Atticus Liab. Co. v. The Dramatic Publ'g Co.

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ATTICUS LIMITED LIABILITY COMPANY, Plaintiff, and AARON SORKIN, Involuntary Plaintiff, v. THE DRAMATIC PUBLISHING COMPANY, Defendant.

No. 22cv10147 (DLC)

United States District Court, S.D. New York

April 27, 2023

For plaintiff Atticus Limited Liability Company: Frank David D'Angelo, Wook J Hwang Jonathan Zavin Loeb & Loeb LLP Keane A. Barger Loeb & Loeb, LLP

For involuntary plaintiff Aaron Sorkin: Maura Wogan Nicole Bergstrom Frankfurt Kurnit Klein & Selz, P.C.

For defendant The Dramatic Publishing Company: Kevin Tottis Keith Stolte Max A. Stein Tottis Law, Steven J. Hyman David Biasband Oliver R. Chernin Paul Howard Levinson McLaughlin & Stern, LLP

OPINION AND ORDER

JENISE COTE, United States District Judge

In 1960, Harper Lee published the American masterpiece To Kill a Mockingbird (the "Novel"). This lawsuit raises the question of whether the defendant has exclusive rights to perform amateur productions of a play derived from that masterpiece. The plaintiff, Atticus Limited Liability Company ("Atticus"), which owns the production rights to the play authored by Aaron Sorkin that arrived on Broadway in 2018 to critical acclaim (the "Sorkin Play"), contends that the defendant has only non-exclusive rights. The defendant - The Dramatic Publishing Company ("Dramatic") - disagrees. Dramatic contends that it has exclusive rights to perform in amateur productions a play derived from the Novel. Dramatic's play, written by Dramatic's former-President Christopher Sergei (the "Sergei Play"), has been performed pursuant to a license from Lee for nearly 50 years.

For the reasons explained below, this Opinion finds as a matter of law that Dramatic's rights are no longer exclusive.^[1] It remains to be determined, however whether the plaintiff's right to assert as much is limited by an award entered on January 28, 2022, in the arbitration between the Estate of Harper Lee and Dramatic. Dramatic prevailed in that arbitration and contends that the plaintiff is bound through the doctrine of claim preclusion to abide by that decision.

Background

The following facts are taken from the evidence submitted in connection with the motion for summary judgment brought by Atticus and a motion to dismiss filed by Dramatic. The facts are undisputed or are taken in the light most favorable to Dramatic, unless otherwise indicated.

I. Factual Background

A Lee's 1969 Agreement with Dramatic

In 1969, Lee entered into an agreement with Dramatic, granting Dramatic "the complete right throughout the world" to create a dramaztization of the Novel which "is to be the only one the amateur acting rights of which [Lee] will permit to be leased and/or licensed" (the "1969 Agreement"). The phrase "amateur acting rights" was defined under the contract to include:

[A]11 performance rights for little theatres, community theatres and/or drama associations, colleges, universities, high school and other school groups, churches, clubs and other amateur organizations or groups therein or connected therewith, together with all stock, repertoire, lyceum and Chautauqua performances whether any or all of the abovementioned performances are given by paid and/or unpaid actors, but shall not include Broadway production rights nor first-class professional road and/or first class touring production rights.

Lee "reserve[d] all rights not expressly granted to [Dramatic], including but not limited to the professional acting . . . rights."

Lee agreed to "do nothing, either by omission or commission, to prevent or hinder [Dramatic] from the full exercise of all rights granted and/or purported to be granted herein." For its part, Dramatic agreed that during the run of any "first class" production in New York or a related touring engagement, Dramatic "shall not permit amateur performances [of the Sergei Play], as provided herein, within a distance of twenty-five (25) miles of the city limits of any city which had a 1960 U.S. census population in excess of 150,000."

The 1969 Agreement also contained an arbitration clause. It stated that: "[a]ny controversy arising out of this agreement is to be arbitrated in Chicago by and under the rules of the American Arbitration Association." Pursuant to the 1969 Agreement, Dramatic's then-President, Christopher Sergei, wrote a stage adaptation of the Novel, the Sergei Play.

B. 2011 Termination Letter

In April 2011, Dramatic was notified that Lee was terminating the 1969 Agreement (the "2011 Termination Letter"). The 2011 Termination Letter states, in relevant part,

Pursuant to Section 304 (c) of the Copyright Act of 1976 (as amended) (17 U.S.C. § 304(c)) and the regulations issued thereunder by the Register of Copyrights, 37 CFR § 201.10, Nelle Harper Lee hereby terminates the grant of transfer of copyright(s) made in that certain Agreement dated June 26, 1969 between Nelle Harper Lee on the one hand and The Dramatic Publishing Company on the other hand .... The effective date of termination shall be April 26, 2016.

C. Atticus and Sorkin's Acquisition of Rights in the Novel

On June 29, 2015, Lee entered into an agreement with Rudinplay, Inc.^[2] (the "2015 Agreement"). The 2015 Agreement designated Rudinplay as Lee's exclusive agent to select a playwright for a new dramatic adaption of the Novel. Upon the written approval by Lee of the selected playwright, Lee granted Rupinplay:

[T]he sole and exclusive option (the "Option") to acquire, on an exclusive (subject to Paragraph 2(b) below), worldwide basis, all live stage rights in and to the Novel and all subsidiary and ancillary rights related to such live stage rights.

That option would "be deemed exercised" upon the "initial commercial first class production" of the play on Broadway or London's West End. Section 2(b) states:

[Rudinplay] acknowledges that, notwithstanding [the 2011] termination, the amateur acting rights to the [Sergei Play] can continue to be exploited following such termination under the terms of the [1969] Agreement on a non-exclusive basis in the United States, and on an exclusive basis elsewhere. The rights granted hereunder shall be subject to the rights granted under the Prior Agreement, as limited by such termination.

(emphasis added).

Rudinplay subsequently contracted with Aaron Sorkin to serve as the playwright for the new stage adaptation of the Novel, and Rudinplay assigned to Atticus its production rights to the Sorkin Play. Sorkin is a well known and successful theater, film, and television writer. Lee died on February 19, 2016. The Sorkin Play debuted on Broadway on December 13, 2018.

D. The Arbitration Proceedings Between Dramatic and the Lee Estate

On March 7, 2019, Dramatic filed an arbitration demand against the Estate of Harper Lee, and later added Harper Lee, LLC as a party (collectively, the "Lee Estate"). In the arbitration proceeding, Dramatic asserted that the Lee Estate had breached the 1969 Agreement by hindering the full exercise of Dramatic's rights and had tortiously interfered with its related licensing contracts. Specifically, Dramatic alleged that Rudin and the Lee Estate had interfered with Dramatic's license to Jonathan Church Productions ("Church") for a non-first-class tour of the Sergei Play in the United Kingdom and Ireland. Dramatic alleged that "Dramatic and Church received a letter from lawyers representing Mr. Rudin and endorsed by the Lee Estate, threatening lawsuits if any presentations of the Sergei version were made[,]" and Church cancelled the tour "as a result of those threats of litigation." On another occasion, Dramatic had sought permission from the Lee Estate for nine amateur theaters to produce the Sergei Play within 25 miles of certain major cities while the Sorkin Play ran on Broadway. The Lee Estate initially authorized eight of the nine productions, but revoked that permission months later "as many or most of the Licensed Productions were preparing to open." Dramatic alleged that "[o]ver the next month, in concert with Mr. Rudin, the Lee Estate proceeded to threaten a number of the productions," and those theaters "shut down their productions because of fears of reprisal."

In its arbitration demand, Dramatic alleged "multiple breaches" of the 1969 Agreement, sought a declaration regarding the scope of "Dramatic's exclusive rights to the Sergei Version of the play," and requested an injuction against the Lee Estate "from purporting to own, be authorized to exploit or to exploit [the amateur] worldwide rights in any stage version of the novel To Kill a Mockingbird."

The Lee Estate claimed that it had "no advanced approval" of Atticus' letters regarding the Church tour, and that it "did not sign those letters and never made any demand on anyone that the planned tour be cancelled." The Lee Estate maintained, however, that "licenses for productions [of the Sergei Play] involving professional actors are not permitted under the [1969 Agreement]."

The Lee Estate asserted that it had revoked "any purported waiver" of the 25-mile restriction upon discovering that "several" of the theaters were "professional theaters." The Lee Estate further asserted that Atticus, not the Lee Estate, "sent letters to the theaters that had been issued licenses by Dramatic that were not consistent with the geographic limitiation," and that the Lee Estate "never asked any of these theaters to cancel their scheduled perfomrances." Accordingly, the Lee Estate filed counterclaims against Dramatic, in which it asserted (1) a claim for breach of contract of "the express surviving terms of the [1969 Agreement]," (2) a claim of copyright infringement of the "exclusive live stage rights in and to the Novel," and (3) a claim of copyright infringement of the Novel.

The arbitrator entered an interim award on ...