Graham-Sult v. Clainos

The U.S. Court of Appeals for the Ninth Circuit concluded that the federal district court erred in dismissing claims for copyright infringement, conversion and declaratory relief brought by the sons of the late concert promoter Bill Graham, against several parties that acquired physical and intellectual property from Graham’s estate.  In addition, the dismissal of claims of conversion and breach of fiduciary duty against the executor of Graham’s estate under California’s anti-SLAPP statue were also reversed by the appellate court.Graham-Sult v. Clainos, Case Nos. 11-6779, 12-15892 (9th Cir., Dec. 27, 2013) (Smith, J.).

From the 1960s until his death in a helicopter crash in 1991, Bill Graham was a local and international concert promoter.  Graham’s will created individual trusts for his sons who were 14 and 23 at the time of Graham’s death.  The executor of the will and trustee of the trusts was Graham’s friend and business partner, Nicholas Clainos.

In 2010, 15 years after the probate court entered its final disposition for Graham’s estate, the plaintiffs filed a district court action against Clainos, Richard Greene (Clainos’s lawyer in the estate and trust matters) and the “BGA Defendants,” who were parties affiliated with later purchases of business interests owned by Graham’s estate, including Bill Graham Enterprises, Inc. (BGE).

During the probate of Graham’s estate, and with the encouragement of the probate court, Greene structured a sale of BGE to the company’s key employees, and a new company, Bill Graham Presents (BGP) was formed.  Three weeks after the final order of the probate court, Greene prepared an assignment (the Assignment) executed by Clainos granting all of the intellectual property “claimed by or registered in” Graham’s name to BGE and backdated the assignment to August 1, 1995—seven days before the probate court had entered the final order of distribution.  Following the Assignment, the BGA Defendants came to own physical and intellectual property through transactions involving the sale of BGP to various entities.

The plaintiffs brought 12 causes of action claiming that they were entitled to pro rata distribution of certain physical and intellectual property belonging to Graham’s estate, including copyrighted concert posters, a trademark registration for THE FILLMORE and several personal scrapbooks (the Archives), which the plaintiffs claimed were owned in Graham's name at the time of his death.

The district court dismissed the plaintiffs’ claims against Clainos under the California anti-SLAPP statute, which allows the striking of complaints filed against a party based on “writing[s] made in connection with an issue under consideration or review by a… judicial body.”  However, the 9th Circuit held that six of the plaintiffs’ causes of action were unrelated to anti-SLAPP “protected activity” pertaining to the probate case.  Namely, Clainos’s execution of the back dated Assignment and removal of Graham’s personal property were not activities of written or oral statements constituting protected activity under anti-SLAPP.  Furthermore, the transfer of Graham’s intellectual property through the Assignment was found to exist outside of the probate court’s supervision since the Assignment was drafted and executed after the final probate distribution was entered.  Therefore, the 9th Circuit reversed and remanded the dismissal of six of the plaintiffs’ claims against Clainos, including claims for conversion of the Archives.

In addition to the claims against Clainos, the 9th Circuit reversed the district court’s dismissal of the plaintiffs’ claims against the BGA Defendants for conversion, copyright infringement and declaratory judgment.  Regarding the conversion claims, the 9th Circuit noted that the plaintiffs properly alleged that they were entitled to ownership or possession of the Archive assets when they were able to show that the copyrighted posters at issue were registered in Graham’s personal name (confirming his intent that they be personal property) and therefore would be part of his estate.

The 9th Circuit also held that the copyright infringement claims were improperly dismissed because the plaintiffs sufficiently pleaded enough facts to show that the Assignment was not effective, and that they had a legitimate claim to the copyrights when the BGA Defendants obtained them in transactions following the Assignment.  And finally, the 9th Circuit reversed the district court’s dismissal of the declaratory judgment cause of action for lack of an actual case or controversy, because the issue of the validity of the Assignment and the proper ownership of the Archives were considered to be disputed issues of fact and law that presented an actual controversy.