Mattel v. Luce, Forward, Hamilton & Scripps

• Decision Date: 28 June 2002
• Docket Number: No. B151826.,B151826.
• Citation: 99 Cal.App.4th 1179,121 Cal.Rptr.2d 794
• Court: California Court of Appeals Court of Appeals
• Parties: MATTEL, INC., Plaintiff and Respondent, v. LUCE, FORWARD, HAMILTON & SCRIPPS et al., Defendants and Appellants.

121 Cal.Rptr.2d 794

99 Cal.App.4th 1179

MATTEL, INC., Plaintiff and Respondent, v. LUCE, FORWARD, HAMILTON & SCRIPPS et al., Defendants and Appellants.

No. B151826.

Court of Appeal, Second District, Division 4.

June 28, 2002.

Jeffer, Mangels, Butler & Marmaro, Marc Marmaro and Robert P. Baker for

Defendant and Appellant Luce, Forward, Hamilton & Scripps.

White, O'Connor, Curry, Giatti & Avanzado, Lee S. Brenner, Carl R. Benedetti and James E. Curry, Los Angeles, for Defendant and Appellant James B. Hicks.

Quinn, Emanuel, Urquhart, Oliver & Hedges, Edith Ramirez, Michael T. Zeller and Adrian M. Pruetz, Redwood Shores, for Plaintiff and Respondent.

HASTINGS, J.

This action for malicious prosecution was filed by plaintiff/respondent Mattel, Inc. following entry of a judgment in favor of respondent against Harry R. Christian, plaintiff in an action for trademark infringement against respondent filed in the United States District Court, Central District of California, case No. CV 99-2820 NM (BQRx). Respondents Luce, Forward, Hamilton & Scripps, a limited liability partnership, and James B. Hicks, a former partner of Luce, Forward represented Hicks in the District Court and are named as defendants in this action, but Christian is not.

Appellants filed a special motion to strike the complaint pursuant to Code of Civil Procedure section 425.16.¹ The motion was denied when the trial court concluded that respondent presented sufficient evidence to establish a probability of prevailing on the action. It temporarily stayed proceedings when appellants filed a timely appeal, but later ordered the stay vacated and set a trial date. We stayed the trial court proceedings, set a hearing on a petition for supersedeas and ordered the appeal set for hearing immediately.

We conclude that this action for malicious prosecution qualifies for treatment under section 425.16; that the trial court did not err in finding that respondent demonstrated a probability of prevailing on the action; and that perfection of the appeal from denial of the special motion to strike automatically stayed proceedings in the trial court pending outcome of the appeal.

SUMMARY OF FACTS

A summary of the tenor and background of this action is set out in the recent opinion from the Ninth Circuit addressing an appeal by Hicks from an award of sanctions levied against him in the underlying action: Christian v. Mattel, Inc. (9th Cir.2002) 286 F.3d 1118:

"It is difficult to imagine that the Barbie doll, so perfect in her sculpture and presentation, and so comfortable in every setting, from `California girl' to `Chief Executive Officer Barbie,' could spawn such acrimonious litigation and such egregious conduct on the part of her challenger. In her wildest dreams, Barbie could not have imagined herself in the middle of Rule 11 proceedings. But the intersection of copyrights on Barbie sculptures and the scope of Rule 11 is precisely what defines this case.

"James Hicks appeals from a district court order requiring him, pursuant to Federal Rule of Civil Procedure 11, to pay Mattel, Inc. $501,565 in attorneys' fees that it incurred in defending against what the district court determined to be a frivolous action. Hicks brought suit on behalf of Harry Christian, claiming that Mattel's Barbie dolls infringed Christian's Claudene doll sculpture copyright. In its sanctions orders, the district court found that Hicks should have discovered prior to commencing the civil action that Mattel's dolls could not have infringed Christian's copyright because, among other things, the Mattel dolls had been created well prior to the Claudene doll and the Mattel dolls had clearly visible copyright notices on their heads. After determining that Hicks had behaved `boorishly' during discovery and had a lengthy rap sheet of prior litigation misconduct, the district court imposed sanctions." (Id. at p. 1121.)

The Ninth Circuit affirmed the finding of the trial court that Hicks had "`filed a case without factual foundation'" (id. at p. 1129) and concluded that "the district court did not abuse its discretion by ruling that the complaint was frivolous." (Ibid.) But it remanded the matter to the trial court for review of the amount of sanctions awarded and for an opportunity "to delineate the factual and legal basis for its sanctions orders." (Id. at pp. 1131.)

Predictably, after resolution of the underlying action, this action for malicious prosecution was filed against appellants.

Appellants filed a special motion to strike pursuant to section 425.16. The thrust of the motion was that respondent would not be able to prevail on its claim for malicious prosecution because the underlying action had ultimately been concluded between respondent and Christian by a settlement, which, it argued, did not qualify as a final termination favorable to respondent.

Respondent opposed the motion. It presented evidence that various "other" claims between Christian and respondent, not connected to the underlying Christian copyright infringement action, which was the subject of the Ninth Circuit opinion, had been resolved by settlement. But not the underlying Christian copyright infringement claim. Rather, judgment had been entered in favor of respondent and against Christian on that claim resulting from the grant of summary judgment. The various District Court documents evidencing the judgment and findings in connection with the Rule 11 (Fed. Rules of Civ. Proc.) proceedings against Hicks, referenced above, were also presented to the trial court in opposition.

The trial court denied the special motion to strike and appellants filed a timely notice of appeal. Appellants also obtained an order from the trial court staying proceedings in the trial court pending outcome of the appeal.

The trial court conducted a status conference on March 21, 2002. It ordered that the stay be vacated in its entirety, but delayed the effective date the order to April 22, 2002, to allow appellants time to seek review from us. It also set a trial date of January 13, 2003.

Appellants immediately filed petitions for writ of supersedeas or in the alternative for a stay of trial court proceedings pending outcome of the appeal. We granted the stay, requested opposition, and then set a hearing on the petition for writ of supersedeas for June 14, 2002. Noting that briefing on the appeal would be concluded with filing of the reply brief no later than May 28, we ordered that no requests for extensions would be granted and set the appeal for hearing on the same date.

Further facts will be presented in addressing the issues.

DISCUSSION

1. Federal Preemption of Appellants' Action

On appeal, appellant Luce, Forward raises an argument not presented to the trial court: "[Respondent's] malicious prosecution complaint is predicated on the filing and prosecution of The Underlying Federal Lawsuit, a copyright infringement action brought in federal court pursuant to exclusive federal jurisdiction under the Copyright Act, 17 U.S.C. § 101.... Accordingly [respondent's] malicious prosecution action is preempted by federal law because The Underlying Federal Lawsuit could only have been brought in federal court and because federal remedies exist for the wrongful filing and maintenance of copyright infringement actions. Idell v. Goodman (1990) 224 Cal.App.3d 262, 271, fn. 3, 273 Cal.Rptr. 605, Gonzales v. Parks (9th Cir.1987) 830 F.2d 1033, 1035. Therefore, the state court lacks subject matter jurisdiction over this action, which should now be dismissed." We disagree.

28 United States Code section 1338, subdivision (a), states: "The district courts shall have original jurisdiction of any civil action arising under any Act of Congress relating to patents, plant variety protection, copyrights and trademarks. Such jurisdiction shall be exclusive of the courts of the states in patent, plant variety protection and copyright cases." (Italics added.)

The action against Luce, Forward is a tort claim "arising under" the common law of California, it is not a claim "arising under" the federal Copyright Act. That action has already been concluded in favor of respondent, one of the essential elements of the common law claim for malicious prosecution.

A similar argument was made and rejected in Miller v. Lucas (1975) 51 Cal. App.3d 774, 124 Cal.Rptr. 500 in connection with nine tort claims, one of which was malicious prosecution, based on interference with plaintiffs rights in a patent. The Court of Appeal concluded the trial court erred when it sustained a demurrer on the ground of preemption, although it affirmed the trial court on another ground. In connection with the preemption argument, the court stated:

"Although the federal district courts have exclusive jurisdiction in patent and copyright cases (28 U.S.C. § 1338(a)), `every action that involves, no matter how incidentally, a United States Patent is not for that reason governed exclusively by federal law.' (Farmland Irrigation Co. v. Dopplmaier (1957) 48 Cal.2d 208, 308 P.2d 732.) Patent matters primarily concerned with either consensual relations or tortious wrongdoing may be tried in state courts and where such a suit is brought, validity of a patent or its infringement may properly be considered by a state court. [Citation.] Jurisdiction of the state court founded on contract or tort is not defeated because the existence, validity or construction of a patent may be involved. [Citation.] An aggrieved competitor can sue for damages in the state court for trade libel and unfair competition [citation] and a tort claim for deceit in the sale of patent rights is controlled by state law. [Citation.] State law also controls claims that plaintiff was fraudulently induced to forego asserting patent rights [citation] and state law controls a claim for wrongfully delaying issuance of a patent by the patent office. [Citation.]

"Thus, there is broad state jurisdiction over matters affecting...