oO RULING Rebel Entertainment Partners, Inc. v. Big Ticket Television, Inc., et al. BC613594 April 3, 2018 Motion of Defendants Big Ticket Television, Inc., CBS Studios, Inc., and CBS Corporation for Summary Adjudication Procedural Issues Defendants’ Improper Lodging of Documents under Seal. Defendants lodged under seal unredacted versions of (1) the Memorandum of Points and Authorities in Support of Defendants’ Motion for Summary Adjudication; (2) Separate Statement of Undisputed Material Facts in Support of Defendants’ Motion for Summary Adjudication; and (3) Compendium of Evidence in Support of Defendants’ Motion for Summary Adjudication, specifically portions of Exhibit K and Exhibit L. Defendants did not file and there is no motion to seal on calendar. California law authorizes the sealing of court records containing confidential information. See NBC Subsidiary, Inc. v. Superior Court (1999) 20 Cal.4th 1178, 1222, n. 46. California Rules of Court (“CRC”) Rule 2.551(a) provides that a record may not be filed under seal without a court order and the court must not permit a record to be filed under seal based solely on the agreement or stipulation of the parties. The party requesting a record be filed under seal must file a motion or an application for an order sealing the record that is accompanied by a memorandum or declaration containing facts to justify the sealing. CRC Rule 2.551(b)(1). “The court may order that a record be filed under seal” if it finds that there is an overriding interest in favor of maintaining the confidentiality of the information. CRC Rule 2.550(d). Because Defendants did not file a motion to seal, there is no basis for the Court to seal the documents filed in support of the motion for summary adjudication. Those documents are ordered immediately unsealed. See CRC 2.550 and 2.551; Mercury Interactive Corp. v. Klein (2007) 158 Cal.App 4th 60, 100 (the presumption of access applies when a party attaches a sealed discovery document to a dispositive motion). The parties are ordered to not file or lodge any further documents under seal absent a Court order. Further non-compliance may result in senetions, Defendants’ Reliance on Fi ited in Separate Statement. Defendants cite to and rely on facts that are submitted in support of the motion, such as in supporting declarations, but are not, included in the separate statement. See CCP § 437c(b)(1) (“The supporting papers shall include a separate statement setting forth plainly and concisely all material facts that the moving party contends are undisputed, Each of the material facts stated shall be followed by a reference to the supporting evidence. The failure to comply with this requirement of a separate statement may in the court's discretion constitute a sufficient ground for denying the motion."). See United *> Community Church v, Garcin (1991) 231 Cal.App.3d 327, 337 (the “Golden Rule” of summary © judgment motions is that evidence not set forth in the separate statement is treated as if does not © exist). ‘The “absolute prohibition on consideration of nonreferenced evidence is unsupported by the statute” because the statute is permissive, not mandatory, and leaves in the trial court's discretion whether to consider evidence not referenced in the moving party's separate statement.See San Diego Watercrafis, Inc. v. Wells Fargo Bank, N.A. (2002) 102 Cal.App.4th 308, 311, 315-16; King v, United Parcel Service, Inc. (2007) 152 Cal. App.4th 426, 438 (the separate statement is provided “to expedite and clarify the germane facts” and it is not an abuse of discretion to consider evidence which the opposing party is well aware of and had ample opportunity to refute) Although Plaintiff generally objects to Defendants’ citations to declarations and exhibits not incorporated into the separate statement, Plaintiff was well aware of and had full opportunity to refute such evidence. Therefore, the Court has considered Defendants’ briefing. CCP § 437e(F)(1). “A motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty.” CCP § 437e(6)(1), Plaintiff contends that the motion does not completely dispose of the First and Second Causes of ‘Action because it does not address the allegations that Defendants engaged in improper self- dealing to license Judge Judy at below-market rates. However, a motion for summary adjudication can challenge separate and distinct wrongful acts combined with other wrongful acts within the same cause of action, such as multiple and separate breaches stated in a single breach of contract cause of action, Lilienthal & Fowler v. Superior Court (1993) 12 Cal. App.4th 1848, 1854-55; see also CDF Firefighters v. Maldonado (2011) 200 Cal.App.4th 158, 165, (separate breaches of the same contract are regarded as separate causes of action); Dominguez v, Washington Mutual Bank (2008) 168 Cal. App.4th 714, 727 (when separate causes of action are ‘commingled into one the trial court can grant summary adjudication on the individual claims). Therefore, Defendants’ motion for summary adjudication is properly presented. Evidentiary Objections. Plaintiff's objections! to the Declarations of Pete Ely and Todd P. Leavitt are overruled. Defendants’ Objections to the Declarations of Richard Lawrence, Alan Perris and Sabrina K. Robinson are overruled. The Court does not rule on Plaintiff's objection to the declaration of Todd P. Leavitt submitted with Defendant's reply brief. CCP §437¢(q) Judicial Notice. Defendants’ request for judicial notice is granted as to the existence of the document, North Beverly Park Homeowners Assn. v. Bisno (2007) 147 Cal.App.4th 762, 778 (a court may take judicial notice of the existence of a public record, but not the hearsay statements contained in it unless an independent hearsay exception applies to those statements) ‘The motion is granted as to the issue whether Defendants breached the Agency Agreement or the implied covenant of good faith and faith dealing by (1) the deduction of Judge Scheindlin’s salary as a “Cost of Production” and (2) Defendants negotiation of Judge Scheindlin’s salary. The motion is denied as to the issue of whether Hot Bench is a spin-off, remake, sequel, or episodic television series based upon or derived from Judge Judy pursuant to the parties’ agreement and therefore triggers any purported obligation to discuss a “packaging fee” in good faith and whether Plaintiff has suffered " Plaintif’s “objections” submitted in its Separate Statement to citation of language from portions ofthe contracts as an undisputed fact fails o comply with California Rules of Court Rule 3.1354. Nevertheless, the Court has considered those objections 2cognizable damages as a result of the alleged breach to discuss a “packaging fee” for Hot Benck in good faith. ‘The function of a motion for summary judgment or adjudication is to allow a determination as to ‘whether an opposing party cannot show evidentiary support for a pleading or claim and to enable an order of summary dismissal without the need for trial. Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843. In analyzing such motions, courts must apply a three-step analysis: (1) identify the issues framed by the pleadings; (2) determine whether the moving party has negated the opponent's claims; and (3) determine whether the opposition has demonstrated the existence of a triable, material factual issue.” Hinesley v. Oakshade Town Center (2005) 135 Cal.App-4th 289, 294. Thus, summary judgment or summary adjudication is granted when, after the Court's consideration of the evidence set forth in the papers and all reasonable inferences accordingly, no triable issues of fact exist and the moving party is entitled to judgment as a matter of law. CCP § 437¢(c); Villa v. McFarren (1995) 35 Cal.App.4th 733, 741. ‘As to each claim as framed by the complaint, the defendant moving for summary judgment or summary adjudication must satisfy the initial burden of proof by presenting facts to negate an essential element, or to establish a defense. Scalf v, D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1520. Courts “liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.” Dore v. Amold Worldwide, Inc. (2006) 39 Cal.4th 384, 389. A motion for summary judgment or summary adjudication must be denied where the moving party's evidence does not prove all ‘material facts, even in the absence of any opposition Leyva v. Sup. Ct. (1985) 164 Cal. App.3d 462, 475) or where the opposition is weak. Salesguevara v. Wyeth Labs., Inc. (1990) 222 Cal.App.3d 379, 384, 387. A defendant has met its burden of showing that a cause of action has no merit if it demonstrates the absence of any single essential element of plaintif's case or a complete defense to plaintif?'s action. CCP § 437c(0)(2); Bacon v. Southern Cal. Edison Co. (1997) 53 Cal.App 4th 854, 858. Once the defendant moving party has met the burden, the burden shifts to the plaintiff to show via specific facts that a triable issue of material facts exists as to a cause of action or a defense thereto. CCP § 437e(0)(2). Where a plaintiff cannot establish an essential element of a cause of action, or where a complete defense is shown, a court must grant a motion for summary adjudication. CCP § 437c(0)(1)-(2). A defendant meets its burden by showing that “one or more elements of a cause of action... . cannot be established.” Id.; Aguilar v, Atlantic Richfield Co. (2001) 25 Cal.4th 826, 853. First Cause of Action for Breach of Contract and Second Cause of Action for Breach of the Implied Covenant of Good Faith and Fair Dealing. Accause of action for damages for breach of contract is comprised of the following elements: (1) the contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting damages to plaintiff.” Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1367.“The covenant of good faith and fair dealing, implied by law in every contract, exists merely to prevent one contracting party from unfairly frustrating the other party's right to receive the benefits of the agreement actually made.” Guz v. Bechtel Nat. Inc, (2000) 24 Cal. 317, 349 (emphasis removed from original). “The covenant thus cannot be endowed with an existence independent of its contractual underpinnings.” Id. “It cannot impose substantive duties or limits ‘on the contracting parties beyond those incorporated in the specific terms of their agreement.” Id, at 349-50. “Because the covenant is a contract term, however, compensation for its breach has almost always been limited to contract rather than tort remedies.” Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 684. “A cause of action for a breach of the implied contractual covenant of good faith and fair dealing cannot be stated in the absence of a valid contract to which the covenant appertains.” Pacific States Enterprises, Inc. v. City of Coachella (1993) 13 Cal.App.4th 1414, 1425, Issue 1 (as to First and Second Causes of Action): Whether Defendants breached the ‘Agency Agreement or the implied covenant ith and faith dealing by (1) the deduction of Judge Scheindlin’s salary as a “Cost of Production” and (2) Defendants? negotiation of Judge Scheindlin’s salary. Defendants are entitled to summary adjudication of the issue whether Defendants breached the Agency Agreement by the deduction of Judge Scheindlin’s salary as a “Cost of Production” and whether Defendants breached the agreement in their negotiation of Judge Scheindlin’s salary. ‘The Participation is a sum equal to 5% of 100% of the “Defined Proceeds” derived from exploitation of Judge Judy and “any and all elements thereto from-all sources (including ancillary and subsidiary uses) in all media...” DUMF Nos. 6-7 (DCE) Exh. F $] 2, 2.1, 2.2) “Defined Proceeds” are “the excess, if any of ‘Gross Receipts’ over the total of the ‘Distribution Fees,’ the ‘Distribution Expenses,’ and the ‘Cost of Production in such order.” DUMF Nos. 9-10 (DCE Exh. K 42 and Exh “I” thereto at 4 1(A)). At issue here are the Cost of Production, specifically Judge Sheindlin’s salary, and Big Ticket’s deduction of such salary in the Participation calculation, “Costs of Production” are defined as “‘all direct out-of pocket costs made or incurred by [Big Ticket), in good faith, on a reasonable basis, and consistent in the United States television industry, for or in connection with the Episodes of (Judge Judy] (including any and all pilot and development costs) and including all amounts incurred in connection with the production thereof calculated according to the standard accounting practices now or hereafter employed by [Big, Ticket) on a reasonable basis and consistent with the customary practice in the United States television industry.” DUMF No, 14 (DCE Exh. K 2 and Exh “I” thereto at { I(E) (emphasis @ added). The payments include, but are not limited to, “production f , materials, == equipment, and personnel...; advertising and publicity...; third party legal, accounting, and 2 auditing charges; insurance premiums (or an equivalent charge, if and to the extent that [Big £5. Ticket] elects to self-insure) for cast, negative, errors, and omissions and extra expense insurance © and any other insurance customarily included in production costs in the United States television ‘% industry; all personal property and other direct taxes; amounts paid or payable for services or performers, writers, directors, producers, and all other ‘above-the-line personnel...Id (emphasis added). Thus, itis undisputed that salaries for performers, including Judge3 Scheindlin’s salary, are a “Cost of Production” that can be deducted in the calculation of the Participation. Plaintiff does not present any evidence to controvert this fact. Defendants have also established that such salary is being paid “in good faith, on a reasonable basis, and consistent in the United States television industry.” There is no evidence presented that Judge Sheindlin’s salary was negotiated in bad faith or is unreasonable.? Judge Sheindlin has re-negotiated her agreements to star in Judge Judy during the show’s airing. Pottash Decl. {¥ 3-4; DCE Exhs. A (Compl. 27) and B (Sheindlin Dep. 17:20-21:17). Her present salary was the result of arms-length negotiation and Judge Sheindlin’s final “take-it-or-leave-it offer.” DCE. Exhs. A (Compl. 4 27-38) and B (Sheindlin Dep. 17:20-21:17). That Judge Scheindlin is paid ‘more than other television hosts does not establish her salary is unreasonable or that Defendants’ negotiated the salary in bad faith, At the time CBS Television announced during Season 12, ‘which aired from 2007 through 2008, that Judge Scheindlin signed a new multiyear contract to ‘continue on Judge Judy through 2012, Judge Judy was the top-rated half-hour syndicated court television show since its premiere and was the only first-run syndicated television show that season to increase its ratings year-to-year. Potash Decl. { 3; Ely Decl. 15; DCE Exh. A (Compl. $27). At the time CBS Television announced during Season 19, which aired from 2014 through 2015, that an agreement was reached to extend Judge Sheindlin’s contract for Judge Judy through 2020, Judge Judy was the highest-rated first-run syndication show for five years and the highest-rated court show for 969 consecutive weeks with an average of 10.3 million viewers. Pottash Decl. § 4; Ely Decl. 22. Plaintiff has presented no evidence that the salary ‘was negotiated in bad faith or is unreasonable in light of the undisputed “resounding success” of Judge Judy and the fact that without its namesake star the show could not continue, Issue 2 (as to First Cause of Action): Whether Hor Bench is a spin-off, remake, sequel, or episodic television series based upon or derived from Judge Judy pursuant to the ies’ agreement and therefore triggers any purported obligation to discuss a “packagii fee” in good faith and whether Plaintiff has suffered cognizable damages as a result of 1¢ alleged breach to discuss a “packaging fee” for Hot Bench in ith, ‘The Agency Agreement provides that “[aJny spin-off, remake, sequel or episodic television series based on or derived from [Judge Judy] shall be discussed in good faith with respect to an ‘ARL packaging fee.” DUMF No. 16. California recognizes a cause of action for breach of an agreement to negotiate in good faith. See Copeland v. Baskin Robbins U.S.A. (2002) 96 Cal. App th 1251, 1253-55. The contract to negotiate is distinguished from the ultimate agreement the parties hope to reach. “If, despite their good faith efforts the parties fail to reach. ultimate agreement on the terms in issue the contract to negotiate is deemed performed and the parties are discharged from their obligations” as the failure to agree “is not itself a breach of the contract to negotiate.” Id. at 1257. The parties are not committed to the ultimate contractual objective but to the obligation to negotiate the open issues in good faith in an attermpt to reach the objective within the agreed upon framework. See Teacher Ins. and Annuity Ass'n of America v. Tribune Co, (S.D.N.Y. 1987) 670 F.Supp. 491, 498 (this obligation does not guarantee the final ‘contract would be reached if the parties comported themselves with good faith “as good faith differences in the negotiation of the open issues may prevent a reaching of the final contract”). * Plaintiff is unclear as to what benefit Defendants would gain from paying Judge Scheindlin an inflated salary. Even if they avoid payment ofthe Partiipation, Defendants stil have to pay the inflated salary. 5‘The Court cannot conclude as a matter of law that Hot Bench is not an “episodic television series” which is “based upon or derived from’ Judge Judy. Defendants argue that Plaintiff's ‘opposition raises for the first time the theory that Hor Bench is “derived from” Judge Judy when the Complaint is limited to whether Hot Bench is a spin-off. However, the Complaint alleges at several points and makes reference to the allegation that Hor Bench is “based upon or derived from” Judge Judy. See Compl. $f 6 (“Defendants are required to discuss in good faith with [Plaintiff] a packaging fee for any ‘spin-off, remake, sequel or episodic television series derived ‘from (Judge Judy].”), 22 (“Among other things, the Agreement provides in relevant part:...‘Any spin-off, remake, sequel, or episodic television series based upon or derived from [Judge Judy] shall be discussed in good faith with respect to af} [Plaintiff] packaging fee.”), 35 (“The ‘Agreement further provides: Any spin-off, remake, sequel, or episodic television series based ‘upon or derived from [Judge Judy] shall be discussed in good faith with respect to a [Plaintiff] packaging fee.”) (emphasis added), The Complaint clearly apprises Defendants that Plaintiff is alleging that Defendants breached the provision of the Agency Agreement requiring a good faith discussion with respect to a packaging fee for “[alny spin-off, remake, sequel, or episodic television series based upon or derived from Judge Judy].” The allegations of the Complaint are not limited to “spin-offs.” Defendants contend that Plaintiff's definition of “derived from” deviates from the custom and practice of the industry and is so broad as to be render it meaningless, and that under the proper definition of “derived from” there is no such relationship between Hot Bench and Judge Judy. Leavitt Reply Decl. $f] 5-22. Defendants state Hot Bench is a first-run syndication television program created by Judge Sheindlin. DUMF No. 17. Defendants state that unlike other courtroom shows, Hor Bench features a three-judge panel presiding over small claims cases and makes viewers privy to the panel’s in-chambers deliberations as they attempt to reach a majority decision on each case. Leavitt Decl. ¥ 14. Defendants state that the original judges for Hot Bench were Patricia DiMango, Tanya Acker, and Larry Bakman and that in November 2016 Michael Corriero replaced Judge Bakman, DUMF Nos. 18-19. Defendants state that none of the judges on Hor Bench have appeared on Judge Judy and that Hot Bench’s courtroom bailiff is ‘Sonia Montejano, who has never appeared on Judge Judy. DUMF Nos. 20-22. However, Plaintiff presents evidence that in the custom and usage of the television industry, an episodic television series is “derived from” another television series when key creative talent, such as a producer, director, or on-screen talent, with the original series are involved with the production of the subsequent series and the subsequent series is of the same genre as the original series. PAMF No. 12; Perzis Decl. § 10. Plaintiff presents evidence that Hot Bench is an “episodic television series” in that it airs in individual half-hour episodes focusing on specific disputes and is currently in its third season of original first-run syndicated programming. PAMF No. 15; Perris Decl. 13. Plaintiff presents evidence that Hot Bench involves the same creative talent behind Judge Judy in that Judy Sheindlin is the Creator of Hot Bench and is prominently given that credit on-screen: “Created by Judge Judy Scheindlin,” which, Plaintiff argues, demonstrates that Hor Bench is derived from Judge Judy because Judy Scheindlin is credited as “Judge Judy Scheindlin” which is the same credit she receives on Judge Judy; such credit serves to link the two shows, Plaintiff argues, as itis featured at the beginning of Hot Bench rather than uring the end credits that air quickly and are in small print. PAMF No. 15; Perris Decl. $13.Plaintiff presents evidence that (1) Judy Scheindlin is the on-screen talent from Judge Judy as every episode features her as the television judge; (2) Randy Douthit, the executive director and executive producer for Judge Judy, was the original executive producer of Hot Bench; and (3) ‘Maureen Fitzpatrick, who was responsible for the development of Judge Judy as Executive Vice President of programming and development at CBS Television, was an original executive producer for Hot Bench. PAMF No. 15; Perris Decl. § 13. Plaintiff also presents evidence that Judge Scheindlini appeared “in character” as “Judge Judith Scheindlin” on an episode of Hor Bench which aired during early November 2016, in which she chaired a three-person panel of “judges” that “presided over” a dispute; Judge Scheindlin participated in the deliberation with the other “judges” on her panel and delivered the panel's decision. PAMF No. 17; Perris Decl. $15. Plaintiff presents evidence that this appearance was promoted on other media, such as Entertainment Tonight, and the fact that Judge Scheindlin has not appeared on another Courtroom Program “in character” and was prominently featured reflects that Hot Bench is derived from Judge Judy. PAMF No. 17; Perris Decl. 15. Plaintiff states that a June 6, 2013 email correspondence shows that “Hot Bench” was the original working title for Judge Judy; a July 8, 2013 email from an executive reflects the request for the Judge Judy set to be featured in the interview segments of Hot Bench; a May 11, 2014 email from another executive emphasized the importance to reinforce “Created by Judge Judy ‘Scheindlin” credit featured in the opening of Hot Bench; and the “Hot Bench Launch Creative Brief” and “Hot Bench Marketing” reinforce the need to link the show to Judge Scheindlin and that her doing promotion is the strongest national asset. PAMF No. 18; Perris Decl. 4 16, Plaintiff presents evidence that both Judge Judy and Hot Bench are part of the same genre and feature actual disputes adjudicated through binding arbitration in a simulated courtroom and the “tweak” of a three “judge” panel and showing brief deliberations is a minor portion of Hot Bench as itis an “episodic television series” that is “derived from” Judge Judy. PAMF Nos. 19-20; Perris Decl. 17-18, ‘These disputes of material fact preclude the conclusion as a matter of law that Hot Bench is not “derived from” Judge Judy. ‘Damages. Because it cannot be known if the parties would have reached a final agreement or ‘what the terms would have been, “reliance damages are the only form of recovery available in an action on a contract to negotiate.” While expectation damages are not recoverable, the breach of 2 good faith negotiation “encompasses the plaintiff's out-of-pocket costs in conducting the negotiations and may or may not include lost opportunity costs” missed while participating in the negotiation which was not conducted in good faith. Copeland 96 Cal.App.4th at 1263. See also ‘Auerbach v. Great Western Bank (1999) 74 Cal.App.4th 1772, 1791 (rejecting expectation damages awarded by the jury when there was no evidence to quantify the benefit that would have been received). Plaintiff has presented evidence and a dispute of material fact that it suffered out-of-pocket ‘expenses in reliance on the parties’ agreement to negotiate a “packaging fee” for any show, in this case Hot Bench, which was derived from or based upon Judge Judy. Plaintiff states that in 2014 and in reliance on the Agency Agreement it paid $36,000.00 for the accounting firm of Robinson & Company, Inc. to conduct an audit with respect to Plaintiff's potential packaging fee for Hot Bench. PAMF No. 21; Lawrence Decl. 2. 3 3 Hot Bench premiered in September 2014, See Leavitt Decl. 13. 7