Tuesday, May 4, 2010
Appeals Court Revives Malicious Prosecution Suit Against Manatt
Action Targeting Franklin Mint Over Diana Collectibles Not Supported by Probable Cause, Panel Says
By KENNETH OFGANG, Staff Writer
The law firm of Manatt, Phelps & Phillips lacked probable cause to sue the Franklin Mint Company for trademark dilution or false advertising over its Princess Diana dolls and plates, the Court of Appeal for this district ruled yesterday.
Div. Four reinstated Franklin Mint’s malicious prosecution suit, ruled in the company’s favor as to liability, and sent the case back to the Los Angeles Superior Court for trial on issues of malice and damages. The plaintiff, which claims it lost 90 percent of its value as a result of being falsely accused, is seeking tens of millions of dollars in damages against the Los Angeles-based firm.
The underlying suit was brought in 1998, six months after Diana’s death, by Manatt partner Mark Lee on behalf of The Diana, Princess of Wales Memorial Fund, which was established by the executors of her estate, and which inherited the princess’s rights of publicity.
The complaint alleged that Franklin Mint, which has produced Princess Diana merchandise since around the time of her marriage to Prince Charles in 1981, had diluted Diana’s trademark and had falsely asserted that it intended to donate all proceeds of the sales to charities favored by the princess.
The complaint referred to the company and its executives as “vultures feeding on the dead.”
That action was tried in the U.S. District Court for the Central District of California, where Judge Florence-Marie Cooper, since deceased, dismissed some claims at the outset and granted summary judgment on the remainder in 2000. She subsequently ruled that the claims were “groundless” and “unreasonable,” and awarded statutory attorney fees of more than $1.6 million in connection with those claims.
Six months later, Franklin Mint sued the Manatt firm, along with Lee and the Princess Diana fund, for malicious prosecution. The fund later settled, and the case went to trial solely against Lee and the law firm.
Manatt defended its conduct and claimed that Franklin Mint’s financial problems were its own doing. A news account of the trial said there were several heated exchanges, and cited Lee’s “I absolutely believe it’s true” comment in defense of his “vultures” comment in the complaint.
After five weeks of trial, retired Los Angeles Municipal Court Judge Warren S. Ettinger, sitting on assignment, ruled that probable cause existed as a matter of law and granted nonsuit.
But Justice Thomas Willhite, writing yesterday for the Court of Appeal, said there was no probable cause for the trademark claim because Diana’s name was not a trademark, and because even if it was, “no reasonable attorney would argue that ‘Diana, Princess of Wales’ or Princess Diana’s likeness had acquired the secondary meaning necessary to qualify for protection under the Federal Trademark Dilution Act.”
The justice distinguished cases in which the names or images of other celebrities had been held protected under trademark law. Those individuals “achieved public name (or image) recognition in connection with their provision of services,” Willhite explained, while “Princess Diana did not.”
Nor was the false advertising claim tenable, Willhite went on to say, because a reading of the advertisements makes it clear that Franklin Mint, which has given millions of dollars from its sale of Diana collectibles to charity, never promised to give all of those proceeds to the Diana fund or to charities generally.
Justice Steven Suzukawa concurred, but Justice Richard Mosk dissented.
Mosk, who normally sits in Div. Five but was assigned to Div. Four for this case due to recusals, said that while “[t]he cost in money and reputation can be significant” when a company is sued, “that does not mean that the lawyers who represented the losing party should be fair game.”
The Manatt firm, he said, “submitted literally volumes of evidence in support of the claims during the course of the federal action.” Franklin Mint’s failure to introduce that evidence in its malicious prosecution case “compelled the trial court to rule on Manatt’s motion for nonsuit that, as a matter of law, the Mint did not establish that Manatt lacked probable cause in the underlying action,” Mosk wrote.
Franklin Mint was represented on appeal by the law firms of Loeb & Loeb and Akin Gump Strauss Hauer & Feld; Manatt Phelps by Horvitz & Levy and Munger, Tolles & Olson; and Lee by Hill Farrer & Burrill.
The case is Franklin Mint Company v. Manatt, Phelps & Phillips, LLP, 10 S.O.S. 2367.
Copyright 2010, Metropolitan News Company