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January 21, 2011 1:30 PM

Manatt Settles Malicious Prosecution Suit for $25 Million

Posted by Brian Baxter

Ending 13 years of litigation, Manatt, Phelps & Phillips has agreed to pay $25 million in damages to Los Angeles businessman Stewart Resnick and his wife, Lynda, in a case that began over trademark and advertising claims related to the late Diana Spencer, Princess of Wales.

The Resnicks once owned The Franklin Mint, which produced a commemorative plate, purse, and porcelain doll using the princess's likeness after she was killed in a 1997 car crash in Paris. Manatt and IP partner Mark Lee--representing Diana's estate and a memorial fund set up in her name--sued The Franklin Mint for trademark dilution and false advertising, claiming that their client's likeness had been used without permission to market memorabilia.

Former federal district court judge Florence Marie Cooper of the Central District of California dismissed the case on summary judgment in 2000, calling it "groundless" and "unreasonable," while awarding The Franklin Mint and its attorneys' $2.3 million in legal fees under a provision contained in the Lanham Act. Franklin Mint then sued Manatt, Lee, and Diana's estate and memorial fund for malicious prosecution in 2002, claiming that the litigation was an attempt to hurt the company's Diana-related sales.

Franklin Mint, owned by the Resnicks through their Roll Global holding company, was particularly incensed about a passage in Manatt's complaint comparing the company to "vultures feeding on the dead." Franklin Mint's lawyers at Loeb & Loeb, led by partner Andrew Clare, argued that such an allegation damaged their clients' reputation. (Roll sold the Exton, Pa.-based Franklin Mint in 2006 to a group led by executives from The Morgan Mint.)

Diana's estate and charity trust fund settled The Franklin Mint's claims against them in 2004 for $25 million--all of which the Resnicks say they donated to charity.

Manatt, however, didn't give up the fight so quickly. After a 17-day trial two years ago, a Los Angeles municipal court judge granted Manatt's motion for nonsuit, effectively ending the case in the firm's favor.

That decision was overturned last May when California's Second District Court of Appeal handed down a 2-to-1 ruling in which it held that Manatt and Lee had no probable cause to file the initial claims against The Franklin Mint and the Resnicks. The ruling also revived the malicious prosecution case. Akin Gump Strauss Hauer & Feld partners L. Rachel Helyar and Rex Heinke represented The Franklin Mint on appeal. (Click here for the appeals court's concurring and dissenting opinions.)

Manatt hired Quinn Emanuel Urquhart & Sullivan name partner and national appellate practice chair Kathleen Sullivan to file a 41-page cert petition in June asking the Supreme Court of California to review various legal issues in the case. Sullivan focused on a dissenting opinion of one appellate court judge who objected to Manatt being targeted for damages because it was on the losing side of a case for its client.

But the California Supreme Court declined to block the malicious prosecution suit in July, according to sibling publication The Recorder. With Manatt having now settled the underlying litigation, the Resnicks claim they will also donate the additional $25 million they've received from the firm to charity. The Resnicks also said in a statement that they had incurred about $7 million in legal fees and costs in the malicious prosecution case alone.

A Manatt spokesman provided the following statement to The Am Law Daily on behalf of firm CEO and managing partner William Quicksilver: "We are pleased that we were able to resolve this case with the support of our insurers. This settlement will not have an adverse impact on us, and Manatt is well positioned for growth moving forward. While we continue to believe in our legal position, it was in the firm's best interest to settle this matter and put it behind us. We are gratified by the outpouring of public support for the legal positions we asserted, which came from virtually every corner of the legal community--important organizations and legal publications, law firms, and prominent individual attorneys. We are pleased that the settlement proceeds are going to charity."

Munger, Tolles & Olson partners Brad Brian and Michael Doyen represented Manatt at trial. Partners David Axelrad, John Taylor, Jr., Frederic Cohen, and Curt Cutting of L.A. litigation boutique Horvitz & Levy took up the matter on appeal, while Quinn Emanuel's Sullivan worked on the firm's cert petition to California's High Court. Partners Kevin Brogan, Neil Martin, and Dean Dennis from L.A.'s Hill, Farrer & Burrill represented Manatt IP partner Lee.

It's been a challenging year for Manatt's chief risk manager, general counsel Monte Lemann II, who spoke with The Recorder in December about the firm's risk-management approach.

Manatt found itself caught in a political firestorm over its representation of the Jamaican government in a high-profile extradition matter involving an alleged international drug baron, which is now the subject of an official inquiry in the Caribbean island country. The firm also agreed to pay a $550,000 fine in October as part of a settlement with former New York state attorney general Andrew Cuomo's office in a probe into corruption involving state pension funds.

 

[Correction, 1/22/11, 12:22 p.m.-The California appellate court reversal cited in the seventh paragraph from the top was a 2-to-1 decision, not 3-to-2 as originally posted. We regret the error.]

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I found this article from the WSJ link.

I find it a ridiculous that Franklin Mint were allowed to make money from Princess Diana in the first place after she died and was unable to take legal action against the Resnicks.

Is this legal if the person is alive as well?

I think Manatt should get their revenge with a commemorative set of coffee cups with the Stuart and Lynda Resnicks likeness to hand out to staff for whatever use they see fit.

Cheers

Coffee cups?

Dartboard.

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