Judge: Gregory Keosian, Case: 22STCV07817, Date: 2023-11-30 Tentative Ruling

Case Number: 22STCV07817    Hearing Date: November 30, 2023    Dept: 61

Defendant Endeavor Group Holdings, Inc.’s Motion for Summary Judgment is GRANTED.

Defendant Endeavor Group Holdings, Inc.’s Motion to Seal is GRANTED.

Defendant to give notice.

I.                OBJECTIONS

Defendant Endeavor Group Holdings, Inc. (Defendant) objects to various portions of the declaration of Plaintiff David Carde (Plaintiff submitted in opposition to the present motion for summary judgment. Objections No. 3, 6, 16, 18, 22, 37–39, 45, 46–57, 61, 64, 82, 84, 89, 92, 98, 117, are SUSTAINED, as Plaintiff purports to offer expert testimony on matters for which has shown no qualification to opine.

(a) A person is qualified to testify as an expert if he has special knowledge, skill, experience, training, or education sufficient to qualify him as an expert on the subject to which his testimony relates. Against the objection of a party, such special knowledge, skill, experience, training, or education must be shown before the witness may testify as an expert.

(b) A witness' special knowledge, skill, experience, training, or education may be shown by any otherwise admissible evidence, including his own testimony.

(Evid. Code 720.)

[T]he qualifications of an expert must be related to the particular subject upon which he is giving expert testimony. Consequently, the field of expertise must be carefully distinguished and limited, and qualifications on related subject matter are insufficient.

The foundation required to establish the expert's qualifications is a showing that the expert has the requisite knowledge of, or was familiar with, or was involved in a sufficient number of transactions involving the subject matter of the opinion. Whether a person qualifies as an expert in a particular case depends upon the facts of the case and the witness's qualifications. The determinative issue in each case is whether the witness has sufficient skill or experience in the field so his testimony would be likely to assist the jury in the search for truth.

(Howard Entertainment, Inc. v. Kudrow (2012) 208 Cal.App.4th 1102, 1115, internal quotations, alterations, and citations omitted.)

Plaintiff does not identify his particular area of expertise, but his testimony under the heading of “Expert Qualifications” is as follows. He has “cognitive abilities” which enable him “to see patterns amongst noise in data that others do not see.” (Carde Decl. ¶ 3.) Plaintiff “accumulated a multi-decade deep dive into patterns in the entertainment industry.” (Carde Decl.  7.) At an “early age,” Plaintiff watched movies with his grandfather and read Variety and The Hollywood Reporter. (Carde Decl. ¶ 8.) He is an “autodidact” who taught himself finance. (Carde Decl. ¶ 9.) At an unspecified date he obtained a job as “special advisor to the CEO” at an unspecified studio after meeting the CEO in a parking lot. (Carde Decl. ¶ 9.) Nine months before the release of the film Out of the Furnace in 2013, he expressed concerns about its “potentially disastrous” release in an email. (Carde Decl. ¶ 11.) At this studio, Plaintiff worked on “various challenged projects,” and witnessed the rise of concerns within the entertainment industry about the threat of technology companies, such as YouTube. (Carde Decl. ¶ 12.) Also in 2013, he advised against the company licensing its content to Netflix for an up-front fee. (Carde Decl. ¶ 13.) Plaintiff has thought a great deal about “network effects,” and has read George Gilder’s book, Life After Television. (Carde ¶¶ 14–17.)

In Howard Entertainment, it was held that the trial court had abused its discretion in not permitting a witness, Bauer, to testify as an expert on personal manager contracts, when the following summary described his qualifications:

Bauer has been in the entertainment industry from 1974 through the present as an executive in business affairs, talent agent, and personal manager. He has obtained employment for actors, directors, writers, and producers. He was president of a prominent talent agency. He has discussed extensively entertainment matters with persons in the entertainment business. He represented as a talent agent actors who were represented by personal managers. He was familiar with specific instances concerning the payment of personal managers **166 after termination of their representation. He discussed the matter with attorneys at a prominent entertainment law firm. He personally was a party to agreements like the one in issue here.

(Howard Entertainment, supra, 208 Cal.App.4^th at p. 1116.)  

Plaintiff’s testimony is not like that described in Howard Entertainment, and he has not established, in the face of Defendant’s objections, his qualifications to testify as an expert concerning either “network effects” or customs and practices in the entertainment industry related to idea submissions. Plaintiff does not identify the particular subject to which his expertise pertains, identifies no credentials related to any such subject, and offers only a broad description of his experience devoid of specific duties, employers, transactions, or dates. Plaintiff offers only that he was a special assistant to a CEO for an uncertain duration, during which time he predicted the failure of one movie and the threat posed by Netflix to entertainment companies. He does not demonstrate special knowledge, skill, experience, training, or education sufficient to qualify him as an expert on the subject to which his testimony relates, except insofar as the matters he identifies informed his decision to write and deliver the analysis that is the subject of this litigation.

Defendant’s Objections No. 19–21 and 115–116 are also SUSTAINED, as Plaintiff offers no foundation in personal knowledge for the qualifications or knowledge of Michael Giordano. Plaintiff also offers no foundation for his testimony, save hearsay, concerning the distribution of the 2021 prospectus, the geolocation data associated with various IP addresses, or the relation of the Evernote program to Endeavor’s own IT department oversight. Thus Objections No. 81, 103, 111, and 112, are also SUSTAINED. The remaining objections are OVERRULED.

Plaintiff in turn objects to material submitted by Defendant in its reply. Objection No.1, 3, and 4 are SUSTAINED, as these materials consist of hearsay statements by counsel for a non-party. The other objections are OVERRULED.

II.             SUMMARY JUDGMENT

A party may move for summary judgment “if it is contended that the action has no merit or that there is no defense to the action or proceeding.”  (Code Civ. Proc. § 437c, subd. (a).) “[I]f all the evidence submitted, and all inferences reasonably deducible from the evidence and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law,” the moving party will be entitled to summary judgment.  (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.) A motion for summary adjudication may be made by itself or as an alternative to a motion for summary judgment and shall proceed in all procedural respects as a motion for summary judgment.  (Code Civ. Proc. § 437c, subd. (f)(2).)

The moving party bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact, and if he does so, the burden shifts to the opposing party to make a prima facie showing of the existence of a triable issue of material fact.  (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850; accord Code Civ. Proc. § 437c, subd. (p)(2).)

Once the defendant has met that burden, the burden shifts to the plaintiff to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto.  (Aguilar, supra, 25 Cal.4th at 850.)  The plaintiff may not rely upon the mere allegations or denials of its pleadings to show that a triable issue of material fact exists but, instead, shall set forth the specific facts showing that a triable issue of material fact exists as to that cause of action or a defense thereto.  (Ibid.)  To establish a triable issue of material fact, the party opposing the motion must produce substantial responsive evidence.  (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 166.)

Defendant Endeavor Group Holdings, Inc. moves for summary judgment on Plaintiff David Carde’s solitary claim for breach of implied-in-fact contract. Defendant argues that Plaintiff cannot demonstrate the existence of such a contract, since the analysis upon which this lawsuit is based was submitted without any express condition of payment and contrary to the express policies against solicitation contained on Defendant’s website. (Motion at pp. 17–19.) Defendant also argues that Plaintiff cannot prove that Defendant actually used his submission, since those involved in the IPO that followed the submission have denied reading it, and the only evidence of its use suggests that it was saved on a separate server by one of its recipients, who thereafter did not share the item. (Motion at pp. 19–22.) Defendant finally argues that there is no substantial similarity between Plaintiff’s submission and its eventual IPO materials, beyond their joint use of common business jargon. (Motion at pp. 22–26.)

“[F]or an implied-in-fact contract one must show: that he or she prepared the work; that he or she disclosed the work to the offeree for sale; under all circumstances attending disclosure it can be concluded that the offeree voluntarily accepted the disclosure knowing the conditions on which it was tendered (i e., the offeree must have the opportunity to reject the attempted disclosure if the conditions were unacceptable); and the reasonable value of the work.” (Faris v. Enberg (1979) 97 Cal.App.3d 309, 318.) “[T]he existence of an implied contract is a question of fact, not law.” (Ghazarian v. Magellan Health, Inc. (2020) 53 Cal.App.5th 171, 191.)

“In an idea submission case such as this, to prevail on a cause of action for breach of implied-in-fact contract, plaintiffs must show (1) they clearly conditioned the submission of their ideas on an obligation to pay for any use of their ideas; (2) the defendants, knowing this condition before the plaintiffs disclosed the ideas, voluntarily accepted the submission of the ideas; and (3) the defendants found the ideas valuable and actually used them—that is, the defendants based their work substantially on the plaintiffs' ideas, rather than on their own ideas or ideas from other sources.” (Spinner v. American Broadcasting Companies, Inc. (2013) 215 Cal.App.4th 172, 184.) “In the absence of direct evidence, “use” of an idea can be inferred from evidence showing the defendant had access to the plaintiff's idea and the parties' ideas are similar.” (Ryder v. Lightstorm Entertainment, Inc. (2016) 246 Cal.App.4th 1064, 1073.)

The purpose of the substantial-similarity analysis is to answer the question whether the defendant copied the work of the plaintiff. Ordinarily, similar elements between known work of the plaintiff and the defendant's work will, depending on the degree of uniqueness and originality of the element, support such an inference. However, where defendant owns a prior work containing the same elements, he has no reason, beyond the illicit thrill of copyright infringement, to copy wrongfully from another what he could legally copy from himself. Therefore, where an element occurs both in the defendant's prior work and the plaintiff's prior work, no inference of copying can be drawn.

(Ryder v. Lightstorm Entertainment, Inc. (2016) 246 Cal.App.4th 1064, 1075.)

Defendant’s presentation of the facts is as follows. On September 30, 2019, Michael Giordano sent the following email to Ari Emanuel, Defendant’s CEO, stating as follows:

Ari,

My friend and client (to the extent Disney/Fox allows me to have clients!) David Carde took it upon himself to write an analysis of your upcoming IPO, based on VC Bill Gurley’s (Benchmark Capital) defense of Uber’s valuation and Bharat Anand’s theories on digital media.

David believes that with applied AI & machine learning, Endeavor is poised to become a $100 Billion company due to network effects, which I know has to make you smile.

His write-up is attached.

Best,

Mike Giordano

(Motion Exh. 4.)

The attached analysis, authored by Plaintiff, was entitled “An Alternative Look at Endeavor’s Potential Valuation & Why it Can be Worth Greater than $100 Billion.” (Ibid.) The opening page depicts a cyclical diagram around a central phrase — “The Content Conversation” — around which revolve four bubbles — “Talent,” “Owned & Operated Assets,” “New Categories & Markets,” and “New Talent” — connected by arrows overlaid with the words, “Network Effects.” (Ibid.) The thesis of the analysis states that “the major contributor to the valuation of Endeavor is the ability to create synergistic connections through a network effect.” (Ibid.) The analysis states that Defendant is “[a] network-effects partner to clients in that clients ‘plug into’ an infrastructure of tools which combine human intelligence with technology, as well as direct to consumer (‘DTC’) offerings — leveraging the ‘integrated’ verticals of the platform to create value (and freedom) for clients.” (Ibid.) The analysis argues that Defendant “is well positioned to become a DTC [direct-to-consumer] SaaS [software-as-a-service] company.” (Ibid.) Plaintiff in the analysis states that he will discuss the importance of patterns, including the necessity of “update” to the work of Joseph Campbell’s The Hero with a Thousand Faces to account for recent media trends. (Ibid.) The analysis suggests that Defendant could use its “disparate” assets and “infrastructure” to monetize new fields of content — such as by using one of Defendant’s prime clients, Dwayne Johnson, to launch “en-route entertainment” for self-driving cars, educational content for children, or virtual-reality tourism. (Ibid.) Plaintiff’s analysis discusses how Defendant can use its infrastructure to bundle content directly to consumers and attract new clients to itself. (Ibid.) Plaintiff describes this as “a massive network effect whereby as Endeavor takes market share and creates synergistic connections, it puts itself in position to take even more market share.” (Ibid.) The analysis concludes with a “key point,” namely that Defendant’s “infrastructure and optionality are the drivers of value and with the right decisions by management, this company is just at the beginning of how big and impactful it can be.” (Ibid.)

Emanuel claims to have never read the email, and that it was automatically deleted as unread. (Emanuel Decl. ¶ 6; Wells Decl. ¶ 7.)

On September 30, 2019, Giordano forwarded the previous email to Ari Greenburg, president of the Endeavor subsidiary, William Morris Endeavor Entertainment, LLC (WME). (Motion Exh. 1.) That email stated:

Ari, I thought you might appreciate the attached analysis, written by my friend and “client” David Carde, who has a true knack for identifying diamonds in the rough (which I’ve seen him do time and time again). As you can see below, I also tried to share this with AE two weeks back, though I’m sure he’s had bigger fish to fry…

Best,

Mike

(Motion Exh. 1.) Greenburg did not respond to this email, but forwarded it to Evernote, a file-keeping software. (Motion Exh. 2; Greenburg Decl.  8.) Greenburg states that he does not recall reading or opening the essay and denies that he ever printed or shared it. (Greenburg Decl. ¶ 9.)

Defendant states that both itself and WME had non-solicitation policies in effect at the relevant times, which disclaimed any custom of accepting unsolicited submissions, all accessible on their respective websites (Braun Decl. ¶¶ 10–11, Exhs. 10–12.) Defendant’s policy states that it “does not accept submissions of any kind through the Website . . . or otherwise.” (Braun Decl. Exh. 10.) WME’s website states, “Please note we operate exclusively by referral and do not accept unsolicited materials or solicitations of any kind. Any unsolicited materials received will be returned, unread or destroyed at our discretion.” (Braun Decl. Exh. 11.)

Defendant argues that its materials published prior to the receipt of Plaintiff’s unsolicited submission made reference to the very “network effects” that Plaintiff claims to have introduced to them. Defendant cites various pre-submission publications in which its executives refer to the company as a “platform” which would take advantage of “network effect[s].” (Braun Decl. Exh. 5; Bina Decl. Exh. 28, 29, 36.)  One 2019 item stated that Defendant’s “unique platform enables [talent] to connect with each other and our IP and owned assets in ways that are far more meaningful than if approached in isolation.” (Braun Decl. Exh. 5.) Defendant argues that these pre-submission statements indicate that they already had access to the ideas advanced within it. (Opposition at pp. 24–26.)

Plaintiff in opposition contends that his analysis expressed the idea of “network effects” in a manner different than that previously advanced by Defendant, which referred to network effects among users of a given company’s service, rather than network effects created by a client’s access to various properties within a company’s “architecture.” (Opposition at pp. 12–14.) Plaintiff contends that this is shown by a comparison between the diagrams used by Defendant in its withdrawn 2019 IPO materials, which showed the “integrated capabilities” of its clients and brands through hub-and-spoke diagrams, and the materials used in the later 2021 IPO, which illustrated the “network effects” of its various properties through cyclical, arrow-driven diagrams. (Carde Decl. ¶¶ 69–73.) Plaintiff further argues that direct evidence of access can be shown by materials produced through subpoena by Evernote, which indicates activity surrounding his analysis in Greenburg’s Evernote account.  (Opposition at pp. 11–12.)

Defendant’s argument concerning the absence of an implied-in-fact contract is persuasive. Such a contract is not created by the mere submission of an idea; Plaintiff must show that he clearly conditioned the submission of his analysis on an obligation to pay for its use, and that Defendant, knowing this condition before the plaintiffs disclosed it, voluntarily accepted the submission of the analysis. (Spinner, supra, 215 Cal.App.4th at p. 184. Neither Giordano’s emails nor Plaintiff’s analysis contained anything indicating to their recipients that the analysis was submitted in the expectation of payment.

Plaintiff argues that this position was rejected in the order overruling Defendant’s prior demurrer. (Opposition at pp. 16–17.) But a demurrer takes as true the allegations of a complaint, while a party opposing a motion for summary judgment must, if the moving party carries their burden, produce “substantial responsive evidence” creating a triable issue of fact. (Sangster, supra, 68 Cal.App.4th at p. 166.) Plaintiff’s Complaint alleges, “In the entertainment industry, it is axiomatic and a custom and practice that when ideas and intellectual property are submitted through representation, those materials may not be used by the recipient for free, but rather compensation will be required for any use.” (Complaint ¶ 34.) The Complaint promised to support this assertion with “expert testimony about this custom and practice.” (Complaint ¶ 34.) But in response to the present motion, the only evidence that Plaintiff has presented of this custom and practice is the very same allegation from his complaint, copied and pasted into his declaration. (Carde Decl. ¶ 19.) As discussed with reference to Defendant’s objections to Plaintiff’s opposition materials, Plaintiff offers no foundation in his own knowledge, skill, experience, training, or education that would qualify him to testify to the custom that he claims.

Plaintiff moreover does not address the express policies of both Defendant and WME against unsolicited materials. These policies warned against unsolicited materials “of any kind,” Braun Decl. Exhs. 10–11.) Although Plaintiff argues that the WME policy states that it operates “exclusively by referral,” Defendant’s policy contained no such language, and in any event this clause is immediately followed by the language, “and [we] do not accept unsolicited materials or solicitations of any kind.” There are thus no triable issues of fact as to the existence of an implied in fact contract based on Plaintiff’s submission of the analysis.

The motion is therefore GRANTED.

III.           MOTION TO FILE UNDER SEAL

The court may order that a record be filed under seal only if it expressly finds facts that establish:

(1) There exists an overriding interest that overcomes the right of public access to the record;

(2) The overriding interest supports sealing the record;

(3) A substantial probability exists that the overriding interest will be prejudiced if the record is not sealed;

(4) The proposed sealing is narrowly tailored; and

(5) No less restrictive means exist to achieve the overriding interest.

(California Rules of Court (“CRC”) Rule 2.550, subd. (d).)

A party moving to seal records must make a sufficient evidentiary showing to overcome the presumed right of public access to the documents. (See Huffy Corp. v. Superior Court (“Huffy”) (2003) 112 Cal.App.4th 97, 108.)

Defendant moves to seal the following items submitted in support of its motion for summary judgment: 91) a line of Ari Greenburg’s declaration which references his private email address; (2) a portion of Exhibit 24 to the declaration of Jessica Stebbins Bina, which contains the same email address; and (3) portions of the declaration of Richard Wells referencing the same email address and discussing Defendant’s cybersecurity policies. (Motion at p. 2.) These items have been designated “confidential” pursuant to the protective order entered in this case.

Defendant argues that failing to order the sealing of Greenburg’s private email address could result in him being subject to harassment. (Motion at p. 5.) Defendant further argues that the information related to Defendant’s cybersecurity policies would be harmful to Defendant if permitted to be disclosed. (Motion at pp. 5–6.) The motion is supported by the declaration of Courtney Braun, WME’s executive vice president and general counsel, who testifies that publishing Defendant’s cybersecurity policies would constitute a security risk. (Braun Decl. ¶ 6.)

Defendant has shown the existence of an overriding interest that will be prejudiced if sealing is not ordered as requested. Moreover, the relief requested consists of limited redactions and is narrowly tailored to accommodate the interests identified, which cannot otherwise be protected.

The motion to seal is GRANTED.