Reply Brief — Estate of Thomas Steinbeck, et al., Petitioners v. Waverly Scott Kaffaga, as Executrix of the Estate of Elaine Anderson Steinbeck

No. 19-1181

IN THE

Supreme Court of the United States

THE ESTATE OF THOMAS STEINBECK, GAIL STEINBECK,

AND THE PALLADIN GROUP, INC.,

Petitioners,

v.

WAVERLY SCOTT KAFFAGA, AS EXECUTOR OF THE

ESTATE OF ELAINE ANDERSON STEINBECK,

Respondent.

REPLY BRIEF OF PETITIONERS

MATTHEW J. DOWD

Counsel of Record

ROBERT J. SCHEFFEL

DOWD SCHEFFEL PLLC

1717 Pennsylvania

Avenue, NW

Suite 1025

Washington, D.C. 20006

mdowd@dowdscheffel.com

Counsel for Petitioners

i

TABLE OF CONTENTS

Page

TABLE OF CONTENTS ............................................ i

TABLE OF AUTHORITIES ....................................... ii

REPLY OF PETITIONERS ....................................... 1

I. Respondent Does Not Dispute That No

Court Has Decided the Key Issue:

Whether The 1983 Agreement Is “An

Agreement To Contrary” Under 17 U.S.C.

§ 304(c)(5) ............................................................ 2

II. Gail Steinbeck Was Not a Party to the

Prior Litigation and Should Not Be

Subject to Issue Preclusion ................................ 3

III. At A Minimum, The Court Should Grant,

Vacate, And Remand in View of Lucky

Brands Dungarees, Inc. v. Marcel Fashion

Group, Inc. .......................................................... 4

CONCLUSION ........................................................... 7

ii

TABLE OF AUTHORITIES

Cases

Page

Davis v. Brown, 94 U.S. 423 (1877) ........................... 4

Fourth Estate Public Corp v.

Wall-Street.com, LLC,

139 S. Ct. 881 (S. Ct. 2019) ................................... 1

Lawlor v. National Screen Service Corp.,

349 U.S. 322 (1955) ............................................... 6

Lucky Brand Dungarees, Inc. v.

Marcel Fashions Group, Inc.,

140 S. Ct. 1589 (2019) ................................. passim

Montana v. United States,

440 U.S. 147 (1979) ............................................... 2

Oyeniran v. Holder,

672 F.3d 800 (9th Cir. 2012) ................................. 2

Parklane Hosiery Co. v. Shore,

439 U.S. 322 (1979) ............................................... 3

Whole Woman’s Health v. Hellerstedt,

579 U.S. ___, 136 S. Ct. 2292 (2016) .................... 6

Statutes

17 U.S.C. § 304(c)(5) ......................................... passim

iii

Other Sources

18 C. Wright, A. Miller, & E. Cooper,

Federal Practice and Procedure § 4402

(3d ed. 2016) .......................................................... 4

REPLY OF PETITIONERS

This case presents the Court with the opportunity

to reconcile collateral estoppel principles in the

context of competing legal views on copyright

termination rights. As the late Justice Ginsburg

observed when writing for a unanimous Court just last

year in a copyright case, “the statutory scheme has not

worked as Congress likely envisioned.” Fourth Estate

Public Corp v. Wall-Street.com, LLC, 139 S. Ct. 881,

892 (S. Ct. 2019). So too here, where the termination

rights—under federal copyright law—of statutory

heirs to John Steinbeck’s copyrights have been

supplanted by a decision rooted in state contract law.

Worse yet in the present case, Petitioners have

been precluded from actually litigating a viable

defense—whether or not the 1983 Agreement is an

agreement to the contrary, and thus unenforceable,

pursuant to 17 U.S.C. § 304(c)(5). While Respondent

offers various arguments in its Brief in Opposition,

Respondent does not identify a single court that

decided the key issue. Without that, issue preclusion,

or collateral estoppel, cannot apply. More forcefully,

without a decision on that issue, preclusion cannot be

applied to Gail Steinbeck, as she was never a party to

any prior litigation among the parties here.

Finally, and at a minimum, the Court should

grant, vacate, and remand this case so that the Ninth

Circuit can properly apply issue preclusion in light of

this Court’s decision in Lucky Brand Dungarees, Inc.

v. Marcel Fashions Group, Inc., 140 S. Ct. 1589 (2019).

That case, decided last Term, raised a similar issue

about the correct understanding of federal preclusion

principles in the context of successive intellectual

-2property litigation between the same parties. The

court of appeals should be afforded the opportunity to

reconsider its decision in light of this Court’s

clarification and application of preclusion principles in

the oft-thorny area of intellectual property rights—

particularly in copyright law, where a single

copyrighted work creates a bundle of individual

property rights, which are then subject to further

statutory limitations, including the right to

termination.

I. Respondent Does Not Dispute That No Court

Has Decided the Key Issue: Whether The 1983

Agreement Is “An Agreement To Contrary”

Under 17 U.S.C. § 304(c)(5)

Respondent argues for various reasons that issue

preclusion applies, notwithstanding the unusual

circumstances of the present case. None of those

arguments supports denying the petition. More

importantly, not once does Respondent identify a

single court that decided the issue critical to

Petitioner’s defense to the breach of contract and tort

claims. Simply put, no court has decided whether the

1983 Agreement is an “agreement to the contrary”

under 17 U.S.C. § 304(c)(5).

Without a decision on that particular issue, there

can be no prelusion. See, e.g., Oyeniran v. Holder, 672

F.3d 800, 806 (9th Cir. 2012) (citing Montana v.

United States, 440 U.S. 147, 153–54 (1979)). Further,

except in limited circumstances, a plaintiff cannot use

non-mutual collateral estoppel as a legal strategy to

-3preclude a defendant from asserting a defense. See

Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 n.5

(1979).

II. Gail Steinbeck Was Not A Party to the Prior

Litigation and Should Not Be Subject to Issue

Preclusion

One very straightforward reason for granting the

petition is that Gail Steinbeck—one of the Petitioners

here—was not a party in the prior litigation.

Therefore, under settled principles of issue preclusion,

Gail Steinbeck should not be precluded from raising

the copyright termination rights issue that was so

critical to her defense to the breach of contract and

tort claims.

Here, there is no dispute that Gail Steinbeck—one

of the Petitioners—was not a party to any of the

earlier litigations. She was not a defendant in the

New York action. She was not a party in the parallel

litigation in the Ninth Circuit. This case presents the

first time Gail Steinbeck was a named party to the

disputes over John Steinbeck’s copyrights and the

later-vesting termination rights. The Ninth Circuit

never explained how or why Gail Steinbeck should be

precluded, even though she was not a party to earlier

litigation.

-4III. At A Minimum, The Court Should Grant,

Vacate, and Remand in View Lucky Brand

Dungarees, Inc. v. Marcel Fashion Group, Inc.

Alternatively, the Court should grant, vacate, and

remand this case so that the Ninth Circuit can

properly apply issue preclusion in light of this Court’s

decision in Lucky Brand. That case raised a similar

issue about the correct understanding of federal

preclusion principles in the context of successive

intellectual property litigation between the same

parties. This Court routinely grants a petition and

then vacates and remands the case so that the appeals

court can reconsider its decision in view of intervening

precedent.

The same outcome is warranted,

particularly given the similarity in circumstances.

First, as this Court recognized in Lucky Brand,

“[i]f the second lawsuit involves a new claim or cause

of action, the parties may raise assertions or defenses

that were omitted from the first lawsuit even though

they were equally relevant to the first cause of action.”

140 S. Ct. at 1595 (quoting 18 C. Wright, A. Miller, &

E. Cooper, Federal Practice and Procedure § 4402 (3d

ed. 2016)); see also Davis v. Brown, 94 U.S. 423, 428

(1877) (holding that where two lawsuits involved

different claims, preclusion operates “only upon the

matter actually at issue and determined in the

original action”), cited by Lucky Brand, 140 S. Ct. at

1595.

This directive is particularly applicable here,

where the present case involves breach of contract and

-5business tort claims—none of which were raised in

any prior litigation between the parties. Moreover,

this directive has all the more force when one of the

defendants sought to be precluded—Gail Steinbeck—

was never involved in any of the prior litigation and

thus did not have the opportunity to raise these issues

earlier.

Further, the Ninth Circuit failed to recognize that

the prior cases involved different termination rights

that had not yet vested, even during the prior New

York litigation. The Ninth Circuit’s reasoning—

whether it is the court’s 2019 decision or its 2017

decision—fails to abide by this Court’s conclusion

emphasized in Lucky Brand:

Put simply, the two suits here were

grounded on different conduct,

involving different marks, occurring

at different times. They thus did not

share a “common nucleus of operative

facts.” Restatement (Second) § 24,

Comment b, at 199.

Lucky Brand, 140 S. Ct. at 1595.

Moreover, the Ninth Circuit’s rationale is

inconsistent with this Court’s explanation in Lucky

Brand:

Claim preclusion generally “does not

bar claims that are predicated on

events that postdate the filing of the

-6initial complaint.” Whole Woman’s

Health v. Hellerstedt, 579 U.S. ___,

___, 136 S. Ct. 2292, 2305 (2016)

(internal quotation marks omitted);

Lawlor v. National Screen Service

Corp., 349 U.S. 322, 327–328 (1955)

(holding that two suits were not

“based on the same cause of action,”

because “[t]he conduct presently

complained of was all subsequent to”

the prior judgment and it “cannot be

given the effect of extinguishing

claims which did not even then exist

and which could not possibly have

been sued upon in the previous case”).

Lucky Brand, 140 S. Ct. at 1596.

Here, there is no concern that a ruling in favor of

Petitioners will impair or destroy rights or interests

established in the earlier litigation. Rather, all that

will be achieved is a ruling that Petitioners are not

liable for the breach of contract and business tort

claims, assuming that a court—any court—will make

a ruling on whether the 1983 Agreement is an

agreement to the contrary under 17 U.S.C. § 304(c)(5).

In any event, the Ninth Circuit lacked the

guidance of this Court’s decision in Lucky Brand. For

these reasons, if the Court does not grant outright the

petition, the Court should grant, vacate, and remand

so that the Ninth Circuit can reconsider the outcome

-7so it is consistent with the Court’s decision in Lucky

Brand.

CONCLUSION

The petition for a writ of certiorari should be

granted.

Respectfully submitted,

MATTHEW J. DOWD

Counsel of Record

ROBERT J. SCHEFFEL

DOWD SCHEFFEL PLLC

1717 Pennsylvania

Avenue, NW

Suite 1025

Washington, D.C. 20006

mdowd@dowdscheffel.com

SEPTEMBER 2020