PRINTED ON RECYCLED PAPER OPPOSITION TO MOTION FOR PRELIMINARY INJUNCTION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MURPHY ROSEN LLP 100 WILSHIRE BOULEVARD, SUITE 1300 SANTA MONICA, CA 90401-1142 TELEPHONE 310-899-3300; FACSIMILE 310-399-7201 PAUL D. MURPHY (SBN 159556) DAVID E. ROSEN (SBN 155385) MARK J. NAGLE (SBN 248873) MURPHY ROSEN LLP 100 Wilshire Boulevard, Suite 1300 Santa Monica, California 90401-1142 Telephone: (310) 899-3300 Facsimile: (310) 399-7201 Email: [email protected]Email: [email protected]Email: [email protected]Attorneys for Defendant Morgan Spurlock and Warrior Poets Inc. UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA TURNER ENTERTAINMENT NETWORKS, INC., Plaintiff, vs. MORGAN SPURLOCK, and WARRIOR POETS INC., Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) CASE NO. 2:18-cv-2490 R (ASx) DEFENDANTS’ OPPOSITION TO MOTION FOR PRELIMINARY INJUNCTION Date: May 7, 2018 Time: 10;00 a.m. Place: Courtroom 880 Case 2:18-cv-02490-R-AS Document 21 Filed 04/16/18 Page 1 of 23 Page ID #:127
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PRINTED ON RECYCLED PAPER OPPOSITION TO MOTION FOR PRELIMINARY INJUNCTION
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PAUL D. MURPHY (SBN 159556) DAVID E. ROSEN (SBN 155385) MARK J. NAGLE (SBN 248873) MURPHY ROSEN LLP 100 Wilshire Boulevard, Suite 1300 Santa Monica, California 90401-1142 Telephone: (310) 899-3300 Facsimile: (310) 399-7201 Email: [email protected] Email: [email protected] Email: [email protected]
Attorneys for Defendant Morgan Spurlock and Warrior Poets Inc.
UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF CALIFORNIA
TURNER ENTERTAINMENT NETWORKS, INC.,
Plaintiff,
vs.
MORGAN SPURLOCK, and WARRIOR POETS INC.,
Defendants.
))))))))))))))))))
CASE NO. 2:18-cv-2490 R (ASx)
DEFENDANTS’ OPPOSITION TO MOTION FOR PRELIMINARY INJUNCTION
Date: May 7, 2018 Time: 10;00 a.m. Place: Courtroom 880
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TABLE OF CONTENTS
Page(s)
I. PRELIMINARY STATEMENT ......................................................................... 1
II. STATEMENT OF RELEVANT FACTS .......................................................... 3
A. Warrior Poets. ................................................................................................ 3
B. The Production Services Agreement. ............................................................ 4
C. Spurlock’s December 13, 2017 Tweet. ......................................................... 5
III. ARGUMENT .................................................................................................... 7
A. The Legal Standard for a Preliminary Injunction. ........................................ 7
B. TEN Has Not Established it is Likely to Succeed on the Merits. ................. 7
C. TEN Has Not Established that Injunctive Relief is Necessary to Avoid ...... 9
Kimber v. Grant, 2017 U.S. Dist. LEXIS 31628 (S.D. Cal. March 6, 2017) .............................. 15
Los Angeles Memorial Coliseum Comm. v. National Football League, 634 F.2d 1197 (1980) ................................................................................ 13, 17
Marlyn Nutraceuticals, Inc. v. Mucos Pharma GmbH & Co., 571 F.3d 873 (9th Cir. 2009) ........................................................................... 15
Mazurek v. Armstrong, 520 U.S. 968, 117 S. Ct. 1865 (1997) ............................................................. 10
National Meat Ass’n v. Brown, 599 F.3d 1093 (9th Cir. 2010) ......................................................................... 10
Ohio National Life Assurance Corp. v. Davis, 2010 WL 4916643 (C.D. Cal. 2010) ............................................................... 16
Perfect 10, Inc. v. Amazon, Inc., 487 F.3d 701 (9th Cir. 2007) ........................................................................... 10
Sampson v. Murray, 415 U.S. 61, 94 S. Ct. 937 (1974) ................................................................... 13
Sanborn Mfg., Inc. v. Campbell Hausfeld/Scott Fetzer Co., 997 F.2d 484 (8th Cir. 1993) ........................................................................... 18
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Sun Microsystems, Inc. v. Microsoft Corp., 188 F.3d 1115 (9th Cir. 1999) ......................................................................... 10
Thalheimer v. City of San Diego, 645 F.3d 1109 (9th Cir. 2011) ......................................................................... 10
U.S.A. Express Cab, LLC v. City of San Jose, 2007 U.S. Dist. LEXIS 95692 (N.D. Cal. December 31, 2007) ..................... 11
Winter v. NRDC, Inc., 555 U.S. 7 (2008) ............................................................................................ 14
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I.
PRELIMINARY STATEMENT
In March 2017, Turner Entertainment Networks, Inc. (“TEN” or
“Turner”) entered into a Production Services Agreement (“Agreement”) with
Warrior Poets, Inc. (“Warrior Poets”). Pursuant to the Agreement, Warrior Poets
was retained to (1) produce a television series for TEN and (2) furnish Morgan
Spurlock (one of the producers at Warrior Poets) as executive producer. In
December 2017, Spurlock tweeted a statement in which he admitted to various
incidents from his past. Because of the tweet, TEN decided it no longer wanted
Warrior Poets or Spurlock to be affiliated with the project.
Now, without citation to any evidence and based on nothing more than
the allegations of its unverified complaint, TEN seeks a preliminary injunction
prohibiting Warrior Poets or Spurlock from disbursing any funds from Warrior
Poets’ general operating account and affirmatively requiring Warrior Poets and
Spurlock to pay all funds in that account to TEN.1 For numerous reasons, the
Court should deny the motion.
First, TEN necessarily did not satisfy its burden of establishing a
substantial likelihood of success because it presents no evidence to support its
position. It is well-settled that the allegations of an unverified complaint are
insufficient to support a preliminary injunction. In any event, TEN cannot
establish a substantial likelihood of success. TEN’s motion is premised on the
false assumption that Spurlock’s tweet somehow breached the Agreement. It did
not. If TEN wants to walk away from the project, so be it. But that does not
mean Warrior Poets breached the Agreement. Furthermore, TEN is not entitled
1 The Motion (p. 4) identifies by account number the bank account it alleges “upon information and belief” was the separate bank account for the production. This is not accurate. The account that is the subject of this Motion is Warrior Poets’ general operating account.
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to the funds in the production account. As the Agreement makes clear, the only
circumstance under which TEN is entitled to the funds in that account is if TEN
exercises its right to take over the production. To date, TEN has not chosen to
exercise this right. And TEN certainly is not entitled to the funds in Warrior
Poets’ general operating account, which is what its Motion actually seeks.
Second, TEN did not, and cannot, establish irreparable harm. This is a
breach of contract case where the only remedy sought is readily ascertainable
money damages. Financial harm is not irreparable. Though TEN argues “there
is real concern that Defendants will commingle and/or use the funds . . . in
violation of the PSA,” it presents absolutely no evidence whatsoever to support
this assertion. Instead, this “concern” is alleged only “upon information and
belief.” (Complaint, ¶37.) Furthermore, the Motion argues nothing more than
the “possibility” of irreparable harm. (Motion, p. 7.) As the Supreme Court has
made clear, a “possibility” of irreparable harm is never enough.
Third, there is no basis to grant any relief against Spurlock. He is not a
party to the Agreement. Because the only claim asserted in the complaint is for
breach of a contract between TEN and Warrior Poets, injunctive relief cannot be
granted against Spurlock.
This is a simple breach of contract case with basic money damages at
issue. It is far from the type of case in which provisional relief is appropriate.
TEN’s Motion is a transparent attempt to gain the upper-hand in the litigation,
and granting the Motion would be akin to granting an attachment without
requiring TEN to meet the high burden associated with an attachment order.
Furthermore, because the Motion erroneously seeks all of the funds in Warrior
Poets’ general operating account rather than the project’s production account,
granting the Motion would cripple Warrior Poets’ entire business operations.
The Motion is devoid of evidence and unsupported by law, and should be denied.
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II.
STATEMENT OF RELEVANT FACTS
A. Warrior Poets.
Warrior Poets is a New York based production studio formed in 2004.
Over the years, Warrior Poets has been credited with more than 50 motion
picture and television productions. These projects run the gamut of subject
matters. Motion picture projects include: The Greatest Movie Ever Sold; Where
in the World is Osama Bin Laden?; Rats; and One Direction: This Is Us.
Television projects include: 30 Days (FX); I Hart Food (Food Network);
Morgan Spurlock: Inside Man (CNN); and Springfield of Dreams (Fox
Sports/Fox/MLB). (Spurlock Decl., ¶2.)
By 2017, Warrior Poets employed three critically acclaimed lead staff
producers: Spurlock, Matthew Galkin and Jeremy Chilnick. Spurlock is an
award-winning writer, director and producer. His first film, Supersize Me, won
him Best Directing honors at the Sundance Film Festival and was nominated for
an Academy Award for Best Feature Documentary. Matthew Galkin has
produced many documentary films and television series for Warrior Poets,
including a number of award winning projects. Jeremy Chilnick is an Emmy-
nominated writer and producer who produced and executive produced many
Warrior Poets projects. (Id. at ¶3.)
In 2017, Chilnick also served as the Chief Operating Officer for Warrior
Poets and was primarily responsible for running the day-to-day operations of the
company. He signed the Agreement at issue here on behalf of Warrior Poets and,
along with the Production Manager, were the primary contacts with TEN during
Warrior Poets’ work on the project. Though Spurlock was the Chief Executive
Officer of Warrior Poets and ultimately responsible for the company and the
Project, Spurlock’s day-to-day focus was on the creative side of the company,
not the business side. (Id. at ¶4.)
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B. The Production Services Agreement.
In March 2007, TEN retained Warrior Poets to produce and executive
produce a television series entitled Who Runs The World? (“the Project”). The
terms of the deal are set forth in a Production Services Agreement (the
“Agreement”) and Standard Terms and Conditions (“Standard Terms”) dated as
of March 7, 2007. (Compl., Ex. A.)
Though the Agreement provides that Warrior Poets will designate
Spurlock to be the executive producer of the Project, Spurlock is not a party to
the Agreement or the Standard Terms. Instead, both documents make clear that
the only legally responsible parties are “Warrior Poets Inc. (‘Producer’) and
Turner Entertainment Networks, Inc. (‘Turner’).” Though Spurlock’s signature
appears at the end of the Agreement, as the notation above his signature makes
clear, he signed the document solely for the purpose of acknowledging that the
Agreement concerns his “services and/or rights.” Specifically, section 12 of the
Agreement requires that Spurlock consent to TEN’s use of his name, voice,
likeness and biography, and section 7(e) of the Agreement requires that Warrior
Poets make Spurlock available for various appearances at marketing events. To
the extent Spurlock has any obligations under the Agreement, they are simply to
offer his services as executive producer and agree to the provisions of sections
7(e) and 12.
The Agreement contains no “morals” clause. Nor does it contain any
other provision that grants TEN the right to declare a default under the
Agreement if TEN disapproves of prior conduct of Warrior Poets personnel.
The Agreement provides that TEN will fund the Project “on a mutually
approved cash flow schedule.” (Id. at §6.) The Agreement contains no provision
allowing TEN to demand repayment of the incremental funds provided to
Warrior Poets.
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If TEN believes that Warrior Poets is “unable to continue” on the Project,
the Standard Terms sets forth a very specific procedure for TEN to “takeover”
the production:
“Turner shall have the right to require Producer to provide
proof reasonably satisfactory to Turner that Producer has the
capacity (including the financial capacity) to complete and
Deliver the Episodes as required hereunder. In the event
Producer fails to make such satisfactory showing within the
time period reasonably required by Turner . . ., Turner shall
have the right, exercisable by written notice to Producer, to
takeover production of the Series. If Turner exercises its
takeover rights, Turner shall be deemed to be appointed the
manager and agent of Producer for the purpose of
completing such episodes and Producer shall, at Turner’s
request, place at Turner’s disposal and under Turner’s
control, the production account and any and all other assets,
personnel and equipment employed and used by producer . .
. .” (Standard Terms, §12) (emphasis added).
Under the Agreement and Standard Terms, the only circumstance under
which TEN is entitled to take control of the Warrior Poets production account is
if TEN exercises its “takeover” rights. To date, TEN has not exercised its
takeover rights.
C. Spurlock’s December 13, 2017 Tweet.
On December 13, 2017, Spurlock tweeted the phrase “I am Part of the
Problem” along with a link to a statement. In the statement, reflecting on the
widespread reporting of misconduct in the entertainment industry, Spurlock
wrote, “I’ve come to understand after months of these revelations, that I am not
some innocent bystander, I am also a part of the problem.” (Compl., Ex. C.) He
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states that “if I’m going to truly represent myself as someone who has built a
career on finding the truth, then it’s time for me to be truthful as well.”
Spurlock then details three specific reasons why he is “part of the
problem.” The first involved an incident while Spurlock was in college (he
graduated from NYU in 1993). The second involved verbal incidents with an
assistant approximately eight years earlier. The third involved infidelity with
former spouses and girlfriends. In the statement, Spurlock also describes his
problems with alcohol abuse. Spurlock concluded by stating, “I am also part of
the solution. By recognizing and openly admitting what I’ve done to further this
terrible situation, I hope to empower the change within myself.” (Id.)
On December 14, 2017, Spurlock checked himself into a rehabilitation
facility to seek treatment and therapy. Also on December 14, Spurlock advised
Mr. Chilnick and Mr. Galkin that, while he sought treatment, he would
temporarily step down from his leadership role at Warrior Poets. Spurlock
remained at the rehabilitation facility for thirty days. (Spurlock Decl., ¶7.)
D. TEN Suspends Production and Decides Not to Take Over the Project.
On December 15, 2017, based solely on Spurlock’s tweet, TEN sent a
letter to Warrior Poets suspending production of the Project. (Compl., Ex. D.)
Thereafter, TEN advised Warrior Poets that it was considering whether to
exercise its “takeover” rights, which would allow TEN to take control of the
production account. (Compl., Ex. E.) To date, however, TEN has not taken over
the production.
The complaint does not seek completion of the production. Instead, the
only relief TEN seeks for the alleged breach of contract is money damages, and
the only injunctive relief sought is either a return of funds or a prohibition of use
of funds. Though the Motion purports to seek a return of the funds in the Project
production account, the account TEN identifies is actually Warrior Poets’ general
operating account.
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III.
ARGUMENT
A. The Legal Standard for a Preliminary Injunction.
“[A] preliminary injunction is an extraordinary and drastic remedy, one
that should not be granted unless the movant, by a clear showing, carries the
burden of persuasion.” Mazurek v. Armstrong, 520 U.S. 968, 972, 117 S. Ct.
1865 (1997). “This burden is correctly placed on the party seeking to
demonstrate entitlement to the extraordinary remedy of a preliminary injunction
at an early stage of litigation, before the defendant has had the opportunity to
undertake extensive discovery or develop its defenses.” Perfect 10, Inc. v.
Amazon, Inc., 487 F.3d 701, 714 (9th Cir. 2007).
In deciding whether to grant a preliminary injunction, the Court must
balance “the plaintiff’s likelihood of success against the relative hardships to the
parties.” Sun Microsystems, Inc. v. Microsoft Corp., 188 F.3d 1115, 1119 (9th
Cir. 1999). In order to prevail, plaintiff “must demonstrate ‘that he is likely to
succeed on the merits, that he is likely to suffer irreparable harm in the absence
of preliminary relief, that the balance of the equities tip in his favor, and that an
injunction is in the public interest.’” National Meat Ass’n v. Brown, 599 F.3d
1093, 1097 (9th Cir. 2010) (quoting Winter v. National Res. Def. Council, Inc.,
129 S. Ct. 365, 374 (2008)).
TEN has not come close to meeting its burden under this test.
B. TEN Has Not Established it is Likely to Succeed on the Merits.
“The burden of proof at the preliminary injunction phase tracks the burden
of proof at trial.” Thalheimer v. City of San Diego, 645 F.3d 1109, 1116 (9th
Cir. 2011). This requires the moving party to present evidence sufficient to
establish the likelihood of success on the merits in order to shift the burden to
defendants to present contrary evidence. Id.
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Here, TEN necessarily has failed to meet this burden because TEN
literally presents no evidence whatsoever in support of its Motion. Instead, TEN
relies solely and exclusively on the bare allegations contained in its unverified
complaint. A motion for preliminary injunction based on nothing more than an
unverified complaint must be denied. See U.S.A. Express Cab, LLC v. City of
San Jose, 2007 U.S. Dist. LEXIS 95692 at *2 fn.1 (N.D. Cal. December 31,
2007) (“an application for a temporary restraining order or preliminary injunction
cannot be supported by an unverified complaint”); K-2 Ski Co. v. Head Ski Co.,