Warner Bros. Wins Big Court Ruling in Fight Over Superman

A judge rules on summary judgment against an attempt by the estate of Superman co-creator Joe Shuster to terminate his rights grant to the studio.

On Wednesday, a federal judge in California granted the studio's motion for summary judgment on the question of whether a 1992 agreement with Jean Peavy, the sister of Superman co-creator Joe Shuster, precludes the estate's attempt to terminate a copyright grant. The decision by U.S. District Court Judge Otis Wright comes four years after another federal judge in California confirmed the validity of a termination notice from the estate of the other co-creator, Jerry Siegel. The termination attempts have threatened Warners' hold on its lucrative Superman franchise.

The Ruling: http://www.hollywoodreporter.com/sites/default/files/custom/Documents/ESQ/Superman.pdf

The judge ruled "that the 1992 Agreement, which represented the Shuster heirs’ opportunity to renegotiate the prior grants of Joe Shuster’s copyrights, superseded and replaced all prior grants of the Superman copyrights. The 1992 Agreement thus represents the parties’ operative agreement and, as a post-1978 grant, it is not subject to termination."

Because Warner Bros. is in the middle of production on next summer's big-budget Man of Steel, directed by Zack Snyder and produced by Christopher Nolan, the studio likely will take tremendous comfort in the latest ruling. It comes after years of nasty litigation with Marc Toberoff, the attorney for the estates.

Starting in the 1970s, DC Comics (now a subsidiary of Warner Bros.) began making payments to Shuster and Siegel. According to court papers, the co-creators were paid $4 million over the years under a 1975 agreement.

When Shuster died in 1992, Peavy filed an affidavit saying that she was the successor and sole heir to his property.  Shuster's will also apparently named Jean's son, Mark Warren Peavy. Nevertheless, after filing her affidavit, Peavy wrote to DC and asked the company to pay her brother's final debts and expenses. DC agreed and also increased survivor benefits, but the company's then-executive vp Paul Levitz admonished, "This agreement would represent the author/heir's last and final deal with DC and would fully resolve any past, present, or future claims against DC."

The argument was enough for Wright to take time in reconsideration, but ultimately he decided to apply the law of New York, where the 1992 agreement was signed. For guidance on whether the Shusters' termination rights had been waived, the judge looked to an important 2008 decision involving the estate of John Steinbeck, where the 2nd District Court of Appeals found that an agreement made by the author's widow in 1994 superseded older contracts and eliminated a termination right. He also looked at a 2008 decision involving the Lassie franchise where a 1978 grant was determined by the 9th Circuit not to have waived a termination right.

The line of Wright's ruling that probably will trigger an appeal is the one that reads, "The broad and all-encompassing language of the 1992 Agreement unmistakably operates to supersede all prior grants."

According to the judge, Peavy's 1992 agreement deals with the same subject matter as the parties' earlier agreements, settling and displacing all claims. He says that the Shuster heirs were aware of the termination rights "when they bargained for and entered into the 1992 Agreement" and can't claim ignorance. This set the case apart from what happened in the Lassie litigation, according to the ruling.

The litigation has been intensely fought, with the studio bringing out its top legal gun, Daniel Petrocelli at O'Melveny & Myers, to handle this important case. Warners continues to assert claims that Toberoff has tortiously interfered with its deals with the estates by, among other things, getting the Siegels to back away from a settlement in 2001. Recently, Warners asked for terminating sanctions arising from alleged efforts by Toberoff to hide pertinent information in the case.

Despite the studio victory, the parties figure to be in court for many years to come. Up first is the 9th Circuit hearing in the Siegel case, and an appeal likely is down the road.

In the meantime, the result of Wednesday's decision will mean that Warners can continue to exploit Superman however it likes, including in Man of Steel next summer. That said, it will need to account for profits to other copyright holders such as the Siegels, providing plenty of new ground for yet more litigation. Far from being settled, the legal fight will continue like a comic book. Stay tuned for the next edition.