Gunther-Wahl Productions v. Mattel, Inc.

• Decision Date: 05 December 2002
• Docket Number: No. B143112.,B143112.
• Citation: 128 Cal.Rptr.2d 50,104 Cal.App.4th 27
• Court: California Court of Appeals Court of Appeals
• Parties: GUNTHER-WAHL PRODUCTIONS, INC. et al., Plaintiffs and Appellants, v. MATTEL, INC., Defendant and Respondent.

128 Cal.Rptr.2d 50

104 Cal.App.4th 27

GUNTHER-WAHL PRODUCTIONS, INC. et al., Plaintiffs and Appellants, v. MATTEL, INC., Defendant and Respondent.

No. B143112.

Court of Appeal, Second District, Division 8.

December 5, 2002.

Rehearing Denied January 6, 2003.

Review Denied February 19, 2003.

Esner & Chang and Stuart B. Esner, Los Angeles; Law Offices of Nate G. Kraut and Nate G. Kraut, for Plaintiffs and Appellants.

Greenberg, Glusker, Fields, Claman, Machtinger & Kinsella, Lawrence Y. Iser; Hill Farrer & Burrill and Michael K. Collins, Los Angeles, for Defendant and Respondent.

COOPER, P.J.

Appellants Gunther-Wahl Productions, Inc. (Gunther-Wahl) and Candy Wahl appeal from a judgment for respondent Mattel, Inc. (Mattel), a toy manufacturer. Appellants sued Mattel for breach of an implied-in-fact contract for allegedly using appellants' ideas for an animated television series and related toy lines, presented to Mattel in July 1993, without paying for those ideas.¹ The presentation was one regarding "Flutter Faeries;" thereafter, various Mattel dolls, including Barbie and the Polly Pocket line, appeared with characteristics plaintiffs claim were similar to the Flutter Faeries concept, thus destroying plaintiffs' opportunity to market the concept or a cartoon series based on it. The jury returned a defense verdict finding no implied-in-fact contract was formed.²

Appellants contest a jury instruction and the refusal to allow certain of their rebuttal evidence. Finding prejudicial instructional error, we shall reverse the judgment.

PROCEDURAL HISTORY AND STATEMENT OF FACTS

Presentation of the Flutter Faeries concept

Michael Wahl, a successful animation executive and former practicing lawyer, had presented possible properties to Mattel in the early 1990's. In 1992, Gunther-Wahl, a "viable and respected independent animation company," started discussing a girl-oriented entertainment property; Michael first discussed the Flutter Faeries in late 1992 or early 1993 with his wife Candy. Gunther-Wahl created a presentation package for the project in June 1993.

Michael Wahl testified he met Mattel's Debra Gallinni sometime in June 1993, possibly at an industry show in New York. They had a discussion, and she asked him to come in and show Mattel what they were doing. According to Michael Wahl, she was the gatekeeper or person to contact at Mattel and said to call and set up a meeting. He believed Ms. Gallinni invited him to the meeting to "come in and present cartoon ideas that have ancillary toy application and merchandising ideas." According to Michael Wahl, he had "no doubt" she invited him in to pitch or present.³ He called her on June 29, 1993, and left word on her answering machine to set up a meeting.

At her deposition, Ms. Gallinni could not recall the circumstances of how the meeting was arranged or whether Rolla Bedford was present at the July 1993 meeting. Her memory was refreshed at trial and she recalled that she was in New York for a convention when Michael Wahl approached her in a hotel lobby and indicated he was developing some properties he wanted to show her and she told him to "set up a meeting through my secretary." She also recalled at trial some details about the Flutter Faeries presentation, that Ms. Bedford was not present, and that a decision was made to present Flutter Faeries at the next girls' license acquisition meeting.

It is undisputed that a meeting between Gunther-Wahl and Mattel occurred at the Mattel offices in July 1993 and that three properties, including Flutter Faeries, were discussed. Michael Wahl understood that if Mattel liked the properties, they would enter negotiations to license and participate. More specifically, Michael Wahl testified: "Our creations are our property. You can't just take them. Generally, my understanding would be that they would have to compensate us if they took them.... Morally and the way our industry works. If everybody could freely take the intellectual properties of others, no one would present anything to anybody and nothing would get produc[ed] and no toys would be made. No one would show anybody anything." As he explained, a lot is spent in development; and there would be no incentive to present ideas to Mattel if he thought Mattel could take those ideas and run with them without compensating him.⁴

Michael Wahl detailed his presentation about Flutter Faeries, including what types of toys were envisioned for Mattel under a toy license. The dolls started as segmented caterpillars and changed from crystal cocoons into half-human, half-butterfly Flutter Faeries, each representing a season, with magic powers that allowed them to interact with the environment. The clothing matched each season; and the concept included dolls, fashion, hair play, fantasy, collectability, adventure, empowerment, and romance. Visual aids demonstrated the accompanying story of the Flutter Faeries, Land of Bliss, King Oberon, Prince Devon, and the evil Queen Penumbra. The presentation also envisioned books shaped like each particular butterfly-fairy: Francesca the fall fairy with powers to control the trees and plants; Genevieve the intelligent winter fairy who could freeze the ground; Lindsey the spring fairy with the power to control flowers and animals; and Josephina the summer fairy who could control the waters. A cocoon, wands, fairy dust, life-size flutter wings with tiaras, and a wasp coach were among the accessories pitched at the meeting.

According to Michael Wahl, Mattel was "very enthusiastic" about the pitch and asked Gunther-Wahl to leave the presentation materials, which he did. Ms. Gallinni or Mr. Markman asked him to leave it so she could show it around and Mattel could evaluate it. Michael Wahl testified that none of the Mattel representatives at the meeting mentioned that Mattel had anything similar in production or stopped his presentation; nor did Mattel ask if the ideas could be used in connection with Barbie or its other products. At presentations with other entities, he would be stopped in the middle of a pitch to be told they already had a similar product; his expectation was that Mattel would do the same.⁵ He would not have left the materials if Mattel said they had something similar in development.

There was no discussion of compensation at the July 7 meeting. Michael Wahl admitted he never told Mattel in words or substance that Mattel would have to pay Gunther-Wahl if the company used any part of the Flutter Faeries concept. However, no one except Mattel ever stole ideas from him, and it was not his understanding he had to have a written contract with payment terms in order to prevent someone from stealing his ideas.⁶

Flutter Faeries was put on the July 21 Mattel girls' licensing meeting agenda that described the concept. The technique at such meetings was to share information that had been presented to Mattel regarding submission of properties available for licensing. Mattel recommended tracking Flutter Faeries "as the entertainment develops." The distribution list for the meeting included people in Marketing and Design departments at Mattel, and those people could have accessed the presentation materials.⁷

Michael Wahl had lunch with Mattel's Markman on July 20 and discussed both Flutter Faeries and Young Astronauts. In this and later conversations with others at Mattel, Wahl was not told that Mattel had any similar products in production. On July 30, Rolla Bedford told Michael Wahl she "thought something was there" and the idea was really charming, and asked if there was any animation on the property. He sent an animation reel of the work his company did in early August 1993.

When Michael Wahl spoke to Rolla Bedford on October 4, she said she thought Flutter Faeries was a cute property but they would pass on it;⁸ she then mentioned something to do with something they were working on. Wahl asked for the presentation materials to be returned, and she agreed. A memo dated October 8 from Markman stated the materials were being returned, but they were not returned until December 1993 with an undated cover letter from Bedford. Mattel never explained its delay. Ms. Bedford did apologize for the delay and wrote that the file "had been mistakenly put in archive."⁹ Nevertheless, during discovery, Mattel still had at least part of the presentation materials. Plaintiffs expert Harriet Beck opined that "the toy company would only retain the materials if they were interested in it," the materials would be returned if the company was not interested, and there was no custom and practice to retain copies without permission from the seller.

The Wahls subsequently discovered that Mattel trademarked the name "Flutter Fairies" and, in their opinion, utilized several of the concepts from the July 1993 presentation and materials in toys produced by Mattel. Candy Wahl opined that if Mattel had designed various Fairy-themed names on its own, one would expect Mattel would have told Michael Wahl at the July 1993 meeting that Mattel had a fairy product.

There was conflicting evidence as to the originality of the Flutter Faeries concept and the origin of Mattel's use of some of the ideas pitched by the appellants in July 1993. Mattel produced evidence that supported its argument that Candy Wahl's Flutter Faeries concept was not unique or original. Moreover, despite inferences to the contrary, there was substantial evidence that Mattel did not borrow or steal her ideas but came up with the challenged portions, such as a fairy theme, fairy dust, flowers on dresses, the name "Flutter Fairies" and so forth, through its own design efforts and/or the efforts of others paid by Mattel. (See Teich v. General Mills, Inc. (1959) 170 Cal.App.2d 791, 803-804, 339 P.2d 627 [even where showing of similarity and access raise an inference of copying, defendant can demonstrate its product was independently conceived and developed and avoid liability].) Furthermore, Mattel...