Rearden LLC v. The Walt Disney Company

Background

The defendants, collectively called Disney, filed Motion in Limine No. 1. A motion in limine asks the court to decide before trial whether particular evidence or arguments may be presented to the jury. Disney sought to prevent Rearden LLC and MOVA LLC, collectively called Rearden, from introducing evidence or argument about materials from an earlier related ownership lawsuit, which the opinion refers to as the SHST litigation.

The materials included the earlier trial court’s statement of decision, the Ninth Circuit’s affirmance, credibility determinations from that litigation, and a preliminary injunction order. Following summary judgment, the only remaining claim was vicarious liability for copyright infringement. The opinion states that this claim requires proof that the defendant profited from direct infringement and declined to exercise a legal right and practical ability to stop or limit it.

Statement of Decision and Ninth Circuit Affirmance

Disney argued that the earlier statement of decision and Ninth Circuit affirmance were hearsay. The court overruled that objection. It explained that the materials could be offered for a non-hearsay purpose and, even if hearsay rules applied, they were admissible under evidence rules concerning records and statements affecting property interests because they declared Rearden the owner of the MOVA Contour assets.

The court nevertheless applied the rule allowing relevant evidence to be excluded when its value is substantially outweighed by risks such as unfair prejudice, jury confusion, misleading the jury, or wasting time. The court found the earlier ownership conclusion materially relevant, but determined that the actual documents could confuse the jury because they included factual analysis and judgments about the evidence. The court therefore allowed the parties to present the fact of the earlier statement of decision, including its ultimate ownership conclusion, and the fact of the Ninth Circuit’s affirmance, but not the documents themselves. The parties were directed to meet and confer about presenting that information through a stipulation, an instruction, or another method.

Credibility Determinations

The court granted Disney’s motion to exclude the credibility determinations from the earlier litigation because Rearden did not oppose that request.

Preliminary Injunction Order

Disney also sought to exclude the text of the earlier preliminary injunction order. Rearden argued that the fact of the injunction, together with the earlier court’s findings about allegedly fraudulent conduct, would show that Disney had notice that competing ownership claims were unreliable.

The court found that the preliminary injunction order did not address the elements of the remaining vicarious-liability claim and did not decide ownership. Instead, it addressed Rearden’s likelihood of proving a fraudulent transfer and the balance of harms. The court concluded that presenting the order’s language could confuse the jury and consume unnecessary trial time. It therefore allowed the jury to be told that the earlier court issued a preliminary injunction on June 17, 2016, ordering DD3 to stop using MOVA, but excluded the actual order.

Disposition

The court granted in part and denied in part Disney’s motion. It allowed the fact of the earlier statement of decision and its ownership conclusion, as well as the fact of the Ninth Circuit’s affirmance, but excluded those documents themselves. It excluded the earlier credibility determinations. It also allowed the fact of the preliminary injunction to be presented to the jury while excluding the injunction order itself. Judge Jon S. Tigar signed the order.