Gibson Dunn | D.C. Circuit Issues Rare Opinion Clarifying Right of Public Access to National Security Information in Judicial Documents

March 18, 2021

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Gibson Dunn’s Media, Entertainment and Technology Practice Group highlights some current notable rulings and developments that will influence future litigation on this space.

Issue: Profit Participation
Nye v. The Walt Disney Co. et al., L.A. County Superior Court, Case No. BC 673736
Date: Feb. 2, 2021
Holding: SVOD/EST revenues are included throughout the definition of “Video Device” in a 1993 settlement concerning manufacturing and distribution of the collection Bill Nye The Science Guy.

Summary: In August 2017, Bill Nye sued the Walt Disney Company and a number of Disney-related entities for fraudulent concealment, breach of contract, and breach of fiduciary responsibility, alleging that he was disadvantaged of thousands and thousands of {dollars} in income for this system Bill Nye The Science Guy, which initially aired on PBS within the Nineties.  At problem in Los Angeles County Superior Court Judge David Cowan’s February 2 ruling was whether or not Nye may current a key contract interpretation problem to a jury, or as an alternative if the courtroom may resolve it as a matter of regulation.

The events’ dispute was over what revenues are included inside “Gross Receipts,” as outlined in Nye’s 1993 settlement with Buena Vista Television.  Specifically, are streaming revenues arising from subscription video on demand (SVOD) (together with revenue from Netflix) or digital sell-through (EST) (for instance, purchases by iTunes) included inside gross receipts?  In 1993 there was no such factor as streaming expertise and SVOD/EST revenues didn’t exist, so the courtroom needed to interpret the settlement’s software to expertise that neither social gathering was desirous about many years in the past.

Buena Vista Television argued that SVOD and EST revenues are much like a video cassette or video disc and thus are revenue derived from a “Video Device,” which the 1993 settlement outlined as “an audio visual cassette, video disc or any similar device.”  Nye argued that revenue derived from a “Video Device” doesn’t embody SVOD and EST revenues.  The problem was important as a result of if the SVOD/EST revenues had been from a “Video Device,” then the 1993 settlement permitted Buena Vista Television to contribute solely 20% of that revenue in direction of Gross Receipts and pay an 80% royalty to its associated entity distributing the collection.  If EST/SVOD revenues weren’t video machine revenue, then, in keeping with Nye, 100% of the revenue ought to have been utilized to gross receipts.

The 1993 settlement supplied Nye and Buena Vista Television with a 50% stake of Net Profits, which the settlement outlined as receipts remaining from gross receipts after sure specified deductions.  So the dispute was over the scale of the Net Profits pie.  Roughly talking, if EST/SVOD counted as a “Video Device,” then the Disney corporations may take 80% of the income off the highest and would solely want to separate the remaining 20% with Nye.  Under Nye’s view, the events’ settlement required the complete 100% of EST/SVOD income, after deductions, to be cut up between them.

The courtroom dominated that Nye couldn’t current his argument to a jury as a result of, even when a jury had been to search out his place legitimate, it was inconsistent with different phrases of the 1993 settlement—and subsequently was not a studying of the settlement to which it was moderately prone.

Of explicit significance to the courtroom was language within the settlement stating that Buena Vista Television’s rights to take advantage of the collection utilized not simply to expertise then present but additionally to any future expertise nonetheless to be developed.  The Nye courtroom discovered that California regulation is “seemingly silent” on the purpose, however “new use cases” in different jurisdictions discovered that extrinsic proof was not often helpful.  The courtroom, for instance, cited the Second Circuit’s holding in Boosey & Hawkes v. Music Publishers, Ltd. v. Walt Disney Co., 145 F.3d 481 (second Cir. 1998), that “intent is not likely to be helpful when the subject of the inquiry is something the parties were not thinking about.”  Id. at 487.  What mattered was the language of the settlement, which expressly contemplated future sorts of distribution.  According to the Nye courtroom, it couldn’t attain a conclusion that rendered that language “superfluous.”

For related causes, the courtroom additionally centered on Nye’s competition that SVOD/EST didn’t fall into any class of distribution within the 1993 settlement that may entitle Buena Vista Television to a distribution price.  Under Nye’s studying, neither Buena Vista Television nor its affiliated distributor would obtain any compensation for SVOD/EST distribution; there could be no distribution price for Buena Vista Television and no video royalty for its affiliated distributor.  Whereas Buena Vista Television would obtain distribution charges starting from 10% to 40% for different technique of distribution, when it got here to SVOD and EST, in keeping with Nye, it could get no price in any respect.  The courtroom concluded that this might be “inconsistent with [Buena Vista Television] receiving a distribution fee under the Agreement for all other means of distribution of the Series.”

Nor may Nye depend on the truth that Buena Vista Television would obtain 50% of Net Profits.  To the courtroom, that didn’t equate to a assured distribution price or royalty; “[r]eceiving half of net profits is not the same as a distribution fee because there might not have been any net profits.”  According to the courtroom, it was “not reasonable to infer that the party with the bargaining power – as all agreed [Buena Vista Television] had – would only provide for its compensation if the show proved to be successful.”

As a outcome, the courtroom interpreted the 1993 Agreement to incorporate SVOD/EST inside its definition of “Video Device,” entitling Nye solely to roughly 10% of total SVOD/EST income somewhat than 50%.

Why It Matters:  The long-term influence of the ruling will probably be value watching.  Some have learn it broadly to imply that the courtroom equated streaming with house video, and have questioned how a digital file streamed over the web might be a “video device” like a bodily VHS tape or disc.  That is just not what the courtroom held.  Rather, the courtroom concluded that the similarity between SVOD/EST and a video cassette or video disc was “debatable,” and dominated that it “cannot hold as a matter of law that SVOD and EST are sufficiently similar to a video cassette or disc that they are a ‘video device.’”

That is to not say that the courtroom believed a jury would agree with Nye’s view that SVOD and EST are exterior the 1993 settlement’s definition of a video machine.  It famous, for instance, that Buena Vista Television “put on evidence to suggest that even with internet distribution there were still physical devices like a Roku or Apple TV box – thereby undercutting Nye’s argument that SVOD/EST do not also have a similar physical component to make them operable.”  In flip, the courtroom acknowledged, Buena Vista Television “might still argue that the software that would be inside a smart tv screen is in some sense still a physical device – even if not a separate device.”  In quick, SVOD/EST may be an evolution of, and much like, house video, even with out the clunky plastic case.

In a vacuum, the dispute about similarity may have been a jury query.  But the courtroom concluded that the disputed problem was immaterial, and that Nye couldn’t attain a jury, for 2 major causes: (1) the 1993 settlement had a “by any means or methods now or hereafter known” clause, and (2) Nye argued that each one streaming and obtain income ought to be allotted to gross receipts, with no distribution price or royalty going to the Disney corporations.  The language in these agreements will differ, notably after they pre-date the arrival of streaming by years or many years.  But the lasting influence of the Nye ruling is extra more likely to be in elevating the significance of those two points than in deciding whether or not SVOD/EST income is derived from a “video device.”

Issue: Anti-SLAPP Law
Coleman v. Grand, E.D.N.Y. No. 18-cv-5663 (ENV) (RLM)
Date: Feb. 26, 2021
Holding: New York’s 2020 modification of its anti-SLAPP regulation broadly expanded the universe of defamation plaintiffs who should present precise malice, and that expanded scope applies in federal courtroom actions and is retroactive.

Summary:  In October 2018, plaintiff Steven Coleman filed a defamation lawsuit in opposition to his former romantic associate, defendant María Grand.  Grand then filed counterclaims alleging defamation and intentional infliction of emotional misery.  Eastern District of New York District Judge Eric Vitaliano held that each one the claims failed as a matter of regulation and granted the events’ cross-motions for abstract judgment.  The distinctive side of Coleman was the usual the courtroom utilized in rejecting the events’ respective defamation claims.

Coleman’s defamation declare arose from an e mail Grand despatched to roughly 40 pals and colleagues, describing her experiences within the relationship with Coleman and her perception that Coleman had used his age and skilled standing to harass and benefit from her.  Grand’s counterclaim arose from, amongst different communications, a May 2018 e mail that Coleman despatched to roughly 80 individuals saying that Grand’s accusations had been false, giving his account of the occasions, and together with express textual content messages between them.

Citing New York Times Co. v. Sullivan, 376 U.S. 254 (1964), and different authorities, the Coleman courtroom famous that federal constitutional regulation requires plaintiffs who’re public figures to indicate that libel defendants acted with precise malice (data the assertion was false or with reckless disregard of whether or not it was false or not), whereas non-public figures want solely meet a gross negligence normal.  The courtroom additional famous, nevertheless, that “for statements on matters of public concern, New York law has long required all plaintiffs to show defendants acted with gross irresponsibility and . . . recently imposed an actual malice standard in some cases.”

The courtroom’s reference to the “recently imposed . . . actual malice standard” associated to New York’s November 2020 amendments to its anti-SLAPP regulation focusing on “Strategic Lawsuits Against Public Participation.”  A element of the brand new regulation that garnered important consideration was its growth of the sorts of circumstances that may be topic to an anti-SLAPP movement to dismiss.  New York’s previous anti-SLAPP statute narrowly utilized solely to a declare introduced by somebody who had sought or obtained a allow, lease, zoning change or different related authorities entitlement the place the declare associated to the efforts by the defendant to report on that software or permission.  In essence, it was restricted to controversies over public permits and actual property growth.

The amended anti-SLAPP regulation made quite a few basic adjustments that higher allow a defamation defendant to rapidly escape a bad-faith SLAPP go well with with out laboring by time-consuming and costly discovery.  It expands the universe of circumstances topic to an anti-SLAPP movement, stays discovery whereas the anti-SLAPP movement is pending, requires the plaintiff to indicate that their libel declare has a considerable foundation in regulation, and requires a plaintiff to pay a profitable defendant’s attorneys’ charges in bringing the anti-SLAPP movement.

Coleman addressed one other consequence of the amended anti-SLAPP regulation, which, when seen in tandem with present New York regulation, considerably raised the bar for many defamation plaintiffs to state a declare.  Holding that Coleman was not a public determine, the courtroom acknowledged that, previous to November 2020, New York regulation would have required Coleman to indicate that Grand acted with “gross irresponsibility” in making the purportedly defamatory statements.  But, Grand argued, the amended anti-SLAPP statute imposed a brand new normal that required Coleman to make the upper exhibiting that she acted with precise malice.

The Coleman courtroom agreed, noting that “[i]t was an important tweak to New York law.”  New York Civil Rights Law part 76-a(2) has all the time imposed an precise malice normal in any “action involving public petition and participation.”  But New York’s amended anti-SLAPP regulation broadly expanded what actions happy that definition, and thus the universe of circumstances topic to the precise malice normal.  Rather than simply actions introduced by a “public applicant or permittee,” an motion involving public petition and participation now consists of:

  1. any communication in a spot open to the general public or a public discussion board in reference to a difficulty of public curiosity; or
  2. another lawful conduct in furtherance of the train of the constitutional proper of free speech in reference to a difficulty of public curiosity, or in furtherance of the train of the constitutional proper of petition.

The Coleman courtroom famous that the one different courtroom to deal with the modification at that time concluded that the modification to § 76-a applies in federal courtroom and has retroactive impact.  See Palin v. New York Times Co., ___ F. Supp. 3d ___, 2020 WL 7711593, at *3-4 (S.D.N.Y. Dec. 29, 2020).  It then reached the identical conclusion.  According to Coleman, “[t]he anti-SLAPP provision at issue here, § 76-a, applies in federal court because it is ‘manifestly substantive,’ governing the merits of libel claims and increasing defendants’ speech protections.”  And, the Coleman courtroom held, the anti-SLAPP amendments had been simply the kind of remedial laws that ought to be given retroactive impact to effectuate its helpful function.  See In re Gleason (Michael Vee, Ltd.), 96 N.Y.second 117, 122 (2001).

Because Coleman’s declare was primarily based upon “lawful conduct in furtherance of the exercise of the constitutional right of free speech in connection with an issue of public interest,” N.Y. Civ. Rights Law § 76-a(1)(a), the courtroom held that he needed to show that Grand acted with precise malice.  Invoking a pre-existing safety in New York’s anti-SLAPP regulation that now additionally has a lot broader software, the Coleman courtroom additional famous that Coleman needed to set up precise malice “by clear and convincing evidence.”  N.Y. Civ. Rights Law § 76-a(2).  The district courtroom held that Coleman failed to fulfill that burden, and that Grand’s statements had been protected opinion in any occasion, so his defamation declare was dismissed.  As “for the flip side,” because the courtroom described it, Grand failed to fulfill her burden to indicate precise malice by clear and convincing proof, and Coleman’s statements had been protected opinion, so Grand’s counterclaims failed as effectively.  Grand’s intentional infliction of emotional misery declare additionally failed as a result of the alleged acts didn’t meet the “exceedingly high bar required to constitute IIED.”

Why It Matters:  In Palin, the Southern District of New York courtroom acknowledged that former vice presidential candidate Sarah Palin was a public determine, so the courtroom held that it “need not and does not address whether § 76-a subjects to New York’s actual malice rule a broader collection of plaintiffs than does the First Amendment.”  2020 WL 7711593, at *4 n.5.  Less than two months later, Coleman reached that precise conclusion.  It is the primary federal courtroom to carry that New York’s amended anti-SLAPP regulation requires a vastly expanded universe of defamation plaintiffs to show precise malice, and to take action by clear and convincing proof.

That normal doesn’t apply to each defamation declare by a personal plaintiff.  But if the challenged speech is on a “matter of public interest,” the plaintiff’s burden will increase considerably no matter whether or not they’re a public or non-public determine.  And in defining the scope of these issues of public curiosity, the amended regulation states that “‘public interest’ shall be construed broadly, and shall mean any subject other than a purely private matter.”  N.Y. Civ. Rights Law § 76-a(1)(d).  Coleman thus exhibits each how New York has considerably elevated its protections for a variety of defamation defendants and that its now broadly relevant “actual malice” safety applies in circumstances filed in federal courtroom.

The following Gibson Dunn legal professionals assisted within the preparation of this consumer replace: Michael Dore and Marissa Moshell.

Gibson Dunn legal professionals can be found to help in addressing any questions you’ll have concerning these developments. Please contact the Gibson Dunn lawyer with whom you normally work, the authors, or the next leaders and members of the agency’s Media, Entertainment & Technology Practice Group:

Scott A. Edelman – Co-Chair, Media, Entertainment & Technology Practice, Los Angeles (+1 310-557-8061, [email protected])
Kevin Masuda – Co-Chair, Media, Entertainment & Technology Practice, Los Angeles (+1 213-229-7872, [email protected])
Orin Snyder – Co-Chair, Media, Entertainment & Technology Practice, New York (+1 212-351-2400, [email protected])
Brian C. Ascher – New York (+1 212-351-3989, [email protected])
Michael H. Dore – Los Angeles (+1 213-229-7652, [email protected])
Howard S. Hogan – Washington, D.C. (+1 202-887-3640, [email protected])
Ilissa Samplin – Los Angeles (+1 213-229-7354, [email protected])
Nathaniel L. Bach – Los Angeles (+1 213-229-7241,[email protected])

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