Jacobs v. Cbs Broadcasting, Inc.

• Decision Date: 03 June 2002
• Docket Number: No. 01-55478.,01-55478.
• Citation: 291 F.3d 1173
• Parties: Mike JACOBS, Jr.; William Webb, individuals; Westwind Releasing Corp., a California Corporation, Plaintiffs-Appellants, and Michael Givens, Plaintiff, v. CBS BROADCASTING INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1173

291 F.3d 1173

Mike JACOBS, Jr.; William Webb, individuals; Westwind Releasing Corp., a California Corporation, Plaintiffs-Appellants, and Michael Givens, Plaintiff, v. CBS BROADCASTING INC., Defendant-Appellee.

No. 01-55478.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted April 11, 2002.

Filed June 3, 2002.

Brian A. Rishwain, Johnson & Rishwain LLP, Los Angeles, CA, for the plaintiffs-appellants.

George R. Hedges, Quinn Emanuel Urquhart Oliver & Hedges, LLP, Los Angeles, CA, for the defendant-appellee.

Appeal from the United States District Court for the Central District of California; Dean D. Pregerson, District Judge, Presiding. D.C. No. CV-97-07997-DDP.

Before REINHARDT and GRABER, Circuit Judges, and HUNT,^* District Judge.

OPINION

GRABER, Circuit Judge.

Plaintiffs Mike Jacobs, Jr., William Webb, and Westwind Releasing Corporation filed this action against Defendant CBS Broadcasting, Inc., alleging that CBS had breached a contract to give Plaintiffs production credit when it produced a television series called Early Edition. The district court granted summary judgment to CBS on the ground that an earlier nonjudicial proceeding precluded Plaintiffs from bringing their claim to court. We reverse because that nonjudicial proceeding was too informal to have preclusive effect.

FACTUAL AND PROCEDURAL BACKGROUND

Michael Givens is a script writer and a member of the Writers' Guild of America (WGA). Givens wrote a script titled The Fourth Estate a/k/a/ Final Edition (Final Edition). Westwind optioned Final Edition for the purpose of securing a television broadcast commitment from a network. Under the agreement between Givens and Westwind, any writing credit to be accorded Givens was to be determined pursuant to the WGA's Minimum Basic Agreement (MBA) credit-determination procedures. Givens was entitled to additional compensation under the contract only if the WGA awarded him a "written by" or "screenplay by" credit.

CBS later agreed with Westwind to acquire the broadcast rights to Final Edition (First Agreement). In a second contract, CBS bought all rights to Final Edition from Westwind and Givens (Second Agreement). The Second Agreement provided that, "[i]f a project is produced based upon the literary property, CBS agrees ... to provide credit to William Webb and Mike Jacobs, Jr. as Co Executive Producers (or Executive Producers at CBS' election) on a shared card." (Emphasis added.) The Second Agreement also incorporated the provision in the original contract between Givens and Westwind stating that any writing credit for Givens would be governed by the WGA's credit-determination procedures.

CBS eventually participated in the production of a series called Early Edition, which shared a common premise with Givens' Final Edition script.¹ However, when the Notice of Tentative Writing Credits for Early Edition was issued, Givens was not listed as a "participating writer" who was entitled to receive credit. Givens complained to the WGA, citing those provisions of the MBA setting forth the circumstances under which WGA members such as Givens are entitled to writing credit. The WGA responded by suspending the credits process and informing Columbia Tristar, one of the producers of Early Edition, that if Early Edition aired with credits different from those that the WGA ultimately found to be proper, the WGA would pursue damages on behalf of the WGA-credited writers.

The WGA undertook an investigation and concluded that Givens was not a "participating writer" of Early Edition. Givens sought review of the participating-writer decision but, after engaging in additional investigation, the WGA reaffirmed its conclusion that Givens was not entitled to writing credit. After this second determination, Givens asked the WGA to reconsider its decision. The WGA again decided that Givens was not entitled to credit. In a letter to Givens, the WGA noted that its determination that Givens was not a participating writer precluded it from representing him in any subsequent writing-credit arbitration against CBS.

While Givens was pursuing his WGA appeals, Givens, Jacobs, Webb, and Westwind filed this action in Los Angeles County Superior Court. They argued that the Early Edition project was "based upon" the literary property Final Edition and that, accordingly, CBS had breached its contract by not providing them with writing and production credit. CBS removed the action to federal court. Next, CBS filed a Notice of Initiation of Arbitration, which sought a decision pursuant to the WGA's arbitration procedure on two questions: (1) whether Givens had a right to enforce the contractual provisions of the Second Agreement with respect to Early Edition independently of the processes and standards for determining writing credit set forth in the MBA, and (2) whether Givens had a right to pursue a writing-credit claim in a judicial forum. The district court stayed proceedings in federal court pending the outcome of the arbitration.

The WGA arbitrator ruled in favor of CBS. The arbitrator held that allowing Givens to litigate his claims would undermine the finality of the MBA's "fast, fair, and effective system for determining credit." Givens stipulated to an order confirming the arbitration award. Accordingly, Givens is not a party to this appeal.

CBS then filed a motion for summary judgment against the remaining Plaintiffs, who seek production credit regardless of who actually wrote the Early Edition scripts. Arguing that Plaintiffs' claims for production credit were entirely derivative of Givens' claim for writing credit, CBS asserted that the formal WGA arbitration had a preclusive effect on Plaintiffs' federal action. The district court rejected that argument, but nonetheless granted summary judgment on the alternate ground that the earlier WGA participating-writer determination involving Givens had a nonmutual collateral estoppel effect² on Plaintiffs' action. Plaintiffs filed a timely notice of appeal.

STANDARD OF REVIEW

We review de novo the district court's grant of summary judgment. Delta Sav. Bank v. United States, 265 F.3d 1017, 1021 (9th Cir.2001), cert. denied, ___ U.S. ___, 122 S.Ct. 816, 151 L.Ed.2d 700 (2002). We also review de novo the district court's determination that a prior decision has preclusive effect. Bates v. Union Oil Co., 944 F.2d 647, 649 (9th Cir.1991).

DISCUSSION

A. California Law on Collateral Estoppel (Issue Preclusion) Applies.

CBS argues that the WGA's determination that Givens was not a participating writer precludes Plaintiffs from litigating whether Early Edition is "based upon" Final Edition. To prevail, CBS must establish that the WGA participating-writer proceeding satisfies the requirements for application of collateral estoppel. Lucido v. Superior Court, 51 Cal.3d 335, 272 Cal.Rptr. 767, 795 P.2d 1223, 1225 (1990) ("The party asserting collateral estoppel bears the burden of establishing these requirements" under California law.); Hydranautics v. FilmTec Corp., 204 F.3d 880, 885 (9th Cir.2000) (same under federal law).

Because this is a diversity action, state law controls whether the WGA participating-writer determination has a preclusive effect on Plaintiffs' claims for production credit. See Pardo v. Olson & Sons, Inc., 40 F.3d 1063, 1066 (9th Cir.1994) ("Because this is a diversity case, we apply the collateral estoppel rules of the forum state...."); Costantini v. Trans World Airlines, 681 F.2d 1199, 1201 (9th Cir.1982) (holding that "a federal court sitting in diversity must apply the res judicata law of the state in which it sits"); Priest v. Am. Smelting & Ref. Co., 409 F.2d 1229, 1231 (9th Cir.1969) ("Since federal jurisdiction in this case is based upon diversity of citizenship, the district court and this court must apply the substantive law of the forum state, ... includ[ing] the law pertaining to collateral estoppel."); see also BBS Norwalk One, Inc. v. Raccolta, Inc., 117 F.3d 674, 677 (2d Cir.1997) ("The governing law in this diversity case is that of New York, where the district court sits: specifically, New York's law on the collateral estoppel effect of an arbitration award.").

Despite those precedents, CBS argues that federal law should govern the issue preclusion analysis in this case. CBS bases its argument on the fact that the district court confirmed the result of the second, more formal arbitration. Because the second arbitration award was confirmed, CBS reasons, that award must be construed as if it were a federal judgment. Under California law, the preclusive effect of a prior federal judgment is a matter governed by federal law. Younger v. Jensen, 26 Cal.3d 397, 161 Cal.Rptr. 905, 605 P.2d 813, 822 (1980) ("A federal judgment has the same effect in the courts of this state as it would have in a federal court." (citation and internal quotation marks omitted)).

CBS's theory has no application, however, because the potentially preclusive effect of the second arbitration is not at issue in this appeal. The district court held that the WGA's earlier participating-writer determination, which was not confirmed, precludes the present action, and it is that holding that CBS seeks to defend. Further, the second arbitration cannot have a preclusive effect on Plaintiffs' claims for production credit, because the arbitrator did not address whether the Early Edition project was "based upon" the literary property Final Edition.³ Thus, we need not decide whether federal law would determine the preclusive effect of the second arbitration. Only the WGA's initial participating-writer determination is at issue. Accordingly, we look to California law for the governing principles.

B. The WGA Participating-Writer Proceeding Is Not Entitled to Preclusive Effect.

Under California law, CBS must demonstrate that the WGA participating-writer determination was adjudicatory in nature before that determination can have collateral estoppel effect. See ...