Mattel Inc. v. Mga Ent. Inc.
| Decision Date | 05 January 2011 |
| Docket Number | Case No. CV 04–9049 DOC (RNBx). |
| Court | U.S. District Court — Central District of California |
| Parties | MATTEL, INC.,v.MGA ENTERTAINMENT, INC.,and Consolidated Actions. |
OPINION TEXT STARTS HERE
David M. Stern, Kevin E. Deenihan, Matthew C. Heyn, Klee Tuchin Bogdanoff & Stern LLP, John B. Quinn, Randa A.F. Osman, Rory S. Miller, Diane C. Hutnyan, Jon D. Corey, Michael T. Zeller, William C. Price, Quinn Emanuel Urquhart & Sullivan LLP, Los Angeles, CA, Sanford I. Weisburst, Quinn Emanuel Urquhart & Sullivan LLP, New York, NY, Annette L. Hurst, Orrick, Herrington & Sutcliffe, LLP, San Francisco, CA, for Mattel Inc.Diana M. Rutowski, Jason S. Angell, L. Kieran Kieckhefer, Theresa A. Sutton, Denise M. Mingrone, Sugithra Somasekar, Orrick Herrington and Sutcliffe LLP, Menlo Park, CA, Douglas Andrew Winthrop, Howard Rice Nemerovski Canady Falk & Rabkin, Warrington S. Parker, III, Yas Raouf, Jimmy S. McBirney, Orrick Herrington and Sutcliffe LLP, San Francisco, CA, Frank D. Rorie, Jr., Orrick Herrington & Sutcliffe, James I. Stang, Richard M. Pachulski, Pachulski Stang Ziehl Young and Jones LLP, Jason D. Russell, Marina Vladimir Bogorad, Thomas Jerome Nolan, Skadden Arps Slate Meagher & Flom LLP, Los Angeles, CA, Thomas S. McConville, Andre De La Cruz, Mark P. Wine, Orrick Herrington & Sutcliffe LLP, Irvine, CA, John K. Ly, Patricia L. Glaser, Glaser Weil Fink Jacobs Howard Avchen & Shapiro LLP, Los Angeles, CA, Michelle M. Campana, Skadden Arps Slate Meagher & Flom LLP, Lisa T. Simpson, Orrick Herrington & Sutcliffe LLP, New York, NY, for MGA Entertainment, Inc.
AMENDED ORDER ON MGA'S MOTION FOR SUMMARY JUDGMENT; MATTEL'S MOTION FOR PARTIAL SUMMARY JUDGMENT; MACHADO'S MOTION FOR SUMMARY JUDGMENT; MATTEL'S MOTION FOR PARTIAL SUMMARY JUDGMENT ON MGA'S COUNTERCLAIMS–IN–REPLY
Before the Court are the following Motions:
(1) MGA Entertainment, Inc. (“MGAE”), MGA de Mexico, S.R.L. de CV (“MGA Mexico”), MGA Entertainment (HK) Ltd. (“MGA HK”), and Isaac Larian (“Larian”)' s (collectively “MGA”) Motion for Summary Judgment;
(2) Mattel, Inc. (“Mattel”) and Mattel de Mexico, S.R.L. de CV (“Mattel Mexico”)'s joint Motion for Partial Summary Judgment;
(3) Carlos Gustavo Machado Gomez (“Machado”)'s Motion for Summary Judgment; and
(4) Mattel's Motion for Partial Summary Judgment on MGAE's Counter–Claims in Reply.
On April 27, 2004, Mattel filed a state court complaint against former employee Carter Bryant (“Bryant”) alleging that Bryant breached his contractual and common law duties to Mattel by failing to disclose his concept sketches and sculpts of the Bratz dolls prior to leaving Mattel for MGA Entertainment, Inc. (“MGAE”) on or about October 4, 2000. Bryant filed a counter-claim against Mattel in state court and filed a separate action for declaratory relief in federal court on November 2, 2004, on which date Bryant also removed Mattel's state court lawsuit to federal court. MGAE intervened in Mattel's suit against Bryant on December 7, 2004 and, four months later, filed a stand-alone complaint in federal court against Mattel for trade dress infringement, dilution, unfair competition, and unjust enrichment, alleging that Mattel infringed MGAE's distinctive packaging and interfered with MGAE's business relationships. On June 19, 2006, the Honorable Stephen G. Larson consolidated the three cases for all purposes upon finding that “the[ ] actions involve a number of common issues of law and fact.”
Bryant was the only defendant named by Mattel's state court complaint. On November 20, 2006, Mattel sought leave to file an amended complaint that would “substitute [MGAE] for Defendant Doe 1, [MGA HK] for Defendant Doe 2, and [Larian] for Defendant Doe 3” and add MGA Mexico and Machado as defendants to a pleading that asserted a host of new claims unrelated to Bryant's conduct. (Dkt. 89.) Mattel's request was denied but only as a procedural matter; the court permitted Mattel to plead its proposed amendments “in the form of an amended answer and counterclaim in” MGAE's case against Mattel. (Dkt. 142.) Mattel filed its First Amended Answer and Counterclaims (FAAC) on January 1, 2007 (Dkt. 143) bringing the same claims that are now pending against MGA and Machado, though the substance of those claims and the detail with which they are alleged has changed considerably. Following the filing of Mattel's counter-claims against MGA and Machado, the court ordered claims related to the ownership of the Bratz line of dolls—raised in Mattel's complaint against Bryant and Mattel's FAAC—to be tried separately from, and prior to, MGAE's affirmative claims and Mattel's counter-claims arising out of conduct unrelated to the ownership of Bratz.
Mattel entered into a settlement with Bryant on the eve of the “phase 1” trial, leaving the following claims to be tried to the jury: (1) Mattel's claim for intentional interference with contract against Larian and MGAE; (2) Mattel's claim for aiding and abetting breach of fiduciary duty against Larian and MGAE; (3) Mattel's claim for aiding and abetting breach of duty of loyalty against Larian and MGAE; (4) Mattel's claim for conversion against MGAE, MGA HK, and Larian; (5) Mattel's claim for statutory unfair competition against Larian, MGAE, and MGA HK; (6) Mattel's claim for declaratory relief against Larian, MGAE, and MGA HK; and (7) Mattel's claim for copyright infringement against Larian, MGAE, and MGA HK. (Dkt. 3917 at 11.) Mattel prevailed on each of its claims and the jury found that Bryant conceived the idea for the name Bratz and created the concept drawings and sculpt for the Bratz dolls during his second term of employment with Mattel (January 4, 1999 to October 4, 2000). On the basis of the jury's special
and general verdicts, and after independently examining the similarity between the concept sketches/sculpts and MGA's Bratz dolls, the district court placed the Bratz trademarks in a constructive trust and enjoined MGA from continuing to sell dolls that were substantially similar to Bryant's initial works. MGA appealed.
During the pendency of MGA's appeal of the phase 1 orders, discovery proceeded on the claims not tried in the phase 1 trial. Mattel amended its responsive pleading three times and joined Mattel Mexico as a plaintiff to its operative Fourth Amended Answer and Counterclaims (“4AAC”), which brings claims arising out of MGA's relationships with Bryant and other former Mattel employees who allegedly stole Mattel's confidential information before leaving Mattel. The 4AAC's claims also arise out of MGA's alleged litigation misconduct and unwillingness to comply with the phase 1 jury's verdicts, though many of these allegations were dismissed on August 2, 2010. MGA narrowed its trade dress infringement allegation to the two-pronged claim that Mattel copied MGA's trapezoidal and heart-shaped packaging. MGA also filed counterclaims-in-reply that arise out of Mattel's alleged market research tactics.
On July 22, 2010, MGA prevailed on its appeal. In vacating the constructive trust and injunction, the Ninth Circuit held that the equitable relief was impermissibly broad and predicated upon jury verdicts tainted by erroneous instruction. On October 22, 2010, this Court granted MGA's motion for a new trial on all claims and issues tried to the jury in phase 1, finding that the indistinct and inseparable claims were all infected by instructional error. The Court separately discarded with the earlier bifurcation of claims, and ordered that all pending claims between the parties be tried in a single proceeding to commence on January 11, 2011.
Rule 56 of the Federal Rules of Civil Procedure provides that “[a] party may move for summary judgment, identifying each claim or defense—or the part of each claim or defense—on which summary judgment is sought.” Fed.R.Civ.P. 56(a). Summary judgment should be granted “when, viewing the evidence in the light most favorable to the non-moving party, there are no genuine issues of material fact” and the moving party is entitled to judgment as a matter of law. Avery v. First Resolution Mgmt. Corp., 568 F.3d 1018, 1021 (9th Cir.2009); see also Fed.R.Civ.P. 56(a). In adjudicating cross-motions for summary judgment, the Ninth Circuit “evaluate[s] each motion separately, giving the nonmoving party in each instance the benefit of all reasonable inferences.” ACLU of Nevada v. City of Las Vegas, 466 F.3d 784, 790–91 (9th Cir.2006) (citations omitted); see also Friends of Columbia Gorge, Inc. v. Schafer, 624 F.Supp.2d 1253, 1263 (D.Or.2008).1
As explained in the order granting MGA's Motion for New Trial, Mattel's counter-claims for conversion, intentional interference with contractual relations, aiding and abetting breach of fiduciary duty, copyright infringement, and declaratory relief require the interpretation of Mattel's Employee Confidential and Inventions Agreement (the “Inventions Agreement”) that Bryant signed on January 4, 1999. By paragraph 2 of the Inventions Agreement Bryant agreed to “communicate to [Mattel] as promptly and fully as
practicable all inventions ... conceived or reduced to practice by me (alone or jointly with others) at any time during my employment with [Mattel].” (Declaration of Dylan Proctor, Ex. 124.) Bryant also assigned to Mattel any “right, title and interest” in such inventions, which the Inventions Agreement defined as “includ[ing], but [ ] not limited to, all discoveries, improvements, processes, developments, designs, know-how, data computer programs, and formulae, whether patentable or unpatentable.” Id.
Prior to the phase 1 trial, Mattel successfully argued that the terms of the Inventions Agreement assigned to Mattel Bryant's right, title, and interest in his ideas for the names Bratz and Jade, leaving for the jury the question of whether...
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