California Court of Appeal Reverses $20,000,000 Verdict:
Understanding the Coppola v Warner Bros.Decision

by

 Joseph D. Schleimer, Esq.

         The California Court of Appeal, Second District, has reversed a $20,000,000 compensatory-damages jury verdict in favor of film director Francis Ford Coppola in his suit for tortious interference with contract against Warner Bros. The Court of Appeal also affirmed the Los Angeles Superior Court’s reversal of the jury award of $60,000,000 in punitive damages for Coppola, based on the same tort claim. Coppola v. Warner Bros. Inc., Appellate No. B126903 (March 26, 2001). However, the Court's unpublished decision leaves the most important legal issues in the case unresolved.

        At Warner Bros., Coppola had begun development of a "Pinocchio" film, based on the classic story which has long been in the public domain. No long-form agreement was executed and compensation terms were never settled, but Coppola did sign a Warner Bros. "certificate of employment." After two years, Coppola tried to bring the project to Columbia. In 1994, Warner executive Steven Spira sent a letter to Coppola's agent, with a copy to Columbia, objecting to the Columbia project and asserting that Warner Bros. had the legal rights to Coppola’s "Pinnochio" project. Coppola claimed that Spira's letter ruined the director's opportunity to make the "Pinocchio" film at Columbia.

        In its ruling, the Court of Appeal sidestepped the issue of whether the certificate of employment, which is used by most of the major movie studios, constituted an enforceable contract. Instead, the Court rejected Coppola’s tort claims based on the litigation privilege in California Civil Code Sec. 47. In doing so, the Court of Appeal held:

"For purposes of analyzing Warner’s privilege defenses, the existence or nonexistence of an enforceable Warner-Coppola contract is not relevant. The inquiry is whether or not Warner had probable cause to make the claim of right stated in the [Steven] Spira letter dated February 17, 1994, regarding any Coppola developed ‘Pinocchio’ project . . .The issue of probable cause is to be determined by the court, not the jury."

        For studio lawyers, the ruling means they are immune under California law when they send letters threatening legal action--even if the express purpose of the letter is to disrupt or "chill" a film project. To benefit from this immunity, the letter-writer must have a "serious contemplation" of litigation and facts that establish a "colorable" or "tenable" legal claim.

        Under the Coppola opinion, if these two factors are present the letter-sender is immune from liability for tortious interference -- even if the impact of the letter is to kill the project, put the script in a state of legal limbo, and ruin the career of the producer, director or screenwriter trying to "shop" the film project at a competing studio. According to the Court of Appeal:

"We conclude that a reasonable attorney, considering the facts before the court, would believe that Warner had a legally tenable claim in any Coppola ‘Pinocchio’ project and that such claim was not totally and completely without merit."

        In evading the question of whether there was ever an enforceable contract, the Court of Appeal referred offhand to extensive negotiations wherein "[t]he parties did not conclude an agreement other than that already extant, if any." Apart from this cryptic comment, the Court left undisturbed the summary adjudication ruling by Superior Court Judge Madeleine I. Flier, which determined as a matter of law that there was no contract between Warner Bros. and Coppola.

        The Superior Court’s decision was based primarily on the fact that a draft long-form agreement had never been signed. In opposing the motion for summary adjudication, Warner Bros. had relied on Coppola’s signature on the three-page certificate of employment, which stated:

"[The Coppola parties] . . . , for good and valuable consideration (receipt of which is hereby acknowledged), do hereby acknowledge, certify and agree that . . . all ideas, suggestions, plots, themes, stories, characterizations and other material, whether in writing or not in writing, at any time heretofore or hereinafter created or contributed by [the Coppola parties] which in any way relate to the [Pinocchio] Picture or to the material on which the Picture will be based, are and shall be deemed works ‘made-for-hire’ for [Warner Bros.] and/or works assigned to [Warner Bros.], as applicable."

        The Court of Appeal quoted the certificate of employment verbatim in its decision, but only as evidence that Warner Bros. had probable cause to send a threat letter to Columbia. Thus, the Court left unresolved the issue that caused such a stir at the time of the $80,000,000 jury verdict -- i.e., the Superior Court’s ruling that the certificate of employment was unenforceable. In her summary adjudication opinion (which was not reviewed by the Court of Appeal), Superior Court Judge Flier provided the following explanation:

"The Certificate provision referring to ‘ideas’ is not subject to the Copyright Act, but is subject to basic contract principles and as such, the Certificate agreement is unenforceable as being too vague as to the identity of the subject matter of the agreement. The Certificate attempts to prohibit ‘forever’ plaintiffs from use or development of all ‘ideas’ relating to Pinocchio. As to those items enumerated in the Certificate which are encompassed by the Copyright Act, such as ‘stories, characterizations and other material.' . . . The Certificate fails to set forth precisely what rights are being transferred and at what price. The provisions which are subject to the Copyright Act are thus unenforceable as a matter of law."

        The ultimate significance of these court rulings is that the certificate of employment has been left in a legal limbo. Opinions by judges of the California Superior Court are not considered citable precedent, although practitioners occasionally do attach a copy of such decisions to their papers and cite them anyway.

        The Court of Appeal not only declined to address the enforceability issue, it also elected not to publish its opinion on the issue of immunity. Accordingly, the Coppola opinion also cannot be cited as legal precedent under California Rule of Court Sec. 977(a), unless the California Supreme Court orders the opinion published or the Court of Appeal changes its mind and publishes the decision itself. Coppola’s attorneys have petitioned to have the decision published and vowed to appeal to the California Supreme Court, so there may yet be a published opinion on these issues.

        One legal oddity is that, while the Coppola opinion cannot be cited as legal authority, it can potentially be used as evidence in future lawsuits. California courts apply an "objective test" to determine probable cause, but they also employ a "subjective test" on the closely-related issue of malice. Thus, if a studio lawyer read and relied on the unpublished Coppola opinion in sending a "threat letter," the Coppola opinion could be used as evidence of the absence of malice.

California Court of Appeal -- text of unpublished opinion in
Coppola v. Warner Bros. Inc. (March 26, 2001)