King v. Allied Vision, Ltd.

• Decision Date: 15 September 1995
• Docket Number: 1997,D,Nos. 1996,s. 1996
• Citation: 65 F.3d 1051
• Parties: Stephen KING, Plaintiff-Appellee, v. ALLIED VISION, LTD.; and Innovation Books, a division of the Innovation Corporation, Defendants, New Line Cinema Corporation, Defendant-Appellant. ockets 94-7409, 94-7225.
• Court: U.S. Court of Appeals — Second Circuit

Page 1051

65 F.3d 1051

36 U.S.P.Q.2d 1257

Stephen KING, Plaintiff-Appellee, v.ALLIED VISION, LTD.; and Innovation Books, a division of the Innovation Corporation, DefendantsNew Line Cinema Corporation, Defendant-Appellant.

Nos. 1996, 1997, Dockets 94-7409, 94-7225.

United States Court of Appeals Second Circuit.

Argued May 15, 1995.

Decided Sept. 15, 1995.

Melvyn R. Leventhal, Leventhal Slade & Krantz, New York City(Marianne Yen, Leventhal Slade & Krantz, on the brief), for defendant-appellant.

Paul R. Levenson, Cowan Liebowitz & Latman, P.C., New York City (Robert W. Clarida, Cowan Liebowitz & Latman, P.C., Peter Herbert, Philippe Zimmerman, Moses

& Singer, New York City on the brief), for plaintiff-appellee.

Before: ALTIMARI, MAHONEY, and WALKER, Circuit Judges.

ALTIMARI, Circuit Judge:

Defendant-appellantNew Line Cinema Corporation("New Line") appeals from two judgments of the United States District Court for the Southern District of New York(Motley, J.), each holding it in civil contempt for failing to comply with a consent decree between New Line and plaintiff-appelleeStephen King("King").Under the decree, New Line agreed not to use King's name in connection with the marketing of the film "The Lawnmower Man," and to take certain specified steps to eliminate references to King on the numerous videocassettes of the film already on the market.In March 1994, the district court found New Line in contempt for its failure to comply with various provisions of the decree, and ordered it to cure the contempt within thirty days.Subsequently, in February 1995, the district court again found New Line in contempt of its earlier order and the decree, imposed sanctions on New Line, and ordered New Line to take numerous steps to cure the contempt within thirty days.

New Line appeals from both orders of contempt, alleging that the district court erred in imposing obligations on New Line which were beyond the scope of the decree.Given New Line's clear failure to comply with various provisions of the decree, we conclude that the district court did not err in its 1994 Order in finding New Line in contempt.Nonetheless, we agree with New Line that one essential obligation imposed in the 1994 order--the obligation to ascertain how many copies of "The Lawnmower Man" each wholesaler and retailer held in their inventory--was beyond the scope of the decree and thus invalid.Therefore, we must also invalidate the order issued in 1995, as the court's finding of contempt was based entirely on New Line's failure to comply with the aforementioned provision.Accordingly, we affirm the judgment of the district court in part and vacate and remand in part.

BACKGROUND

In 1970, King, the author of numerous best-selling horror novels, wrote a short story entitled "The Lawnmower Man," the movie rights to which defendant Allied Vision later obtained.Allied Vision, a British corporation, planned to distribute the film in the United States through its subsidiary New Line.During the film's production and prior to its release, King advised Allied Vision and New Line that he objected to the marketing of the film as "Stephen King's The Lawnmower Man."On May 28, 1992, several weeks after the film opened in theaters, King commenced an action in the district court, seeking injunctive and monetary relief from Allied Vision, Innovation Books, and New Line for allegedly misattributing King's name to the film "The Lawnmower Man."Although the district court entered a preliminary injunction prohibiting the use of King's name, this Court ultimately upheld the use by New Line of a "based upon credit"("based upon a story by Stephen King"), but barred the use of a "possessory credit"("Stephen King's The Lawnmower Man").SeeKing v. Innovation Books, 976 F.2d 824, 829(2d Cir.1992).

On May 17, 1993, the parties voluntarily settled the action, pursuant to which they entered into a court-approved consent decree (the "Decree").The Decree prohibited New Line and those associated with it from using King's name in any manner in connection with the film, and directed New Line to undertake certain corrective measures designed to eliminate King's name from "The Lawnmower Man" videocassettes in circulation at the time of the Decree's execution.The offending videocassette packages, hundreds of thousands of which were already in the marketplace, bore a "based upon credit" in large block letters on the front and in small print on the credit block on the back.

The corrective provisions of the Decree state in relevant part:

p 2.Each of the Defendants shall take immediate steps to provide by certified mail, return receipt requested ... a copy of this Final Consent Decree to all its respective licensees, distributors, successors and assigns embraced by the terms hereof, and all other persons or entities to which each of the Defendants has granted, or grants in the future, the right to engage in any of the commercial activities or forms of exploitation [prohibited by this Decree], accompanied by a letter of instruction ... which explains the terms of the Final Consent Decree, and demands assurance that they will, in all respects, abide thereby.

p 4.Each of the Defendants shall supply all of its wholesalers or others to which it has made distribution of videocassettes or other formats of the Motion Picture with package "paste-overs" or, alternatively, new packages on which the name of Stephen King is not displayed, and demand in a letter, sent by certified mail, ... which shall accompany the "paste-overs" and/or new packages being provided to said wholesalers or others that such entities affix the new "paste-over" covers onto the old packages or, alternatively, replace the old packages with the new packages, and further issue instructions to such entities to cease and desist from all advertising or promotion relating to the Motion Picture....

Paragraph 5 of the Decree provided that, in view of the mandates of p 4, "no requirement is imposed upon Defendants to recall or withdraw" copies of the film already in the market.Under p 6, New Line was required, within thirty days, to provide King with a written affidavit describing with particularity the efforts it undertook to comply with the Decree.Paragraph 7 of the Decree provided that the "failure by such third part[iesnot associated with New Line] to ... abide by the provisions [of the Decree] shall not entitle King to seek to hold ... New Line ... in contempt of this ... Decree."Paragraph 8 of the Decree stated that inadvertent failures to comply would not constitute a violation of the Decree, provided that after notifying King, New Line promptly cured any noncompliance.

Several months after execution of the Decree, King returned to the district court seeking a civil contempt order for New Line's alleged failure to comply with the Decree.Following a hearing, the district court, by Memorandum Opinion dated March 25, 1994, found New Line in contempt.

The district court first cited numerous instances of noncompliance by New Line.With respect to p 2, the district court found that New Line failed to take "immediate steps" to provide its licensees and distributors with a copy of the Decree and the required letter by certified mail, return receipt requested.Rather, New Line did not send the required materials until June 14, more than three weeks following the execution of the Decree.

With respect to p 4, the district court cited the following instances of noncompliance: (1) New Line did not distribute corrective stickers for tapes in the existing inventories of wholesalers and retailers until July 7, 1993(the "first mailing"); (2) the first mailing contained a paste-over sticker which covered only the small reference to King on the credit block, but did not include a sticker to eliminate the credit in large print on the front of the packaging; (3) although New Line learned of this problem on July 9, it did not correct the error until August 13 at the earliest, when it mailed new corrective sleeves to wholesalers and retailers (the "second mailing"); (4) New Line sent eight stickers to each retailer in the first mailing and ten new sleeves to each retailer in the second mailing, without making any effort to determine the number of stickers or sleeves each retailer might require; (5) the first mailing was made by third class mail, rather than certified mail; (6) New Line failed to send demand letters by certified mail asking the wholesalers and retailers to affix the new paste-over stickers or replace the old sleeves with the new sleeves; (7) the first mailing included a promotional letter that simply asked for cooperation, but neither referred to nor enclosed a copy of the Decree; and (8) the copy of the Decree ultimately enclosed with the second mailing did not include the page bearing the signature of the district court.

Additionally, the court concluded that the affidavits New Line submitted to King pursuant to p 6 detailing its compliance efforts contained numerous false and misleading representations.Various New Line employees testified that they signed the affidavits prepared by counsel without actually knowing whether the activities described occurred.Several of the affidavits implied that New Line had undertaken greater and more comprehensive efforts than it actually had.For instance, one affidavit, executed on July 6, 1993, stated that New Line had sent new packages to its wholesalers and retailers to replace existing packages, when in fact corrected sleeves were not sent until mid-August.

The district court also rejected New Line's assertion that any noncompliance was inadvertent, in light of the two nearly month-long delays in effecting both the first and second mailings and of the apparent failure of New Line employees to examine carefully the contents of the mailings.Lastly, the district court referred to an informal investigation conducted by King at assorted video...