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IP/Entertainment Case Law Updates

Ehrenberg v. Walt Disney Company

District court denies Disney’s bid for dismissal of screenwriter Jeffrey Scott’s copyright infringement and idea submission claims based on his alleged uncredited and uncompensated contributions to 2018 Muppet Babies series reboot.

Screenwriter Jeffrey Scott, through his bankruptcy trustee, sued The Walt Disney Company for copyright infringement, breach of express and implied contract, and fraud over the 2018 reboot of the Muppet Babies television show, which Scott originally helped develop in the 1980s. Disney moved to dismiss all but the breach of express contract claim, arguing that Scott had failed to allege substantial similarity and had failed to plead fraud with particularity, and that the implied contract cause of action was both legally insufficient and time-barred. The court denied Disney’s motion in its entirety, finding that Scott had plausibly alleged each claim and that the implied contract claim was timely. 

Marvel Productions and The Henson Company hired Scott in 1983 to develop a “production bible” and scripts for a new series depicting younger versions of the Muppets characters created by Jim Henson. In developing the production bible, Scott created and defined the foundational elements of the Muppet Babies show, and he wrote the scripts for all but four of the episodes that were produced in the show’s first three years. Scott was not an employee of Marvel or Henson, and he never agreed to convey to them his copyright in the production bible or the scripts. The parties operated under an oral agreement, pursuant to which Marvel paid Scott a set amount per script and a royalty for each new episode, gave Scott a “Developed for Television by” credit on each episode in perpetuity, and granted Scott the right in perpetuity to write the script for each new episode.

After Disney purchased Marvel in 2014, Scott approached Disney and suggested producing new Muppet Babies shows. Scott met with Disney executives in early 2016 and gave them his ideas for a reboot of the series. At Disney’s request, Scott also sent written ideas along with scripts. Beginning in 2018, Disney released three new seasons of Muppet Babies but never paid Scott for his contributions or gave him any credit in the show. Scott initially filed suit in 2020 for infringement of his copyright in the original production bible, but through a procedural twist, the court dismissed the lawsuit because the copyright was not disclosed as an asset in a bankruptcy proceeding that Scott filed in 2003. Scott then moved to reopen his bankruptcy proceedings, amended his schedule of assets and obtained permission for the bankruptcy trustee to represent him in prosecuting the claims against Disney, which were refiled in February 2022.

In seeking to dismiss Scott’s copyright causes of action, Disney argued that Scott had failed to allege substantial similarity between any protectable elements of his work and the Muppet Babies reboot. The court, however, found numerous examples of content in the new series that were substantially similar to Scott’s 1980s production bible and scripts, and further found that at least some of these elements were not generic and were protectable. For example, the court noted that the Muppet Babies reboot used the same nanny character with distinctive socks, who is only ever seen from the legs down, which Scott created in his production bible and scripts. The court also noted that substantial similarity was alleged between specific scripts written by Scott and specific episodes of the new series. The court concluded that the combination of so many specific elements could be protectable and could support a finding of substantial similarity under the extrinsic test.

Scott’s claim for breach of implied contract, commonly referred to as a Desny claim under California law, alleged that Scott’s submission of ideas in 2016 and Disney’s subsequent solicitation of additional ideas from him created an implied-in-fact contract, under which Disney impliedly agreed to pay Scott for the use of those ideas in the Muppet Babies reboot. To survive dismissal of a Desny claim, the plaintiff must sufficiently allege that he clearly conditioned the submission of ideas on an obligation to pay for their use, that the defendant was aware of this condition and accepted the submission, and that substantial similarity exists between the ideas and the work. Disney argued that at most the allegations established an expectation of payment if Disney were to hire Scott himself to write scripts for the reboot. The court disagreed, reasoning that industry custom, Disney’s past history of paying Scott to develop ideas he proposed, Disney’s solicitation of additional ideas from him concerning Muppet Babies, and certain statements suggesting that Scott would be involved were sufficient to plausibly allege a Desny claim.

Disney also argued that Scott failed to plead substantial similarity between the ideas that Scott pitched to Disney in 2016 and the rebooted Muppet Babies series. The court again disagreed, noting several specific examples of Scott’s suggestions, such as updating the nanny character, switching to computer-generated animation and the detailed expansion of the nursery setting, all of which were incorporated into the reboot without providing any compensation to Scott. Finally, Disney claimed that the Desny claim was time-barred under the applicable two-year statute of limitations. The court explained that because the parties’ intent is difficult to ascertain in implied-in-fact contract cases, California courts generally assume that the claim’s accrual date is the date the work is released to the general public. Although Disney argued that an earlier date should apply as a result of significant prerelease media coverage, the court instead applied the general California rule, concluding that Scott had timely filed suit.

On the fraud claim, Disney argued that Scott had failed to plead his cause of action with the particularity required by Federal Rule of Civil Procedure 9(b). The court rejected this argument, finding that Scott had included allegations of specific, misleading representations by Disney around the time of the 2016 meeting concerning a potential Muppet Babies reboot. In an email, Disney executives had asked Scott to send “a one sheet on the new creative direction you intend to take with the show” in order to “move the project forward.” The court found that these statements, combined with allegations that the Disney executives concealed from Scott that they were already preparing for the reboot and assembling a production team without him, were sufficient to state a claim for fraud.           

Summary prepared by Sarah Schacter and Jordan Meddy

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