JW & JJ Entertainment, LLC et al v. Sandler
Filing
12
MEMORANDUM OPINION. Signed by Judge Alexander Williams, Jr on 09/26/2013. (bas, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
SOUTHERN DIVISION
JW & JJ ENTERTAINMENT, LLC et al.,
Plaintiffs,
v.
Civil Action No. 8:13-cv-01609-AW
MARK SANDLER,
Defendant.
MEMORANDUM OPINION
Plaintiffs have filed a Complaint for Declaratory Judgment and Preliminary and
Permanent Injunctive Relief (“Complaint”). Plaintiffs’ Complaint involves a contract dispute.
Defendant has filed a Motion to Dismiss. The Court has reviewed the record and deems a
hearing unnecessary. For the following reasons, the Court GRANTS IN PART AND DENIES
IN PART Defendant’s Motion to Dismiss.
I.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiffs are an assemblage of individuals and corporate entities who are movie
producers. Plaintiffs are in the process of producing a movie based on the life story of boxer
Roberto Durán Samaniego (“Roberto Duran” or “Duran”). Plaintiffs plead that Duran is widely
regarded as one of the greatest boxers of all time. Defendant Mark Sandler (“Sandler” or
“Defendant”) is an individual who lives in Maryland. Basically, Plaintiffs allege that Sandler has
indicated that he will sue them if they make their movie without paying him.
The dispute has its origins in a business relationship gone awry between Sandler and
Duran. On February 12, 1995, Sandler, Duran, and Duran’s wife, Felicida Durán, entered into a
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management contract (“Sandler-Duran Agreement” or “Agreement”). The Agreement generally
provides that Sandler would manage all of Duran’s business affairs and that, to effectuate these
purposes, Duran would grant Sandler certain rights.
Section 5 of the Agreement contains one such grant. As the dispute centers on the
meaning and effect of Section 5, the Court reproduces it in its entirety:
Duran grants to Sandler the exclusive right worldwide to use the name “Roberto
Duran” or any form thereof and any image or likeness of Duran in any form
whether photographic, electronic, videotape, audio or audio tape, literary, news
clipping, magazine or otherwise for whatever purpose Sandler deems appropriate.
Duran warrants that Sandler has exclusive rights to the Duran name, image, and
likeness and that he has given and will give no other party said property. Duran
expressly gives to Sandler the rights to Duran’s life story and understands that
Duran’s life story may be documented in book, movie and/or television form.
Duran will cooperative [sic] with Sandler to create Duran’s life story.
Doc. No. 7-6 § 5, at 3.
Sandler asserts that Duran breached the Agreement. Sandler further states that, after
giving Duran notice and an opportunity to cure, he terminated the Agreement and reserved all of
his rights under it. Section 15 of the Agreement states that Sandler could terminate it if Duran
breached it and that Sandler would retain all rights under it if he elected to terminate it based on
Duran’s breach. See id. § 15, at 6.
After Duran’s alleged breach, Sandler states that he sued Duran and his wife in the
Circuit Court for Montgomery County, Maryland. Although “Duran Enterprises, LLC” was the
plaintiff in that suit, Sandler asserts that Duran assigned all of his rights under the Agreement to
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Duran Enterprises pursuant to a term of the Agreement. On February 19, 1997, a default
judgment was entered in favor of Duran Enterprises against Duran and his wife in the amount of
$356,390.19. Doc. No. 7-10.
Plaintiffs allege that, in March 2007, Duran and a company named Compadre, LLC
entered into a contract pursuant to which Duran purported to grant certain rights to Compadre,
including his “exclusive life story rights.” Doc. No. 1 ¶ 12; see also Doc. No. 1-2 at 2–3.
Allegedly, through a series of transactions whose details are irrelevant here, Duran’s life story
rights were transferred to Plaintiffs. See generally Doc. No. 1 ¶¶ 13–28. Pursuant to some of
these transactions, Plaintiffs allege that, starting in 2009, they have been working diligently to
make a movie based on Duran’s life story, the working title of which is “Hands of Stone.”
Plaintiffs add that they have paid hundreds of thousands of dollars for the rights to make Hands
of Stone and have incurred millions of dollars in production costs. See id. ¶¶ 26, 28.
In October 2012, Sandler allegedly spoke with Plaintiff Weisleder by telephone and told
him that he owns the rights to Duran’s life story. Plaintiffs generally allege that Sandler has
stated that he will sue them unless Plaintiffs pay him a certain amount of money.
On June 4, 2013, Plaintiffs filed a Complaint based on the foregoing allegations.
Plaintiffs allege that the Court has both diversity and federal question jurisdiction over the case.
Federal question jurisdiction allegedly arises from a First Amendment challenge that Plaintiffs
would make if Sandler asserted his rights to Duran’s life story pursuant to the Sandler-Duran
Agreement. Under Count I, Plaintiffs request a judgment declaring that:
i.
Defendant has no right to interfere with the production and marketing of
Hands of Stone;
ii.
Defendant does not have a viable cause of action against Plaintiffs;
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iii.
The Sandler-Duran Agreement is void for vagueness;
iv.
The Sandler-Duran Agreement is an illegal contract of adhesion;
v.
Duran did not breach the Sandler-Duran Agreement by purporting to
assign his life story rights to Plaintiffs;
vi.
Defendant cannot state a claim for tortious interference with contract;
vii.
The First Amendment would bar Sandler’s claims.
Doc. No. 1 ¶ 50, at 13–15. For its part, Count II contains a request for preliminary and permanent
injunctive relief. Id. ¶¶ 51–52.
On July 19, 2013, Defendant filed a Motion to Dismiss with Prejudice or, in the
Alternative, for Complete or Partial Summary Judgment (“Motion to Dismiss”). Doc. No. 7.
Defendant asserts that the Agreement gives him exclusive rights to Duran’s life story and argues
that Plaintiffs’ claims are therefore unfounded. Defendant also raises a res judicata argument
based on the state court litigation. Plaintiffs filed their Opposition on August 23, 2013. Doc. No.
10. Plaintiffs more or less make the same arguments that they allege under Count I of their
Complaint. Defendant has filed a Reply. Doc. No. 11.
II.
STANDARD OF REVIEW
The purpose of a 12(b)(6) motion to dismiss is to test the sufficiency of the plaintiff’s
complaint. See Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999). In two recent
cases, the U.S. Supreme Court has clarified the standard applicable to Rule 12(b)(6) motions.
Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007).
These cases make clear that Rule 8 “requires a ‘showing,’ rather than a blanket assertion, of
entitlement to relief.” Twombly, 550 U.S. at 556 n.3 (quoting Fed. R. Civ. P. 8(a)(2)). This
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showing must consist of at least “enough facts to state a claim to relief that is plausible on its
face.” Id. at 570.
In deciding a motion to dismiss, the court should first review the complaint to determine
which pleadings are entitled to the assumption of truth. See Iqbal, 129 S. Ct. at 1949–50. “When
there are well-pleaded factual allegations, a court should assume their veracity and then
determine whether they plausibly give rise to an entitlement to relief.” Id. at 1950. In so doing,
the court must construe all factual allegations in the light most favorable to the plaintiff. See
Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 783 (4th Cir. 1999). The Court
need not, however, accept unsupported legal allegations, Revene v. Charles County
Commissioners, 882 F.2d 870, 873 (4th Cir. 1989), legal conclusions couched as factual
allegations, Papasan v. Allain, 478 U.S. 265, 286 (1986), or conclusory factual allegations
devoid of any reference to actual events, United Black Firefighters v. Hirst, 604 F.2d 844, 847
(4th Cir. 1979).1
III.
LEGAL ANALYSIS
A.
Federal Jurisdictional Question
Plaintiffs assert that the Court has both federal question and diversity jurisdiction over
their claims. Plaintiffs ground this assertion on a First Amendment argument. The essence of this
argument is that the Court would violate their First Amendment rights by enforcing the SandlerDuran Agreement because Duran is famous and they have a constitutional right to make a movie
based on his life story. Defendant responds that there is no governmental action because the
1
Although the Sandler-Duran Agreement is physically outside of the Complaint, the Complaint
incorporates it by reference, thereby making it an appropriate subject of a motion to dismiss. See, e.g.,
Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007) (citation omitted) (stating that
courts must consider the documents that the complaint incorporates by reference when ruling on a
12(b)(6) motion to dismiss); Phillips v. LCI Intern., Inc., 190 F.3d 609, 618 (4th Cir. 1999) (stating that
courts may consider documents external to the complaint when ruling on a 12(b)(6) motion to dismiss
where they are integral to, and explicitly relied on in, the complaint).
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dispute is between private parties. Although jurisdiction does not depend on this question, the
Court answers it because it is dispositive of Plaintiffs’ substantive First Amendment argument.
It is well-established that “[t]he Constitution’s protections of individual liberty and equal
protection apply in general only to action by the government.” See, e.g., Edmonson v. Leesville
Concrete Co., Inc., 500 U.S. 614, 619 (1991) (citing Nat’l Collegiate Athletic Ass’n v.
Tarkanian, 488 U.S. 179, 191 (1988)). Thus, “[i]n our constitutional scheme, [the] state action
doctrine protects the private sector from the restrictions imposed on the conduct of government.”
Andrews v. Fed. Home Loan Bank of Atlanta, 998 F.2d 214, 216 (4th Cir. 1993). However, “[i]n
certain circumstances, a private actor can still be bound by constitutional limitations because its
conduct is fairly attributable to the state.” Id. at 217 (citation and internal quotation marks
omitted). “In order to show state action by a private entity, . . . it must be demonstrated that the
private party charged with the deprivation could be described in all fairness as a state actor.” Id.
(citation and internal quotation marks omitted). One can deem a private party a governmental
actor in four contexts, one of which is relevant here. See id. This occurs “when the state has
committed an unconstitutional act in the course of enforcing a right of a private citizen.” Id.
“Court enforcement of private agreements may constitute state action.” USA Techs. Inc.
v. Tirpak, Civil Action No. 12–2399, 2012 WL 1889157, at *8 (E.D. Pa. May 24, 2012) (citing
Democratic Nat’l Comm. v. Republican Nat’l Comm., 673 F.3d 192, 204 (3d Cir. 2012)); see
also Shelly v. Kraemer, 334 U.S. 1, 19–20 (1948). Although court enforcement of state law
doctrines in a manner alleged to violate the First Amendment may constitute governmental
action, a court’s adverse enforcement of contractual obligations that a party explicitly assumes
does not constitute governmental action. See Cohen v. Cowles Media Co., 501 U.S. 663, 668
(1991). Courts determine whether a party has explicitly assumed contractual obligations in
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derogation of a putative First Amendment defense in light of all the relevant circumstances. See
Goldstein v. Chestnut Ridge Volunteer Fire Co., 218 F.3d 337, 342 (4th Cir. 2000) (citation
omitted); see also Blum v. Yaretsky, 457 U.S. 991, 1005 (1982) (“[T]he factual setting of each
case will be significant . . . .”).
In this case, enforcement of the Sandler-Duran Agreement would not amount to
governmental action. Although the Agreement restricts Duran’s publicity rights, Duran explicitly
assumed this obligation in the Agreement. Section 5 generally grants Sandler the rights to
Duran’s name, image, likeness, and life story. Section 5 specifies that “Duran expressly gives to
Sandler the rights to Duran’s life story and understands that Duran’s life story may be
documented in book, movie and/or television forms.” Doc. No. 7-6 § 5, at 3 (emphasis added).
Thus, the Agreement’s literal language compels the conclusion that Duran explicitly assumed the
obligation of releasing his movie rights Sandler. Furthermore, as assignees of Duran’s purported
movie rights, Plaintiffs stand in Duran’s shoes and have no greater rights than Duran possessed.
See James v. Goldberg, 261 A.2d 753, 757 (Md. 1970); accord In re Bogdan, 414 F.3d 507, 514
(4th Cir. 2005) (citations omitted). Accordingly, enforcing the Agreement would not implicate
Plaintiffs’ First Amendment rights.
Plaintiffs’ primary counterargument seems to be that court enforcement of private
agreements affecting a third party’s constitutional rights may constitute governmental action.
This principle, having been recognized since Shelly, is not in dispute. As spelled out above, the
real inquiry is whether Plaintiffs explicitly assumed the obligation whose judicial enforcement
they characterize as governmental action. Plaintiffs’ own allegations and documents impel the
inference that they did, and any contrary conclusion would lack facial plausibility.
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Plaintiffs also contend that the Agreement does not give Sandler Duran’s “exclusive”
movie rights. Therefore, Plaintiffs reason, Duran still had movie rights to transfer to Plaintiffs.
Essentially, then, Plaintiffs conclude that they have a cognizable First Amendment interest in
making their movie. This argument conflates the standards governing contract dispute claims
with those governing First Amendment claims. Viewing their allegations in the most favorable
light, the Court accepts that Plaintiffs have stated a facially plausible claim that Duran did not
assign all of his movie rights to Sandler. This conclusion, however, does not alter the Court’s
analysis of the First Amendment issue. The Cohen Court focused on whether the court action
created “obligations never explicitly assumed by the parties.” 501 U.S. at 668. Here, based on the
Agreement’s literal language, it is clear that Plaintiffs explicitly assumed the obligation to release
at least some of Duran’s movie rights. Therefore, one could not plausibly infer that enforcing the
Agreement, even if only to the extent of Sandler’s rights, would infringe Plaintiffs’ First
Amendment interests.2
It is somewhat unclear whether Plaintiffs are arguing that they have superior and/or
exclusive rights to make a movie about Duran because, allegedly, they purchased their purported
interest in the same without notice of the Sandler-Duran Agreement. The salient flaw in this
2
The Court’s reading of Cohen’s “obligations never explicitly assumed” reservation is consistent with
courts’ construction of the same. See, e.g., Yoder v. Univ. of Louisville, No. 12–5354, 2013 WL 1976515,
at *8 (6th Cir. May 15, 2013) (construing Cohen for the proposition that “a party’s voluntary promise to
keep information confidential constituted a valid waiver of its First Amendment rights, even in the
absence of an enforceable contract”); C.B.C. Distrib. & Mktg., Inc. v. Major League Baseball Advanced
Media, L.P., 505 F.3d 818, 820–21, 823 (8th Cir. 2007) (concluding that plaintiff did not explicitly
assume obligation of not infringing publicity rights because it did not license away any such rights);
United Egg Producers v. Standard Brands, Inc., 44 F.3d 940, 943 (11th Cir. 1995) (citing cases)
(“[W]here a court acts to enforce the right of a private party which is permitted but not compelled by law,
there is no state action for constitutional purposes in the absence of a finding that constitutionally
impermissible discrimination is involved.”); Tirpak, 2012 WL 1889157, at *3–5, *13 (preliminarily
enjoining party from violating non-disparagement provision of agreement that explicitly placed obligation
of non-disparagement on party); see also Dem. Nat’l Comm., 673 F.3d at 204 (suggesting that court
enforcement of consent decree between private parties does not constitute governmental action).
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argument is that this case does not involve the purchase of an interest in real property and,
therefore, the bona fide purchaser rule is inapplicable. See generally Md. Code Ann., Real Prop.
§ 3-203; see also Howard Chertkof & Co., Inc. v. Gimbel, 849 A.2d 1036, 1049 (Md. Ct. Spec.
App. 2004) (emphasis added) (“It is well settled that one who purchases real property without
notice of prior equities is protected as a bona fide purchaser for value.”). Rather, the applicable
rule is that “[a]n unqualified assignment . . . does not confer upon the assignee any greater right
than the right possessed by the assignor.” Goldberg, 261 A.2d at 757; see also Restatement
(Second) of Contracts § 342 (stating that “the right of an assignee is [generally] superior to that
of a subsequent assignee of the same right from the same assignor”). Therefore, the fact that
Duran purported to sell his movie rights to Plaintiffs after he did so to Sandler does not give
Plaintiffs a superior claim to those rights.3
For these reasons, this case does not implicate the First Amendment. Rather, the case
boils down to a contract dispute. Permitting Plaintiffs to convert this contract dispute into a First
Amendment case evokes the admonition that, if “every private right were transformed into
governmental action by the mere fact of court enforcement of it, the distinction between private
and governmental action would be obliterated.” Naoko Ohno v. Yuko Yasuma, 723 F.3d 984,
1000 (9th Cir. 2013) (citation and internal quotation marks omitted). Accordingly, the Court
dismisses Plaintiffs’ claim that enforcing the Agreement would violate their First Amendment
rights for want of governmental action.
B.
Res Judicata
Defendant argues that res judicata bars Plaintiffs’ claim that the Agreement does not stop
them from making the movie. Defendant asserts that the validity and enforceability of the
3
It does not appear that Plaintiffs are arguing that they are not successors-in-interest to Duran. Plaintiffs
could not make this argument in light of the Complaint and incorporated contracts, in which they
basically admit that they are purported successors-in-interest to Duran. See Doc. No. 1 ¶¶ 12–27.
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Agreement was determined in the 1996 –1997 state court lawsuit. Plaintiffs respond that
Defendant has not satisfied the elements of res judicata. Plaintiffs also make an undeveloped due
process argument.4
“Under Maryland law, claim preclusion has three elements: (1) the parties in the present
litigation are the same or in privity with the parties to the earlier litigation; (2) the claim
presented in the current action is identical to that determined or that which could have been
determined in prior litigation; and (3) there was a final judgment on the merits in the prior
litigation.” Jones v. HSBC Bank USA, N.A., 444 Fed. App’x 640, 643–44 (4th Cir. 2011)
(citation and internal quotation marks omitted).
Under Maryland law, not all claims raised in a subsequent suit that arise out of the same
transaction or series of transactions at issue in a prior suit are barred. See Rowland v. Harrison,
577 A.2d 51, 57 (Md. 1990). In Rowland, the Court of Appeals of Maryland held that “where the
same facts may be asserted as either a defense or a counterclaim, and the issue raised by the
defense is not litigated and determined so as to be precluded by collateral estoppel, the defendant
in the previous action is not barred by res judicata from subsequently maintaining an action on
the counterclaim.” Id. In reaching this conclusion, the Maryland Court of Appeals relied on, and
expressly adopted the test set forth in, section 22 of the Restatement (Second) of Judgments.
Section 22 has an exception to its general rule that res judicata does not bar the defendant in the
prior action from later suing on the counterclaim where the same facts could have been asserted
as either a defense or counterclaim in the prior action but were not. Pertinently, section 22(2)
states,
4
Federal courts “refer to the preclusion law of the State in which judgment was rendered” to determine its
preclusive effect. In re Genesys Data Techs., Inc., 204 F.3d 124, 127 (4th Cir. 2000) (citation and internal
quotation marks omitted). Here, the judgment was entered in Maryland.
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A defendant who may interpose a claim as a counterclaim in an action but fails to
do so is precluded . . . from maintaining an action on the claim if . . . [t]he
relationship between the counterclaim and the plaintiff’s claim is such that
successful prosecution of the second action would nullify the initial judgment or
would impair rights established in the initial action.
Rowland, 577 A.2d at 55 (quoting Restatement (Second) of Judgments § 22(2), (b)).
The Maryland Court of Appeals does not appear to have taken a liberal approach to its
construction of section 22(2)(b). For instance, although the Maryland Court of Appeals has held
in the foreclosure context that a plaintiff’s subsequent claim was res judicata, it reasoned that the
allegations in the second suit negated and contradicted an essential foundation of the foreclosure
judgment. See Fairfax Sav., F.S.B. v. Kris Jen Ltd. P’ship, 655 A.2d 1265, 1280 (Md. 1995); see
also Moore v. Nissan Motor Acceptance Corp., 831 A.2d 12, 17 (Md. 2003).
In this case, it is premature to resolve Defendant’s res judicata argument. Although
Defendant asserts that Duran, as predecessor-in-interest to Plaintiffs, could have asserted his
claims as defenses in the prior suit, neither Party discusses the applicability of Rowland.
Likewise, if Rowland applied, one would still have to consider the effect of section 22(b). One
cannot adequately do so because Defendant has adduced only a bare-bones default judgment and
purportedly corresponding complaint from the state court suit. Given this evidentiary gap, one
cannot sufficiently consider (1) whether Duran could have asserted the at-issue claims in the
prior proceeding and, if so, (2) whether reasserting them here would nullify the prior judgment.
For these reasons, the Court denies Defendant’s Motion to Dismiss as to its res judicata
argument. This disposition does not prejudice the right of Defendant to raise this argument on
summary judgment.
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C.
Whether the Agreement Validly Conveyed “Publicity Rights” to Defendant
1.
Choice of Law
“A federal court sitting in diversity must apply the choice-of-law rules from the forum
state.” Wells v. Liddy, 186 F.3d 505, 521 (4th Cir. 1999) (citing Klaxon Co. v. Stentor Elec. Mfg.
Co., 313 U.S. 487, 496–97 (1941)). Under Maryland law, it is “‘generally accepted that the
parties to a contract may agree as to the law which will govern their transaction, even as to issues
going to the validity of the contract.’” Nat’l Glass, Inc. v. J.C. Penney Props., Inc., 650 A.2d
246, 248 (Md. 1994) (quoting Kronovet v. Lipchin, 415 A.2d 1096, 1104 (Md. 1980)). In other
words, Maryland law recognizes “the ability of contracting parties to specify in their contract
that the laws of a particular state will apply in any dispute over the validity, construction, or
enforceability of the contract, and thereby trump the conflict of law rules that otherwise would be
applied.” Kunda v. C.R. Bard, Inc., 671 F.3d 464, 469 (4th Cir. 2011) (citation and internal
quotation marks omitted); see also Vanderhoof-Forschner v. McSweegan, Nos. 99-1615, 991616, 2000 WL 627644, at *2 n.3 (4th Cir. May 16, 2000) (citation omitted) (stating that courts
typically need not inquire into the validity of choice-of-law provisions where “the parties agree
that Maryland law governs their claims”).
In this case, the Sandler-Duran Agreement contains a choice-of-law clause requiring
“[a]ll disputes hereunder [to] be decided in accordance with the laws of the State of Maryland . .
. .” Doc. No. 7-6 § 19, at 7. Neither Party has disputed the validity or applicability of this
provision. Therefore, unless otherwise noted, the Court applies Maryland law to disputes
regarding the interpretation and enforceability of the Sandler-Duran Agreement.
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2.
Discussion
Defendant argues that the Sandler-Duran Agreement validly conveyed “publicity rights”
to him. Plaintiffs respond that Maryland has not recognized a right to publicity.
The Court sees the issues somewhat differently than as set forth by the Parties. The
Parties suggest that one must find a right of publicity (or a related right) at common law to
conclude that the Sandler-Duran Agreement prevents Plaintiffs from making Hands of Stone.
This suggestion stems from Section 5 of the Agreement, which generally gives Sandler the rights
to Duran’s name, image, likeness, and life story in a variety of media. However, concluding that
the Agreement validly gives Sandler Duran’s movie rights does not require the Court to
determine that the right to publicity, or a related right, exists at Maryland common law.
Generally speaking, private parties have the right to enter into contracts that create benefits or
burdens that do not exist in the decisional or positive law and allocate them among the parties
thereto as they see fit. See generally U.S. Const. art. I, § 10, cl. 1 (“No State shall . . . pass any . .
. Law impairing the Obligation of Contracts . . . .”); U.S. Const. amend. X (“The powers not
delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved
to . . . the people.”);5 42 U.S.C. § 1981 (“All persons . . . shall have the same right . . . to make
and enforce contracts . . . as is enjoyed by white citizens . . . .”); Ogden v. Saunders, 25 U.S. (12
Wheat.) 213, 346–47 (1827) (opinion of Trimble, J.) (“[I]ndividuals do not derive from
government their right to contract, but bring that right with them into society; that obligation is
not conferred on contracts by positive law, but is intrinsic, and is conferred by the act of the
parties.”). In other words, “[u]nder the principles of freedom of contract, parties have a broad
right to construct the terms of contracts they enter into as they wish, providing the contract is
5
It is unsettled whether private individuals have standing to assert Tenth Amendment claims. Kennedy v.
Allera, 612 F.3d 261, 269–70 & n.3 (4th Cir. 2010) (collecting cases).
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neither illegal nor contrary to public policy.” Willard Packaging Co., Inc. v. Javier, 899 A.2d
940, 947 (Md. Ct. Spec. App. 2006); see also Lake James Cmty. Volunteer Fire Dep’t, Inc. v.
Burke County, N.C., 149 F.3d 277, 280 (4th Cir. 1998) (citations omitted); Wolf v. Ford, 644
A.2d 522, 525 (Md. 1994) (citation omitted); Md.-Nat’l Capital Park and Planning Comm’n v.
Wash. Nat’l Arena, 386 A.2d 1216, 1229 (Md. 1978).
The fact that a contract creates rights and/or obligations that the common law has yet to
recognize does not render it illegal or contrary to public policy. Were this rule to govern, it
would unleash socioeconomic upheaval considering the centrality of contracts to modern life and
the seemingly infinite number of rights and/or obligations that parties could create through them.
Besides, Maryland has recognized the tort of misappropriation, which makes actionable the
unlawful appropriation of “a person’s name or likeness.” Lawrence v. A.S. Abell Co., 475 A.2d
448, 451 (Md. 1984) (citation omitted); see also Household Fin. Corp. v. Bridge, 250 A.2d 878,
882–83 (Md. 1969).
In view of this authority, the question is not whether the Agreement could convey
publicity rights in the absence of a common law cause of action for the same. Rather, assuming
the Agreement is otherwise valid, the question is whether the Court’s enforcement of the rights
and burdens that it creates and allocates between the parties would be illegal or contrary to public
policy. Other than the idea that the Agreement violates the First Amendment, Plaintiffs present
no such argument. Nor does it appear that such an argument would hold water. Therefore,
although Maryland recognizes the tort of misappropriation, the Court need not consider whether
the infringement of “publicity rights” is actionable under Maryland common law. In short, this is
primarily a contract rights’ case.
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D.
Whether the Agreement Gave Defendant “Exclusive” Movie Rights
Plaintiffs argue that the movie rights that the Agreement gives Defendant are
nonexclusive. Plaintiffs base this argument on, in their view, the plain language of the
Agreement. The first sentence of Section 5 generally grants Defendant “the exclusive right” to
use Duran’s name, image, and likeness for any purpose. Doc. No. 7-6 § 5, at 2–3. By contrast,
the third sentence of Section 5 gives Defendant “the rights” to Duran’s life story. Id. According
to Plaintiffs, the fact that the word “exclusive” qualifies Duran’s right to Defendant’s name,
image, and likeness but not the right to Duran’s life story shows that Duran did not intend to give
Defendant exclusive rights to his life story. Defendant responds that the grant of Duran’s name,
image, and likeness subsumes his life story. Defendant also notes that the Agreement contains a
noncompete clause prohibiting Duran from entering into any competing agreements without
Defendant’s approval. Defendant concludes that the noncompete clause shows that the parties
meant to grant Defendant exclusive rights to Duran’s life story.
The ordinary principles of contractual interpretation in Maryland are well-established.
The Court of Appeals of Maryland has “long adhered to the objective theory of contract
interpretation.” Myers v. Kayhoe, 892 A.2d 520, 526 (Md. 2006) (citing Traylor v. Grafton, 332
A.2d 651, 675 (1975)). “‘A court construing an agreement under [the objective theory] must first
determine from the language of the agreement itself what a reasonable person in the position of
the parties would have meant at the time it was effectuated.’” Id. (quoting Dennis v. Fire &
Police Emps. Ret. Sys., 890 A.2d 737, 747 (2006)). “‘[W]hen the language of the contract is
plain and unambiguous there is no room for construction, and a court must presume that the
parties meant what they expressed.’” Id. (quoting Dennis, 890 A.2d at 747). In other words, “[a]
court will presume that the parties meant what they stated in an unambiguous contract, without
15
regard to what the parties to the contract personally thought it meant or intended it to mean.”
Maslow v. Vanguri, 896 A.2d 408, 420 (Md. Ct. Spec. App. 2006) (citations omitted).
“‘Only when the language of the contract is ambiguous will [courts] look to extraneous
sources for the contract’s meaning.’” Ubom v. Suntrust Bank, 17 A.3d 168, 173 (Md. Ct. Spec.
App. 2011) (citation and internal quotation marks omitted). “Ambiguity will be found if, to a
reasonable person, the language used is susceptible to more than one meaning, or it is of a
doubtful meaning.” Id. (citation omitted). “To determine whether a contract is susceptible to
more than one meaning, the court considers ‘the character of the contract, its purpose, and the
facts and circumstances of the parties at the time of the execution.’” Id. (quoting Phoenix Servs.
Ltd. P’ship v. Johns Hopkins Hosp., 892 A.2d 1185, 1223 (Md. 2006)).
In this case, although Defendant’s arguments are not without force, the Court believes
that the Agreement is facially ambiguous. Given the breadth of Section 5, a reasonable person
could conclude that Duran intended to transfer his movie rights to Defendant exclusively. On its
face, the language name, image, and likeness could subsume someone’s life story because
depicting someone’s life story presumably entails using the person’s name, image, and/or
likeness. Furthermore, Section 5 states that “Duran will cooperate with Sandler to create Duran’s
life story,” and the Agreement contains a noncompete clause precluding Duran from entering
into competing agreements without Sandler’s prior approval. These terms may suggest that
Duran did not envision anyone else creating his life story. Arguably, then, it would have made
little sense for the parties to grant Defendant just some of the rights to Duran’s life story.
Nonetheless, one could plausibly infer that the language name, image, and likeness does
not encompass Duran’s life story. For instance, one could conceivably argue that concluding that
Duran gave Sandler exclusive rights to his life story would render the word “exclusive”
16
superfluous. Cf. State Highway Admin. v. David Bramble, Inc., 717 A.2d 943, 948 (Md. 1998)
(citation omitted) (“[T]his Court will ordinarily avoid interpreting contracts in a way that renders
its provisions superfluous . . . .”). Furthermore, expounding Texas law, the Fifth Circuit has held
that “[t]he protection of name or likeness . . . does not include a person’s life story.” Matthews v.
Wozencraft, 15 F.3d 432, 437 (5th Cir. 1994) (internal quotation marks omitted). And, while the
Agreement contains other terms (e.g., the noncompete clause) that may compel a contrary
conclusion, the Parties have not adequately briefed the significance of these terms.
The Agreement’s facial ambiguity empowers the Court to look to external sources for
clues as to its meaning. However, the Court is ruling on a Motion to Dismiss, and the Parties
have yet to submit any such evidence. Therefore, construing Plaintiffs’ Complaint in the most
favorable light, Plaintiffs deserve the benefit of discovery regarding whether Duran gave Sandler
exclusive rights to his life story.
E.
Whether the Agreement Is Unconscionable
Plaintiffs plead that the Agreement is unconscionable. This argument begins with two
terms of the Agreement. Section 15 provides that Sandler may terminate the Agreement and
retain all rights under it if Duran breaches it. Doc. No. 7-6 § 15, at 6. For its part, Section 13
provides that the agreement runs for successive five-year terms unless Sandler gives Duran
notice of termination. Id. § 13, at 6. Based on these provisions, as well as the state court
judgment against Duran, Defendant asserts that he still has exclusive rights to Duran’s life story.
Plaintiffs maintain that “[i]t would misread the Agreement, and lead to an unconscionable . . .
result to construe the Agreement to permit Sandler to enjoy an exclusive right to the Duran’s life
story – even for projects not undertaken for 18 years after termination of the Agreement – in
perpetuity.” Doc. No. 10 at 28. Although Defendant argued that the Agreement is not
17
unconscionable in his Motion to Dismiss, Plaintiffs advance no further arguments for their
contention that the Agreement is unconscionable.
The Court disagrees that the Agreement is unconscionable. Plaintiffs do not respond to
Defendant’s arguments that the Agreement is not unconscionable. Plaintiffs neither cite authority
to oppose this argument nor argue from fact. These oversights, in effect, amount to a concession
that the Agreement is not unconscionable. See Hawkins v. Leggett, --- F. Supp. 2d ----, Civil
Action No. 12–cv–00623 AW, 2013 WL 3218964, at *25 n.3 (D. Md. June 24, 2013) (citation
omitted); Ferdinand–Davenport v. Children’s Guild, 742 F. Supp. 2d 772, 777 (D. Md. 2010)
(citation omitted). Furthermore, even were the Court to reach the merits of the question, it would
conclude as a matter of law that the Agreement is not unconscionable. Under Maryland law,
“[a]n unconscionable contract involves extreme unfairness, made evident by (1) one party’s lack
of meaningful choice, and (2) contractual terms that unreasonably favor the other party.” Barrie
Sch. v. Patch, 933 A.2d 382, 394 (Md. 2007) (citation and internal quotation marks omitted).
Here, the Complaint and incorporated contracts leave no indicia of “extreme unfairness” in the
Agreement. Defendant asserts, and Plaintiffs have yet to dispute, that Defendant paid Duran at
least $60,000 in connection with the Agreement. Moreover, the Agreement requires Defendant to
engage in revenue-generating activities as Duran’s manager. See Doc. No. 7-6 § 4, at 2.
Additionally, given the nature of the Agreement and Duran’s status as a famous boxer, it defies
good sense to infer that he lacked a meaningful choice in terms of whether to enter into the
Agreement. Accordingly, as a matter of law, the Agreement is not unconscionable.6
6
Plaintiff pleads that the Agreement is an illegal contract of adhesion. The Court’s determination that the
Agreement is not unconscionable forecloses the possibility that the Agreement could be an unenforceable
contract of adhesion. See Patch, 933 A.2d at 394 (citation omitted) (noting that a contract of adhesion is
unenforceable only if it is unconscionable).
18
F.
Void for Vagueness
Plaintiffs also plead that the Agreement is void for vagueness. The Court disagrees with
this argument as well. Plaintiffs do not respond to Defendant’s dispositive arguments against this
claim. Therefore, as with their unconscionability claim, Plaintiffs have essentially acknowledged
that his claim is not viable. See Part III.E, supra. Furthermore, the Court rejects this claim on the
merits. Under Maryland law, courts generally declare a contract void for vagueness only where it
is “unintelligible or insensible.” See Coe v. Hays, 614 A.2d 576, 580 (Md. 1992) (citation and
internal quotation marks omitted). This does not occur where, as here, the agreement’s “meaning
. . . can be ascertained, either from the express terms of the instrument or by fair implication.” Id.
(citation and internal quotation marks omitted). Accordingly, the Court concludes as a matter of
law that the Agreement is not void for vagueness.
G.
Preliminary and Permanent Injunctive Relief
Defendant seeks the dismissal of Count II of Plaintiffs’ Complaint, through which
Plaintiffs seek preliminary and permanent injunctive relief. The Court dismisses Count II for the
following reasons.
“[I]njunctive relief [i]s an extraordinary remedy that may only be awarded upon a clear
showing that the plaintiff is entitled to such relief.” Winter v. Natural Res. Def. Council, Inc.,
555 U.S. 7, 22 (2008) (citing Mazurek v. Armstrong, 520 U.S. 968 (1997) (per curiam)).
Accordingly, a plaintiff must establish each the following four factors to obtain a preliminary
injunction: “(1) that he is likely to succeed on the merits, (2) that he is likely to suffer irreparable
harm in the absence of preliminary relief, (3) that the balance of equities tips in his favor, and (4)
that an injunction is in the public interest.” Real Truth About Obama, Inc. v. Fed. Election
Comm’n, 575 F.3d 342, 346 (4th Cir. 2009) (quoting Winter, 555 U.S. at 20), vacated on other
grounds, 130 S. Ct. 2371 (2010).
19
In this case, one could not plausibly infer the satisfaction of the first or second elements
of this test. As for element (1), Plaintiffs have not shown a likelihood of success on the merits.
The Court has dismissed the vast bulk of Plaintiffs’ claims, including their key First Amendment
claim. Furthermore, although the Parties did not brief this question, it is conceivable that
Plaintiffs, as successors-in-interest to Duran, waived their right to pursue a First Amendment
claim by executing the Agreement. Cf. Snepp v. U.S., 444 U.S. 507, 510 n.3 (1980) (holding that
party waived First Amendment rights by voluntarily signing agreement requiring him to obtain
preclearance before publishing certain information about the CIA); Curtis Publ’n Co. v. Butts,
388 U.S. 130, 145 (1967) (stating that waivers of First Amendment rights must be “clear and
compelling”); Johnson v. Zerbst, 304 U.S. 458, 464 (1938) (“A waiver is ordinarily an
intentional relinquishment or abandonment of a known right or privilege.”); Tirpak, 2012 WL
1889157, at *10–12 (assuming arguendo party had First Amendment right and holding that party
waived it by executing agreement explicitly placing on party obligation of non-disparagement).7
Additionally, although the Court left Plaintiffs’ contract dispute claim in the suit, the Court noted
that Defendant’s arguments thereagainst did not lack force. Thus, Plaintiffs have not shown a
likelihood of success on the merits.
Even if Plaintiffs could show a likelihood of success on the merits, one could not
plausibly infer that Plaintiffs would be likely to suffer irreparable harm in the absence of
preliminary injunctive relief. Although this is a declaratory judgment action, the thrust of
Plaintiffs’ Complaint is that they will incur economic harm if Defendant asserts his rights under
the Agreement. For instance, Plaintiffs allege as follows: (1) the amount in controversy exceeds
$ 75,000; (2) certain Plaintiffs paid hundreds of thousands of dollars for the rights to make a
7
If the case proceeds to summary judgment, the Court will entertain argument on whether Plaintiffs, as
purported successors-in-interest to Duran, waived the right to pursue a First Amendment claim by signing
the Sandler-Duran Agreement.
20
movie about Duran; and (3) Plaintiffs have incurred “millions of dollars in production costs.” See
Doc. No. 1 ¶¶ 7, 26, 28, 47. Where, as here, “the harm suffered by the moving party may be
compensated by an award of money damages at judgment, courts generally have refused to find
that harm irreparable.” Hughes Network Sys., Inc. v. InterDigital Commc’ns Corp., 17 F.3d 691,
694 (4th Cir. 1994) (citations omitted); see also Monsanto Co. v. Geertson Seed Farms, 130 S.
Ct. 2743, 2748 (2010) (emphasis added) (stating that irreparable harm is present only where
“remedies available at law, such as monetary damages, are inadequate to compensate for that
injury”); Wis. Gas Co. v. FERC, 758 F.2d 669, 674 (D.C. Cir. 1985) (citation omitted)
(“Recoverable monetary loss may constitute irreparable harm only where the loss threatens the
very existence of the movant’s business.”). Plaintiffs’ allegations do not support a plausible
inference that they will lose their livelihood in the absence of preliminary injunctive relief.
Indeed, in responding to Defendant’s argument that Plaintiffs have inadequately pleaded
irreparable harm, Plaintiffs assert only that the “deprivation of a First Amendment right
constitutes irreparable harm.” Doc. No. 10 at 34 (citation and internal quotation marks omitted).
Although this is a correct legal statement, Legend Night Club v. Miller, 637 F.3d 291, 302 (4th
Cir. 2011), the Court has dismissed Plaintiffs’ First Amendment claim. Accordingly, Plaintiffs
have not sufficiently stated a claim under prong two.8
Nor have Plaintiffs stated a cognizable claim for permanent injunctive relief. If Plaintiffs
cannot state a claim for preliminary injunctive relief, it follows a fortiori that they cannot state a
claim for permanent injunctive relief.9
8
As plaintiffs must establish each of the four foregoing factors to obtain a preliminary injunction, the
Court need not consider the third and fourth elements.
9
Plaintiffs seek a declaration that Defendant would not be able to state a claim for tortious interference
with contract. The Court has reviewed the Parties’ pleadings and memoranda carefully and concludes that
it is plausible that Defendant could state a claim against one or more Plaintiffs for tortious interference
with the Sandler-Duran Agreement. See generally Hugh v. E Tech Holdings, Inc., Civil Action No. 8:13–
21
IV.
CONCLUSION
In light of the preceding considerations, the Court GRANTS IN PART AND DENIES
IN PART Defendant’s Motion to Dismiss. A separate Order memorializing the Court’s rulings
follows. The Court will issue a Scheduling Order.
September 26, 2013
Date
/s/
Alexander Williams, Jr.
United States District Judge
cv–01197–AW, 2013 WL 4543402, at *2 (D. Md. Aug. 26, 2013) (citations omitted) (discussing the
elements for intentional interference with contract).
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