Bit Parts

Film Investment Negotiations Lead to Personal Jurisdiction over Out-of-State Defendants

The California Court of Appeal, Second District, ruled that a California trial court has personal jurisdiction over out-of-state defendants in a suit brought over an investment in a proposed film. Cameo FJ Entertainment v. Braidy, B220241. Plaintiffs Keith and Lee Pettle, owners of the California-based Cameo FJ Entertainment, sued in Los Angeles Superior Court alleging fraud and additional misrepresentations over their investment in the proposed motion picture Victims, which was never produced. According to the court of appeal: “In 2004, respondent Michael Kunath [a resident of Washington state] and representatives of Carousel Pictures [the latter aren't parties to the suit] met with appellants Keith and Lee Pettle co-owners of Cameo FJ Entertainment at the Chateau Marmont in Los Angeles ' The eight months following the Los Angeles meeting consisted of e-mails and phone negotiations between the Kunath and Carousel representatives. The e-mails involved multiple parties, across multiple jurisdictions.” (Co-defendants in the case are from Switzerland and Lichtenstein.) The superior court granted the defendants motion to dismiss. But reversing and remanding, the court of appeal noted, in an unpublished opinion, that the meeting in Los Angeles “provided the groundwork for the contract that later followed, and to establish the confidence required for Cameo FJ Entertainment to execute the power of attorney that led to the alleged losses. While it also appears that there were some negotiations that occurred in Washington State, however, like many modern business negotiations, a significant amount of negotiation occurred via e-mail and telephone.” The court of appeal added: “Any losses as a result of those communications form a relationship between that action and the forum involved ' California.”

Music Festival Insurance Doesn't Cover Assault by Security Guard

The U.S. Court of Appeals for the Eighth Circuit decided that an insurer had no obligation to defend a music festival promoter from a suit alleging sexual assault by a security guard on a festival attendee. Festivals and Concert Events Inc. (FACE) v. Scottsdale Insurance Co., 09-3647. A jury in the festival attendee's suit found the guard liable for sexual battery and FACE liable for negligent hiring. FACE then filed a declaratory suit against its insurer for coverage. But the appeals court noted that if the security guard “did commit an assault, then the assault and battery exclusion [in FACE's insurance policy with Scottsdale] applied to defeat coverage.” And if the security guard “did not commit an assault, then FACE was not legally obligated to pay damages to [the sexual battery plaintiff], and coverage was not implicated. There was no potential outcome of the trial that would require Scottsdale to indemnify FACE, and the insurer thus had no duty to defend.”

No Grandfathering for Louisiana Film Tax Credit

The Supreme Court of Louisiana decided that state tax credits can't be earned for film production and infrastructures costs incurred after Jan. 1, 2010. Red Stick Studio Development L.L.C. v. State of Louisiana, 2010-C-0193. Red Stick Studio had filed an application for tax credits in February 2007, when the allowable amount was up to 40% of a studio's investment. The Louisiana court of appeal later ruled that, after the state legislature limited the credits, Red Stick continued to qualify as a grandfathered project under '3(C) of Act 456 of the 2007 Regular Session of the Legislature, La. R.S. 47:6007. But the state supreme court reversed, finding Red Stick was entitled to the 40% tax credit only until the legislatively mandated Jan. 1, 2010 end-date. The supreme court noted that “it is clear that the information presented to the Legislature” when considering Act 456 “provided an understanding that grandfathered projects had to be completed within [a 24-]month period [beginning Jan. 1, 2008] to earn tax credits. ' Nothing in this legislative history suggests that the legislature intended that grandfathered projects be entitled to earn forty percent tax credits for the life of the projects, with no deadline or time limit for incurring expenditures.”

“Offering” Allegation Insufficient for Infringement Claim

The U.S. District Court for the District of Utah entered the controversy over whether “offering” to distribute is enough to constitute infringement of a copyright owner's distribution rights. Shannon's Rainbow LLC v. Supernova Media Inc., 2:08-CV-880. The issue has been a hot topic in file-sharing litigation, as has whether “making available” states a sufficient infringement claim. The Utah case resulted from failed negotiations for distribution of the movie Shannon's Rainbow. The plaintiffs alleged in part that the defendants “authorized a number of individuals and entities to make copies of” Shannon's Rainbow. Dismissing the suit, District Judge Ted Stewart noted that the Tenth Circuit, within which the District of Utah resides, had “not yet weighed-in on” the “offering” controversy. Judge Stewart added: “In light of the numerous authorities holding that violation of the exclusive right of distribution requires an actual dissemination of a copy of the work, the Court will adopt this interpretation of the law. To hold otherwise would significantly expand the rights available under the Copyright Act and run contrary to the holdings of several circuits on the authority of one dissenting district court.” (The dissenting “offering” court was Elektra Entertainment Group Inc. v. Barker, 551 F.Supp.2d 234 (S.D.N.Y.2008).)

Film Investment Negotiations Lead to Personal Jurisdiction over Out-of-State Defendants

The California Court of Appeal, Second District, ruled that a California trial court has personal jurisdiction over out-of-state defendants in a suit brought over an investment in a proposed film. Cameo FJ Entertainment v. Braidy, B220241. Plaintiffs Keith and Lee Pettle, owners of the California-based Cameo FJ Entertainment, sued in Los Angeles Superior Court alleging fraud and additional misrepresentations over their investment in the proposed motion picture Victims, which was never produced. According to the court of appeal: “In 2004, respondent Michael Kunath [a resident of Washington state] and representatives of Carousel Pictures [the latter aren't parties to the suit] met with appellants Keith and Lee Pettle co-owners of Cameo FJ Entertainment at the Chateau Marmont in Los Angeles ' The eight months following the Los Angeles meeting consisted of e-mails and phone negotiations between the Kunath and Carousel representatives. The e-mails involved multiple parties, across multiple jurisdictions.” (Co-defendants in the case are from Switzerland and Lichtenstein.) The superior court granted the defendants motion to dismiss. But reversing and remanding, the court of appeal noted, in an unpublished opinion, that the meeting in Los Angeles “provided the groundwork for the contract that later followed, and to establish the confidence required for Cameo FJ Entertainment to execute the power of attorney that led to the alleged losses. While it also appears that there were some negotiations that occurred in Washington State, however, like many modern business negotiations, a significant amount of negotiation occurred via e-mail and telephone.” The court of appeal added: “Any losses as a result of those communications form a relationship between that action and the forum involved ' California.”

Music Festival Insurance Doesn't Cover Assault by Security Guard

The U.S. Court of Appeals for the Eighth Circuit decided that an insurer had no obligation to defend a music festival promoter from a suit alleging sexual assault by a security guard on a festival attendee. Festivals and Concert Events Inc. (FACE) v. Scottsdale Insurance Co., 09-3647. A jury in the festival attendee's suit found the guard liable for sexual battery and FACE liable for negligent hiring. FACE then filed a declaratory suit against its insurer for coverage. But the appeals court noted that if the security guard “did commit an assault, then the assault and battery exclusion [in FACE's insurance policy with Scottsdale] applied to defeat coverage.” And if the security guard “did not commit an assault, then FACE was not legally obligated to pay damages to [the sexual battery plaintiff], and coverage was not implicated. There was no potential outcome of the trial that would require Scottsdale to indemnify FACE, and the insurer thus had no duty to defend.”

No Grandfathering for Louisiana Film Tax Credit

The Supreme Court of Louisiana decided that state tax credits can't be earned for film production and infrastructures costs incurred after Jan. 1, 2010. Red Stick Studio Development L.L.C. v. State of Louisiana, 2010-C-0193. Red Stick Studio had filed an application for tax credits in February 2007, when the allowable amount was up to 40% of a studio's investment. The Louisiana court of appeal later ruled that, after the state legislature limited the credits, Red Stick continued to qualify as a grandfathered project under '3(C) of Act 456 of the 2007 Regular Session of the Legislature, La. R.S. 47:6007. But the state supreme court reversed, finding Red Stick was entitled to the 40% tax credit only until the legislatively mandated Jan. 1, 2010 end-date. The supreme court noted that “it is clear that the information presented to the Legislature” when considering Act 456 “provided an understanding that grandfathered projects had to be completed within [a 24-]month period [beginning Jan. 1, 2008] to earn tax credits. ' Nothing in this legislative history suggests that the legislature intended that grandfathered projects be entitled to earn forty percent tax credits for the life of the projects, with no deadline or time limit for incurring expenditures.”

“Offering” Allegation Insufficient for Infringement Claim

The U.S. District Court for the District of Utah entered the controversy over whether “offering” to distribute is enough to constitute infringement of a copyright owner's distribution rights. Shannon's Rainbow LLC v. Supernova Media Inc., 2:08-CV-880. The issue has been a hot topic in file-sharing litigation, as has whether “making available” states a sufficient infringement claim. The Utah case resulted from failed negotiations for distribution of the movie Shannon's Rainbow. The plaintiffs alleged in part that the defendants “authorized a number of individuals and entities to make copies of” Shannon's Rainbow. Dismissing the suit, District Judge Ted Stewart noted that the Tenth Circuit, within which the District of Utah resides, had “not yet weighed-in on” the “offering” controversy. Judge Stewart added: “In light of the numerous authorities holding that violation of the exclusive right of distribution requires an actual dissemination of a copy of the work, the Court will adopt this interpretation of the law. To hold otherwise would significantly expand the rights available under the Copyright Act and run contrary to the holdings of several circuits on the authority of one dissenting district court.” (The dissenting “offering” court was Elektra Entertainment Group Inc. v. Barker , 551 F.Supp.2d 234 (S.D.N.Y.2008).)