Client Alert: Weinstein Co. v. Smokewood

Weinstein Co. v. Smokewood – Beware What You Argue, It May Come Back To Haunt You

by Ezra Doner*

The film Push was the big prizewinner at the 2009 Sundance Film Festival. The Weinstein Company (TWC), after aggressive pursuit, thought they had a deal to distribute it. But when, instead, the film was sold to another film company, TWC brought a number of lawsuits, including one against the film’s financier (Weinstein Co. v. Smokewood Ent. Group, LLC, 2009 U.S. Dist. LEXIS 88682 (SDNY. Sept. 24, 2009). This latter case was recently dismissed, and the Court’s memorandum ordering the dismissal offers a pair of lessons for litigants.

Judicial Estoppel

Although TWC claimed it had acquired distribution rights to Push by written and/or oral agreement, the Court quickly disposed of the oral agreement claim. The Copyright Act, the Court noted, specifically provides that a sale of a copyright, to be enforceable, must be reflected in a written and signed document.

But that wasn’t the whole of the Court’s inquiry on this issue. The defendant asserted that in an unrelated litigation over broadcast rights to TWC’s hit TV show Project Runway, TWC had made the opposite legal argument, namely, that an oral contract to acquire a copyright was not enforceable. The defendant argued that in the Project Runway case, TWC conceded the point of law and that, accordingly, TWC should be precluded from making a contrary argument in the Push case. This principle of case-to-case consistency is known as “judicial estoppel,” the word “estoppel” deriving from the Old French for a “plug” or “stopper.”

The Court accepted judicial estoppel as a valid legal principle but concluded that, in the Push case, the principle didn’t apply. TWC lost the Project Runway case (albeit on a different issue) and, according to the Court’s ruling, judicial estoppel only applies if in the subsequent case, you contradict a legal argument on which you had previously won.

Even though judicial estoppel wasn’t the deciding factor, the first lesson of the Push case is, Beware what you argue, because in the next case, an argument may come back to haunt you.

Absurdities

The Push decision offers a second lesson as well. TWC’s alternative assertion of a written agreement was based on an exchange of emails with the defendant’s agent. In the first email, a TWC executive purported to “confirm” that the parties had reached agreement. In his response, the agent was non-committal but sign his email “Best,” followed by his initials. TWC argued that the agent’s valediction “Best” signaled his assent to TWC’s purported confirmation of the deal, likening the valediction to the endorsement of a check. The Court, however, characterized TWC’s argument as “absurd on its face.”

The second lesson of this case is, Don’t make an argument that a federal judge will call absurd. Although litigants frequently argue in the alternative, an absurd argument – if that’s how a court sees it – won’t help the rest of your case.

To their credit, TWC’s litigators were creative, trying to make the “best” case they could. One can only wonder what web they might have spun if the financier’s agent had signed off more emotively, with words such as “warmly,” “fondly” or even “love” .

*Ezra Doner is a New York-based entertainment lawyer who specializes in the motion picture industry. Before entering private practice, he worked at film companies in LA and NY, including Gladden Entertainment, Cinema Group and Miramax Films.