Worldvision Enterprises, Inc. v. American Broadcasting Companies, Inc.

• Decision Date: 02 May 1983
• Court: California Court of Appeals Court of Appeals
• Parties: WORLDVISION ENTERPRISES, INC., Plaintiff and Appellant, v. AMERICAN BROADCASTING COMPANIES, INC., Defendant and Respondent. Civ. 64740.

Page 148

191 Cal.Rptr. 148

142 Cal.App.3d 589

WORLDVISION ENTERPRISES, INC., Plaintiff and Appellant, v. AMERICAN BROADCASTING COMPANIES, INC., Defendant and Respondent.

Civ. 64740.

Court of Appeal, Second District, Division 5, California.

May 2, 1983.

Hearing Denied July 13, 1983.

Hill, Farrer & Burrill, Jack R. White and William M. Bitting, Los Angeles, for plaintiff and appellant.

Wyman, Bautzer, Rothman, Kuchel & Silbert, Andrew M. White, Karen S. Newman, and Stefan D. Stein, Los Angeles, for defendant and respondent.

ASHBY, Associate Justice.

In this action for breach of fiduciary duty and negligent interference with prospective economic advantage, plaintiff Worldvision Enterprises, Inc., appeals from a summary judgment in favor of defendant American Broadcasting Companies, Inc. (Code Civ.Proc., § 437c.)

Plaintiff claims that defendant disparaged a television series called "The Rookies" while that series was being broadcast by defendant on its ABC television network. Alleging that plaintiff owned future distribution rights (syndication rights) to the program, plaintiff claims that the value of these rights was damaged by defendant's statements about The Rookies. We hold that as a matter of law defendant owed no duty to protect plaintiff's economic interests, and therefore the trial court properly granted summary judgment for defendant.

In the early 1970's, Spelling-Goldberg Productions produced this television series, which depicted the adventures of two young police officers. Pursuant to a contract between defendant and Spelling-Goldberg, defendant held the network television broadcast rights for the series for five broadcast seasons commencing in the fall of 1972.

In late 1974, plaintiff entered into a written agreement with Spelling-Goldberg to acquire the syndication rights to The Rookies, that is, the right to distribute the series For some time Congress had expressed concern that children were being exposed to excessive violence and sex on television. In June 1974, Congress had directed the Federal Communications Commission to submit a report outlining specific actions to deal with the problem. Believing that industry self-regulation was preferable to any attempted government regulation of program content, the FCC exerted pressure on the major television networks which led to the announcement by the networks in early 1975 that commencing in the fall 1975 season the first hour of each night of prime time network entertainment would be designated a "family viewing" period devoted to programing suitable for general family audiences.

commencing in the fall of 1977, to independent broadcasters and to network affiliates for broadcast during hours not pledged to network programming. In early 1975, plaintiff conducted a vigorous "preselling" campaign to numerous television stations.

On April 1, 1975, defendant announced that in the fall The Rookies' broadcast time would be changed from 8 p.m. to 9 p.m. because "certain episodes or programs of these series have contained and may continue to contain subject matter that all might not agree is appropriate for general family viewing." Plaintiff in this case acknowledges the right of defendant to change the scheduled broadcast time of The Rookies.

Plaintiff does complain, however, of a speech made by Elton Rule, defendant's president, on May 29, 1975. The speech was given at the annual meeting of defendant's network affiliates. In discussing the difficulty of defining what is "appropriate" for family viewing, Mr. Rule stated, " 'The Rookies' has become a benchmark for family viewing. When we consider 'the appropriateness' for one time period or another of a series that occasionally deals with violent themes, we have something to measure it against." Plaintiff claims that after these remarks plaintiff's customers were no longer interested in purchasing The Rookies and that the value of plaintiff's syndication rights was thereby "destroyed." ¹

FIDUCIARY DUTY

Plaintiff contends there is a triable issue of fact as to the existence of a confidential relationship between plaintiff and defendant which imposed upon defendant a fiduciary duty not to damage plaintiff's syndication rights. Plaintiff relies primarily on the fact that the executives of plaintiff corporation were former employees of defendant and the allegation that the two corporations had developed a cooperative working relationship to their mutual advantage.

Plaintiff traces its corporate origin to a rule adopted by the Federal Communications Commission in 1970 which prohibited the major television networks from engaging in the domestic syndication of any television No inference of confidential relationship is raised by the status of plaintiff's key officials as former employees of defendant's subsidiary. In Odorizzi v. Bloomfield School Dist. (1966) 246 Cal.App.2d 123, 129, 54 Cal.Rptr. 533, the court said, "Under prevailing judicial opinion no presumption of a confidential relationship arises from the bare fact that parties to a contract are employer and employee; rather, additional ties must be brought out in order to create the presumption of a confidential relationship between the two. [Citation.] The absence of a confidential relationship between employer and employee is especially apparent where, as here, the parties were negotiating to bring about a termination of their relationship. In such a situation each party is expected to look after his own interests, and a lack of confidentiality is implicit in the subject matter of their dealings." Plaintiff's chief executive officer, Kevin O'Sullivan, acknowledged in his deposition that the negotiations for the purchase were lengthy, tedious, difficult, and at arm's length. The purpose of the purchase agreement was to comply with the FCC rule, which intended that the syndication business would move into the hands of a separate entity "where the directors and officers of each corporation have a duty to serve the best interests of their company without regard to the interests of the other company." (In re Columbia Pictures Industries, Inc., supra, 30 FCC2d at p. 15.) Such a relationship is wholly inconsistent with the fiduciary relationship advocated by plaintiff.

                programs.  The rule was designed to remove any network incentive to choose for network exhibition those programs in which the network had acquired syndication rights [142 Cal.App.3d 594] and to enable independent producers to become more competitive.  (In re Columbia Pictures Industries, Inc.  (1971) 30 FCC2d 9, 10, affd sub nom., Iacopi v. FCC (9th Cir.1971) 451 F.2d 1142.)   To implement the rule, defendant was required to divest itself of its subsidiary, ABC Films, Inc., which had been engaged in syndication.  Plaintiff corporation was formed by five executives of ABC Films, Inc., for the purpose of acquiring the stock of ABC Films.  The purchase agreement was expressly intended to comply with the FCC rule
                

Plaintiff contends that a triable issue of fact is raised by the description of the working relationship of the corporations by Mr. O'Sullivan in his affidavit in opposition to the motion for summary judgment. Mr. O'Sullivan makes such statements as: "Since that merger, Worldvision has continued to carry on the business of ABC Films, Inc. using the same key personnel and same worldwide sales organization with a few changes which occurred after 1975. [p] ... The owners, including ABC, could depend upon us to give them accurate and proper and prompt reports. By the same token, ABC recognized that its own properties would be entrusted for syndication to persons with a business track record, to wit, their own employees of long standing.... In other words, a substantial selling point which I expressed to Rule was the mutual trust between ABC and their former employees--they could trust us with their properties and we could trust them with respect to fair dealings with these properties.... [p] There was a very definite on-going relationship which required confidence between the parties.... [p] .... [p] Both Worldvision and Affiant reposed trust and confidence in ABC in that ABC would not do any act which would diminish the value of the syndication rights vested in Worldvision."

The mere fact that in the course of their business relationships the parties reposed trust and confidence in each other does not impose any corresponding fiduciary duty in the absence of an act creating or establishing a fiduciary relationship known to law. (Hayward Union etc. School Dist. v. Madrid (1965) 234 Cal.App.2d 100, 124, 44 Cal.Rptr. 268; Gosnell v. Lloyd (1932) 215 Cal. 244, 254, 10 P.2d 45.) Plaintiff's assertion is insufficient to create a triable issue of fact which would preclude summary judgment. (See Hayward Union etc. School Dist. v. Madrid, supra.)

Mr. O'Sullivan also declared: "Due to the fact that properties syndicated by Worldvision are first possessed and broadcast by ABC on network television, ABC possesses great power to control, protect, advance, or destroy the syndication rights in the properties in which Worldvision has a vested interest. Accordingly, ABC has great power to control the economic life of the properties they show." The same sort of power could be attributed to any important supplier or customer of a business. The fact that two corporations do much business with each other does not create a fiduciary relationship. (See Ruhl v. Mott (1898) 120 Cal. 668, 678, 679, 53 P. 304.)

Plaintiff also argues that defendant "controlled" "property contemporaneously owned" by plaintiff and that this control gave rise to a fiduciary duty by way of analogy to a husband's control over community property (Vai v. Bank of America (1961) 56 Cal.2d 329, 337-338, 15 Cal.Rptr. 71, 364 P.2d 247) or to a life tenant and remainderman (see Civ.Code, § 818; Rest., Property, § 204). The authorities cited do not support plaintiff's position. The fiduciary duty in Vai arose because by ...