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Jury Awards Steinbeck Heir $13M Over Film Deal Shenanigans

Jury Awards Steinbeck Heir $13M Over Film Deal Shenanigans

By Daniel Siegal

Law360, Los Angeles (September 5, 2017, 11:17 PM EDT) -- A California federal jury found late Tuesday that John Steinbeck’s daughter-in-law intentionally lied about her stake in the late author’s works to sabotage movie deals for “The Grapes of Wrath” and “East of Eden” arranged by Steinbeck’s stepdaughter, and awarded the stepdaughter $13.15 million, including punitive damages. 
After only a few hours of deliberation following a weeklong trial in downtown Los Angeles, the jury returned on Tuesday evening with a verdict in favor of Waverly Scott Kaffaga, the daughter of Steinbeck’s late wife, Elaine Anderson Steinbeck, on her claims against Gail Knight Steinbeck — widow of the famous author’s late son Thomas Steinbeck — and her company The Palladin Group Inc.

U.S. District Judge Terry Hatter had ruled before the trial that the defendants had breached a 1983 royalty agreement between Steinbeck’s heirs and were liable for slander of title. On Tuesday, the jury additionally found that the defendants were liable for intentionally interfering with Kaffaga’s efforts to broker deals to bring Steinbeck’s works to the screen, and for driving down the value of the Steinbeck catalog as a whole.

The jury awarded Kaffaga $5.25 million in compensatory damages, and hit Gail Steinbeck and Palladin with $7.9 million in punitive damages.

Kaffaga, in a statement on Tuesday evening, thanked the jury, and said she was pleased that the verdict recognized that control of Steinbeck’s works rests with her late mother’s estate.

"The outcome upholds the estate's mission of sharing his legacy with the world,” she said.

Gail Steinbeck told Law360 on Tuesday that her late husband’s illness and death in 2016 hobbled her ability to properly defend the case, especially during the summary judgment proceedings before the trial.

"It's a real disappointment because we never got an opportunity to present a case, a defense,” she said. “I feel comfortable that the Ninth Circuit will correct it.”

During closing arguments earlier in the day Tuesday, Kaffaga attorney Susan J. Kohlmann of Jenner & Block LLP told the jury that Kaffaga was simply trying to carry out her mother’s wish to share Steinbeck’s works with the world, but that the defendants “have made that all but impossible.” According to Kohlmann, Gail Steinbeck had contacted the studios involved in the “The Grapes of Wrath” and “East of Eden”deals and falsely represented that her approval was needed for the use of Steinbeck's works.

Kohlmann said the defendants' interference with Kaffaga’s effort to arrange a new film version of “East of Eden” by Universal Studios Inc. and Imagine Entertainment caused Universal to walk away for fear of getting drawn into a legal battle, even though actress Jennifer Lawrence had already agreed to star in the film.

With “The Grapes of Wrath” project with DreamWorks Studios, Gail Steinbeck negotiated a confidential “side deal” for her husband that cut into the potential revenue that would have been distributed to Elaine Steinbeck’s estate, Kohlmann argued.

Matthew I. Berger of the Matthew I. Berger Law Group, representing Gail Steinbeck, argued that the only thing Kaffaga’s case has in common with the two famous stories is “all three are works of fiction.”

Berger argued that there are countless reasons why movie deals fall apart, and countless reasons why, even when consummated, they might not generate any profits, and said it was “highly speculative” to award any damages based on how the “East of Eden” movie might have done, and that there wasn’t any evidence that Kaffaga would have been paid more had his client not gotten involved in the “Grapes of Wrath” project.

Kaffaga — representing her mother’s estate — filed suit in 2014, in the latest skirmish in a decadeslong dispute over who has the right to negotiate and sign licensing deals and other contracts with respect to John Steinbeck’s 36 books and other written works.

When the author died in 1968, he left the income stream for certain of his works that he had copyrighted during his lifetime to his then-wife Elaine Steinbeck. However, other works that were not yet up for copyright renewal during his lifetime — the so-called later Steinbeck works — provided entitlement to royalty payments to his two children, Thomas and John Steinbeck IV, in addition to Elaine, according to Kaffaga's suit.

In 1974, Elaine, Thomas and John IV began negotiating a royalty agreement pertaining to those later works, though a resolution wasn’t reached until 1983.

In 2003, Elaine died and left her interest in the Steinbeck works to Kaffaga. Around the same time, some of the author's works became eligible for copyright renewal, and the Steinbeck children became involved in a lengthy legal battle with publishers over a renewal agreement Elaine had supposedly signed without their knowledge in 1994.

The Second Circuit eventually ruled that the Steinbeck children could not terminate the rights Elaine held, and the U.S. Supreme Court declined to get involved, leaving the ruling in place. However, the Steinbecks asserted in their coverage complaint that the Second Circuit’s decision only applied to written works, and never touched on the subject of film or stage rights.

Waverly Scott Kaffaga is represented by Susan J. Kohlmann, Alison I. Stein and Andrew J. Thomas of Jenner & Block LLP.

The Thomas Steinbeck defendants are represented by Matthew I. Berger and Robert M. Graham of the Matthew I. Berger Law Group.

The case is Waverly Scott Kaffaga v. Thomas Steinbeck et al., case number 2:14-cv-08699, in the U.S. District Court for the Central District of California.

--Additional reporting by Bonnie Eslinger. Editing by Bruce Goldman.

Correction: An earlier story misstated the punitive damages awards. The error has been corrected.