deadline · 05/08/2019 · report, titled “agencies for sale,” claims that $3 billion in...
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Stephen M. Doniger (SBN 179314) [email protected] Scott Alan Burroughs (SBN 235718) [email protected] Jessica L. Phillips (SBN 314238) [email protected] DONIGER / BURROUGHS 603 Rose Avenue
Venice California 90291
Telephone: (310) 590-1820 Attorneys for Plaintiff John Musero
SUPERIOR COURT FOR THE STATE OF CALIFORNIA COUNTY OF LOS ANGELES
JOHN MUSERO, an Individual, Plaintiff, v.
CREATIVE ARTISTS AGENCY, LLC, a Delaware limited liability company; ANDREW MILLER, an individual; LEAH YERUSHALAIM, an individual; and DOES 1 through 10, inclusive,
Defendants.
CASE NO. 19STCV10435 [Assigned for All Purposes to: The Hon. Hon. Yolanda Orozco, Dept. 31] PLAINTIFF’S OPPOSITION TO DEFENDANTS’ DEMURRER TO PLAINTIFF’S COMPLAINT
Hearing Date: August 5, 2019 Time: 8:30 a.m. Dept.: 31
Action Filed: March 26, 2019 Trial Date: June 8, 2020
Plaintiff John Musero submits the following in opposition to Defendants’ Notice of Demurrer
and Demurrer to Plaintiff’s Complaint.
Electronically FILED by Superior Court of California, County of Los Angeles on 07/23/2019 03:58 PM Sherri R. Carter, Executive Officer/Clerk of Court, by E. Gregg,Deputy Clerk
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TABLE OF CONTENTS
I. Introduction………………………………………………………………………………1
II. Statement of Facts………………………………………………………………………..1
III. Legal Standard For Addressing Demurrers………………………………………………3
IV. Musero Has Properly Pled His Breach Of Contract Claim………………………………4
a. An Implied-In-Fact-Contract Was Formed…………….…………………………….5
b. The Contract Was Breached…………..…………………………….………………..6
c. The Cases Cited By Defendants Are Inapplicable….………………………………..7
V. Musero Has Properly Pled His Breach Of Implied Covenant Of Good Faith And Fair
Dealing Claim…………………………………………………………………………….9
VI. Musero Has Properly Pled His Breach Of Fiduciary Duty Claim………………………11
VII. Musero’s Complaint Sufficiently Appraises Defendants Of Both The Nature Of The
Claims And Of The Factual Basis For The Claims……………………………………..14
VIII. If The Court Finds That Musero’s Complaint Is Deficient, Musero Must Be Granted
Leave To Amend………………………………………………………………………..15
IX. Conclusion………………………………………………………………………………15
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TABLE OF AUTHORITIES
Page(s) Cases Careau & Co. v. Sec. Pac. Bus. Credit, Inc.,
(1990) 222 Cal.App.3d 1371, as modified on denial of reh'g .......................................................... 9 Chandler v. Roach,
156 Cal. App. 2d .............................................................................................................................. 4 City of Stockton v. Sup.Ct. (Civic Partners Stockton, LLC,
(2007) 42 Cal.4th 730 ................................................................................................................. 3, 15 Cruz v. Cty. of Los Angeles,
(1985) 173 Cal.App.3d 1131 ...................................................................................................... 3, 14 Desny v. Wilder,
(1956) 46 Cal.2d 715 ........................................................................................................................ 4 Donahue v. Ziv Television Programs, Inc.,
(1966) 245 Cal.App.2d 593 .............................................................................................................. 4 Fink v. Goodson Todman Enterprises, Ltd.,
(1970) 9 Cal.App.3d 996 .................................................................................................................. 5 Folev v. Interactive Data,
47 Cal. 3d 654 Corn. 14 .................................................................................................................... 4 Gressley v. Williams,
(1961) 193 Cal.App.2d 636 .............................................................................................................. 3 Guz v. Bechtel Nat. Inc.,
(2000) 24 Cal.4th 317 ....................................................................................................................... 9 Katz Dochrermann & Epstein, Inc. v. Home Box Office (S.D.N.Y., Mar. 31, 1999, No. 97 CIV.
7763 (TPG)), 1999 WL 179603 .............................................................................................................................. 4
Markogianis v. Burger King Corp., 1997 WL 167113 (S.D.N.Y. Apr. 8, 1997) ...................................................................................... 6
McDonald v. Sup.Ct. (Flintkote Co., (1986) 180 Cal.App.3d 297 ........................................................................................................ 3, 15
McGhan v. Ebersol, 608 F. Supp. 277 (S.D.N.Y. 1985) ................................................................................................... 6
Meyer v. Graphic Arts Int'l Union, (1979) 88 Cal.App.3d 176 ................................................................................................................ 3
Montz v. Pilgrim Films & Television, Inc., (9th Cir. 2011) 649 F.3d 975 ............................................................................................................ 4
People ex rel. Harris v. Rizzo, (2013) 214 Cal.App.4th 921 ........................................................................................................... 11
Perez v. Golden Empire Transit Dist., (2012) 209 Cal.App.4th 1228 ........................................................................................................... 3
Pierce v. Lyman, (1991) 1 Cal.App.4th 1093 ............................................................................................................. 11
Quelimane Co. v. Stewart Title Guaranty Co., (1998) 19 Cal.4th 26 ......................................................................................................................... 3
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Smith v. Weinstein, (S.D.N.Y. 1984) 578 F.Supp. 1297 .................................................................................................. 5
Spinner v. American Broadcasting Companies, Inc., (2013) 215 Cal.App.4th 172 ..................................................................................................... 7, 8, 9
Stansfield v. Starkey, (1990) 220 Cal.App.3d 59 .................................................................................................... 3, 12, 13
Thompson v. California Brewing Co., (1957) 150 Cal. App. 2d 469 ............................................................................................................ 4
Youngman v. Nevada Irrigation Dist., (1969) 70 Cal. 2d 240 ....................................................................................................................... 4
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I. Introduction
Plaintiff’s complaint is a factually detailed pleading which sets forth plainly understandable
claims against Defendants. Yet through this demurrer Defendants seek to hold Plaintiff to an
improperly high fact-pleading standard while misrepresenting the holding of cases that actually
support the viability of Plaintiff’s claims. California law requires that a complaint be liberally
construed and that all material facts properly pled be taken as true, and under that standard Plaintiff
has sufficiently pled causes of action for breach of fiduciary duty, breach of implied covenant of
good faith and fair dealing, and breach of contract. Accordingly, the instant demurrer should be
denied in its entirety.
II. Statement of Facts
This case exists against the backdrop of a major battle—including litigation—between the
Writers Guild of America (“WGA”) and the four major talent agencies regarding systematic
fiduciary duty breaches by the agencies against their writer-clients. The primary dispute revolves
around “packaging,” the practice of agents bringing a “package” of talent (writers, producers,
actors, etc.…) to a television network, cable outlet or streamer rather than separately negotiating for
each client. Agencies have strong incentives to package because they are compensated with
“packaging fees” which are much more lucrative for the agents and agencies than the standard ten
percent of client fees that they would otherwise earn.1
Packaging fees often include large back-end profit participation, and can create a durable
asset that pays in perpetuity even if a client leaves the show or the agency. They thus put agents’
interests at odds with the interests of their packaged clients,2 and create a strong disincentive to
push clients that are not packaged since packaged deals are so much more lucrative. Indeed, it has
been reported that “close to 100 percent of broadcast network scripted TV shows generate package
fees for talent agencies,” and approximately 80% of new television shows are packaged by the two
1 Agencies are paid three-part fees (called “3/3/10” by the studios instead of commissioning their clients. They first receive 3 percent of the “base license fee” on what the network pays the studio, which usually ranges from $15,000 to $75,000 per episode, or about $300,000 to $750,000 per season. They then receive another 3 percent of the base licensing fee per episode, but deferred and payable out of 50 percent of "net profits." Finally, they receive up to 10 percent of Modified Adjusted Gross Receipts. See Jonathan Handel, “Television Packaging Deals: All the Confusing Questions Answered”, The Hollywood Reporter , https://www.hollywoodreporter.com/news/what-exactly-are-packaging-fees-a-writers-agents-explainer-1198974
2 An agency has a profit participation interest has an interest in negotiating lower compensation for its clients since better compensation for the client reduces the ultimate profits of the show and thus means less, not more, for the agency.
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biggest agencies, William Morris and Defendant CAA.3 Thus the agencies, beholden to their
investors4 and focused on their own paychecks, are entirely unwilling to limit their compensation to
a percentage of what they negotiate for their clients.
Plaintiff John Musero is a Los Angeles based professional writer. Formerly a criminal
prosecutor and an in-house studio lawyer at Columbia pictures, Musero worked as a Staff Writer on
the third season of Aaron Sorkin’s acclaimed HBO drama series, The Newsroom. In 2014, Musero
signed with Defendant Creative Artists Agency, LLC (“CAA”), and Defendant agents Andrew
Miller (“Miller”) and Leah Yerushalaim (“Yerushalaim”), both of whom worked in the television
literary department, began acting as Musero’s agents.
CAA touts itself as a licensed talent agency that represents “many of the most successful
professionals in film, television, music...” It describes itself as a “full-service entertainment agency”
that renders services to its clients in connection with their activities in the entertainment and sports
industries. CAA describes its role, in part, by stating: “In consideration for CAA’s services, which
are rendered pursuant to contracts between CAA and its clients, CAA receives commissions on
monies and other consideration that CAA’s clients receive for their services as a result of contracts
of employment entered into, substantially negotiated, renegotiated, or renewed during the term of
CAA’s representation…”
By signing with CAA, Musero placed his trust in Defendants to use their judgment and
expertise to act in his best interest, and to always put his interest ahead of their own. For three
years, Musero relied on Defendants exclusively to act as his advocates with respect to his career as
a writer. Unfortunately, they did not do so.
As set forth more fully in Musero’s Complaint, Musero submitted television show projects
to Defendants to pitch on his behalf, and yet Defendants used those properties primarily for the
benefit of their larger clients, ultimately receiving Musero’s treatment for a show about the
Attorney General’s office styled Main Justice and then developing a remarkably similar show about
the Attorney General’s Office also called Main Justice with a larger client, Jerry Bruckheimer’s
3 See https://www.hollywoodreporter.com/news/gavin-polone-tvs-dirty-secret-783941 4 A new WGA report, titled “Agencies For Sale,” claims that $3 billion in private equity investments in WME and CAA “is upending Hollywood talent representation” and “threatens to overwhelm the major agencies’ core purpose as agents – to represent their clients.” The guild estimates that TPG’s $340 million investment into CAA had more than tripled in value between 2010 and mid-2017. Meanwhile, the writer clients have not shared in these gains, instead seeing their earnings slip, with a 23% decline in TV writer-producers’ median weekly income between 2014 and 2016.” See: https://deadline.com/2019/03/wga-report-wme-caa-private-equity-writers-1202577388/.
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company, and negotiating a packaged deal with CBS for that project after becoming aware that
CBS was previously interested in Musero’s Main Justice project.
Musero is informed and believes that Defendants misappropriated his Main Justice, and that
the sale of Bruckheimer’s Main Justice was a packaged deal involving CAA clients. While the
offending Main Justice was ultimately not picked up by CBS, and its pilot never aired, the show
was publicly announced, and CBS cast and produced the pilot for millions of dollars. Thus, by
selling a competing project under the same title about the same thing, agent Miller foreclosed any
possibility of the prior project he had represented and commissioned, Musero’s Main Justice, being
sold.
III. Legal Standard For Addressing Demurrers
C.C.P §452 provides that in the “construction of a pleading, for the purpose of
determining its effect, its allegations must be liberally construed, with a view to substantial
justice between the parties.” California courts have thus held that complaints which show some
right to relief are held sufficient against a demurrer–even though the facts are not clearly
stated; or are intermingled with irrelevant matters; or that the plaintiff has demanded relief to
which he is not entitled. Gressley v. Williams (1961) 193 Cal.App.2d 636, 639. If essential
facts of some valid cause of action are alleged, the complaint withstands a general demurrer.
Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 38-39.5
For the purposes of ruling on the demurrer, Plaintiff’s allegations must be accepted as
true. Perez v. Golden Empire Transit Dist. (2012) 209 Cal.App.4th 1228, 1238 (“where
allegations are subject to different reasonable interpretations, court must draw "inference
favorable to the plaintiff, not the defendant."). A demurrer is “not the appropriate procedure for
determining the truth of disputed facts,” nor is it the function of the court to “speculate as to a
plaintiff's ability to support the allegations at trial.” Cruz v. Cty. of Los Angeles (1985) 173
Cal.App.3d 1131, 1134; Meyer v. Graphic Arts Int'l Union (1979) 88 Cal.App.3d 176, 179.
Finally, “[u]nless the Complaint shows on its face that it is incapable of amendment, denial
of leave to amend constitutes an abuse of discretion, irrespective of whether leave to amend is
requested or not.” McDonald v. Sup.Ct. (Flintkote Co.) (1986) 180 Cal.App.3d 297, 303-304; City
of Stockton v. Sup.Ct. (Civic Partners Stockton, LLC) (2007) 42 Cal.4th 730, 747.
5 The only cause of action that requires particularity in pleading is fraud. Id. at 524-525. Fraud requires particularity, that is, “pleading facts which show how, when, where, to whom, and by what means the representations were tendered." Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73.
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As set forth below, Plaintiff has clearly alleged facts sufficient to state his causes of action
for breach of contract, breach of implied covenant of good faith and fair dealing, and breach of
fiduciary duty. Accordingly, the instant demurrer is properly overruled in its entirety.
IV. Musero Has Properly Pled His Breach Of Contract Claim
Musero has properly alleged breach of both an implied-in-fact and an express contract by
Defendants. Specifically, he has properly alleged that he entered into a contractual relationship with
them to act as his agents, that the mutual understanding and agreement was that he would disclose
his work to them so that they could shop that work around and get compensation and writing credit
for him if it was used, that he disclosed his work, including Main Justice, to them for that purpose,
and that they breached their agreement by using Musero’s work (or permitting it to be used) without
securing compensation for Musero.
A claim for breach of contract lies where one party discloses his original script and seeks
compensation based on a promise to secure him compensation for use of the ideas allegedly
embodied in the script shared with the defendant. See Desny v. Wilder (1956) 46 Cal.2d 715. This
rule is justified on the theory the bargain is not for the idea itself, but for the service of sharing that
idea. See Donahue v. Ziv Television Programs, Inc. (1966) 245 Cal.App.2d 593. There must “be an
expectation on both sides that use of the idea requires compensation.” Montz v. Pilgrim Films &
Television, Inc., (9th Cir. 2011) 649 F.3d 975, 976. Thus, an “idea purveyor” can prevail if he has
obtained an “express promise to pay,” or “where the circumstances preceding and attending
disclosure, together with the conduct of the offeree acting with knowledge of the circumstances,
show a promise of the type usually referred to as ‘implied’ or ‘implied in fact’” Desny, 46 Cal.2d at
738. (emphasis added). Although the parties will usually expressly contract for the performance of
and payment for such a service, in the absence of an express contract, when the service is requested
and rendered, the law does not hesitate to infer or imply a promise to compensate for it. Id. at 733.6
A plaintiff may establish an implied-in-fact contract through the parties’ conduct and
relationship. Folev v. Interactive Data Corn. 14 (1988) 47 Cal.3d 654, 677. For example, “a
contract will be implied in fact when the parties clearly intended payment to the extent of the use of
the plaintiff’s idea, though they did not set forth that intention in express language.” Katz
6 The essential difference between an implied contract and an express contract is the mode of proof. When a contract is implied, rather than relying on express language the party asserting it must prove conduct from which a promise may be inferred (see Folev v. Interactive Data Corn. 14 (1988) 47 Cal. 3d 654, 675, 677; Youngman v. Nevada Irrigation Dist. (1969) 70 Cal. 2d 240, 246; Chandler v. Roach, supra, 156 Cal. App. 2d at 440; Thompson v. California Brewing Co. (1957) 150 Cal. App. 2d 469, 473).
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Dochrermann & Epstein, Inc. v. Home Box Office (S.D.N.Y., Mar. 31, 1999, No. 97 CIV. 7763
(TPG)) 1999 WL 179603, at 4; see also Smith v. Weinstein, (S.D.N.Y. 1984) 578 F.Supp. 1297,
1307, aff’d (2d Cir. 1984) 738 F.3d 419 ("A party may by contract agree to pay for ideas, even
though such ideas could not be protected by copyright law. Rights under such an agreement are
qualitatively different from copyright claims..."). The material claimed to be similar need not be
protectable under copyright law. See Fink v. Goodson Todman Enterprises, Ltd. (1970) 9
Cal.App.3d 996, 1008.
In this case, Musero alleges facts to establish both the formation and breach of an implied-
in-fact contract, including (1) a mutual understanding that Musero, in disclosing his idea, would be
compensated by Defendants’ in the form of “work[ing] for [him] to market and sell Main Justice to
a Buyer and to credit and pay [him] the reasonable value for his work,” and (2) that Defendants
breached this implied contract by using Main Justice in an unauthorized manner and failing to
compensate Musero. Complaint ¶ 73, 63-4.
a. An Implied-In-Fact-Contract Was Formed
Defendants first argue that no contract was formed because Musero did not “clearly
condition his disclosure” on “an obligation by Defendants to pay for its use,” and that Musero does
not allege that “Defendants agreed to such terms in advance.” (Dem., p. 5). In making this
argument, Defendants ignore that they were Musero’s agents, and that the understood (if not
express) agreement between agents and their clients is that the agents will use the work given to
them by their clients to secure compensation for their clients. The parties’ agency agreement, their
conduct, and industry custom all evidence an agreement requiring Musero to be compensated if
Defendants found a buyer interested in using the ideas disclosed in, inter alia, Musero’s Main
Justice.
The Complaint is clear that Musero communicated his goals for the original contractual
relationship (Defendants’ representation of Musero as a writer) to Defendants, including “selling his
original works (in the form of television series pitches and pilots) to producers, production
companies, studios, streamers, networks, cable companies and other buyers” to supplement his
income. Complaint ¶ 17. Defendants cannot credibly argue that in accepting representation of
Musero they did anything other than agree to advance Musero’s goals. Indeed, the Complaint
further provides: “Defendants were aware of this obligation as they worked closely with Plaintiff to,
in part, refine Main Justice and prepare it for consideration and sale to a Buyer.” Complaint ¶ 74.
Musero may also establish the existence of an implied-in-fact contract by showing that
people in the idea-recipient’s line of work generally pay for ideas received if they use them.
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Markogianis v. Burger King Corp., No. 95 CIV. 4627 (JFK), 1997 WL 167113, at 5-6 (S.D.N.Y.
Apr. 8, 1997) (stating that “industry custom can create an implied-in-fact contract between the
parties, resulting in the requisite legal relationship needed to support a misappropriation claim”);
McGhan v. Ebersol, 608 F. Supp. 277, 285 (S.D.N.Y. 1985) (“An implied-in-fact contract may be
based upon industry custom of usage regarding submission and use of ideas.”).
Here, Musero’s complaint alleges that Defendants earned fees from the use of his work, and
it is beyond reasonable dispute that when an agent earns a commission from the work of its client,
the client is also to receive compensation. Thus, industry custom establishes that Defendants were
contractually obligated to secure payment for Musero where they are profiting from the use of the
ideas he disclosed to them as his agent to market for his benefit. It should certainly be inherent and
obvious to even those outside the entertainment industry that Defendants and Musero had a “mutual
understanding” prior to the formation of the contract at issue that CAA’s representation as a “full-
service entertainment agency” would include their agents marketing and selling Musero’s disclosed
ideas, and compensating and crediting Musero for his work. (Dem., p. 4); Complaint ¶ 14.
b. The Contract Was Breached
The Complaint states: “Defendants breached the agreement by misappropriating Plaintiff’s
original and creative work in Main Justice, developing it with [their clients] producer Jerry
Bruckheimer, Bruckheimer TV and writer Penn, selling it to CBS, conferring a significant
economic benefit to CAA, Miller and Yerushalaim.” Complaint ¶ 77. CAA/Defendants
misappropriated Musero’s idea by “redevelop[ing] his creative work with another writer and
company it represented without Musero’s knowledge or permission, and then sold that creative
work to a major network who developed the work into a pilot without changing the title and without
paying or crediting Musero.” Complaint ¶ 10.
Musero thus rendered his performance—disclosed his idea—with the reasonable expectation
that Defendants’ would compensate him. Yet, Defendants have failed to “tender Plaintiff a proper
credit and the reasonable value of Main Justice.” Complaint ¶ 69. Instead, they have been “unjustly
enriched” by their oppressive and/or fraudulent conduct to the detriment of Musero but to the
benefit of their bigger, more profitable clients. Id.
Furthermore, when Defendants “package” deals, as they allegedly did here in selling
Bruckheimer’s Main Justice to CBS, Defendants take themselves out of the typical agent roll, and
essentially become the one’s “using” the idea for their own financial gain. Defendants coordinate
and sell sets of talent (writers, producers, actors, etc.), choosing not only which talent is included in
the sale, but also which talent is excluded. Thus, when Defendants failed to include Musero in their
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sale of Bruckheimer’s Main Justice, they breached their contract with him—as properly alleged in
the Complaint.
c. The Cases Cited By Defendants Are Inapplicable.
Defendants cite two California Court of Appeal opinions for the proposition that Musero has
failed to properly plead his breach of contract claims—Spinner and Mann. Relying on these cases,
Defendants aver that in order to state a claim, “Plaintiff must have ‘clearly conditioned’ his
disclosure of Main Justice on an obligation by Defendants to pay for its use.” (Dem., p. 5). But
those decisions reflect cases that were both procedurally and factually readily distinguishable and
offer no assistance in this case.
Spinner v. American Broadcasting Companies, Inc. (2013) 215 Cal.App.4th 172 was an
appeal following a motion for summary judgment. Mann was an appeal from a judgment
notwithstanding the verdict. In both cases, the plaintiff-writer-plaintiffs sued the production
company and network directly alleging breach of an implied-in-fact contract. In both cases, the
defendants disputed receipt of and access to the plaintiff’s work—i.e. the plaintiffs couldn’t prove
that they conditioned disclosure to the defendants on the obligation for the respective defendants to
pay for its use. In both cases, the lower court held (and the appellate courts affirmed) that the
Plaintiffs failed to prove that the respective defendants had access to the plaintiffs’ works and thus,
there could have been no obligation by defendants to pay for its use. Here, Musero brought his
claims against his agency and agent—not a production studio or television network—and it is
undisputed that the Defendants had access to Musero’s Main Justice. Plaintiff also plead that
Defendants knew that Musero was disclosing his work to be shopped and sold by them and for him
to ultimately make a profit and receive writing credit.
In Spinner, the Plaintiff was a television producer, writer and former studio executive. In
1977, he submitted a two-hour pilot tentatively entitled “L.O.S.T.” (“the 1977 Script”) to ABC. Id.
at 175. In 1991, he verbally pitched the 1977 Script and was advised to put a new spin on the
project. Plaintiff then created a new eight-page futuristic treatment. ABC passed on both. In 1994,
Plaintiff resubmitted the same futuristic treatment to another ABC executive and ABC, again,
passed. Id. at 177. Around December 2002, Lloyd Braun (an ABC executive) came up with the
concept for the hit television series LOST. Id. at 178. Following LOST’s development and success,
Spinner sued alleging a breach of an implied-in-fact contract between him and ABC. However,
discovery revealed that the creators of LOST had no reasonable opportunity to access Spinners
work and the undisputed evidence established that LOST was independently created. ABC moved
for summary judgment and prevailed. The Court of Appeal affirmed the trial court’s decision.
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In its discussion, the Court of Appeal noted that “bare ‘corporate receipt’ of the plaintiff’s
work may not be sufficient to show access.” Id. at 196. The Spinner court noted that Braun and the
creators of LOST did not know Spinner, never communicated with him, no one ever mentioned any
script of treatment by Spinner, no one suggested that they knew anything about the contents of the
script of treatment by Spinner, and they have never spoken with or receipted materials from the
ABC executives that Spinner worked with in 1977, 1991, or 1994. Id. at 178-182. Additionally,
ABC was unable to locate Spinner’s 1977 Script within its records. Id. at 182. Accordingly, the
court found that Spinner’s showing of access was insufficient as a matter of law noting “a
reasonable possibility of access requires a sufficiently strong nexus between the intermediary to
whom the plaintiffs submitted their work and the creator of the allegedly offending work.” Id. at
186. The court explained “for instance, the nexus may be sufficiently strong when the intermediary
was in a position to transmit the plaintiffs’ work to the creator, was a supervisor with responsibility
for the creator’s work, was part of the same work unit, was a contributor of creative ideas or
material to the creator’s work, or was otherwise in contact with the creator regarding some subject
matter that overlapped with the plaintiffs’ work. Id. at 186-187.
Similarly, in Mann v. Columbia Pictures Inc. (1982) 128 Cal.App.3d, plaintiff alleged a
breach of contract claim regarding her written work entitled “Women Plus”—a script about six
principal characters in a beauty salon setting. Plaintiff filed suit contending that Women Plus was
accepted by Columbia Pictures and used by defendants in the motion picture production of
“Shampoo” and sought the reasonable value of her ideas. The lower court granted summary
judgment in favor of the defendants finding, in part, that the evidence was insufficient to establish
either that there was a submission of plaintiff’s outline to Defendants, or that there was any contact
between the screenplay authors and the people alleged to have possessed plaintiff’s outline, and
thus there was no implied in fact contractual obligation. The Court of Appeal affirmed.
In doing so, the Mann Court discussed that “Florence Klase, Mann’s personal friend, had a
neighbor Evelyn Light, who knew Harry Caplan. Klase informed plaintiff that Caplan “was an
important man at Columbia.” And as a favor to Mann, Klase agreed to deliver Women Plus to
Light. Light submitted Mann’s writing to Caplan. Id. at 636. However, discovery revealed that at
the relevant time Caplan worked for Filmmakers Corporation, not Columbia Pictures. Caplan was a
production manager, did not read stories, and did not work in any studio’s story department. Id. at
637. Caplan did not read Mann’s submission and submitted the envelope containing the materials to
a story editor at Filmmaker. Caplan testified that he never submitted the envelop of its contents to
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any reader employed by Columbia. Id. Mann failed to show that Women Plus was ever submitted to
Columbia and moreover, Defendants produced evidence of independent creation.
Here, Plaintiff plead, and it is undisputed, that Defendants were in possession of Musero’s
Main Justice. It is also undisputed that Plaintiff submitted Main Justice to Defendants (his agents)
to help him develop, pitch and sell his Main Justice for a profit and writing credit. Plaintiff also
alleges that his agent (who was undeniably in receipt of Main Justice) worked with Penn and
Bruckheimer to create, develop, pitch and sell the offending Main Justice, just two years after
Musero’s submission to and development with his agents—the Defendants. Plaintiff also alleges
that Defendants failed to credit or pay Musero for their use of his work. The Spinner and Mann
analysis, opinions, and holdings are inapplicable here and Plaintiff has met his burden at this stage.
V. Musero Has Properly Pled His Breach Of Implied Covenant Of Good Faith And Fair
Dealing Claim.
As set forth above, Musero alleges a contractual relationship with Defendants through (1)
the original agent-talent representation contract between Musero and Defendants, and (2) the
implied contract between Musero and Defendants whereby Musero’s disclosure of Main Justice
was “given in exchange for a promise by Defendants” to “market and sell Main Justice to a Buyer
and to credit and pay Plaintiff the reasonable value for his work.” Complaint ¶ 16, 73. As set forth
below, he also alleges that Defendants’ failure or refusal to discharge contractual responsibilities
was prompted by a conscious and deliberate intent to deprive Musero of the benefits of the
agreement, and supports that claim with specific facts. So owing, his claim for breach of the implied
covenant of god faith and fair dealing is properly pled and this demurrer should be overruled.
The covenant of good faith and fair dealing is “implied by law in every contract, and exists
merely to prevent one contracting party from unfairly frustrating the other’s party’s right to receive
the benefits of the agreement actually made.” Guz v. Bechtel Nat. Inc., (2000) 24 Cal.4th 317, 349.
This covenant does not exist “independent of its contractual underpinnings,” nor does it “impose
[additional] substantive duties or limits on the contracting parties” Id. at 349-50. Thus, allegations
which assert a valid claim “must show that the conduct of the defendant, whether or not it also
constitutes a breach of [contract], demonstrates a failure or refusal to discharge contractual
responsibilities, prompted not by an honest mistake, bad judgment or negligence but rather by a
conscious and deliberate act, which unfairly frustrates the agreed common purposes and disappoints
the reasonable expectations of the other party thereby depriving that party of the benefits of the
agreement.” Careau & Co. v. Sec. Pac. Bus. Credit, Inc., (1990) 222 Cal.App.3d 1371, 1395, as
modified on denial of reh'g (Oct. 31, 2001).
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Musero’s Complaint alleges that Defendants unfairly frustrated his purpose in contracting
with them. Musero communicated to Defendants that “his goal was to obtain a steady stream of
income by working as a writer employed on another television series and to supplement that income
by selling his original works.” However, neither of Musero’s goals were realized as Defendants
acted unfairly by “never submit[ing] Musero to staff for an open position” and mishandling both of
Musero’s pilot ideas (Influence and Main Justice). Moreover, Musero’s purpose in disclosing Main
Justice to Defendants to help him market and sell it was unfairly frustrated when Defendants
mishandled Main Justice and further misappropriated it with other CAA clients. Musero’s Main
Justice can never be sold as a “competing project under the same title about the same thing” was
sold to CBS and widely announced. Complaint ¶ 10, 17, 48, 50.
The Complaint is clear that Defendants promised and then failed to “submit Musero for a
single paid writing position,” advocate and negotiate for him regarding both Influence and Main
Justice, and follow up with potential Buyers and further shop Musero’s pilot ideas. Defendants put
their interests and those of their bigger clients above Musero’s by representing both sides of the
deal and disclosing information to the bigger CAA client to their benefit and Musero’s detriment,
“failing to seek and collect timely payment” owed to Musero from CAA’s “larger and more
profitable client, The Mark Gordon Company, and misappropriating Musero’s Main Justice.”
Complaint ¶ 17, 20, 28, 61, 63(a)-(f), 77.
The Complaint alleges Musero was deprived of the benefits of both contracts. Musero was
deprived of the benefit of Defendants’ adequate representation of him and his interests, in addition
to being deprived of the benefit of disclosing Main Justice to Defendants as Defendants not only
failed to act in accordance with their duties to Musero to sell his ideas, submit him for writing
opportunities, and act as responsible agents, but maliciously misappropriated Musero’s idea
thereafter so that they and their larger client could profit. Complaint ¶ 14, 50, 63(f).
Defendants alleged bad faith is further supported by the fact that CAA has been accused in
the past “of being engaged in significant conflicts of interest in how it represents writers” for
“representing both sides of a deal while favoring the bigger earning client” and “packaging’ deals”
whereby “the fees paid to the writer are smaller” than those paid to Defendants’. Complaint ¶ 6.
Defendants’ “packaged” deals, including the alleged packaged sale of Bruckheimer’s Main Justice,
put Defendants’ own financial interests at odds with those of even their big clients, and further
disincentivizes them from advocating for their smaller, unpackaged clients.
Thus, as the covenant of good faith and fair dealing is implied in every contract, and the
complaint alleges sufficient facts to show Defendants unfairly frustrated the agreed common
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purposes of both agreements, disappointing Musero’s reasonable expectations and depriving him of
the benefits of both contracts, Defendants’ demurrer should be denied.
VI. Musero Has Properly Pled His Breach Of Fiduciary Duty Claim.
Defendants’ claims that the Complaint fails to properly support Musero’s breach of
fiduciary duties claim is disingenuous. As Musero’s agents, there is no question that they stood in a
relationship of trust and confidence with him, and the Complaint painstakingly describes the
violation of that trust and confidence by Defendants all of which was to Musero’s detriment.
Defendnats may dispute Musero’s claims, but they are properly pled.
The “elements of a cause of action for breach of fiduciary duty are: (1) existence of a
fiduciary duty; (2) breach of the fiduciary duty; and (3) damage proximately caused by the breach.”
People ex rel. Harris v. Rizzo (2013) 214 Cal.App.4th 921, 950. The fiduciary relationship is “two-
fold: undivided loyalty and confidentiality.” Pierce v. Lyman, (1991) 1 Cal.App.4th 1093, 1102.
This relationship can arise when “confidence is reposed by persons in the integrity of others, and if
the latter voluntarily accepts or assumes to accept the confidence, he or she may not act so as to
take advantage of the other's interest without that person's knowledge or consent." Id. at 1101–02.
Here, the Complaint asserts Musero “placed his trust in Defendants to uphold their fiduciary
duties and to act properly on his behalf with respect to his employment,” and “relied on
[Defendants] to use their judgement and expertise to act in his best interest, and to always put his
interest ahead of their own.” Complaint ¶ 17. This relationship has been further explained by the
Writers Guild of America (“WGA”) which warned that an agent has a “full obligation to their
clients, including the obligation to avoid any conflict of interest or to make any deals that benefit
the agent at the client’s expense.” Complaint ¶ 7. It further noted that a “fiduciary is expected to
refrain from acting for his private advantage or otherwise contrary to the interests of his client; the
fiduciary should fully, without compromise, assert the complete and unmitigated interest of the
client.” Id. Accordingly, the Complaint more than sufficiently alleges facts constituting a fiduciary
relationship.
Second, the Complaint sufficiently alleges that Defendants, in their capacity as agents of
Musero, breached both of their fiduciary duties: to give Musero their undivided loyalty and to
maintain confidentiality. Defendants’ egregious claim that Musero failed to allege facts for this
element is unfounded. The Complaint, clearly and in great detail, lists seven points regarding
Defendants’ actions that constitute Defendants’ breach of their fiduciary duty:
“Defendants breached their fiduciary duties to Plaintiff by, inter alia:
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a. promising, and then failing, to submit Plaintiff for a single paid writing position during the nearly three years that Defendants exclusively represented Plaintiff following his indisputable success on HBO’s The Newsroom;
b. promising, and then failing, to advocate for Plaintiff with third parties while failing to negotiate a contract with Storyline Entertainment for its interest in his original work Influence to the benefit of Defendants’ larger and more profitable client, Storyline Entertainment, and the detriment of Plaintiff;
c. promising, and then failing, to advocate for Plaintiff with third parties while failing to negotiate a contract with The Mark Gordon Company for its interest in his original work Main Justice to the benefit of Defendants’ larger and more profitable client, The Mark Gordon Company, and to the detriment of Plaintiff;
d. disclosing confidential negotiation communications and strategy to the side opposite Plaintiff - The Mark Gordon Company – regarding The Mark Gordon Company’s option of Plaintiff’s pilot, Main Justice, to the benefit of Defendants’ larger and more profitable client, The Mark Gordon Company, and the disadvantage of Plaintiff;
e. failing to seek and collect timely payment from The Mark Gordon Company on Plaintiff’s behalf for writing services rendered by Plaintiff on Main Justice, which failure resulted in Plaintiff losing money owed him in order to get paid for work that he already did, all of which was to the benefit of Defendants’ larger and more profitable client, The Mark Gordon Company, and to the detriment of Plaintiff;
f. misappropriating Plaintiff’s original and creative work in Main Justice, developing it with producer Jerry Bruckheimer, production company Bruckheimer TV and writer Penn, selling it to, and getting it made at CBS, thereby conferring a significant economic benefit to CAA, Miller and Yerushalaim; and
g. falsely representing to Musero that it was pursuing writing opportunities for him, such as occurred with regard to the The Good Wife Spinoff where Defendants knew or should have known that the positions had been filled and a fully staffed writer’s room had commenced.”
Complaint ¶ 63(a)-(g).
Thus, Musero sufficiently alleged facts that Defendants breached both their duties of
undivided loyalty and of confidentiality.
Despite the detailed allegations of the Complaint, Defendants argue that it fails to allege
“what confidential information was taken, with whom it was shared, or when,” and what aspects of
Musero’s work were misappropriated, when, or how it was done so. (Dem., p. 7-8). But in doing so,
Defendants are improperly attempt to hold Musero to a heighten the pleading standard of fraud
claims (not alleged herein), as fraud is the only claim that has a particularly requirement that
“necessitates pleading facts that show how, when, where, to whom, and by what means” the fraud
occurred. Stansfied, 220 Cal.App.3d at 61.
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And in any event, the Complaint is fairly specific as to how Musero’s confidential
communications, negotiation strategies, and television pilot idea were taken, who it was shared
with, and when—after Musero and his manager got Main Justice read and considered by two
potential Buyers, The Mark Gordon Company and the Dan Jinks Company (“Jinks”), Defendants
“shared Musero’s confidential communications and negotiation strategies with CAA client The
Mark Gordon Company in order to drive down the value of Main Justice to the detriment of
Musero, but to the benefit of its larger and more profitable client, The Mark Gordon Company.”
Complaint ¶ 31. Upon information and belief, Defendants “improperly disclosed” that “Musero was
waiting on Jinks and CBS to make a competitive cash offer,” and advised The Mark Gordon
Company to “hold off on improving its initial offer.” Id. Only three months after MGA chose not to
exercise its option to purchase Musero’s Main Justice, Bruckheimer’s Main Justice was announced.
Finally, upon information and belief, the “pitch document” used to sell Bruckheimer’s Main Justice
was “preceded by, borrowed from, and harvested the concept, pitch, series overview, and pilot” of
Musero’s Main Justice. Complaint ¶ 36, 43.
Furthermore, the Complaint sufficiently alleges when and how Musero’s work was
misappropriated, and what aspects of it were taken:
In September of 2017, it was announced that two of Defendants’ clients, Jerry
Bruckheimer and Sascha Penn, along with producer Eric Holder, were teaming up on a legal
drama series project called Main Justice. Upon information and belief, “the same agent who
previously represented Musero and Musero’s Main Justice – Andrew Miller, also
represented Bruckheimer’s Main Justice and its writer, Penn.” Moreover, “CAA agent
Miller personally initiated the development of Bruckheimer’s Main Justice with his client,
Penn, and his other client Bruckheimer TV.”
Upon information and belief, “despite Bruckheimer’s Main Justice being represented
as a project inspired by Eric Holder, Holder was not in any way a part of, or involved in, the
earliest stages of its development. Rather, Holder’s belated involvement was designed to
create the false appearance of an independent project that began with Holder.” Moreover,
“Penn (unlike Musero) does not have a prosecutorial, legal or political background. Penn
had previously never written in this genre.”
Both Musero’s and Bruckheimer’s Main Justice dramas are fictional, and “centered
around the U.S. Attorney general,” “take the audience into the tumultuous world of the 5th
floor of the Department of Justice,” take on the “biggest legal and investigative cases in the
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country,” and “conclude with a final scene that contains a shocking ambush assassination
attempt on the Attorney General on a D.C. street at night.”
Complaint ¶ 37-42, 44-5.
Finally, the Complaint alleges that Musero has been damaged, and that Musero’s damage
was proximately caused by the breach. Among other things, the Complaint clearly states
Defendants failures (as discussed above) were the “direct and proximate cause” of Musero’s
damages as Defendants “profited significantly from their work on Bruckheimer’s Main Justice,”
and their sale of “a competing project under the same title about the same thing” foreclosed any
possibility of Musero’s Main Justice being sold. Complaint ¶ 48, 64.
California law is clear that Plaintiff’s allegations must be accepted as true for the
purposes of ruling on the demurrer and a demurrer is “not the appropriate procedure for
determining the truth of disputed facts,” nor is it the function of the court to “speculate as to a
plaintiff's ability to support the allegations at trial.” Cruz, 173 Cal.App.3d at 1134. The issues
raised by Defendants are best suited for discovery, not a demurrer. Thus, the Complaint more
than sufficiently alleges facts to state a cause of action for breach of fiduciary duty.
VII. Musero’s Complaint Sufficiently Appraises Defendants Of Both The Nature Of The
Claims And Of The Factual Basis For The Claims.
The demurrer should be denied for the additional reason that the Complaint sufficiently
notifies Defendants of both the factual bases and nature of the claims. Defendants’ demurrer claims
the “complaint, and each cause of action” are “uncertain and vague.” (Dem., p. 8). Defendants’
accusation is meritless, and each of their claims of vagueness is refuted above in detail. The
Complaint clearly, and with sufficient particularity, states each cause of action and details facts
supporting each element. The Complaint uses “on information and belief,” appropriately, and sets
forth the basis of Musero’s claims such that Defendants can adequately prepare their defense.
Moreover, Defendants say the Complaint “improperly groups the defendants together by
ascribing alleged conduct to ‘Defendants,’ making it impossible to understand why each person has
been sued.” (Dem., p. 9). This baseless accusation is rebutted by the fact that each Defendant’s role
is clearly stated. From CAA’s conflict of interest in representing both sides of deals to Miller and
Yerushalaim’s failures in representing Musero, from Miller’s work on both Musero’s Main Justice
and Bruckheimer’s Main Justice to CAA and Defendants’ packaging deals, the Complaint properly
groups Defendants, allowing each Defendant to understand why they are part of this litigation.
Thus, the complaint more than sufficiently alleges facts to state its three causes of action.
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VIII. If The Court Finds That Musero’s Complaint Is Deficient, Musero Must Be
Granted Leave To Amend.
In the event that this Court finds that Musero’s Complaint as alleged is deficient in any way,
California law requires that Plaintiff be granted leave to amend.
“Unless the Complaint shows on its face that it is incapable of amendment, denial of leave
to amend constitutes an abuse of discretion, irrespective of whether leave to amend is requested or
not.” McDonald v. Sup.Ct. (Flintkote Co.) (1986) 180 Cal.App.3d 297, 303-304; City of Stockton v.
Sup.Ct. (Civic Partners Stockton, LLC) (2007) 42 Cal.4th 730, 747.
Defendants have failed to show that Musero’s complaint is incapable of amendment. Should
this court so require, Plaintiff can add additional facts and allegations to further support and
substantiate his pending claims.
IX. Conclusion
For the foregoing reasons, Defendant’s demurrer should be denied in its entirety.
Respectfully submitted,
DONIGER / BURROUGHS
Dated: July 23, 2019 By: /s/ Stephen M Doniger Stephen M. Doniger, Esq. Jessica L. Phillips, Esq.
Attorneys for Plaintiff John Musero
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PROOF OF SERVICE
ST A TE OF CALIFORNIA, COUNTY OF LOS ANGELES
I am employed in the County of Los Angeles, State of California. I am over the age of 18 and not a party to the within action; my business address is: DONIGER/BURROUGHS APC, 603 Rose Ave, Venice, CA 90291.
On July 23, 2019 I served the ENCLOSED documents de cribed as: PLAINTIFF'S OPPOSITION TO DEFENDANTS' DEMURRER TO PLAINTIFF'S COMPLAINT; PLAINTIFF'S OPPOSITION TO DEFENDANTS' MOTION TO STRIKE PORTIONS OF PLAINTIFF'S COMPLAINT; on the following necessary part(ies) in this action:
Craig Holden LEWIS BRISBOIS LLP
633 West 5th Street Suite 4000 Los Angeles, CA 90071
Email: [email protected]
Attorne or Defendants
[8] by placing D the original [8]a true copy thereof enclosed in sealed envelopes addressed as follows: [8] BY MAIL
[8] I deposited such envelope in the mail at Venice, California. The envelope was mailed with postage thereon fully prepaid. [8]BY ELECTRONIC MAIL (E-MAIL)
[8] On this date I caused the above-referenced document(s) to be transmitted to the e-mail address noted above.
[8] As follows: I am "readily familiar" with the firm's practice of collection and processing correspondence for mailing. Under that practice it would be deposited with the U.S. postal service on that same day with postage thereon fully prepaid at Venice, California in the ordinary course of business. I am aware that on motion of the party served, service is presumed invalid if postal cancellation date or postage meter date is more than one day after date of deposit for mailing in affidavit.
EXECUTED July 23, 2019 in Venice, California. [8] I declare under penalty of perjury under the laws of the State of California that the above is true and correct. I further declare that I am employed in the office of a member of the California Bar, at whose direction this service was made.
PROOF OF SERVICE 1
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