Cassese v. Fox Broadcasting Company

Court of appeal affirms in part and reverses in part trial court’s dismissal of breach of implied contract and breach of confidence claims relating to Fox’s reality television show “So You Think You Can Dance?”.

Plaintiffs created a concept for a dance-themed competitive reality television series called “So You Think You Can Dance?” and registered the concept with the Writer’s Guild of America (WGA) in 2003. Plaintiffs disclosed the concept to Martin Erlichman who agreed to act as their agent and to pitch the concept to Creative Artists Agency (CAA) and others. In September of 2003, Erlichman confirmed that the concept had been “successfully placed” with CAA and that CAA wanted permission to hold on to the physical document embodying the plaintiffs’ concept.

In July of 2005, defendant Fox aired the first episode of “So You Think You Can Dance?” which included nearly identical elements to those that were embodied in plaintiffs’ WGA registered concept. The series was produced by defendants Dick Clark Productions (DCP) and 19 Entertainment; and plaintiffs did not receive credit or compensation relating to the series.

Plaintiffs filed suit for, among other things, breach of implied contract, breach of confidence, unjust enrichment and unfair competition. In December of 2006, the trial court sustained the defendants’ demurrer and dismissed most of the plaintiffs’ claims without leave to amend. Plaintiffs appealed. (While the appeal was pending, the plaintiffs filed a complaint against CAA for breach of implied contract and breach of confidence. In August of 2007, the trial court sustained defendants’ demurrer to plaintiffs’ breach of implied contract claim without leave to amend, but overruled CAA’s demurrer to plaintiffs’ breach of confidence claim.)

In October of 2008, the court of appeal affirmed the trial court’s decision sustaining defendants’ demurrer to the first amended complaint, but held that the trial court erred by not allowing the plaintiffs to amend the complaint. After remand, plaintiffs filed a second amended complaint and defendants again filed a demurrer. In July of 2009, the trial court sustained defendants’ demurrer to the second amended complaint without leave to amend, and dismissed plaintiffs’ claims again. Plaintiffs appealed.

In this decision, the California Court of Appeal affirmed in part and reversed in part the trial court’s decision.

Under Desny v. Wilder, 46 Cal.2d 715 (1956), and its progeny, a plaintiff alleging breach of implied contract must show that: (1) he or she prepared the work; (2) he or she disclosed the work to the offeree for sale; (3) under all circumstances attending disclosure it can be concluded that the offeree voluntarily accepted the disclosure knowing the conditions on which it was tendered (i.e., the offeree must have the opportunity to reject the attempted disclosure if the conditions were unacceptable); and (4) the reasonable value of the work.

Regarding the breach of implied contract claim against DCP and 19 Entertainment, the court held that plaintiffs had cured the two defects in the first amended complaint by alleging that: (1) CAA was the agent for 19 Entertainment and DCP, and (2) that CAA knew the conditions on which plaintiffs tendered their concept.

The second amended complaint alleged: “Plaintiffs and CAA both knew that, under the terms of the implied-in-fact contract, any use of the ‘So You Think You Can Dance?’ treatment that excluded Plaintiffs from benefiting from the treatment was an unauthorized use of the treatment and a breach of the implied-in-fact contract.” The court concluded that the plaintiffs “sufficiently alleged that CAA knew of the conditions under which the treatment was tendered within the meaning of the third element of Desny,” and that, because an agent’s knowledge is imputed to the agent’s principal, “CAA’s knowledge of the terms of plaintiffs’ disclosure of the treatment was imputed to 19 Entertainment and DCP.”

The court rejected defendants’ argument that plaintiffs failed to allege facts showing that CAA voluntarily accepted the treatment. According to the court, the second amended complaint alleged sufficient facts about the circumstances surrounding plaintiffs’ disclosure of the treatment through Erlichman to CAA to support the allegation that CAA’s acceptance of the treatment formed an implied contract between plaintiffs on the one hand, and 19 Entertainment and DCP on the other.

The court noted that the second amended complaint alleged that plaintiffs registered their treatment with the WGA, and that the WGA recommends that authors register their creative works as preventative measures against plagiarism or unauthorized use of an author’s material; “that plaintiffs wanted Mr. Erlichman, a well-known, experienced, and successful producer, agent and manager, to pitch the treatment because he ‘had a comprehensive understanding of the customs and practices of the entertainment industry, which include compensating creators for their work’; that Mr. Erlichman informed plaintiffs that he wanted to submit the treatment to CAA, one of the most prominent and successful talent agencies in the world; that CAA does not accept any unsolicited submissions of treatments and that when it accepts a treatment following a query from an agent, manager, attorney, personal representative or the like, ‘the submission is considered “solicited” by CAA’; that CAA accepted plaintiffs’ treatment in light of Mr. Erlichman’s stature in the entertainment industry and his long-standing business relationship with CAA; that after CAA accepted the treatment from Mr. Erlichman, it asked if it could retain it ‘for a while’; that plaintiffs’ names and biographies and the WGA registration number appear on the treatment CAA received; that CAA is aware that it is not the custom and practice within the entertainment industry for someone to submit WGA registered material to an agency without an understanding that he or she will be compensated in the event the material is produced; and that CAA had express authority to enter into contracts on behalf of 19 Entertainment and DCP for the receipt of new material submissions.” Under these circumstances, the court stated that a reasonable person could conclude that when CAA accepted plaintiffs’ treatment from Erlichman, “it knew that Erlichman was not merely giving CAA a gift on behalf of plaintiffs. Rather, a reasonable person could conclude that CAA understood that if it accepted the treatment, it did so with the promise that its clients would compensate plaintiffs for the use of it.”

Regarding the claim of breach of implied contract against Fox, the court held that plaintiffs’ second amended complaint failed to allege that CAA was Fox’s agent and “CAA’s knowledge of the terms of plaintiffs’ disclosure of their treatment thus cannot be imputed to Fox.” Moreover, the court continued, CAA was the only party to communicate with plaintiffs through plaintiffs’ agent regarding a proposed contract for the sale of “So You Think You Can Dance?” “Because Fox and plaintiffs, and their respective agents, did not have communications with each other, Fox and plaintiffs did not come to a mutual understanding regarding the terms of plaintiffs’ alleged disclosure of their treatment to Fox. Accordingly, plaintiffs and Fox did not enter into an implied Desny contract.”

The court affirmed dismissal of the breach of confidence claim, because plaintiffs failed to allege that they disclosed their treatment to defendants in confidence; “CAA’s alleged agreement to have its clients pay plaintiffs for the use of the treatment is not the same thing as an agreement to keep the treatment in confidence.” The court also affirmed dismissal of the unfair competition and unjust enrichment claims.