R Garvey [email protected], [email protected], [email protected] Robert Williams Goldwater III [email protected] Ray Kendall Harris [email protected], [email protected] Joel Louis Herz [email protected], [email protected] Alec R Hillbo [email protected], [email protected] Brandon Scott Peters [email protected], [email protected], [email protected] Anders V Rosenquist , Jr [email protected] Ira S Sacks [email protected] Clay M Townsend [email protected], [email protected]; [email protected] Christa O Westerberg [email protected], [email protected], [email protected] 2. I hereby certify that on November 15, 2006, a true and correct copy of the attached document was sent via U.S. Mail, postage paid thereon, to the following parties, at the addresses listed: Keith R. Mitnik Morgan & Morgan, PA 20 N. Orange Ave. Suite 1600 Orlando, FL 32802

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