9th Circuit Says End Steinbeck Copyright Fight

"This 'suit has, in course of time, become so complicated, that … no two … lawyers can talk about it for five minutes, without coming to a total disagreement as to all the premises. Innumerable children have been born into the cause: innumerable young people have married into it;' and, sadly, the original parties 'have died out of it.' A 'long procession of [judges] has come in and gone out' during that time, and still the suit 'drags its weary length before the court.' Those words were not written about this case … but they could have been," wrote Circuit Judge Tallman, in a meta reference quoting Chief Justice John Roberts in the U.S. Supreme Court decision Stern v. Marshall, 564 U.S. 462 (2011), as he recited Dickens' Bleak House.

Today, the Steinbeck litigants include Waverly Scott Kaffaga, Steinbeck's stepdaughter, and the estate of the author's son, Thomas Steinbeck, now controlled by the Nobel Prize-winning writer's daughter-in-law, Gail Steinbeck. Gail has vowed that she and her company, The Palladin Group, will continue to fight for the rights to Steinbeck's works until she draws her "last breath," according to the appeals court's ruling.

The case disputes the directives of John Steinbeck's will and whether the evolution of copyright law negates a 1983 settlement reached between Steinbeck's widow and Kaffaga's mother, Elaine Steinbeck, and his sons, Thomas Steinbeck and John Steinbeck IV, over who would control the rights to certain works.

In 2004, Thomas Steinbeck and his family began challenging the 1983 agreement, citing copyright termination provisions of the Copyright Act. However, the U.S. Court of Appeals for the Second Circuit determined the agreement was valid and enforceable. Steinbeck v. Steinbeck Heritage Foundation, 400 F. App'x 572 (2d Circuit 2010). In 2014, they sued Kaffaga in the U.S. District Court for the Central District of California on the grounds that the Copyright Act of 1976 classified the contract as a "prohibited agreement to the contrary," which U.S. District Judge Terry Hatter dismissed in 2015, holding that Thomas Steinbeck and his family's claims were "precluded by collateral estoppel" due to the Second Circuit's ruling. The Ninth Circuit affirmed the decision in 2017. Steinbeck v. Kaffaga, 702 F. App'x 618 (9th Cir. 2017).

Kaffaga countersued in 2015, alleging that Thomas Steinbeck's side of the family, now represented by Gail, had wrongfully asserted their rights, which led to Hollywood producers backing out of deals to turn Steinbeck's novels The Grapes of Wrath and East of Eden into blockbusters. District Judge Hatter granted her summary judgment on alleged breach of contract and slander of title. In 2017, a federal jury in Los Angeles handed Kaffaga $5.25 million in compensatory damages and $7.9 in punitive damages against Thomas' estate for her remaining claims, including tortious interference with economic advantage.

In its appeal, Thomas' estate again argued that the 1983 agreement did not determine the termination rights under U.S. copyright law. The estate also claimed the district court improperly dismissed evidence relating to the family's intent in the reported movie rights interference.

However, the court ruled that Thomas' estate made the same exact arguments in 2017, which it said were precluded by the Second Circuit's decision. Upholding the summary judgment and shutting down the estate's defenses to the tortious interference grounds on collateral estoppel, the Ninth Circuit said the prior courts were right to exclude evidence related to defendants' different interpretations of the 1983 agreement and that the district court even let Gail testify to her understanding of the agreement and the Copyright Act.

"Defendants must now stop attempting to relitigate the validity and enforceability of the 1983 agreement, including whether it is an 'agreement to the contrary' and their understanding of the 1983 agreement and the plethora of court decisions interpreting it," Judge Tallman wrote. "They must also stop representing to the marketplace that they have any intellectual property rights or control over John Steinbeck's works. The 1983 agreement vests those control rights exclusively in Kaffaga, as successor to her mother, Elaine, and is enforceable according to its terms. Various federal courts, including this one, have repeatedly affirmed Elaine and Kaffaga's exclusive control."

Although the panel found "overwhelming evidence of Gail and Thomas Steinbeck's malice to support the punitive damages award," the court decided that Kaffaga did not meet the standard for arguing "meaningful evidence" that Gail would be able to bankroll the millions of dollars in punitive damages against her. In response, the panel vacated the $5.9 million in punitive damages against Gail but left in place $1.9 in punitives against the estate.

However, Gail's lawyers don't appear to be dropping their copyright case. "We are pleased with the court's decision to strike down the punitive damages award," said Matthew Dowd of Dowd Scheffel in Washington, DC, and Matthew Berger of Matthew I. Berger Law Group in Santa Barbara, CA, in an emailed statement. "At the same time, we are assessing our options of how to proceed. It is unfortunate that there has yet to be a court opinion that decides whether the 1983 agreement is an 'agreement to the contrary' and thus prohibited by the 1976 Copyright Act."

Kaffaga's attorneys from Jenner & Block in Los Angeles and New York, on the other hand, are glad to close this chapter.

"On behalf of Waverly Kaffaga, we are gratified that the court emphatically held that this dispute is over, even noting that the district court may wish to reconsider Kaffaga's request for an injunction," said Jenner & Block's Susan J. Kohlmann, Alison Stein, Brittany Lamb and Andrew Thomas in an emailed statement. "Kaffaga is looking forward to bringing Steinbeck's many works to life for future generations."

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Alaina Lancaster, based in San Francisco, covers disruptive trends and technologies shaping the future of law. She authors the weekly legal futurist newsletter What's Next. Contact her at [email protected], or on Twitter @a_lancaster3.