Lee v. Pow! Entm't, Inc., Case No. 2:19-cv-08353-ODW(FFMx)

• Decision Date: 25 June 2020
• Docket Number: Case No. 2:19-cv-08353-ODW(FFMx)
• Citation: 468 F.Supp.3d 1220
• Court: U.S. District Court — Central District of California
• Parties: Joan Celia LEE, Plaintiff, v. POW! ENTERTAINMENT, INC., and Does 1 through 10, Defendants.

468 F.Supp.3d 1220

Joan Celia LEE, Plaintiff,

v.POW! ENTERTAINMENT, INC., and Does 1 through 10, Defendants.

Case No. 2:19-cv-08353-ODW(FFMx)

United States District Court, C.D. California.

Signed June 25, 2020

Jonathan D. Freund, Craig A. Huber, Freund Legal, Neville Lawrence Johnson, Johnson and Johnson LLP, Jordanna G. Thigpen, Thigpen Legal, Stephen P. Crump, Freund Legal LLP, Beverly Hills, CA, for Plaintiff.

Alpheus Raymond Hamrick, III, Charles Conway Rainey, George Knopfler, Hamrick and Evans LLP, Burbank, CA, for Defendants.

ORDER GRANTING MOTION TO DISMISS [20] AND MOTION FOR SANCTIONS [35]

OTIS D. WRIGHT, II, UNITED STATES DISTRICT JUDGE

I. INTRODUCTION

On March 4, 2020, Defendant POW! Entertainment, Inc., ("POW") filed a motion to dismiss the amended complaint filed by Plaintiff Joan Celia Lee ("JC Lee"). (Mot. to Dismiss, ECF No. 20.) POW argues that JC Lee's amended complaint is barred by the doctrines of res judicata, collateral estoppel, and statute of limitations. ¹

On these grounds, POW also filed a motion for sanctions against JC Lee. (Mot. for Sanctions, ECF No. 35.) On June 22, 2020, the Court held a hearing for the Motion for Sanctions. Mr. Freund, Mr. Huber, and Mr. Johnson appeared on behalf of JC Lee, who was present. Mr. Rainey and Mr. Knopfle appeared for POW. For the reasons discussed below, the Court GRANTS POW's Motion to Dismiss and Motion for Sanctions. (ECF Nos. 20, 35.)

II. FACTUAL BACKGROUND

A. Present Lawsuit

JC Lee is the daughter and trustee for the estate of comic book author Stan Lee. (See First Am. Compl. ("FAC") ¶ 1, ECF No. 18.) Stan Lee is responsible for co-creating comic book characters such as Spider-Man, the X-Men, Iron Man, and many others. (FAC ¶ 28). POW, a Delaware corporation, claims that Stan Lee assigned to it the rights to his intellectual property. (FAC ¶¶ 3, 38–42.)

On February 14, 2020, JC Lee filed her FAC against POW. JC Lee seeks to enforce the terms of an agreement made in 1998 (the "1998 Agreement") between Stan Lee and Stan Lee Entertainment, Inc. ("SLEI"). (FAC ¶¶ 10–14.) Specifically, JC Lee contends that, under the terms of the 1998 Agreement, Stan Lee assigned full and complete title to his name, likeness, and creator rights to SLEI in perpetuity. (FAC ¶¶ 30–31.) As such, JC Lee seeks declaratory and injunctive relief that SLEI, owns the rights to Stan Lee's intellectual property, name, and likeness, and asserts a cause of action against POW for cybersquatting in violation of 15 U.S.C. § 1125(d). (FAC ¶¶ 47–80.)

POW, in response, seeks sanctions against JC Lee on the grounds that her complaint is both frivolous and brought for an improper purpose. (Mot. for Sanctions 13–20.) Consequently, POW served JC Lee with notice of the instant Motion using e-mail and first-class certified mail on April 7, 2020. (Mot. for Sanctions 25.) On May 11, 2020, 34 days later, POW filed the Motion with the Court. (See Mot. for Sanctions.)

B. Factual Background

After departing from Marvel in August 1998, Stan Lee formed SLEI, to which he allegedly "conveyed clear title to his name, likeness and all creator rights" on October 15, 1998. (FAC ¶¶ 14, 30.) In January 2001, Stan Lee accused Stan Lee Media, Inc. ("SLMI"), successor-in-interest to SLEI² , of being "in complete breach of the salary and benefit provisions, inter alia , of the 1998 [A]greement so that he was justified in terminating the agreement." (Mot. for Sanctions 6–7 (internal quotation marks omitted) (quoting Abadin v. Marvel Entm't, Inc. , No. CV 09-0715-PAC, 2010 WL 1257519, at *6 (S.D.N.Y. Mar. 31, 2010) ).) Subsequently, due to a lack of operating capital caused by a series of unfortunate events³ , SLMI filed for Chapter 11 bankruptcy. (FAC ¶ 37.)

Following the bankruptcy filing, in 2001, Stan Lee and others formed POW. (FAC ¶¶ 20, 39.) JC Lee alleges that the other founders of POW manipulated Stan Lee into transferring ownership of his creator rights and rights to his name and likeness "three years after he divested himself of any further legal interest in those rights" to SLMI per the 1998 Agreement. (FAC ¶ 21.)

When Stan Lee died in November 2018, JC Lee, as his only heir and trustee of his estate, became the successor-in-interest of Stan Lee's alleged obligations relating to the 1998 Agreement. (FAC ¶ 23.) She files suit "to ensure the Lee Trust is able to perform the duties it assumed under Stan Lee's [1998 Agreement] and act in accord with the obligations under the Assignment by obtaining a Declaratory Judgment to the effect all rights, title and interest to Stan Lee's Name and likeness and Brand, along with copyrights and trademarks now reside with [SLEI] in association with the Lee Trust." (FAC ¶ 46.)

C. Prior Litigation

The 1998 Agreement between Stan Lee and SLMI has been the subject of numerous cases in federal courts throughout the country. See Abadin , 2010 WL 1257519 (" Abadin ") (appeal dismissed for failure to prosecute Abadin v. Marvel Entm't, Inc. , No. 10–1717 (2d Cir. 2010)); Lee v. Marvel Enters., Inc. , 765 F. Supp. 2d 440, 456 (S.D.N.Y. 2011), aff'd , 471 F. App'x 14 (2d Cir. 2012) ; Stan Lee Media Inc. v. Lee , No. 2:07-cv-00225-SVW (SSx), 2012 WL 4048871 (C.D. Cal. Aug. 23, 2012) (" SLMI I ") (consolidating three related cases filed in the Central District), aff'd , 585 F. App'x 597 (9th Cir. 2014) ; Stan Lee Media, Inc. v. Walt Disney Co. , No. 12-2663-WJM (KMTx), 2013 WL 4776026 (D. Colo. Sept. 5, 2013) (" SLMI II "), aff'd , 774 F.3d 1292 (10th Cir. 2014) ; Disney Enters., Inc. v. Entm't Theatre Grp. , No. CV 13-5570-JLS, 2014 WL 5483487 (E.D. Pa. Oct. 30, 2014).

Notably, in 2010, the Southern District of New York held that the 1998 Agreement was terminated by Stan Lee in 2001 per his correspondence with SLMI indicating that SLMI breached the salary and benefit provisions in the agreement. Abadin , 2010 WL 1257519, *6. Furthermore, the court held that the statute of limitations to challenge the termination had lapsed by 2010, and that, even if not expressly terminated, the 1998 Agreement had expired in 2005 pursuant to California Labor Code section 2855a, which limits the duration of personal services contracts to seven years. Id.

In 2012, Judge Wilson of the Central District of California addressed the 1998 Agreement as well. See SLMI I , 2012 WL 4048871. In that action, SLMI sued Stan Lee and others alleging that Stan Lee and Marvel were infringing on the 1998 Agreement because Stan Lee had "assigned all copyrights and trademarks associated with all characters and comic books that he authored, including the iconic characters that he created during his tenure at Marvel" to SLMI. Id. at *1. The court granted defendants’ motion to dismiss on the grounds that SLMI's claims were barred by res judicata. Id. at *7. Tellingly, the court concluded "that there is a compelling public interest in bringing this matter to a close." Id.

In 2013, the District of Colorado cited the aforementioned cases and similarly held that claims to enforce the 1998 Agreement were precluded by collateral estoppel. See SLMI II , 2013 WL 4776026.

Despite the numerous failed attempts to enforce the 1998 Agreement, SLMI allegedly filed suit against Stan Lee's estate and reached a settlement that was adopted by a court, although she fails to provide further details. (FAC ¶ 44.) JC Lee now files this suit to satisfy the estate's obligation under the terms of that settlement to "correct the breach of the agreement" and "remedy the results of the various invalid assignments made by Stan Lee." (FAC ¶¶ 45–46.) The Court infers that SLMI has entered into a settlement prompting JC Lee to file this suit for declaratory relief, though neither the substance of the settlement nor the judgment have been provided to the Court.

III. MOTION TO DISMISS⁴

A. Legal Standard

A court may dismiss a complaint under Federal Rule of Civil Procedure ("Rule") 12(b)(6) for lack of a cognizable legal theory or insufficient facts pleaded to support an otherwise cognizable legal theory. Balistreri v. Pacifica Police Dep't , 901 F.2d 696, 699 (9th Cir. 1988). "To survive a motion to dismiss ... under Rule 12(b)(6), a complaint generally must satisfy only the minimal notice pleading requirements of Rule 8(a)(2)"—a short and plain statement of the claim. Porter v. Jones , 319 F.3d 483, 494 (9th Cir. 2003) ; see also Fed. R. Civ. P. 8(a)(2). The "[f]actual allegations must be enough to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). The "complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (internal quotation marks omitted). "A pleading that offers ‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause of action will not do.’ " Id. (citing Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ).

Whether a complaint satisfies the plausibility standard is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679, 129 S.Ct. 1937. A court is generally limited to the pleadings and must construe all "factual allegations set forth in the complaint ... as true and ... in the light most favorable" to the plaintiff. Lee v. City of Los Angeles , 250 F.3d 668, 679 (9th Cir. 2001). But a court need not blindly accept conclusory allegations, unwarranted deductions of fact, and unreasonable inferences. Sprewell v. Golden State Warriors , 266 F.3d 979, 988 (9th Cir. 2001).

Where a district court grants a motion to dismiss, it should generally provide leave to amend unless it is clear the complaint could not be saved by any amendment. See Fed. R. Civ. P. 15(a) ; Manzarek v. St. Paul Fire & Marine Ins. Co. , 519 F.3d 1025, 1031 (9th Cir. 2008).

B. Res Judicata

POW moves to dismiss all of JC Lee's claims arguing that her claims are barred by res judicata,...