Category: Entertainment Law

Eight Nebraska Football Players Commence Litigation Against the Big Ten Seeking Reinstatement of Their Season and Monetary Damage

On August 27, 2020, eight Nebraska football players commenced litigation against the Big Ten Conference in the District Court of Lancaster County, Nebraska. The lawsuit asserts that the Big Ten Conference’s cancellation or possible delay of the 2020 college football season was “arbitrary and capricious.” In support of the same, the student-athletes point to the SEC’s, Big 12’s and ACC’s decisions to move forward with their college football seasons.

The lawsuit alleges the contractual procedures required to cancel or delay the season were not followed. Moreover, the lawsuit asserts that although, the players are not parties to that contract, they enjoy certain rights as third-party beneficiaries and therefore have standing to assert those claims. Legally, the players’ assertion that they somehow enjoy third-party status is in my opinion extremely weak. Under Nebraska law, in order for the players to enjoy third-party beneficiary statute, “it must appear by express stipulation or by reasonable intendment that the rights and interests of such unnamed parties were contemplated and provision was made for them.” Properties Inv. Group v. Applied Communications, 242 Neb. 464, 470 (1993). In other words, the Court is likely to look to the express language of the contract or governing documents between the member institutions to determine whether or not it expressly or reasonably confers the rights to student-athletes to sue for violating the same. I expect that the express language of the contract between the 14 schools in the Big Ten does not give rights to their student-athletes to sue.

The lawsuit also alleges that because these players were permitted under Nebraska state law to sell their name and likeness the Big Ten’s decision to cancel or delay the season will result in damages. The players’ lawsuit alleges that the Big Ten tortuously interfered with their business expectancies. Factually, those claims are problematic because a review of the rooster, reveals that most of the plaintiffs are redshirt freshman with little to no playing experience. Moreover, based upon both the short and long term uncertainty concerning COVID-19, it will be extremely difficult, perhaps impossible for the players to prove that the Big Ten’s decision was “arbitrary and capricious.” Douglas Cnty v. Archie, 295 Neb. 674, 688 (2017). Nebraska law holds that an “action is ‘arbitrary and capricious’ if it is taken in disregard of the facts and circumstances of the case, without some basic which would lead a reasonable and honest person to the same conclusion.” In my opinion, based upon the medical and scientific data and the member institutions concerns for the health and well-being of their students, it will be next to impossible for the plaintiffs to meet that extremely high burden. Even if it turns out that the Big Ten made the wrong decision will not be dispositive to this issue.

The players’ lawsuit is also legally flawed because Nebraska law holds that damages cannot be speculative or conjectural. Pribiil v. Koinzan, 266, Neb. 222, 227-228 (2003). Although, the players assert that if they were given the opportunity to play, it would have resulted in them being able to sell their name and likeness, I suspect none of these players had contracts, endorsements or agreements when the Big Ten decided to cancelled or delay its college football season. If so, I believe the players’ damages would be speculative or conjectural and not subject to recovery. Because this is a legal issue, not a factual question, I suspect, the claim is likely to be dismissed at some point in the litigation.

I expect the Big Ten to file a pre-answer motion seeking the dismissal of the entire. I expect the Big Ten to assert that the players do not enjoy third-party beneficiary status, the decision was not arbitrary and capricious and that the alleged damages as asserted in the case are speculative and conjectural. While the Court in deciding a pre-answer motion to dismiss is required to assume all of the facts contained in the lawsuit are truthful and accurate, I suspect that most, if not all of the claims asserted in this lawsuit will be dismissed. Even if the damages issue were to survive a pre-answer motion to dismiss, I suspect after the completion of discovery the remainder of the case would be dismissed by way of summary judgment motion.

COPYRIGHT © 2020, STARK & STARK
ARTICLE BY Scott I. Unger of  Stark & Stark
For more articles on sports, visit the National Law Review Entertainment, Art & Sports section.

COVID-19 Liability: Practical Guidance on Risk Management for Horse Shows and Competitions

As COVID-19 continues to alter our daily lives, many of us have found comfort in barn time spent with our four-legged friends.  With so many spring and summer events cancelled, we are eager to get back in the saddle and into the show ring.  However, the legal implications facing horse show boards and competition venues are complex and ever-evolving. Which rules and guidelines apply?  What if someone at the show has or contracts COVID-19?  How do we manage (can we manage) the risks inherent in a pandemic?  This legal alert will explore risk management for horse shows in the age of COVID-19, including best practices, the efficacy of COVID-19 waivers, and prospects for statutory immunity.

Meeting Your Standard of Care through Best Practices

“Standard of care” is the legal yardstick by which we measure whether a person or business is acting in a reasonable manner.  If a business breaches or violates its standard of care and someone is injured as a result, a judge or jury can find that the business is legally liable to the injured person.  The best way for horse shows to meet their standard of care is to follow best practices in planning and preparing for events.

Best practices start with having a detailed, written plan for how the event will address and minimize the risk of exposure to COVID-19.  A good starting place is the United States Equestrian Federation’s (USEF) Emergency Response Plan, which walks through the types of things to consider when developing a plan specific to your event.[1]  But simply having a plan is not enough – you must implement and live your plan.  From a liability perspective, having a plan that is not updated, followed, or that is even intentionally ignored, is worse than not having a plan at all.

Your plan should comply with all applicable requirements and guidelines from your governing body or bodies.  If you are a USEF affiliate or hosting a USEF-rated competition, your plan must incorporate the mandatory requirements found in the USEF’s COVID-19 Action Plan.[2]  In addition, check with your breed/discipline association and your state and local government for requirements or recommendations.  For example, in Kentucky, three sets of state requirements could apply: Minimum Requirements, Horse Show Requirements, and Venues and Event Spaces Requirements.[3]  The state requirements overlap with each other and with the USEF Action Plan on topics such as maximizing work from home and electronic options, staff health screenings, face coverings, and social distancing, but the Kentucky Minimum Requirements also require items like a plan to ensure testing of symptomatic staff within a certain period of time and mandatory staff training on COVID-19 and the applicable state requirements.

As part of living your plan, you should consider how you will enforce it and then train your staff accordingly.  Both the USEF and Kentucky require the use of face coverings.  Both also require that shows ask an individual to comply and, if the person refuses (and is not exempt), either deny entry to the person or remove the person from the show grounds.  What is your enforcement plan?  Think in terms of a tiered system of soft and hard enforcement.  Soft enforcement includes making masks readily available across the grounds, signs, floor markings for social distancing, and routine announcements reminding participants and spectators of masking and other protocols.  If you’re seeing sloppy compliance or non-compliance, soft enforcement can also be in the form of show management holding (socially distanced) trainers’ or competitors’ meetings to reinforce the importance of following the protocols.  It can also come in the form of hiring off-duty, uniformed police officers, since their presence alone can encourage compliance.  Hard enforcement means denial of entry, asking someone to leave, and, if necessary, escorting that person from the premises.  If you see persistent non-compliance from a specific barn or group, consider whether hard enforcement might mean banning them from competition.  Of course, the goal is to avoid the need for hard compliance.  Consider training your staff on de-escalation techniques and push the themes of “we’re all in this together” and “we want to be able to compete, so please help us make this show happen.”

Finally, your plan should recognize what you do not know and plan for contingencies.  Revisit the plan as our understanding of COVID-19 evolves and as applicable requirements and guidelines change.  Since as many as 40 percent of COVID-19 cases are asymptomatic, encourage employees, volunteers, and contractors to take advantage of free testing in your area before, during, and after the competition.  Consider having staff operate in small pods with minimal face-to-face interaction with other pods.  This could minimize disruptions in the event a staffer becomes symptomatic or has to quarantine due to potential exposure or an asymptomatic positive.  Consider the conditions and circumstances under which you would cancel the show.  Will you rely on local positivity rates?  Will you consult with state and local health departments?  How far in advance do you need to make the call to be considerate to participants, sponsors, venues, and staff?  An insurance check-up – like an annual physical – is always a good idea, but this is especially so in the age of COVID-19.  Check your liability policy for language excluding claims related to communicable or infectious diseases.  If your policy excludes coverage for these claims (or if the policy isn’t clear on the subject), ask your agent if you can add coverage.  It may be cost-prohibitive to do so, but at least you will have a better understanding of your risk.  If you have event cancellation insurance, make sure you know what the policy covers and the type of documentation you will need if you have to make a claim.

Shows and competition venues should consider all of these factors when tailoring their individual plans.  While meeting the standard of care will not always deter claims or lawsuits, following best practices provides a solid starting point for your defense in the event of a claim.  It documents the careful planning, preparation, and implementation that went into making the show reasonably safe for participants and staff.

Should You Use COVID-19 Waivers?

COVID-19 waivers (“COVID waivers”) are an increasingly popular tool used by businesses in an effort to limit legal exposure.  However, like many popular trends, we have yet to see if the waivers have any staying power.  From a litigation perspective, there are serious questions about their enforceability.    Asking someone to waive potential claims related to “the inherent risks of being in public during a pandemic” is a much more abstract concept than asking them to sign the typical “inherent risk of equine activities” waiver.[4]  We do not yet know all or even most of the risks associated with COVID-19 and, as a result, courts may not enforce COVID waivers.  To compound this concern, courts in a majority of states (including Kentucky) have found that waivers signed on behalf of minors are not enforceable in at least some situations.[5]  Even putting enforcement concerns aside, COVID waivers – like most waivers – generally do not protect against gross negligence or willful misconduct.  In the context of COVID-19, this could look like a show that fails to follow their plan or a participant or staff member who knows he/she is positive and, nevertheless, comes to the competition.

Despite all of these challenges, a well-written COVID waiver can be useful to establish that a person was given fair notice of the potential for exposure and the potential risks of that exposure and chose to participate anyway.  If you decide to use a COVID waiver as part of your risk-management plan, consider including the following features.

  1. Draft the waiver in plain English with minimal legalese.
  2. Make the waiver a standalone document.  Avoid using combination waivers that lump in the standard equine activities language with vague references to “communicable and/or infectious diseases.”
  3. State the known risks of COVID-19 and the scope of the waiver in a clear and conspicuous manner.[6]  Does the waiver include claims arising from negligence?  Is it limited to the show board/committee, the venue, and staff, or does it include claims against other participants?
  4. One COVID waiver per person, signed by that person.  Do not permit trainers to sign on behalf of participants.  Develop a system for participants to access, sign, and submit the waiver online but avoid using fine print with a “Click Here to Accept Terms & Conditions” box.
  5. Use a specific waiver for minor children that requires the person signing to warrant and represent that she/he is the parent or authorized legal guardian.
  6. Use the waiver as a vehicle for compliance.  Consider attaching a copy of the show’s COVID-19 participant requirements and safety protocols.  Include language in the waiver that references those requirements and states that the participant acknowledges receipt and agrees to comply.

As discussed above, a well-written COVID waiver has uses beyond enforceability.  Even if a court finds that the waiver does not bar a claim, your show will still have important written evidence that the participant was warned of the risk in plain English and chose to participate anyway.

What about Statutory Immunity?

Several states and the federal government have enacted – or are considering – some form of statutory immunity to protect businesses from COVID-19 related claims.[7]  States like Kentucky limit that immunity to certain sectors, such as health care providers and PPE manufacturers.[8]   At least 10 states offer immunity to a broad range of businesses through heightened burdens of proof.[9]  For example, under Tennessee’s new COVID-19 Recovery Act, businesses are protected unless a plaintiff can prove (i) causation by clear and convincing evidence and (ii) that the business acted with gross negligence or willful conduct.[10]  The former will likely require proof of a verified, contact-traced outbreak at the business, and evidence that the plaintiff was at the business during a certain window of exposure.

While statutory immunity can provide some liability protection, horse shows should view it as a backstop rather than the centerpiece of their COVID-19 risk-management plan.  As with any immunity statute, COVID-19 immunity statutes will face court challenges on a variety of issues from the scope of immunity to the type of proof required to meet any exceptions.  Even if your state offers immunity for your event, it is not a substitute for careful planning and implementation of best practices.

Final Thoughts

Risk management in the age of COVID-19 is an ever-evolving challenge, but identifying best practices and putting them into action can help horse shows rein in potential liability and provide safe opportunities for competition.  Know the applicable governing body, state, and local requirements, be smart about how you use COVID waivers, and never rely entirely on statutory immunity.  It is impossible to eliminate all liability risks, but careful planning and living that plan give shows, venues, and equestrians the best chance for a return to safe and fun competition.

Footnotes

[1]See United States Equestrian Federation, COVID-19 Emergency Response Plan, August 18, 2020, available at: https://www.usef.org/forms-pubs/4Tog688hc10/covid-19-emergency-response-plan–

[2]See United States Equestrian Federation, COVID-19 Action Plan, August 18, 2020, available at: https://www.usef.org/forms-pubs/XhKGVYiiwTA/usef-covid-19-action-plan-for-operating

[3]See, e.g., Minimum Requirements for All Entities, Kentucky Healthy at Work Guidance Version 3.0, effective July 10, 2020, available at:  https://govsite-assets.s3.amazonaws.com/PuhOvvxS0yUyiIXbwvTN_2020-7-10%20-%20Minimum%20Requirements.pdf;  Requirements for Horse Shows, Kentucky Healthy at Work Guidance Version 3.0, effective July 10, 2020, available at:  https://govsite-assets.s3.amazonaws.com/1bjXrMecSSeEy8LR3mDk_2020-5-29_-_healthy_at_work_reqs_-_horse_shows%20draft%203.0.pdf; Requirements for Venues and Event Spaces, Kentucky Healthy at Work Guidance Version 3.0, effective June 29, 2020, available at: https://govsite-assets.s3.amazonaws.com/wHu3QCJdS6Bleg8gV5qR_HAW%20Venues%20and%20Events%20Spaces%20-%20FINAL%20-%202020-06-22.pdf

[4]See, e.g., KRS 247.4027 of the Kentucky Farm Animal Activities Act which endorses the use of waivers related to participation in equine and farm animal activities.

[5]See, e.g., Miller, as Next Friend of her Minor Child, E.M. v. House of Boom Kentucky, LLC, 575 S.W.3d 656 (Ky. 2019) (holding that pre-injury liability waivers for commercial businesses signed by a parent or guardian on behalf of a minor child are unenforceable under Kentucky law.)

[6]See Symptoms of Coronavirus, Center for Disease Control, available at: https://www.cdc.gov/coronavirus/2019-ncov/symptoms-testing/symptoms.html?utm_campaign=AC_CRNA

[7] Congress has considered legislation that would impose strict nationwide limitations on COVID-19 tort liability.  In anticipation of a “risk of a tidal wave of lawsuits” the proposed bill offers immunity for businesses, educational, religious and nonprofit institutions, local government agencies and healthcare providers for exposing people to COVID-19. SeeSAFE TO WORK Act, S. 4317, 116th Cong., §2 (2020), available at: https://www.congress.gov/bill/116th-congress/senate-bill/4317/text

[8]See Kentucky Senate Bill No. 150, March 30, 2020; see, e.g., states including Alaska (S.B. 241, enacted April 9, 2020), Massachusetts (S2640, enacted April 17, 2020), New Jersey (S2333, enacted April 14, 2020), New York (S75006B-A90506B-Chapter 56 (Section GGG),and Wisconsin (2019 Wisconsin Act 185, enacted April 15, 2020, as well as the District of Columbia (B23-0734), have enacted similar protections for healthcare workers and personal protective equipment manufacturers.

[9] Like the contemplated federal legislation, some states have already enacted legislation limiting COVID-19-related civil liability for a broad range of businesses.  See, e.g., Georgia (S.B. 359, enacted August 5, 2020), Kansas (H.B. 2016a, enacted June 8, 2020), Louisiana (HB 826, enacted June 13, 2020).

[10]See Tennessee COVID-19 Recovery Act (SB 8002/HB 8001), August 17, 2020.

© 2020 Dinsmore & Shohl LLP. All rights reserved.
For more articles on horse racing, visit the National Law Review’s Entertainment, Art & Sports section.

How To Stay Safe On a Boat This Summer

The weather is already heating up, and you may be thinking about getting out on a boat to enjoy some summer fun with your friends and family. Despite the ongoing COVID-19 pandemic, many people may choose to safely enjoy their time on the water. However, boating accidents can lead to significant injuries for those on board. During the latest reporting year of data, the US Coast Guard states that there were 4,145 total boating accidents across the country. These incidents led to thousands of injuries and more than 600 deaths. If you are going to be spending any time on the waterway this summer, there are various safety tips then we want to discuss with you today.

Always Have a Life Jacket

Life jackets are an essential part of boating safety, whether you are on a motorized or non-motorized water vessel. Statistics from the US Coast Guard show that approximately 75% of all boating deaths are due to drowning and that 84% of drowning victims were not wearing a life jacket when they went into the water.

We need to point out that even skilled swimmers need to wear life jackets when they are on a boat. A fall from a boat can lead to a personal injury that involves an individual hitting their head and becoming disoriented or injured, making these kinds of boat injuries difficult to stay above water. Every life jacket needs to be the appropriate fit for the wearer’s size and weight. Always ensure that the life jacket properly fastens.

Use Good Judgment

When boating, good judgment goes a long way. This can include the following:

  • Never operating a boat while under the influence of alcohol or drugs as this can affect judgment, vision, balance, and coordination.
  • If the weather looks rough or if the forecast for the day does not look good, you need to consider not going out on the boat. Bad weather conditions can create tremendous hazards for boaters.
  • Always operate at a safe speed. Open waters can be deceptively dangerous, and operating at high speeds increases the risk of a collision with other boats, docks, the shoreline, and obstacles in the water.

Be Careful When Participating in Water Sports

Many people in and around our area like to participate in various popular water sports, including water skiing, tubing, wakeboarding, kneeboarding, etc. If you or your family members will be participating in these activities, you need to thoroughly understand how to safely use all materials and objects involved.

  • Learn how to get out of the water safely and how to use the tow rope.
  • Understand basic hand signals and how to use a spotter in the boat.
  • Make sure that the tow line does not get caught in the propeller of the boat or wrapped around any person.
  • Wait for a propeller to stop moving before getting back on the boat.
  • Only participate in water sports during the daytime.

Ensure a Boat has Been Properly Maintained

The truth is that boats are high maintenance vessels. If you and your family own a boat or are enjoying time on a friend’s boat, ensure that the vessel has been properly inspected and maintained. If you will be enjoying boating activities or water sports on a rented boat, make sure you only work with accredited businesses with extensive experience handling boats.

Be Mindful of Social Distancing

Boats are not conducive to the social distancing measures necessary to stop the spread of COVID-19. This summer, you should consider only going out on a boat with those who live within your household. Failing to do so could risk you or somebody you love contracting the virus, which is not something you want to experience.

© 2020 by Console and Associates. All rights reserved.

See the Personal Injury law section of the National Law Review for similar topics.

How Outdoor Sports and Recreation Operations Can Legally Protect Themselves in a Post COVID-19 Environment

There is a world history of pandemics that, at one point or another, crippled civilizations or dynasties.  In America’s more recent history, our country has experienced the Spanish Flu (1918 – 1920), the Asian Flu (1957 – 1958), and the H1N1 Swine Flu (2009 – 2010).  Though the Swine Flu is in our society’s most recent memory, the current Coronavirus infection and death numbers have already surpassed the total Swine Flu infection and death numbers.  The Coronavirus (COVID-19) has wreaked havoc on Americans and their interactions with each other because of the rapid rate at which the virus spreads.  Businesses have been impacted due to governmental orders to temporarily close or greatly reduce their services.  But with proper action, the spread of the virus will slow, the economy will rebound, and people will return to the extracurricular activities they enjoy.

As our country presses forward, the Coronavirus will change the way business owners conduct business – including operators in the outdoor sports and recreation business.

On May 5, 2020, North Carolina Governor Roy Cooper signed Executive Order No. 138 (the “Order”), which modifies Executive Order No. 121 (also known as The North Carolina “Stay at Home” Order).  The Order signaled the beginning of Phase 1, effective 5:00 p.m. on May 8, 2020, and the gradual reopening of North Carolina.  On May 20, 2020, Governor Cooper signed Executive Order No. 141, which outlines “Phase 2” of reopening North Carolina and will begin on May 22, 2020, at 5:00 p.m. (also known as the North Carolina “Safer at Home” Order).  The Order removes the distinction between essential and non-essential businesses, which were defined in Executive Order No. 121, thus allowing many businesses originally deemed non-essential to reopen.  Additionally, the Order explicitly provides that outdoor activities are allowed and that day camps and programs for children and teens are permitted to resume if they are able to adhere to certain guidelines and social distancing requirements.  Phase 2 allows for overnight camps for children and teens to resume, also as long as requirements are met.  As North Carolina moves through Phase 1 and into Phase 2, several state parks will reopen to the public.  Phase 2 does not permit Mass Gatherings of more than ten people indoors or more than twenty-five people outdoors nor does it allow for indoor fitness facilities to reopen.  Please click HERE for a summary of what Phase 2 allows and does not allow.

As outdoor sports and recreation businesses prepare to eventually reopen, business owners should evaluate their legal documents to determine if the business is adequately protected in the event of this continuing pandemic or another pandemic.  Two items to consider are the contractual language in event contracts and liability waivers.

Update Contractual Language Regarding Event Cancellation or Postponement

Outdoor sports and recreation businesses that provide services such as race organization, adventure vacations, guided excursions, exhibition management, or outdoor recreation conference organization have been forced to cancel or postpone events if the event was scheduled to take place during one of the many state or local government orders to shut down.

Businesses that plan these events often expend costs associated with the event as the planning progresses.  In light of the Coronavirus, most businesses should revise their contractual language involving event production, especially in cases where there is a “no refund” policy.

If the current contractual language does not address governmental orders related to government-ordered shutdowns, pandemics, or does not contain a force majeure provision, then the contract likely should be revised to include such provisions.

The contractual language that addresses pandemics and governmental orders to shut down can help limit the business’s financial liability in the event of event cancellation or postponement due to a future pandemic or governmental order to shut down.

Update Liability Waivers

Outdoor sports and recreational activities come with inherent risks for participants and sometimes even for event spectators.  When a participant or spectator gets injured during the activity, there is potential liability exposure to the other participants, the event organizers, and the activity providers.  Liability exposure is greatly reduced with a proper liability waiver signed by the participant or agreed to by the spectator before the activity begins.

There are several key components to an effective liability waiver.  One such component is the assumption of risk provision.  This provision identifies (1) the activity at hand, (2) the inherent risks associated with engaging in or observing such activity, and (3) that these risks cannot be eliminated no matter the level of care taken to avoid injury.

In light of the Coronavirus, outdoor sports and recreation business owners should examine the assumption of risk provision in their liability waivers.  They should seek legal guidance in adding language to provide that participants are at risk of coming into contact with certain communicable diseases or viruses similar to COVID-19.  The waiver should also be updated to reflect that participants agree to waive claims arising from injury, illness, or death associated with these assumed risks.

Many runners and tri-athletes are looking eagerly to the day when they will once again be allowed to sign up for and compete in races and events. Others are awaiting the return of guided white-water rafting trips, lazy days floating on a tube down a local river, or visiting an adventure center to challenge themselves on a ropes or zip line course.  Owners of these outdoor sports and recreation operations should use this time to get their documents in order to protect themselves against potential future lost revenue or liability in the event of another pandemic or if a government order to shut down occurs.

© 2020 Ward and Smith, P.A.. All Rights Reserved.

For more on the return of sports, see the National Law Review Entertainment, Art & Sports law section.

DOJ Seeking to End Movie Studio and Theater Antitrust Decrees amidst Streaming Competition – A New Opportunity in Theatrical Distribution?

For the film and media distribution industries, this year has been action-packed.  Production budgets are skyrocketing and new digital services have been announced or are launching with each passing month. The streaming wars are upon us. Moreover, the FCC recently voted to treat streaming services as “effective competition” to traditional cable providers (or MVPDs), thereby triggering basic cable rate de-regulation in parts of Hawaii and Massachusetts.

The distribution landscape took yet another unexpected legal twist this week. On November 18, Assistant Attorney General Makan Delrahim announced that the Antitrust Division of the Department of Justice would ask a federal court to terminate the “Paramount Consent Decrees” (the “Decrees”), which have prohibited movie studios from engaging in certain distribution practices with movie theaters since the 1940s. The DOJ filed a motion to terminate the Decrees in federal court in the Southern District of New York on November 22, 2019.  Notably, the DOJ cites streaming services and new technology as a few of the many reasons that the Decrees may no longer be necessary in what the DOJ official sees as today’s highly competitive, consumer-driven content market. Given the volatility of the content licensing space, film licensors and licensees will have to carefully consider how the DOJ’s actions will affect their content rights and options going forward.

By way of background, the Decrees emerged out of the landmark 1948 Supreme Court antitrust case, United States v. Paramount Pictures, Inc. Prior to the case, top Hollywood studios frequently owned movie theaters (thus, owning both the means of production and distribution). This vertical integration led to lower distribution costs for the studios and gave them pricing power and the ability to discriminate about which theaters distributed their films. Not surprisingly, smaller, independent theaters struggled to survive.  The problem was exacerbated by studios engaging in practices such as “block-booking” (requiring theaters to distribute all or none of the studio’s slate of films) and overbroad “clearances” (restrictions on the time which must elapse between particular runs of a film), as well as alleged horizontal conspiracies between the studios and theaters on matters like minimum ticket pricing. As part of the Decrees, the defendant studios were restricted or prohibited from engaging in these practices and were required to divest certain interests in their theaters.

The DOJ’s November 22nd motion may not come as a surprise, as the DOJ first announced that the Decrees were under review in August 2018, after which several industry players, including the National Association of Theatre Owners (NATO), submitted comments. In particular, NATO argued, despite how streaming and technology might increase competition, that block-billing would still adversely impact independent or local chains that exhibit fewer films and may not be able to afford larger blocks of films.

Delrahim summed up the DOJ’s position, stating, “the [D]ecrees, as they are, no longer serve the public interest, because the horizontal conspiracy – the original violation animating the decrees – has been stopped. […] Changes over the course of more than half a century also have made it unlikely that the remaining defendants can reinstate their cartel.” In particular, the DOJ argued that the competitive concerns of the 1940s no longer exist because the movie marketplace has changed so drastically, citing how film distributors have become less reliant on theatrical distribution with the advent of streaming. According to the DOJ, colluding to limit theatrical film distribution in today’s market “would make no economic sense.”  In addition to streaming services, Delrahim also cited new theatrical release business models (such as flat-fee multi-ticket pricing) as increasing competition and innovation in film distribution.

The DOJ acknowledged NATO’s concerns in part and asked the court to implement a two-year sunset on block-booking and circuit dealing (licensing to all theaters under common ownership, as opposed to on a theater-by-theater basis). Whether terminating the Decrees would decrease innovation, neither the motion papers nor Delrahim venture to guess. Delrahim noted that antitrust enforcers need not predict the future but need only recognize that changes are occurring. He added that practices covered by the Decrees would not become per se lawful, but would rather be subject to review under the rule of reason standard.

Commentators are split on whether termination of the Decrees that have shaped Hollywood for decades will lead to any significant change for the movie business. One thing that is important to note is that the Decrees did not outright prohibit vertical integration of studios and theaters – the defendant studios could (and did) acquire theaters after proving that such acquisitions would not unreasonably restrain trade. Further, only those studios party to the Decrees remain subject to their restrictions, meaning many of today’s top studios (that now typically own a vast portfolio of traditional and digital entertainment properties) were non-existent or much smaller in the 1940s and have not been subject to the Decrees.

While it remains to be seen how this development will play out, it is noteworthy for digital providers because it may breathe extra life back into the theatrical release window. With mammoth streaming deals inked every week, the value of the theatrical release window was seemingly diminishing for some films. But now that many studios are forgoing third-party licensing fees and instead retaining their content for their own streaming platforms, studios may begin to ask whether added revenues from ownership of a theater chain could be a potential new source of revenue and a way to gain additional control of the theatrical window. Meanwhile, the effect of lifting the Decrees may not necessarily lead to a flurry of acquisitions, as other studios involved in direct-to-consumer streaming campaigns may not have the capital or desire to exploit the termination of the Decrees. Major theater chains will likely seek to strengthen relationships with studios, while independent theaters will look for ways to succeed despite potentially rising costs.

With all of these developments, studios and media platforms will also need to carefully consider how to protect their interests when handling their licensing arrangements, given the volatility in this space and keeping in mind the two-year sunset (assuming the DOJ succeeds) on block-booking and circuit dealing. While some distributors may be looking for long-term, exclusive content deals as they roll-out their streaming services, studios and content providers may seek flexibility as their distribution options are changing day-to-day.

© 2019 Proskauer Rose LLP.

More on entertainment distribution on the National Law Review Entertainment, Art & Sports law page.

Gaming Industry Associations Agree on Universal Esports Principles

Earlier this month, a set of gaming industry representatives agreed upon and released a set of unifying esports principles. These representatives include the Entertainment Software Association (ESA), as well as associations from Canada, Australia and New Zealand, the UK, and Europe. These “Principles of Esports Engagement” were developed in a collaborative effort and form a set of values applicable in all aspects of the global esports environment.

The principles include the following:

  • Safety and Well-Being
    • All esports community members deserve to participate in and enjoy esports in safe spaces and to be free from threats and acts of violence and from language or behavior that makes people feel threatened or harassed.
  • Integrity and Fair Play
    • Cheating, hacking, or otherwise engaging in disreputable, deceitful, or dishonest behavior detracts from the experience of others, unfairly advantages teams and players, and tarnishes the legitimacy of esports.
  • Respect and Diversity
    • Esports promotes a spirit of healthy competition. Whether in person or online, all members of the esports community should demonstrate respect and courtesy to others, including teammates, opponents, game officials, organizers, and spectators. 
    • Esports is truly global and brings together players from different backgrounds, cultures, and perspectives. We believe the broad and diverse player base of esports contributes to its success. We support an open, inclusive, and welcoming environment for all, no matter one’s gender identity, age, ability, race, ethnicity, religion, or sexual orientation.
  • Positive and Enriching Game Play
    • Esports can help build self-confidence and sportsmanship and boost interpersonal communication and teamwork skills. Esports brings players and fans together to problem solve through strategic play, collaboration, and critical thinking. Participation in esports can also lead to the development of new and lasting friendships among teammates, competitors, and members of the broader esports community.

The goal of these organizations in releasing this set of principles is to foster an esports community that is responsible, welcoming, engaging, and of course, fun. Notably, in ESA’s press release announcing these principles, the association highlighted the growth of esports, citing research that estimates that, in 2019, global esports viewership will hit nearly 500 million and revenues will exceed $1 billion USD. With this level of growth, the esports community has a vested interest in supporting the best conditions for play and ensuring esports remains an exciting and inclusive activity and industry at all levels.

Copyright © 2019, Sheppard Mullin Richter & Hampton LLP.

For more video gaming issues, see the National Law Review Entertainment, Art & Sports law page.

Celebrity Entertainer Sues Over Video Game Avatar

As real-world celebrities continue to expand the reach of their persona into the digital realm, the potential benefit for advertisers, game developers and esports event promoters is exceedingly high. But with increased opportunity comes increased risk.

A New York Supreme Court recently addressed this risk when it construed the State’s right of publicity statute[1] in a dispute over an NBA 2K18 video game avatar. In Champion v. Take Two Interactive Software, Inc., celebrity basketball entertainer Phillip “Hot Sauce” Champion sued the video game developer, alleging violation of his right to privacy for Take-Two’s use of his name and likeness. The Court ultimately dismissed the lawsuit, but not before it provided a helpful discussion of New York’s publicity statute and its modern application to the esports industry.

A Primer on New York’s Publicity Statute

New York publicity law allows both criminal charges and civil liability for use of a person’s “name, portrait or picture” for advertising or trade purposes without prior written permission. This right to publicity extends to any recognizable likeness that has a “close and purposeful resemblance to reality.” Courts have already held that video game avatars are within the scope of the statute’s reach.

However, while seemingly broad at first pass, this statutory right is actually more narrow than similar rights in other states where the right to publicity is recognized only at common law (i.e., in states that have no black-letter publicity statute). For example, in New York, neither “incidental” use of a person’s name or likeness, nor use that is protected under the First Amendment, are violations.

Further, unlike the words “portrait” and “picture,” the word “name” in the statute is construed literally. In fact, New York courts find liability only for uses involving an individual’s full name, and not just a surname, nickname, or business name. The statute does, however, protect certain “stage names” in limited situations, such as when the individual has become known by a stage name virtually to the exclusion of his or her real name.

The Plaintiff and the Video Game

Phillip Champion is a prominent street basketball entertainer known professionally as “Hot Sauce.” Champion claims that he is widely recognized as both “Hot Sauce” and “Hot Sizzle” in social media, and is regularly depicted on television and in blogs, movies, YouTube videos, sports magazines and live halftime shows. As a result, Champion is able to license his celebrity persona through sponsorships and endorsement deals with prominent consumer brands like AND1.

Photographs of Champion filed with the Court.

Take-Two created the NBA 2K18 basketball simulation video game, which realistically depicts the on-court competition and off-court management of the National Basketball Association. Users can create a custom player avatar, or select from existing player avatars modeled after real-life professional athletes. The game’s “MyCareer” mode allows the user to create a custom basketball player, and then design and play through the character’s entire career, competing in games and participating in off-court activities. The “Neighborhoods” option, which ties to the off-court activities in the MyCareer mode, lets users explore an off-court urban world while interacting with other basketball players—most of which are non-playable characters controlled by the computer—in scenarios like exercising in public gyms and playing casual basketball games on city courts.

Champion’s Claims

Champion’s lawsuit stems from one of the non-playable characters in the game’s Neighborhood mode, who is depicted as a young, African-American male with a mohawk, wearing all-white hi-top sneakers, a tank-top, and black shorts with white piping. On the front and back of the tank-top is the numeral “1,” and on the back are the words “Hot Sizzles.”

Images of the “Hot Sizzles” avatar filed with the Court.

Champion alleged that the look of the “Hot Sizzles” avatar incorporated numerous personal aspects of his life and identity in violation of the New York publicity statute, and further that the avatar’s “Hot Sizzles” name was itself a violation because Champion is “ubiquitously” known as “Hot Sizzle.”  Take-Two responded that its “Hot Sizzles” avatar does not sufficiently resemble Champion, whether in name or image, under New York law.

On Champion’s claims to his likeness, the Court found no physical resemblance between Champion and the “Hot Sizzle” avatar, and determined that the only reasonable commonalities are that “both are male, African-American in appearance, and play basketball.” The Court compared this case to two similar cases (Lohan v. Take-Two Interactive Software, Inc.  and Gravano v. Take-Two Interactive Software, Inc. ), both involving Take-Two’s Grand Theft Auto video game, in which the avatars exhibited many closer similarities to the plaintiffs in clothes, hair, poses, voice, and life stories. Finding no similar likenesses in this case, the Court ruled that, at least from a visual perspective, the Hot Sizzles avatar in NBA 2K18 is not recognizable as Champion as a matter of law.

On Champion’s claim to the name “Hot Sizzles,” the Court recognized that the use of a person’s celebrity or “stage” name with a video game avatar could aid in recognition of the avatar as that person’s likeness. However, the Court determined that Champion’s “primary performance persona” is actually “Hot Sauce,” which is entirely distinct from the NBA 2K18 avatar’s name, “Hot Sizzles.” Champion was not able to show that he is widely known as “Hot Sizzle” to the public at large—as opposed to just in the sporting or gaming circles—so the Court ruled that, without this level of connection between Champion and the name “Hot Sizzle,” Take-Two’s use of “Hot Sizzles” does not aid in the visual recognition of the NBA 2K18 avatar as Champion.[2]

Incidental Use and the First Amendment

Take-Two also defended against Champion’s claims by alleging that the “Hot Sizzles” character falls within the “incidental use” exception to liability under New York’s statute. After reviewing the NBA 2K18 game content and related advertising, the Court seemed to agree that the avatar “is a peripheral non-controllable character” that “adds nothing of true substance to a user’s experience in the game.” However, the Court declined to make an affirmative ruling on this component of the lawsuit.

Finally, Take-Two argued that its NBA 2K18 game is protected speech under the First Amendment, and as such, it does not constitute “advertising or trade” under New York’s law. In response, the Court declared that, while video games may conceptually qualify for free speech protection, not every video game constitutes “free speech” fiction or satire. In comparing NBA 2K18 to games that contain a detailed story with pre-defined characters, dialogue and unique environments created entirely by the game designers, the Court determined that here, the users create their own basketball career and completely define their character. Accordingly, the Court found that categorizing NBA 2K18 as “protected fiction or satire” under the First Amendment is “untenable.”

What it Means

As novel sponsorship and endorsement opportunities are created through the advent of esports, advertisers, game developers, and event promoters must be certain they have the appropriate content and publicity licenses in place. However, because publicity laws, in particular, are enforced at the state level, doing this without expert guidance can be daunting. Using the right tools and a proactive licensing and review strategy, brands and marketing agencies can capture (and keep) a broader share of the esports industry’s revenues, and keep the competition on the court, not in it.

[1] New York Civil Rights Law, §§ 50-51.

[2] The Court determined that “Hot Sizzle” is, at best, Champion’s secondary “nickname.”

Copyright © 2019, Sheppard Mullin Richter & Hampton LLP.

War of the Words: Ninth Circuit Reverses Judgment for the Insurer in Rare War Exclusion Case

In Universal Cable Prods. LLC v. Atlantic Specialty Ins. Co., 2:16 cv-04435 PA, (9th Cir. July 12, 2019), the Ninth Circuit reversed the district court’s determinations as it relates to the application of two war exclusions.

In the summer of 2014, Universal Cable Productions wasfilming a television series, Dig, in Jerusalem.  During filming, hostilities arose in the region as Hamas, a Palestinian political movement, began firing rockets from Gaza into Israel.  The ongoing and escalating Israeli-Palestinian strife caused Universal to halt production, and ultimately move it out of the area.  Not surprisingly, the move resulted in significant expenses, prompting Universal to file a claim under its television production policy in order to cover the costs.

The insurer denied coverage for the claim, relying, for apparently the first time, on the applicability of the policy’s war exclusions.  The exclusions, which the insurer argued were triggered by Hamas’ firing of rockets, barred coverage for expenses resulting from: war, warlike action by a military force, or insurrection, rebellion, or revolution.  Universal countered that the exclusions are not applicable because the terms in the exclusions had a specialized meaning in the insurance context, and the Hamas action did not comport with that meaning.  The district court, refusing to apply any specialized meaning and instead using the plain meaning of the terms, sided with the insurer and found that Hamas’ actions clearly constituted war or warlike action which triggered the application of the exclusions.  Universal appealed.

On appeal, the Ninth Circuit disagreed with the district court’s analysis—namely the district court’s refusal to apply the alleged specialized meaning of the exclusions’ terms—finding that a provision of the California Civil Code required the application of specialized meaning when the meaning has been developed from customary usage.  The appellate court first found that the principal construing any ambiguity in favor of the insured was not applicable.  In doing so, the court noted that “the typical concerns animating [that principle] do not exist here.”  Next, the court found that because the terms “war” and “warlike action by a military force” had acquired a special meaning via usage, that special meaning must be followed and failure to do so “is reversible error.”  The court determined that in the insurance context, “war” and “warlike action by a military force” required the existence of “de jure” or “de facto” governments and because the court found that Hamas is neither, the exclusions did not work to bar coverage. Consequently, the court reversed the district court’s ruling in favor of the insured.

©2011-2019 Carlton Fields, P.A.

Article by Roben West of Carlton Fields.
For more insurance law, see the National Law Review Insurance Reinsurance & Surety law page.

Game Over: Obviousness Can Be Based on a Single Prior Art Reference

The US Court of Appeals for the Federal Circuit affirmed a Patent Trial and Appeal Board (PTAB) obviousness decision, finding that obviousness can be based on a single prior art reference if modifying that prior art reference is found to be obvious. Game and Technology Co., Ltd. v. Activision Blizzard Inc., Case No. 18-1981 (Fed. Cir., June 21, 2019) (Wallach, J).

Game and Technology (GAT) owns a patent directed to a method for generating a “gamvatar” by combining game items with layers of an avatar in online games. Activision Blizzard and Riot Games sought and were granted inter partes review of the patent. During the proceeding, the PTAB construed the term “gamvatar” to be a combination of an avatar with a game item function, and construed the term “layers” to mean display regions. The PTAB issued a final written decision finding the challenged claims obvious based on a user manual for a video game called Diablo II. GAT appealed.

On appeal, GAT argued that the PTAB erred in construing the terms “gamvatar” and “layers,” and further argued that the PTAB erred in its determination that the claimed method would have been obvious over the Diablo II manual.

Addressing claim construction, GAT argued that the PTAB’s construction of “gamvatar” was broader than the broadest reasonable interpretation BRI, and argued that “gamvatar” should mean “concurrently usable online and in the game.” The Federal Circuit rejected GAT’s argument, finding that the PTAB did not err in construing the term “gamvatar” because the claims and specification both showed that “gamvatar” is a combination of an avatar with a game item function and is not limited to “concurrently useable online and in the game.” As to the term “layers,” GAT argued that the term should be construed as regions for displaying graphical objects where the layers are displayed on the avatar. The Court disagreed, finding that the claim and the specification supported the PTAB’s construction of the term “layers” to mean display regions.

Turning to obviousness, GAT argued that the PTAB erred in using the user manual to find obviousness because a “a single reference . . . cannot support obviousness.” The Federal Circuit rejected GAT’s argument as a matter of law, finding that a patent can be obvious based on a single prior art reference if it would have been obvious to modify the reference to arrive at the claims invention. Applying that standard here, the Federal Circuit found that the PTAB did not err in its obviousness decision because the PTAB’s finding that the Diablo II manual teaches the “gamvatar” and the “layers” limitations was supported by substantial evidence.

 

© 2019 McDermott Will & Emery
For more in PTAB cases, please see the Intellectual Property type of law page on the National Law Review.

Netflix Eliminates E-cigarette Depictions from Streaming Content

Netflix stated it will eliminate all e-cigarette representations from future streaming content targeted to TV-14 or below for series and PG-13 or below for films. CNN reported the move in response to a Truth Initiative study showing how Netflix depicts smoking more than broadcast TV.

Overall, 92% of cable/streaming shows showed cigarette/e-cigarette use. Netflix had “nearly triple the number of tobacco instances (866) compared to the prior year (299).” The multi-year study showed Stranger Things alone had “262 tobacco depictions in its second season, up from 182 in the first season.” This is significant because the Surgeon General warns that high levels of exposure to such visuals doubles the risk of smoking initiation. Considering 61% of young adults report online streaming channels as their primary means of program viewing, Netflix’s move away from e-cigarette representations could significantly impact this generation’s vaping epidemic.

Netflix will also limit cigarette depictions to adult usage. According to the CNN report, Netflix will only feature adult portrayals if “it’s essential to the creative vision of the artist or because it’s character-defining (historically or culturally important).”

The study did not specify how many of these depictions were related to the Juul vape device — which recently had a meteoric rise in use and captured over 70% of the e-cigarette market in the last two years. Juul has been accused of designing products and ads that appeal to youth and placing these ads in channels most populated by young adults and teens.

COPYRIGHT © 2019, STARK & STARK
This article was written by Domenic B. Sanginiti, Jr of Stark & Stark.
For more on cigarette & vape regulation see the Biotech, Food & Drug page on the National Law Review.