Big Talent Agencies as Defendants In Implied-in-Fact Contract Suits

James DeMonaco, the writer-director of the allegedly infringing film The Purge , and Why Not Productions (WNP), both UTA clients, together with three other production companies and Universal Studios (collectively, the “production defendants”), are accused of breaching the alleged implied-in-fact contract as well as of direct copyright infringement.

A key element of the implied-in-fact contract was mutual assent between the plaintiff and the defendants that the plaintiff's ideas and screenplay would be paid for if used, and a key element of both claims was that the production defendants had access to the plaintiff's screenplay. But what hurdles must a plaintiff surmount to plead those claims when, as here, his idea was presented to two UTA agents who personally represented none of the production defendants and had no involvement in producing the film?

Big Agency Defense

The defendants contend that it would be contrary to law and result in a multitude of meritless claims if “every time an idea is disclosed to any talent agent,” it created “binding legal obligations for every other client represented by different talent agents” at the same agency. The plaintiff's argument is that recognizing such a “big agency defense” would immunize every major talent agency from liability for stealing others' intellectual property as long as the direct recipient at the agency wasn't also involved in the infringing project.

Plaintiff Douglas Jordan-Benel alleged that the feature film The Purge was based substantially on his screenplay called Settler's Day. Jordan-Benel's manager allegedly sent Settler's Day to two agents at UTA, David Kramer and Emerson Davis. Kramer, as a UTA department head, allegedly supervised a third UTA agent, Charlie Ferraro, who represented James DeMonaco. Both Davis and Kramer allegedly worked on other projects with Ferraro. (There is no mention of any waiver or release of claims by Jordan-Benel or his representative, which would have been required of an unrepresented writer pitching a screenplay.)

According to court documents, Davis informed Jordan-Benel's manager by e-mail within a week that he intended to “pass” on the screenplay. Nevertheless, according to the complaint, The Purge and Jordan-Benel's screenplay had much in common, beginning with the theme of law and lawlessness: “Both works revolve around a yearly event during which, for one day or less, citizens are invited to ignore the law and indulge in almost any crime they please, including murder.” Allegedly, the similarities between the two films, which took almost nine pages to recite, are “so striking that it is a statistical impossibility that the former could have been created independently from the latter.” There was no mention of any express agreement between Jordan-Benel's manager and UTA or its clients, which explains why Jordan-Benel claimed an implied-in-fact contract had been made.

Under California law, if a submitter discloses an idea before the offeree knows under “all circumstances attending disclosure” that “compensation is a condition of its use” and accepts that condition, no contract can be implied. Jordan-Benel was obliged to replead the contract claim after losing a motion to dismiss by UTA in February 2015 because he failed to allege that UTA ever understood that Jordan-Benel expected to be compensated as his manager submitted the screenplay, or that UTA was given the opportunity to reject the submission before the idea was presented to it. (There are four elements of an implied-in-fact contract claim under California law: 1) the plaintiff prepared the work; 2) he or she disclosed the work to the offeree for sale; 3) under “all circumstances attending disclosure,” it could be concluded that the “offeree voluntarily accepted the disclosure knowing the conditions on which it was tendered,” having had the opportunity to reject the attempted disclosure if the conditions were unacceptable; and 4) the pleading must include “the reasonable value of the work.” (New York law is similar, except some authority holds that the parties also must agree prior to disclosure on a particular price should the idea be used. See, Forest Park Pictures v. Universal Television Network Inc., 683 F.3d 424 (2nd Cir. 2012).)

In his amended pleading, Jordan-Benel alleged that his manager requested and received permission from Davis to submit his screenplay to UTA, and was told by Davis to e-mail it to Davis and Kramer, which amounted to a solicitation of the screenplay by UTA. He alleged that his manager and Davis (the latter on behalf of UTA and other defendants) understood that the purpose of the submission was for “UTA to represent plaintiff in order to procure the 'sale' of the screenplay” and for UTA “to 'sell' the screenplay to a UTA client” unknown to Jordan-Benel and his manager at the time. This understanding, according to the pleading, was based on “custom and practice in the entertainment industry and the prior dealings between [the manager] and UTA.”

In March 2015, UTA again moved to dismiss the implied-in-fact contract claim on several grounds. First, Jordan-Benel failed to allege that “UTA ever understood or agreed that plaintiff was disclosing his screenplay on the condition that he would be compensated from UTA, or anyone else, for that disclosure.” Further, Jordan-Benel “failed to allege facts that he disclosed his screenplay for sale to UTA, [or] that he clearly conditioned his disclosure ' on UTA's payment for any alleged use of that script '.” UTA argued that Jordan-Benel was really seeking UTA's representation rather than trying to make a sale to UTA. Accordingly, if UTA didn't understand that Jordan-Benel was offering the idea for sale to UTA or that disclosure was conditioned on compensation from UTA, and UTA was not the intended purchaser, then no contract could be implied.

UTA also moved to dismiss a contributory copyright claim on the basis that Jordan-Benel failed sufficiently to allege both access to Jordan-Benel's screenplay by the production defendants and facts demonstrating that UTA “knew of any direct infringement, and induced, caused, or materially contributed to the alleged infringement.”

The production defendants also moved to dismiss the claims against them, referring to Jordan-Benel's assertion of plagiarism as an “obsessive conviction.” They argued that direct copyright infringement requires a showing of access to the plaintiff's work, and there was a complete absence of direct contact by the plaintiff with any of the production defendants; further, they said that depositing the screenplay with UTA was a “bare corporate receipt” that prior decisions have refused to equate with access. Merely alleging that Kramer supervised DeMonaco and WNP's agent wasn't enough; it must be shown, according to the production defendants, that Kramer supervised the allegedly infringing project, contributed ideas and materials to it, or worked in the same unit as the alleged infringers.

The production defendants argued that there could be no implied-in-fact contract with any of them because Jordan-Benel had no contractual privity with DeMonaco, The Purge or WNP, and access to the screenplay could not be inferred; nor did Jordan-Benel allege sufficient facts to show that the two UTA employees, Kramer and Davis, had any authority to bind DeMonaco and WNP.

Under these circumstances, the production defendants argued, there could have been no mutual understanding about the purpose for and conditions upon which Jordan-Benel was submitting his screenplay, especially in the case of DeMonaco and WNP. The plaintiff's representative submitted nothing to them, or even to an agent that represented them. And on top of that, Jordan-Benel failed to allege that he “submitted his Screenplay to the two agents at UTA with the express intention of 'selling' it to DeMonaco or WNP.” (Both UTA and the production defendants also sought to strike Jordan-Benel's declaratory relief claim for payment and credit as writer respecting all further exploitation of The Purge and its sequel Anarchy.)

In response to UTA's assault on the implied-in-fact contract Jordan-Benel argued that he was not required to allege that the submission was being made for sale to UTA or to any UTA client in particular. Also, especially because the submission was solicited (that Davis allegedly invited Jordan-Benel's manager to make the submission), and UTA therefore had “advance warning of and opportunity to reject disclosure,” there was no requirement that Jordan-Benel expressly condition the submission on compensation.

Instead, it is “inferred that the defendant knew or should have known the condition under which the submission was made” and “custom and practice in the entertainment industry” bolster Jordan-Benel's position. Further, UTA's “acceptance” of Jordan-Benel's screenplay “combined with the fact that all of the defendants used the screenplay, and shared in the benefits derived therefrom” rendered UTA and the others “jointly and severally” liable on the implied contract, Jordan-Benel argued.

Jordan-Benel contends that the effect of the “big agency” defense, if allowed, would be to “grant big agencies (and their clients) an exemption from the law of idea theft.” He argued that the implied contract between the parties was formed when DeMonaco and WNP accepted and exploited Jordan-Benel's ideas, requiring the defendants to “compensate him whether or not they actually understood that to be their obligation.” Further, Jordan-Benel claims, direct contact between him and DeMonaco or WNP was not required because UTA as an organization, rather than any particular individual it employed, was their agent and could act on their behalf even if Jordan-Benel didn't know their identities at the time of submission.

As for the contributory copyright infringement claim against UTA, Jordan-Benel argued that UTA had actual or constructive knowledge that the infringement was occurring, “materially contributed” to the infringing activities, and could have “prevented the infringement by signing plaintiff to the agency, or arranging for an arm's length purchase” of Jordan-Benel's screenplay. As for establishing access to Jordan-Benel's idea by the production defendants ' a necessary element of a direct copyright infringement claim ' Jordan-Benel argued, “proof of access [by a defendant] requires only an opportunity to view or to copy plaintiff's work and evidence that a third party with whom the plaintiff and defendant were dealing had possession of plaintiff's work,” which his pleading satisfied.

Conclusion

The submission of ideas, presentations and screenplays to talent agents is so prevalent in the motion picture and television industries that legal and practical guidance from courts on how these submissions should be handled would be welcome. Meanwhile, our in-depth examination in this article of the issues in the Jordan-Benel litigation focused on the key legal claims and arguments likely to arise when such submission suits are filed.

Michael I. Rudell and Neil J. Rosini are partners in the law firm Franklin, Weinrib, Rudell & Vassallo, based in New York City.

An elite group of large talent agencies have earned reputations as gatekeepers to success in the film and television industries. Non-client writers and producers attempt to share in that success by becoming agency clients or by having their ideas, presentations and screenplays accepted by the agencies for their existing clients. For example, an agency might receive an idea or draft screenplay from a non-client writer, bring it to a client's attention and then negotiate the deal for that client to acquire rights. The agencies' practice of “packaging” a combination of services by writers, directors, actors and producers for a single film or television project, when offering that project to a studio or network, is prevalent and has enhanced their gatekeeping role.

United Talent Agency

When major talent agencies appear in the fact patterns of idea theft and copyright infringement claims, it's usually to establish how the plaintiff's property got into the hands of an agency client, such as the producer or writer of the infringing production. But in the pending case Jordan-Benel v. Universal City Studios, 14-05577 (C.D. Calif.), United Talent Agency (UTA), which is one of the elite, was named not only as a conduit but also as a defendant, accused of breaching an implied-in-fact contract with the plaintiff writer, as well as contributory copyright infringement of the plaintiff's screenplay, which UTA had rejected. Even while motions to dismiss by the defendants are pending (oral arguments were heard on May 17), these legal positions in the litigation deserve attention.

James DeMonaco, the writer-director of the allegedly infringing film The Purge , and Why Not Productions (WNP), both UTA clients, together with three other production companies and Universal Studios (collectively, the “production defendants”), are accused of breaching the alleged implied-in-fact contract as well as of direct copyright infringement.

A key element of the implied-in-fact contract was mutual assent between the plaintiff and the defendants that the plaintiff's ideas and screenplay would be paid for if used, and a key element of both claims was that the production defendants had access to the plaintiff's screenplay. But what hurdles must a plaintiff surmount to plead those claims when, as here, his idea was presented to two UTA agents who personally represented none of the production defendants and had no involvement in producing the film?

Big Agency Defense

The defendants contend that it would be contrary to law and result in a multitude of meritless claims if “every time an idea is disclosed to any talent agent,” it created “binding legal obligations for every other client represented by different talent agents” at the same agency. The plaintiff's argument is that recognizing such a “big agency defense” would immunize every major talent agency from liability for stealing others' intellectual property as long as the direct recipient at the agency wasn't also involved in the infringing project.

Plaintiff Douglas Jordan-Benel alleged that the feature film The Purge was based substantially on his screenplay called Settler's Day. Jordan-Benel's manager allegedly sent Settler's Day to two agents at UTA, David Kramer and Emerson Davis. Kramer, as a UTA department head, allegedly supervised a third UTA agent, Charlie Ferraro, who represented James DeMonaco. Both Davis and Kramer allegedly worked on other projects with Ferraro. (There is no mention of any waiver or release of claims by Jordan-Benel or his representative, which would have been required of an unrepresented writer pitching a screenplay.)

According to court documents, Davis informed Jordan-Benel's manager by e-mail within a week that he intended to “pass” on the screenplay. Nevertheless, according to the complaint, The Purge and Jordan-Benel's screenplay had much in common, beginning with the theme of law and lawlessness: “Both works revolve around a yearly event during which, for one day or less, citizens are invited to ignore the law and indulge in almost any crime they please, including murder.” Allegedly, the similarities between the two films, which took almost nine pages to recite, are “so striking that it is a statistical impossibility that the former could have been created independently from the latter.” There was no mention of any express agreement between Jordan-Benel's manager and UTA or its clients, which explains why Jordan-Benel claimed an implied-in-fact contract had been made.

Under California law, if a submitter discloses an idea before the offeree knows under “all circumstances attending disclosure” that “compensation is a condition of its use” and accepts that condition, no contract can be implied. Jordan-Benel was obliged to replead the contract claim after losing a motion to dismiss by UTA in February 2015 because he failed to allege that UTA ever understood that Jordan-Benel expected to be compensated as his manager submitted the screenplay, or that UTA was given the opportunity to reject the submission before the idea was presented to it. (There are four elements of an implied-in-fact contract claim under California law: 1) the plaintiff prepared the work; 2) he or she disclosed the work to the offeree for sale; 3) under “all circumstances attending disclosure,” it could be concluded that the “offeree voluntarily accepted the disclosure knowing the conditions on which it was tendered,” having had the opportunity to reject the attempted disclosure if the conditions were unacceptable; and 4) the pleading must include “the reasonable value of the work.” (New York law is similar, except some authority holds that the parties also must agree prior to disclosure on a particular price should the idea be used. See, Forest Park Pictures v. Universal Television Network Inc., 683 F.3d 424 (2nd Cir. 2012).)

In his amended pleading, Jordan-Benel alleged that his manager requested and received permission from Davis to submit his screenplay to UTA, and was told by Davis to e-mail it to Davis and Kramer, which amounted to a solicitation of the screenplay by UTA. He alleged that his manager and Davis (the latter on behalf of UTA and other defendants) understood that the purpose of the submission was for “UTA to represent plaintiff in order to procure the 'sale' of the screenplay” and for UTA “to 'sell' the screenplay to a UTA client” unknown to Jordan-Benel and his manager at the time. This understanding, according to the pleading, was based on “custom and practice in the entertainment industry and the prior dealings between [the manager] and UTA.”

In March 2015, UTA again moved to dismiss the implied-in-fact contract claim on several grounds. First, Jordan-Benel failed to allege that “UTA ever understood or agreed that plaintiff was disclosing his screenplay on the condition that he would be compensated from UTA, or anyone else, for that disclosure.” Further, Jordan-Benel “failed to allege facts that he disclosed his screenplay for sale to UTA, [or] that he clearly conditioned his disclosure ' on UTA's payment for any alleged use of that script '.” UTA argued that Jordan-Benel was really seeking UTA's representation rather than trying to make a sale to UTA. Accordingly, if UTA didn't understand that Jordan-Benel was offering the idea for sale to UTA or that disclosure was conditioned on compensation from UTA, and UTA was not the intended purchaser, then no contract could be implied.

UTA also moved to dismiss a contributory copyright claim on the basis that Jordan-Benel failed sufficiently to allege both access to Jordan-Benel's screenplay by the production defendants and facts demonstrating that UTA “knew of any direct infringement, and induced, caused, or materially contributed to the alleged infringement.”

The production defendants also moved to dismiss the claims against them, referring to Jordan-Benel's assertion of plagiarism as an “obsessive conviction.” They argued that direct copyright infringement requires a showing of access to the plaintiff's work, and there was a complete absence of direct contact by the plaintiff with any of the production defendants; further, they said that depositing the screenplay with UTA was a “bare corporate receipt” that prior decisions have refused to equate with access. Merely alleging that Kramer supervised DeMonaco and WNP's agent wasn't enough; it must be shown, according to the production defendants, that Kramer supervised the allegedly infringing project, contributed ideas and materials to it, or worked in the same unit as the alleged infringers.

The production defendants argued that there could be no implied-in-fact contract with any of them because Jordan-Benel had no contractual privity with DeMonaco, The Purge or WNP, and access to the screenplay could not be inferred; nor did Jordan-Benel allege sufficient facts to show that the two UTA employees, Kramer and Davis, had any authority to bind DeMonaco and WNP.

Under these circumstances, the production defendants argued, there could have been no mutual understanding about the purpose for and conditions upon which Jordan-Benel was submitting his screenplay, especially in the case of DeMonaco and WNP. The plaintiff's representative submitted nothing to them, or even to an agent that represented them. And on top of that, Jordan-Benel failed to allege that he “submitted his Screenplay to the two agents at UTA with the express intention of 'selling' it to DeMonaco or WNP.” (Both UTA and the production defendants also sought to strike Jordan-Benel's declaratory relief claim for payment and credit as writer respecting all further exploitation of The Purge and its sequel Anarchy.)

In response to UTA's assault on the implied-in-fact contract Jordan-Benel argued that he was not required to allege that the submission was being made for sale to UTA or to any UTA client in particular. Also, especially because the submission was solicited (that Davis allegedly invited Jordan-Benel's manager to make the submission), and UTA therefore had “advance warning of and opportunity to reject disclosure,” there was no requirement that Jordan-Benel expressly condition the submission on compensation.

Instead, it is “inferred that the defendant knew or should have known the condition under which the submission was made” and “custom and practice in the entertainment industry” bolster Jordan-Benel's position. Further, UTA's “acceptance” of Jordan-Benel's screenplay “combined with the fact that all of the defendants used the screenplay, and shared in the benefits derived therefrom” rendered UTA and the others “jointly and severally” liable on the implied contract, Jordan-Benel argued.

Jordan-Benel contends that the effect of the “big agency” defense, if allowed, would be to “grant big agencies (and their clients) an exemption from the law of idea theft.” He argued that the implied contract between the parties was formed when DeMonaco and WNP accepted and exploited Jordan-Benel's ideas, requiring the defendants to “compensate him whether or not they actually understood that to be their obligation.” Further, Jordan-Benel claims, direct contact between him and DeMonaco or WNP was not required because UTA as an organization, rather than any particular individual it employed, was their agent and could act on their behalf even if Jordan-Benel didn't know their identities at the time of submission.

As for the contributory copyright infringement claim against UTA, Jordan-Benel argued that UTA had actual or constructive knowledge that the infringement was occurring, “materially contributed” to the infringing activities, and could have “prevented the infringement by signing plaintiff to the agency, or arranging for an arm's length purchase” of Jordan-Benel's screenplay. As for establishing access to Jordan-Benel's idea by the production defendants ' a necessary element of a direct copyright infringement claim ' Jordan-Benel argued, “proof of access [by a defendant] requires only an opportunity to view or to copy plaintiff's work and evidence that a third party with whom the plaintiff and defendant were dealing had possession of plaintiff's work,” which his pleading satisfied.

Conclusion

The submission of ideas, presentations and screenplays to talent agents is so prevalent in the motion picture and television industries that legal and practical guidance from courts on how these submissions should be handled would be welcome. Meanwhile, our in-depth examination in this article of the issues in the Jordan-Benel litigation focused on the key legal claims and arguments likely to arise when such submission suits are filed.

Michael I. Rudell and Neil J. Rosini are partners in the law firm Franklin, Weinrib, Rudell & Vassallo, based in New York City.