As far as DC Comics and its parent Warner Brothers are
concerned, the Los Angeles lawyer and businessman Marc Toberoff
is Lex Luthor in a kryptonite suit. For more than 10 years,
Toberoff (with recent help from Kendall Brill & Klieger) has
represented the heirs of Superman's creators, Jerome Siegel and
Joe Shuster, in an epic battle for copyrights to the Man of
Steel. Toberoff won a partial summary judgment for Siegel's
heirs in 2008, only to be named as a defendant in DC Comics'
declaratory judgment action against him, his companies, and the
heirs in Los Angeles federal district court. In essence, DC
Comics (represented by O'Melveny & Myers) contends that Toberoff
induced Siegel and Shuster's families to break previous rights
agreements and cast their lot with him. In return, he allegedly
gets 40 percent of whatever the families end up earning from
Superman rights.
Even Superman would struggle under the hefty record of this
litigation, which has involved at least a half-dozen trips to
the 9th Circuit Court of Appeals. The appellate court is still
receiving briefing in Warner Brothers' appeal of the 2008
summary judgment decision(here's Warner's most recent filing,
from last month), but a corollary mandamus case decided Tuesday
could affect the record in that appeal. A three-judge 9th
Circuit panel ruled that Toberoff cannot claim attorney-client privilege on documents he turned over to prosecutors
investigating a former Toberoff associate who allegedly stole
Superman-related work product from his office.
As a result of the ruling, Warner Brothers and DC Comics
will get access to material that supposedly supports their
argument that both the Siegel and Shuster families had already
entered into binding rights agreements before Toberoff poisoned
the relationships with DC Comics.
The privilege dispute comes with a back story that's about
as super-charged as any you'll find in a copyright dispute.
According to the 9th Circuit opinion (written by Judge Diarmuid
O'Scannlain for a panel that also included Chief Judge Alex
Kozinski and Judge Randy Smith) Toberoff briefly employed a
lawyer named David Michaels, who absconded with several
documents from the Shuster and Siegel family files. After he
failed to persuade the heirs to shift their business to him,
Michaels sent the documents to DC Comics, along with an unsigned
cover letter in the form of a timeline depicting Toberoff's
strategy to gain control of Superman rights.
The comics company immediately sent the materials into the
care of a lawyer otherwise uninvolved in the case, then sought
to obtain them in discovery motions against Toberoff and the
heirs. Toberoff claimed all his communications with the Siegel
and Shuster families were privileged, even though he wasn't
acting as an attorney in all of them. Some of the documents --
but by no means all -- were ordered to be produced in the
summary judgment case, including the timeline. That timeline
provided the framework of DC Comics' declaratory judgment suit,
filed in 2010.
About a month after that suit was filed, Toberoff asked the
U.S. Attorney's office to investigate Michaels, according to the
9th Circuit opinion. Prosecutors issued Toberoff grand jury
subpoenas for copies of the stolen documents. Toberoff turned
them over, after negotiating for a letter in which the
government agreed not to share the material with anyone else.
The federal magistrate in DC Comics' suit, however,
concluded that Toberoff had waived any claim to attorney-client
privilege when he gave the documents to the government (which
never took any action against Michaels). When U.S. District
Judge Otis Wright declined to review the ruling by U.S.
Magistrate Ralph Zarefsky, Toberoff went to the 9th Circuit for
a writ of mandamus.
There was pretty much no shot he'd get it, based on the 9th
Circuit's discussion of precedent on whether privilege is waived
by sharing materials with the government. That was a hot issue
in the last 20 years or so, as prosecutors and government
regulators demanded that corporations turn over the fruits of
internal investigations. The 8th Circuit accepted the concept of
a "selective waiver" that would preserve the privilege in
private litigation, but the 1st, 2nd, 3rd, 4th, 6th, 7th, 10th,
and D.C. Circuits have all held that privilege is waived when
documents are turned over to the government. The 9th Circuit
agreed with the overwhelming majority of appellate courts,
rejecting Toberoff's argument that a selective waiver promotes
the public interest by encouraging cooperation with the
government.
Losing the document fight is bad for Toberoff, but there may
be an even more ominous sign in a comment O'Scannlain made at
the beginning of the opinion, when he was describing Toberoff's
dual role as a lawyer and business adviser to the Superman
heirs. "The ethical and professional concerns raised by
Toberoff's actions will likely occur to many readers, but they
are not before this court." The appeals judge is right: Those
actions weren't before the court in the mandamus case -- but as
he probably knows, given the number of times the Superman
copyright dispute has been on the 9th Circuit's docket,
Toberoff's conduct will eventually be considered by the
appellate court.
Matthew Kline of O'Melveny referred me to a Warner
spokesman, who sent an email statement: "We are extremely
pleased that the 9th Circuit unanimously found in our favor. The
ruling means that defendant Marc Toberoff must now turn over
critical evidence in the pending litigation against him and
others."
I left phone messages with Toberoff and his counsel Richard
Kendall of Kendall Brill but didn't hear back.
(Reporting by Alison Frankel)
Follow us on Twitter: @AlisonFrankel, @ReutersLegal