KLING v. United Feature Syndicate Inc., Defendant-counter-claimant-cross-claimant-Appellee.
Mary J. KLING, an individual, Plaintiff-counter-defendant-Appellant, v. HALLMARK CARDS INC., a Missouri corporation; Mattel, Inc., a Delaware corporation, Defendants-Appellees, DIC Animation City Inc., f/k/a/ Live Film and Mediaworks, Inc., Defendant-cross-defendant-Appellee, United Feature Syndicate Inc., Defendant-counter-claimant-cross-claimant-Appellee.
Before: REINHARDT, PAEZ, Circuit Judges, and DWYER, District Judge. 1 Michael H. Bierman and Jeffrey D. Wexler, Tuttle & Taylor, Los Angeles, California, for the plaintiff-appellant. Adrian Mary Pruetz, Quinn Emanuel Urquhart Oliver & Hedges, LLP, Los Angeles, California, for the defendants-appellees.
Rainbow Brite is a young girl who, with the help of the Color Kids, her magical horse Starlite, and the small furry sprites who mine for sprinkles in the Color Caves, strives to keep color alive in Rainbow Land. Robotman, Stellar, Oops, and Lint are robots from Robot Land who, for some reason, enjoy helping human teenagers play music. Here in Legal Land, a rather joyless dispute has arisen regarding the ownership of the copyrights in the scripts for six animated children's television specials featuring the Rainbow Brite and Robotman characters. The specials were written by Woody Kling and produced and broadcast in the mid-1980s. Proceeding on the assumption that Mary Kling, Woody Kling's widow and successor in interest, owns these copyrights, we are asked to decide whether the doctrine of laches bars her from filing in 1997 a claim for infringement based on infringing conduct that began in 1985 but may not have come to either of the Klings' attention prior to 1994. The district court granted the defendants summary judgment, holding that Woody Kling's failure to sue for a declaration of ownership within a reasonable time following July 17, 1985, when he learned that one of the defendants claimed to own the copyrights, barred his widow's 1997 infringement claim.
We hold that the period of delay for laches for a copyright infringement claim runs only from the time that the plaintiff knew or should have known about an actual or impending infringement, not an adverse claim of ownership. Because there is, at the very least, a genuine issue of material fact as to whether the Klings knew or had reason to know about an actual or impending infringement of their alleged copyrights prior to August 1994, we reverse the grant of summary judgment and remand for further proceedings.
Beginning in 1981, Hallmark Cards, Inc. (“Hallmark”) began to develop the Rainbow Brite character and a number of related characters and story lines. In August 1983 Hallmark began discussions with DIC Enterprises, Inc. (“DIC”) regarding the development of an animated children's television program based on the Rainbow Brite characters. In December 1983 the two companies agreed that DIC would produce a Rainbow Brite program and that DIC would assign to Hallmark the copyrights in all material created by or for DIC. United Feature Syndicate, Inc. (“United Feature”) also engaged DIC to produce an animated children's television program based on the character of Robotman.
Heywood F. “Woody” Kling was a producer and head-writer on numerous television shows. In 1974 he incorporated Heywood Kling Productions, Inc. (“HKP”) and as its sole employee wrote scripts for various television programs and plays. Through HKP, Kling contracted with television production companies, networks, and individual producers on a project-by-project basis.
1. DIC engaged Kling to write “a story premise, outline, teleplay and appropriate polish(es)” for the respective programs.
2. Kling would be paid $20,000 for each special in three installments.
3. Kling would receive separate card credit (as writer for the first contract, and writer and developer for the second two contracts).
5. If more than three episodes containing characters developed by Kling were televised, he would receive $1000 per episode royalty.
Kling wrote the scripts. From 1984 to 1986, Hallmark registered a series of copyrights in various works relating to the Rainbow Brite characters, including the three television specials that Kling had written. The certificates of registration for these copyrights identified DIC as the author and stated that DIC had assigned Hallmark the copyright through their December 1983 contract. Also in the mid-1980s, DIC transferred its rights in the Robotman specials to United Feature, which then registered copyrights in the specials as their purported sole owner.
․ Your client sought the “Developed by” credit in future adaptations of Robotman and Rainbow Brite. He is not entitled contractually to any credit on any adaptations of either property that he does not provide specific services on. Moreover, DIC is not the copyright owner of either property and could not in any event grant Mr. Kling credit on adaptations for which he provides no work․ I would suggest that you research into the copyrightability of characters contained within a literary work. Characters are not separate copyrightable elements and no protectible interest has been created therein in favor of Mr. Kling. I would further remind you that as is standard in the entertainment industry, the work performed by Mr. Kling was done as a work-for-hire for copyright purposes, and that DIC Enterprises is the rightful owner of all results and proceeds of his work.
On July 25, 1985, Fenster informed Wernick that based on his response “there is no point in continuing any further negotiations” and listed Kling's demands regarding appropriate crediting. Fenster also notified Hallmark and United Feature in writing of the dispute.
On August 19, 1985, Downing sent Wernick a copy of Fenster's letter to United Feature. Downing stated that “it is imperative that this problem with Heywood Kling be worked out immediately so that we are not in danger of having a court interfere with United Media's [United Feature] rights to exploit the ROBOTMAN television shows.” On October 21, 1985, Wernick sent Fenster a draft agreement settling their dispute. This draft agreement stated in part that HKP “hereby irrevocably transfers and assigns to Releasee [DIC] all of Releasor's [HKP's] right, title and interest in and to any element of the Rainbow Brite and Robotman properties arising out of the Agreements.” On October 23, Downing wrote Wernick to say that while the draft was satisfactory, he would have preferred “to see the phrase ‘(including any copyrights)’ inserted after the word ‘interest’ ” in this part. Following discussions with Wernick, Fenster returned to him a revised agreement that completely deleted the provision addressing transfer of ownership. The parties ultimately entered into an agreement that settled the credit dispute but omitted all discussion of the issue of copyright ownership.
Woody Kling died in 1988. On August 30, 1994, Mary Kling, Woody's widow and successor to all the assets of HKP, visited a Blockbuster Video store in Los Angeles with her son. She discovered that the store was renting video cassettes of television shows featuring Rainbow Brite characters, including the shows that utilized the scripts that her husband had written. Hallmark had released the first three Rainbow Brite specials on two video cassettes in 1985. Reviewing the store's video catalog, Mary Kling further discovered that United Feature had released the first three Robotman specials on two video cassettes in 1985 also. Until her Blockbuster visit in 1994, Mary Kling did not know about the release of these videos. Neither she nor her husband had authorized the making or distribution of video copies of the television shows.
In September 1994 Mary Kling sent letters to DIC asking for executed copies of the Rainbow Brite and Robotman contracts. DIC responded that it was unable to locate the contracts. During the following year Mary Kling made a number of phone calls to DIC concerning the release of the video cassettes, but her calls were never returned. In October 1995 Mary Kling sent DIC a letter concerning the distribution of the video cassettes and requesting an opportunity to negotiate a settlement of the matter. DIC responded by stating that her claims were baseless.
Mary Kling filed a complaint against defendants Hallmark, DIC, Mattel, Inc., and United Feature in August 1997. She alleged copyright co-ownership and copyright infringement claims in the alternative.
The district court further explained that Mary Kling could not prevail insofar as her infringement claim was based on the allegation that she is a co-owner of the scripts, because a co-owner of a copyright cannot be liable to another co-owner for infringement. See Zuill v. Shanahan, 80 F.3d 1366, 1369 (9th Cir.1996) (citing Oddo v. Ries, 743 F.2d 630, 632-33 (9th Cir.1984)). She could prevail, however, if she proved that the defendants were licensees and had exceeded the scope of their license. Ownership of a copyright vests initially in the author of the work, see 17 U.S.C. § 201(a), and there were genuine issues of material fact as to whether for copyright purposes Woody Kling was the author of the scripts or wrote them as “work[s] made for hire” under 17 U.S.C. § 201(b).2 These issues, it held, were appropriate for resolution by the trier-of-fact upon a fully developed record.
Mary Kling filed a First Amended Complaint in June 1998. She alleged that the defendants had infringed her copyrights in the scripts by distributing video cassettes of the Rainbow Brite and Robotman programs, “thereby exceeding the scope of the license” set forth in the respective contracts. The defendants (other than United Feature) soon filed a second motion for summary judgment, relying on the same evidence submitted in support of their first motion. This time, they moved for (1) partial summary judgment on the ground that Mary Kling's damages were limited to those occurring not more than three years prior to the filing of her first complaint, and (2) full summary judgment on the ground of laches.
A plaintiff knows or has reason to know of a claim for declaration of ownership when the plaintiff learns that the defendant is claiming sole ownership of the plaintiff's copyright. See Jackson v. Axton, 25 F.3d 884, 889 (9th Cir.1994). And, once the plaintiff has grounds to sue for a declaration of ownership, unless the plaintiff is the “obvious owner” of the copyright at issue, the plaintiff's delay in filing a claim for declaration of ownership may bar the plaintiff's subsequent copyright infringement claim. See id. at 887 (discussing Neva, Inc. v. Christian Duplications Int'l, Inc., 743 F.Supp. 1533 (M.D.Fla.1990)). Thus, the laches period begins to run from the date the plaintiff knows or has reason to know of a claim for declaration of ownership.
Woody Kling, the court ruled, was never the “obvious owner” of the scripts, and he had had “grounds to establish his ownership interest” since July 17, 1985, when DIC counsel Wernick wrote Kling's attorney Fenster claiming that “the work performed by Mr. Kling was done as a work-for-hire for copyright purposes, and that DIC Enterprises is the rightful owner of all results and proceeds of his work.” The court stated that Mary Kling did not offer any excuse for her husband's failure to file an action seeking a declaration of ownership in the scripts at that time. Furthermore, it ruled, the defendants had shown actual prejudice from the delay as a result of (1) the unavailability of Woody Kling, a critical witness in the ownership dispute, due to his death, and (2) the “extensive licensing program” that Hallmark had undertaken for the Rainbow Brite characters.
In December 1998 the district court denied Mary Kling's motion for reconsideration and for a continuance pursuant to Federal Rule of Civil Procedure 56(f). The court also denied DIC's motion for attorneys' fees pursuant to 17 U.S.C. § 505.
Mary Kling filed a timely notice of appeal from the district court's award of summary judgment. DIC filed a timely notice of cross-appeal from the district court's denial of its motion for attorneys' fees.
We review a district court's grant of summary judgment de novo. See, e.g., Alameda Books, Inc. v. City of Los Angeles, 222 F.3d 719, 721-22 (9th Cir.2000) (citing Robi v. Reed, 173 F.3d 736, 739 (9th Cir.1999), cert. denied, 528 U.S. 952, 120 S.Ct. 375, 145 L.Ed.2d 293 (1999)). In so doing, we must “draw all justifiable inferences in favor of the nonmoving party, including questions of credibility and of the weight to be accorded particular evidence.” Masson v. New Yorker Magazine, Inc., 501 U.S. 496, 520, 111 S.Ct. 2419, 115 L.Ed.2d 447 (1991) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)).
For the purposes of this appeal, we assume that the district court was correct in ruling that genuine issues of material fact exist as to whether for copyright purposes Woody Kling was the author of the Rainbow Brite and Robotman scripts or whether he wrote them as works for hire. See generally Community for Creative Non-Violence v. Reid, 490 U.S. 730, 751-52, 109 S.Ct. 2166, 104 L.Ed.2d 811 (1989). Our task is to determine whether such issues of fact also exist as to whether either or both of the Klings engaged in unreasonable delay by not filing an infringement claim until August 1997.
Laches is an equitable time limitation on a party's right to bring suit. Boone v. Mechanical Specialties Co., 609 F.2d 956, 958 (9th Cir.1979). To obtain a judgment on this affirmative defense, a defendant must prove “both an unreasonable delay by the plaintiff and prejudice to itself.” Couveau v. American Airlines, 218 F.3d 1078, 1083 (9th Cir.2000) (citations omitted); see also Neighbors of Cuddy Mountain v. United States Forest Serv., 137 F.3d 1372, 1381 (9th Cir.1998); Clamp Mfg. Co., Inc. v. Enco Mfg. Co., Inc., 870 F.2d 512, 515 (9th Cir.1989).
The critical question in this case concerns the first requirement of laches: unreasonable delay by the plaintiff. Specifically, we must decide the point at which the period of delay begins in a copyright infringement case.
We begin our analysis with the general rule for laches: any delay is to be measured from the time that the plaintiff knew or should have known about the potential claim at issue. “An ‘indispensable element of lack of diligence is knowledge, or reason to know, of the legal right, assertion of which is “delayed”.’ ” Portland Audubon Soc'y v. Lujan, 884 F.2d 1233, 1241 (9th Cir.1989) (quoting City of Davis v. Coleman, 521 F.2d 661, 667 (9th Cir.1975)). “There must, of course, have been knowledge on the part of the plaintiff of the existence of the rights, for there can be no laches in failing to assert rights of which a party is wholly ignorant, and whose existence he had no reason to apprehend.” Halstead v. Grinnan, 152 U.S. 412, 417, 14 S.Ct. 641, 38 L.Ed. 495 (1894). See also Advanced Cardiovascular Sys., Inc. v. SciMed Life Sys., Inc., 988 F.2d 1157, 1161 (Fed.Cir.1993) (“When applying the equitable doctrine of laches in order to bar a claim, the period of delay is measured from when the claimant had actual notice of the claim or would have reasonably been expected to inquire about the subject matter.”).
In its first summary judgment order, the district court held that Mary Kling's infringement claim was not barred by the copyright statute of limitation, 17 U.S.C. § 507(b), because the defendants had failed to show that either of the Klings knew or had reason to know about the defendants' infringement of their alleged copyright before Mary Kling's August 1994 visit to Blockbuster. The question then arises, if the Klings had no actual or constructive knowledge of any infringement, how could the district court subsequently reject the infringement claim on the ground of laches?
The district court relied in its second summary judgment order on this court's decision in Jackson v. Axton, 25 F.3d 884 (9th Cir.1994). Jackson involved a piano player who had assisted in the initial recording of a song (“Joy to the World”) in 1970 and later contended that he co-wrote the song. Id. at 885-86. In 1975 Hoyt Axton, the holder of the song's registered copyright, told Jackson he had nothing to do with the writing of the song. Id. at 886. Jackson filed an action to establish his co-authorship in 1992. Id. After holding that laches may be a defense to copyright co-ownership claims, we affirmed summary judgment for Axton on this ground. Id. at 887-89. “Jackson's claim was brought late,” we held. “He has been able to sue since at least 1975, and possibly since 1971, when he learned that Axton claimed sole ownership of the Song.” Id. at 889.
We decline to adopt the district court's reasoning. First, the reference in Jackson to the “obvious owner” plaintiff in Neva is not even remotely a holding. It was certainly not intended to set a rule, by negative implication, for the prospective application of the laches doctrine in the wholly different context of copyright infringement suits. Indeed, we expressly stated that the case did not involve the application of laches to an infringement claim. 25 F.3d at 888.
The rule adopted by the district court-requiring that a “non-obvious owner” file a prophylactic action for a declaration of copyright ownership, as a condition precedent to any subsequent infringement suit over a violation that has not yet occurred, simply because the rights of the “non-obvious owner” are questioned-is not consistent with the general rule for laches. A claim for copyright infringement has two elements: “(1) ownership of the copyright; and (2) infringement-that the defendant copied protected elements of the plaintiff's work.” Three Boys Music Corp. v. Bolton, 212 F.3d 477, 481 (9th Cir.2000) (citing Smith v. Jackson, 84 F.3d 1213, 1218 (9th Cir.1996)); see also MAI Sys. Corp. v. Peak Computer, Inc., 991 F.2d 511, 517 (9th Cir.1993) (stating that “plaintiff must prove ownership of a copyright and a ‘copying of protectable expression’ beyond the scope of a license”) (citation omitted). The district court's rule triggers the laches period for an infringement claim at the time a plaintiff knows or should know about a dispute as to only the first of these two elements, ownership-regardless or whether any actual or impending infringement claim exists at the time. The rule is not equitable: it allows for the defeat of a legal claim even though the plaintiff has not delayed in asserting his rights with regard to that claim, and in fact the claim has not yet arisen.
The district court's rule for “non-obvious owners” is plainly unworkable. The ownership of intellectual property is frequently a subject of dispute. To require every owner whose right was not “obviously” established to sue for a declaration of ownership whenever a dispute arises or to forfeit his right to seek relief against possible infringements in the future, could engender much needless litigation. The rule would also encourage would-be scavengers to assert meritless claims of ownership in the hope that non-obvious owners would fail to sue and therefore render themselves unable to challenge future infringements. The district court's rule would dramatically expand the laches doctrine, lead to inefficient results, and undermine the copyright laws' goal of promoting “stability of title.” See Zuill v. Shanahan, 80 F.3d at 1370. We therefore decline to adopt it.
It must be obvious to every one familiar with equitable principles that it is inequitable for the owner of a copyright, with full notice of an intended infringement, to stand inactive while the proposed infringer spends large sums of money in its exploration, and to intervene only when his speculation has proved a success. Delay under such circumstances allows the owner to speculate without risk with the other's money; he cannot possibly lose, and he may win.
Haas v. Leo Feist, Inc., 234 F. 105, 108 (S.D.N.Y.1916). Thus, a copyright holder would be vulnerable to the laches defense if he had knowledge of a planned infringement more than three years prior to filing his action, even if he complied with the statute of limitations by filing less than three years after the infringement actually began. Knowledge that a defendant sincerely (but erroneously) believed it maintained ownership of the copyright might be relevant to a plaintiff's knowledge that an infringement would likely occur in the future, and it might in some cases obligate the plaintiff to investigate the defendant's plans regarding the exploitation of that copyright.4 But knowledge of contested ownership without more is insufficient to run the laches period for future infringement claims, because such knowledge relates to only one of the two elements of the copyright infringement cause of action.
The defendants argue that even if we do not adopt the district court's “obvious owner” rule, we should still hold that summary judgment was proper on the basis of laches. We, of course, may affirm a judgment on any ground supported by the record, regardless of whether the district court relied upon, rejected, or even considered that ground. Washington v. Confederated Bands & Tribes of the Yakima Indian Nation, 439 U.S. 463, 476 n. 20, 99 S.Ct. 740, 58 L.Ed.2d 740 (1979); Cigna Property & Cas. Ins. Co. v. Polaris Pictures Corp., 159 F.3d 412, 418-19 (9th Cir.1998).
The district court concluded in its first summary judgment order, in rejecting the defendants' statute of limitations argument, that there was no evidence that the Klings knew or should have known about the actual infringement of their alleged copyright in the Rainbow Brite and Robotman scripts-the release of the specials on video-prior to Mary Kling's visit to Blockbuster on August 30, 1994. The defendants dispute this conclusion on appeal. Because we are concerned with laches and not the statute of limitations, in accordance with the discussion set forth above we ask a somewhat broader question: whether Woody or Mary Kling knew or should have known of an actual or impending infringement before 1994. We conclude that the evidence relied on by the defendants regarding this question is not sufficient to support summary judgment.
The defendants emphasize, as did the district court, the letter of July 17, 1985, sent to Woody Kling's attorney Fenster by DIC counsel Wernick in the midst of the 1984-85 dispute about Kling's card credit. In his letter, Wernick “remind[ed]” Fenster “that as is standard in the entertainment industry, the work performed by Mr. Kling was done as a work-for-hire for copyright purposes, and that DIC Enterprises is the rightful owner of all results and proceeds of his work.” This is the assertion of adverse ownership that, the district court concluded, should have led Kling to sue for a declaration of ownership. While we have already rejected this analysis, the question remains whether, as a matter of law, the letter reasonably obligated Kling to inquire about DIC's activities to determine whether and how it intended to exploit its claimed ownership rights in the scripts. We think not.
Context is important here. Wernick's assertion was made in the middle of a somewhat blustery, condescending, and dismissive letter, the work of a lawyer “blowing smoke” in an attempt to discourage a potential adversary of a client from proceeding further.5 The letter, however, did not allude to any current or planned use of the Rainbow Brite or Robotman specials written by Kling, but rather focused on Kling's complaint about his insufficient receipt of credit for these television programs. Wernick's assertion of ownership was made in this context, not as a claim that DIC or Hallmark was free to use or adapt Kling's scripts as they saw fit. Indeed, by stating that the contract “was intended to provide further compensation to Mr. Kling, if and in the event the actual shows he worked on were exploited in a fashion other than syndicated broadcast,” Wernick's letter arguably bolsters Mary Kling's infringement claim.
To the extent that ownership of the script copyrights was ever at issue in the credit dispute, Kling refused to accede to the defendants' claims and the defendants failed to press the point. The draft agreement sent by Wernick to Fenster on October 21, 1985, provided that Kling would “irrevocably transfer [ ] and assign[ ]” all ownership interests in the Rainbow Brite and Robotman scripts to DIC. Counsel for United Feature informed Wernick that he would have made this language a specific transfer and assignment of copyright ownership. Fenster, however, struck the language from the draft agreement, and it was not part of the final two agreements reached in late 1985. This negotiation process thus supports Mary Kling's argument that her husband retained his ownership rights in the scripts (assuming some existed to begin with) and therefore did not need to investigate possible plans by DIC to exploit those rights or assign them to others.
The defendants also argue that the two agreements settling the credit dispute show that Woody Kling knew “that video cassettes were a medium for exploiting the Rainbow Brite and Robotman properties.” We disagree. The agreements resolved Kling's claim for credit for the use of fictional characters developed by him in “future episodes” not written by him.6 This case, by contrast, involves the defendants' distribution on video of the six television specials that were based on Kling's own scripts. In the agreements, Kling retained his right to seek remedies in the event that another party denied him proper credit for future adaptations of his characters, on television, video, or another medium. He did not authorize or acknowledge that the defendants could thereafter exploit his six scripts for media other than “syndication broadcast” without renegotiation, in violation of the terms of his 1983 and 1984 contracts with DIC.
Finally, the defendants point to a November 1985 letter by Kling's counsel containing a disparaging reference to the recent release of a feature film entitled “Rainbow Brite and The Star Stealer.”7 This reference, in the defendants' view, shows that Woody Kling “actively patrolled Kling's perceived rights in both the Rainbow Brite and Robotman properties.” Because the defendants were “openly and continuously” conducting a national distribution of the video cassettes, they argue, Kling must have known about the video release of the six specials. The defendants' argument is entirely speculative. The fact that Kling or his lawyer took note of a feature film reviewed in a daily newspaper sheds no light on whether they were patrolling the children's aisles of video stores looking for infringements of Kling's alleged copyrights. Nor do we believe that the release of the film put Kling on any kind of inquiry notice: the “Star Stealer” movie did not involve a script written by Kling, and it is only those scripts to which Mary Kling asserts copyrights. The record simply does not support the conclusion that, as a matter of law, a reasonably diligent plaintiff would have discovered that the defendants were distributing the Rainbow Brite and Robotman video cassettes prior to Mary Kling's visit to Blockbuster in 1994.
In the alternative, the defendants ask us to rule that the copyright statute of limitations, 17 U.S.C. § 507(b), prohibits Mary Kling from obtaining on remand any damages that accrued more than three years before she filed this action. “Separate and apart from when her claims accrued,” they argue, “Plaintiff is limited to damages allegedly accruing within three years of filing her initial complaint.” The defendants rely on our holding in Roley v. New World Pictures, a case in which the plaintiff had knowledge of early acts of infringement, filed his action more than three years later (but within three years of subsequent acts of infringement), and attempted to recover damages for all infringing acts under a “rolling statute of limitations”: the theory that “so long as any allegedly infringing conduct occurs within the three years preceding the filing of the action, the plaintiff may reach back and sue for damages or other relief for all allegedly infringing acts.” 19 F.3d at 480-81. We rejected this theory, stating that “[i]n a case of continuing copyright infringements, an action may be brought for all acts that accrued within the three years preceding the filing of the suit.” Id. at 481. Mary Kling responds that Roley and every other holding cited by the defendant are inapposite because they involved plaintiffs who knew about some infringing acts that occurred more than three years prior to filing suit, whereas she filed this case within three years of the time she learned about any alleged infringement at all-her August 1994 visit to Blockbuster. Roley, she argues, actually supports her position by making clear that an infringement claim accrues only when a plaintiff knows or has reason to know of a violation.
While the defendants' argument raises an interesting, apparently unresolved issue, it is not one that we have jurisdiction to decide on the present appeal. “Even if valid, the argument would serve only to limit [Kling's] potential recovery on remand, not to support the district court's award of summary judgment.” Couveau, 218 F.3d at 1084. Because partial summary judgment orders do not end the litigation on the merits, they are not generally appealable final orders under 28 U.S.C. § 1291. Williamson v. UNUM Life Ins. Co. of America, 160 F.3d 1247, 1250 (9th Cir.1998) (citations omitted). Here, the district court did not address the defendants' motion for partial summary judgment at all. Furthermore, while the doctrine of laches and statutes of limitations involve related concerns, they are fundamentally distinct defenses. See Jackson, 25 F.3d at 887 n. 2, 888. Because the defendants' argument for limited damages is not “inextricably intertwined” with the laches defense on which they succeeded below, pendent appellate jurisdiction does not apply. See Swint v. Chambers County Comm'n, 514 U.S. 35, 49-51, 115 S.Ct. 1203, 131 L.Ed.2d 60 (1995); Couveau, 218 F.3d at 1084 (citations omitted). We therefore leave this issue for another day.
Because we reverse the district court's grant of summary judgment to defendants, they are clearly not the “prevailing party” for purposes of attorneys' fees under 17 U.S.C. § 505. We therefore affirm the district court's denial of their fee motion.
We reverse the district court's order on summary judgment and remand for further proceedings. We affirm the district court's order on attorneys' fees.
3. In Lottie Joplin Thomas Trust v. Crown Publishers, Inc., 456 F.Supp. 531 (S.D.N.Y.1977), aff'd, 592 F.2d 651 (2d Cir.1978), the rights to a Scott Joplin song had been wrongfully assigned to a publishing company in 1959. Counsel for the plaintiff trust learned about the assignment in 1967. The publishing company released a recording of the song in 1974. The court held that the trust was not barred by laches from pursuing an infringement claim. It explained in part that the trust's delay was not unreasonable, because “[c]ounsel to the Trust could have reasonably concluded that,” prior to the time the movie “The Sting” brought Joplin's works to prominence, “enforcement of the copyright was not worth the cost of litigation, especially because no infringing phonograph record was on the market.” Id. at 534.
4. “[T]he law is well settled that, where the question of laches is in issue, the plaintiff is chargeable with such knowledge as he might have obtained upon inquiry, provided the facts already known by him were such as to put upon a man of ordinary intelligence the duty of inquiry.” Johnston v. Standard Mining Co., 148 U.S. 360, 370, 13 S.Ct. 585, 37 L.Ed. 480 (1893).
8. The defendants do not argue that laches would be justified based on the delay between Mary Kling's discovery of the alleged infringement in August 1994 and her filing suit in August 1997. See generally Advanced Cardiovascular Sys., 988 F.2d at 1161 (“When a limitation on the period for bringing suit has been set by statute, laches will generally not be invoked to shorten the statutory period.”) (citation omitted). Because we conclude that the defendants are unable to establish unreasonable delay as a matter of law, we need not decide whether they have established sufficient prejudice to warrant summary judgment.


text:
Section 741, acts May 14, 1908, ch. 168, § 7, 35 Stat. 162; June 17, 1910, ch. 301, § 6, 36 Stat. 538; Mar. 4, 1913, ch. 141, § 1, 37 Stat. 736, related to reports of aids to navigation which might be discontinued.
Section 742, R.S. § 4674; acts Feb. 14, 1903, ch. 552, § 10, 32 Stat. 829; June 17, 1910, ch. 301, § 6, 36 Stat. 538; Mar. 4, 1913, ch. 141, § 1, 37 Stat. 736, related to discontinuance and reestablishment of lights.
Provisions of section 742 were substantially incorporated into sections 501 and 504 of Title 14, Coast Guard.

matches: § 7 § 6 § 1 § 4674 § 10 § 6 § 1


The claimant was represented by Serge Mihaly, Esq., Mihaly & Kascak, 925 White Plains Road, Trumbull, CT 06611.
The Second Injury Fund was represented by Richard Hine, Esq., Assistant Attorney General, 55 Elm St., P. O. Box 120, Hartford, CT 06141-0120.
These Petitions for Review from the April 8, 1996 Supplemental Finding and Award No. 3 of the Commissioner acting for the Fourth District were heard October 11, 1996 before a Compensation Review Board panel consisting of the Commission Chairman Jesse M. Frankl and Commissioners George A. Waldron and Robin L. Wilson.
JESSE M. FRANKL, CHAIRMAN. Both the claimant and the Second Injury Fund have petitioned for review from the April 8, 1996 Supplemental Finding and Award of the Commissioner acting for the Fourth District. The issues before this board consist of several motions filed by the claimant seeking recourse against the Fund for delays in maintaining this appeal. We dismiss the appeal, and remand this case to the trial commissioner for a determination of appropriate attorney’s fees under § 31-327(b).
The claimant was employed by Bliss Exterminating on February 25, 1986, when he was injured in the course of his employment. He has been totally disabled since October 15, 1989, as determined by prior awards. Liability was transferred to the Second Injury Fund from Aetna, the employer’s workers’ compensation insurer, on April 12, 1988. In the Finding and Award on appeal, the commissioner found that the claimant had not received temporary total benefits and a $30 weekly dependency allowance due him from October 15, 1989 to February 23, 1992. His base compensation rate is $276.07 per week. The commissioner awarded the claimant those benefits along with 10% annual simple interest, with credit given for a $3,286.70 payment made on February 7, 1992, and specific payments made during the first seven months of 1990. He found that the total due the claimant was $53,859.29. He also found that the Fund had unduly delayed payment, and awarded the claimant a $25,000 attorney’s fee, although he denied the claimant’s claim for a 20% penalty against the Fund pursuant to § 31-303 C.G.S. Both parties filed petitions for review from that decision.
The post-appeal procedural history now becomes important. The Fund’s petition for review was filed on April 16, 1996, and was soon followed by motions for extensions of time to file a Motion to Correct and Reasons of Appeal, which were both granted. The Fund indicated that it would file its Motion to Correct within 20 days after receipt of the transcript, and its Reasons of Appeal within two weeks of the ruling on its Motion to Correct. The Fund’s attorney (who is not the same person who represented the Fund at oral argument) later filed an addendum explaining that the hearing transcript originally ordered by trial counsel had been lost, and that another transcript had been ordered. The trial commissioner also denied the claimant’s motion to reconsider his granting the Fund an extension of time to file the Motion to Correct.
The claimant simultaneously filed with this board a motion to reconsider granting the Fund an extension of time to file Reasons of Appeal, alleging that the Fund indeed possessed the transcript upon which their motions for extension of time had been predicated, and that its attorney sought to delay the proceedings on the basis of a false representation. The claimant’s motion was granted on May 15, 1996 based on the facts averred and the Fund’s failure to file an objection. A motion for sanctions against the Fund’s counsel was not ruled on at that time. Meanwhile, the Fund filed its Motion to Correct, which the commissioner denied in its entirety. The claimant then moved to dismiss the Fund’s appeal for failure to file timely Reasons of Appeal on May 20, 1996. The Fund filed those Reasons of Appeal that same day, along with a motion to vacate and set aside this board’s May 15, 1996 ruling on the claimant’s motion for reconsideration. It also objected to the claimant’s Motion to Dismiss. The claimant, in turn, objected to the Fund’s motion to vacate.
Underneath all of these motions, there is somewhere buried the principle that the Workers’ Compensation Act is remedial in nature and should be construed to accomplish its humanitarian purpose. Dubois v. General Dynamics Corp., 222 Conn. 62, 67 (1992). A necessary element of this principle is the idea that relief under the Act will be provided as quickly and efficiently as possible. A claimant who is disabled from employment by a work-related injury is usually in need of prompt financial attention as well as medical attention, for the inability to earn wages has an immediate negative impact on the lives of most claimants. Yet, this concept often becomes lost in the partisan battles between employers, employees, insurers, medical providers, and their numerous attorneys.
In this case, the claimant was still awaiting benefits due him as far back as 1989 when the Fund filed its appeal. With hope of a speedy resolution in this case waning, one would hope that the parties would have managed to navigate this appeal expeditiously. Instead, the Fund immediately requested extensions of time on the ground that it did not yet have the transcript. However, the record shows that an attorney from the Fund requested the transcript at the conclusion of the formal hearing (October 20, 1995 Transcript, p. 154), but misplaced or lost it after it was received. A different attorney was assigned to handle the appeal, and represented that a transcript had not yet been received. After the claimant objected, the Fund filed an addendum explaining that the transcript had been lost, and a replacement had been ordered. We also note that the Fund did not respond promptly to the claimant’s motion to reconsider granting the Fund an extension of time, instead waiting until after we granted that motion to state its case.
Although we do not believe that the Fund’s attorney is guilty of conduct warranting sanctions against him personally, it is clear that a lack of communication between attorneys at the Fund and a lack of organization in this case have contributed to the further delay of these proceedings. In Pearston v. Carrier Corporation, 15 Conn. Workers’ Comp. Rev. Op. 196, 3167 CRB-8-95-9 (April 19, 1996), this same appellant represented in a Motion for Extension of Time to file Reasons of Appeal that it had not yet received necessary transcripts, when in fact it had, but its representatives were simply unaware of what their co-workers were doing. We stated there that “representatives of government agencies must act with integrity, truthfulness, and due diligence at all times in order to uphold the public trust. The Fund’s defense of bureaucratic ‘bungling’ does not serve to exempt it from the standards of professionalism which must be met by all members of the bar.” Id., 198.
This case is very similar, and warrants a similar outcome. We thus grant the claimant’s Motion to Dismiss the Fund’s appeal for failure to prosecute with due diligence pursuant to Practice Book §4184A, and award attorney’s fees to the claimant for costs associated with this appeal. The case is remanded to the trial commissioner for a determination of those costs under § 31-327(b). We also note that motions for extension of time should seek relief only until a date certain, and not indefinitely as was requested by the Fund in this case. Time limits such as “two weeks from the date the transcript is received” can extend for months, further delaying the resolution of a case.


text: Representative Matters: Entzminger v. Redner's Market's, Inc. - Represented grocery store in slip & fall $1.7 million demand case involving Complex Regional Pain Syndrome, with an admittedly known leaking display that caused fall. After a 6 day trial obtained a unanimous defense verdict; Kline v. Shockey - Represented a bouncer in a bar fight case with punitive damages. First Plaintiff had four back surgeries, with significant medical bill and loss of past and future wages claims, and the second Plaintiff sustained a closed head injury. Following a four day jury trial, the bouncer was absolved of all liability to the second Plaintiff, and was found liable to the first Plaintiff in the amount of $64. Blakey v. Hellam Twp. - Represented a municipality against Plaintiff, the former wife of a York County Judge, under the Pennsylvania Storm Water Management Act and common law theories for water damage to her multi-million dollar horse farm. Following three days of trial, based upon motions as to the sufficiency of Plaintiff's causation expert, and an in camera examination of said expert, a motion for non-suit was granted. Jones v. Cedar Hershey - Obtained summary judgment on behalf of landlord in trip & fall fall case due to lack of notice. Fraley v. Boscov's - Obtained summary judgment on behalf of retailer in trip & fall case on the grounds that Plaintiff was unable to establish what caused her to fall. Anderson v. Boscov's - Obtained summary judgment on behalf of retailer in malicious prosecution claim arising from shoplifting arrest.

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Before LAY,** GOODWIN and SCHROEDER, Circuit Judges.
Elizabeth Helguero appeals a district court denial of her request for a preliminary injunction in connection with a suit filed under 42 U.S.C. §§ 1981 and 1983. She alleges that the City of Costa Mesa violated her constitutional rights by denying the issuance of an entertainment permit for her bar.
Ms. Helguero argues that the city ordinance, which allows denial of an entertainment permit if the activity will have a "substantially adverse impact" on health, safety, or traffic, is unconstitutionally vague and over broad. Additionally, she contends the district court abused its discretion by denying a continuance and evidentiary hearing to the plaintiff, and by largely adopting the city's Findings of Fact.
A district court's order regarding preliminary injunctive relief is subject to limited review, and will be reversed only if the court abused its discretion, or based its decision on an erroneous legal standard or clearly erroneous findings of fact. See, e.g., FDIC v. Garner, 125 F.3d 1272, 1276 (9th Cir. 1997); Does 1-5 v. Chandler, 83 F.3d 1150, 1152 (9th Cir. 1996). In order to establish a valid claim for a preliminary injunction in this circuit, a plaintiff must demonstrate either: (1) a likelihood of success on the merits and the possibility of irreparable injury, or (2) that serious questions on the merits were raised and the balance of hardships tips sharply in the plaintiff's favor. See, e.g., Cadence Design Sys., Inc. v. Avant! Corp., 125 F.3d 824, 826 (9th Cir. 1997); Sega Enterprises Ltd. v. Accolade, Inc., 977 F.2d 1510, 1517 (9th Cir. 1993).
We agree with the plaintiff that the live entertainment at the Garibaldi de Noche falls into the category of expressive conduct, and therefore carries First Amendment protections. See Ward v. Rock Against Racism, 491 U.S. 781, 790 (1989). However, because the ordinance makes no reference to the kind of live entertainment subject to regulation, this is clearly a content-neutral restriction, subject to intermediate constitutional scrutiny. See Ward, 491 U.S. at 791 (" [T]he government may impose reasonable restrictions on the time, place, or manner of protected speech, provided the restrictions 'are justified without reference to the content of the regulated speech, that they are narrowly tailored to serve a significant governmental interest, and that they leave open ample alternative channels for communication of the information.' ") (internal citation omitted).
Ms. Helguero's central argument is that the city ordinance is unconstitutionally vague and overbroad on its face,1 because the "substantial adverse impact" language in the ordinance allows officials to prohibit a particular speech-related activity under generalized conditions.2 She argues that the ordinance does not provide any standards by which such adverse impacts can be measured, and this gives officials unfettered discretion to determine which speech to permit and which speech to ban.
This argument cannot survive under the weight of Supreme Court precedent. The Court repeatedly has held that a city ordinance is not void for vagueness simply because the statutory language articulates a flexible standard or provides some discretion to city officials.
In Ward, the city concert noise ordinance in question stated its purpose was to "insure appropriate sound quality balanced with respect for nearby residential neighbors...." 491 U.S. at 794. The Court stated: "While these standards are undoubtedly flexible, and the officials implementing them will exercise considerable discretion, perfect clarity and precise guidance have never been required even of regulations that restrict expressive activity." Id.
In Boos v. Barry, 485 U.S. 312 (1988), petitioners challenged the narrowing construction of a city ordinance regulating picketing near foreign embassies, arguing the language "when the police reasonably believe that a threat to the security or peace of the embassy is present" is impermissibly vague. Id. at 330. The Supreme Court rejected the argument, stating the ordinance "is crafted for a particular context and given that context, it is apparent that the 'prohibited quantum of disturbance' is whether normal embassy activities have been or are about to be disrupted. The statute communicates its reach in words of common understanding...." Id. at 332 (citing Grayned v. City of Rockford, 408 U.S. 104, 112 (1972)). See also Grayned, supra (ordinance prohibiting "disturbing the peace" of a school was not unconstitutionally vague); Cameron v. Johnson, 390 U.S. 611 (1968) (rejecting vagueness challenge to an ordinance prohibiting protests that "unreasonably interfere" with access to public buildings); Kovacs v. Cooper, 336 U.S. 77 (1949) (rejecting vagueness challenge to a sound ordinance forbidding "loud and raucous" sound amplification).
In contrast to this precedent, the petitioner cannot cite to any cases in which an ordinance allowing permit denial based on noise and safety concerns was found to be unreasonable. At oral argument, Ms. Helguero's attorney argued that the "best case" to support his position was Fantasy Book Shop, Inc. v. City of Boston, 652 F.2d 1115 (1st. Cir. 1980). However, the court in that case upheld a city ordinance that authorized denial of a permit if issuance "unreasonably" increased noise or pedestrian traffic in the area. Id. at 1119. We fail to understand how the Costa Mesa ordinance, authorizing denial if issuance would have a "substantial adverse" impact on the area, is any more vague than the language upheld in Fantasy Book Shop.
We find the district court was correct in concluding that Ms. Helguero failed to establish that she was likely to succeed on her First Amendment claim. Under Ward and supporting precedent, the city ordinance clearly is a valid time, place and manner restriction because: (1) the city has a substantial interest in limiting noise and nuisance problems; (2) the ordinance is narrowly tailored to serve that interest, and (3) the ordinance leaves open "ample alternative channels" (i.e., non-nuisance venues) for entertainers to utilize. Without a showing that the city's restrictions are unconstitutionally vague or otherwise unreasonable, Ms. Helguero has not demonstrated a likelihood of success on the merits of her claim.
The grant of a preliminary injunction also may be justified if serious questions on the merits are raised and the balance of hardships tips in the plaintiff's favor. See, e.g., Cadence Design Systems, 125 F.3d at 826; Sega Enterprises, 977 F.2d at 1517. However, for the reasons stated above, we find Ms. Helguero has failed to raise serious questions regarding to the merits of her claim. Because of the failure to meet this prerequisite, it is not necessary for this Court to reach the issue of balance of hardships in order to uphold the district court's ruling.
The decision to grant or deny a continuance lies within the broad discretion of the district court, and will not be disturbed on appeal absent clear abuse of that discretion. United States v. Flynt, 756 F.2d 1352, 1358 (9th Cir. 1985). This abuse of discretion standard also applies to the decision to grant or deny a request for oral argument. See, e.g., Kenneally v. Lungren, 967 F.2d 329, 334-35 (9th Cir. 1992), cert. denied, 506 U.S. 1054 (1993).
Under Local Rule 7.7, Ms. Helguero's reply to the city's motion in opposition to a preliminary injunction was due no later than April 21, 1997. Ms. Helguero filed an ex parte motion seeking to continue hearing on the motion on April 25--four days after her answer was due. The district court found Ms. Helguero did not provide good cause for her belated attempt to continue the motion or for her late reply. The court denied the motion to continue, and, without holding a hearing, issued an order denying the motion for preliminary injunction.
Ms. Helguero offers little evidence to indicate that the district court abused its discretion in either its denial of the motion to continue or its ruling on the preliminary injunction without an oral argument. Her request for a continuance was made four days late under local rules, and only three days before the scheduled hearing.
The reasons she offers for her late filings are difficult to comprehend, and the district court cannot be found to have abused its discretion by failing to honor them. Additionally, there is no showing of prejudice caused by the district court's refusal to examine her late declarations. The district court did not abuse its discretion in this regard.
Findings of fact are reviewed under the clearly erroneous standard. See, e.g., In re Lazar, 83 F.3d 306, 308(9th Cir. 1996). This applies "even when the trial judge adopts proposed findings of fact verbatim...." Orantes-Hernandez v. Thornburgh, 919 F.2d 549, 567 (9th Cir. 1990).
Ms. Helguero does not argue, let alone provide support for the argument, that the disputed findings are clearly erroneous. Nor does she provide any authority for the proposition that this court may set aside the Findings of Fact in favor of the memorandum opinion.
Finally, even if there was support to conclude the district court erred in adopting the Findings of Fact, given the dearth of case law in support of the petitioner's argument, such an error would have little impact on the decision of this court. We find the dispute regarding the findings of fact irrelevant.
The Costa Mesa ordinance clearly is a content-neutral time, place and manner regulation that withstands the applicable intermediate scrutiny articulated in Ward, supra. The district court did not abuse its discretion by denying a preliminary injunction, or by its other rulings related to the petitioner's motion.
For the above stated reasons, the ruling of the district court is AFFIRMED.

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ATTY. EMMANUEL D. AGUSTIN, JOSEPHINE SOLANO, ADELAIDA FERNANDEZ, ALEJANDRO YUAN, JOCELYN LAVARES, MARY JANE OLASO, MELANIE BRIONES, ROWENA PATRON, MA. LUISA CRUZ, SUSAN TAPALES, RUSTY BAUTISTA, AND JANET YUAN, Petitioners, v. ALEJANDRO CRUZ–HERRERA, Respondent.
This is a petition for review on certiorari1 assailing the Resolution2 dated September 30, 2005 of the Court of Appeals (CA) in CA–G.R. SP No. 85556 which approved the joint compromise agreement executed by respondent Alejandro Cruz–Herrera (Herrera) and the former employees of Podden International Philippines, Inc. (Podden), namely: Josephine Solano, Adelaida Fernandez, Alejandro Yuan, Jocelyn Lavares, Mary Jane Olaso, Melanie Briones, Rowena Patron, Ma. Luisa Cruz, Susan Tapales, Rusty Bautista, and Janet Yuan (complainants).
Respondent Herrera was the President of Podden while complainants were assemblers and/or line leader assigned at the production department.3 In 1993, the complainants were terminated from employment due to financial reverses. Upon verification, however, with the Department of Labor and Employment, no such report of financial reverses or even retrenchment was filed. This prompted the complainants to file a complaint for illegal dismissal, monetary claims and damages against Podden and Herrera.4 They engaged the services of Atty. Emmanuel D. Agustin (Atty. Agustin) to handle the case5 upon the verbal agreement that he will be paid on a contingency basis at the rate of ten percent (10%) of the final monetary award or such amount of attorney’s fees that will be finally determined.
[Podden and Herrera] are further ordered to pay complainants their money claims representing their underpayment of wages, 13th month pay, premium pay for holidays and rest days and service incentive leave pay to be computed by the Fiscal Examiner of the Research, Information and Computation Unit of the Commission in due time.
[Podden and Herrera] are furthermore ordered to pay each complainant the amount of [P]40,000.00 as moral and exemplary damages, as well as ten (10%) of the total awards as attorney’s fee.
A cursory examination of the records reveal[s] that complainants, all eleven (11) of them, had indeed executed their respective waiver and quitclaim thru an instrument entitled “Pagtalikod sa Karapatang Maghabol” absolving [Podden and Herrera] from any and all liabilities that may arise against the latter to these cases. The instruments were signed by the complainants and sworn to before Notary Public Amparo G. Ocampo. Considering the fact that the complainants, through their common counsel, received a copy of the Decision in these cases on December 28, 1998, it could only be supposed that as of that date they signed the instrument of waiver and quitclaim on March 2, 1999, April 8, 1999 and March 31, 2000, they were already properly apprised about the decision having been issued in their favor, more particularly the contents thereof, by their esteemed counsel. The fact that complainants would execute such waiver and quitclaim, notwithstanding, only shows the spontaneity and voluntariness of their deed.
WHEREFORE, premises considered, the motion for writ of execution is denied on [the] ground that complainants have already settled their cases with [Podden and Herrera].
On account of the settlement, however, [Podden and Herrera] are hereby ordered to pay complainants’ counsel ten (10%) percent of the amount received by complainants as attorney’s fees.
WHEREFORE, the appeal is GRANTED. The Order a quo of May 15, 2000 is hereby reversed and set aside and a new one entered ordering the Labor Arbiter a quo to immediately issue the corresponding writ of execution for the enforcement of the decision rendered in this case. The quitclaims executed by the complainants are hereby nullified. However, any amount received by the complainants under the quitclaims shall be deducted from the award due each of them.
Finding the above terms and conditions not contrary to law, public order and public policy, the parties’ prayer that the foregoing joint compromise agreement be approved and the extant case be dismissed with prejudice is GRANTED and the agreement ADMITTED. Judgment is hereby entered in accordance thereto.
Parties are enjoined to strictly comply with this judgment on compromise.
Atty. Agustin moved for the reconsideration of the foregoing resolution but his motion was denied in the CA Resolution22 dated September 8, 2006.
Displeased, Atty. Agustin, with the complainants named as his co–petitioners, interposed the present recourse contending that the resolutions of the CA violated the principle of res judicata because they amended and altered the final and executory LA Decision dated September 27, 1998 and NLRC Resolution dated May 7, 2003 on the basis of an unconscionable compromise agreement that was executed without his knowledge and consent. Atty. Agustin prays that the joint compromise agreement be set aside, the LA Decision dated September 27, 1998 executed and Herrera ordered to pay him P335,844.18 as attorney’s fees pursuant to the final and executory monetary award originally obtained by the complainants before the LA.
The petition is dismissible outright for being accompanied by a defective certification of non–forum shopping having been signed by Atty. Agustin instead of the complainants as the principal parties.
x x x [T]he certification (against forum shopping) must be signed by the plaintiff or any of the principal parties and not by the attorney. For such certification is a peculiar personal representation on the part of the principal party, an assurance given to the court or other tribunal that there are no other pending cases involving basically the same parties, issues and causes of action.
The Court has espoused leniency and overlooked such procedural misstep in cases bearing substantial merit complemented by the written authority or general power of attorney granted by the parties to the actual signatory.26 However, no analogous justifiable reasons exist in the case at bar neither do the claims of Atty. Agustin merit substantial consideration to justify a relaxation of the rule.
It is apparent that the complainants did not seek the instant review because they have already settled their dispute with Herrera before the CA. It is Atty. Agustin’s personal resolve to pursue this recourse premised on his unwavering stance that the joint compromise agreement signed by the complainants was inequitable and devious as they were denied the bigger monetary award adjudged by a final and executory judgment.
Atty. Agustin ought to be reminded that his professional relation with his clients is one of agency under the rules thereof “[t]he acts of an agent are deemed the acts of the principal only if the agent acts within the scope of his authority.”27 It is clear that under the circumstances of this case, Atty. Agustin is acting beyond the scope of his authority in questioning the compromise agreement between the complainants, Podden and Herrera.
In the present case, the allegations of vitiated consent proffered by Atty. Agustin are all presumptions and suppositions that have no bearing as evidence. There is no proof that the complainants were forced, intimidated or defrauded into executing the quitclaims. On the contrary, the LA correctly observed that, based on the following facts, the complainants voluntarily entered into and fully understood the contents and effect of the quitclaims, to wit: (1) they have already received a copy and hence aware of the LA Decision dated September 27, 1998 when they signed the quitclaims on March 2, 1999, April 8, 1999 and March 31, 2000; (2) the quitclaims were written in Filipino language which is known to and understood by the complainants; (3) none of the complainants attended the hearings on the motion for execution of the LA Decision dated September 27, 1998; (4) they were consistent in their manifestations before the NLRC and the CA that they have already settled their claims against Podden and Herrera hence, their request for the termination of the appeals filed by Atty. Agustin before the said tribunals.
Furthermore, it is the complainants themselves who can impugn the consideration of the compromise as being unconscionable31 but no such repudiation was manifested before the Court or the courts a quo.
The ruling in Unicane Workers Union–CLUP v. NLRC32 cited by Atty. Agustin is not applicable to the facts at hand. The circumstances which led the Court to annul the quitclaim in Unicane are not attendant in the present case. In Unicane, the attorney–in–fact who signed the quitclaim in behalf of the employees exceeded the scope of his authority thus prejudicing the latter. Consequently, it was ruled that the quitclaim did not bind the employees. No akin situation exists in the case at bar.
As the validity of a compromise agreement cannot be prejudiced, so should not be the payment of a lawyer’s adequate and reasonable compensation for his services should the suit end by reason of the settlement. The terms of the compromise subscribed to by the client should not be such that will amount to an entire deprivation of his lawyer’s fees, especially when the contract is on a contingent fee basis. In this sense, the compromise settlement cannot bind the lawyer as a third party. A lawyer is as much entitled to judicial protection against injustice or imposition of fraud on the part of his client as the client is against abuse on the part of his counsel. The duty of the court is not only to ensure that a lawyer acts in a proper and lawful manner, but also to see to it that a lawyer is paid his just fees.
However, equity dictates that an exception to such rule be made in this case with the end in view that the fair share of litigants to the benefits of a suit be not displaced by a contract for legal services.
It must be noted that the complainants were laborers who desired to contest their dismissal for being illegal. With no clear means to pay for costly legal services, they hired Atty. Agustin whose remuneration was subject to the success of the illegal dismissal suit. Before a judgment was rendered in their favor, however, the company closed down and settlement of the suit for an amount lesser than their monetary claims, instead of execution of the favorable judgment, guaranteed the atonement for their illegal termination. To make the complainants liable for the P335,844.18 attorney’s fees adjudged in the LA Decision of September 27, 1998 would be allowing Atty. Agustin to get a lion’s share of the P385,000.0037 received by the former from the compromise agreement that terminated the suit; to allow that to happen will contravene the raison d’être for contingent fee arrangements.
More importantly, Atty. Agustin was not totally deprived of his fees. Under the joint settlement agreement, he is entitled to receive ten percent (10%) of the total settlement. We find the said amount reasonable considering that the nature of the case did not involve complicated legal issues requiring much time, skill and effort.
It cannot be said that Herrera negotiated for the compromise agreement in bad faith. It remains undisputed that Podden has ceased operations on December 1, 1994 or almost four years before the LA Decision dated September 27, 1998 was rendered.41 In view thereof, the implementation of the award became unfeasible and a compromise settlement was more beneficial to the complainants as it assured them of reparation, albeit at a reduced amount. This was the same situation prevailing at the time when Herrera manifested and reiterated before the CA that a concession has been reached by the parties. Thus, the motivating force behind the settlement was not to deprive or prejudice Atty. Agustin of his fees, but rather the inability of a dissolved corporation to fully abide by its adjudged liabilities and the certainty of payment on the part of the complainants.
Also, collusion between complainants and Herrera cannot be inferred from the fact that Atty. Agustin obtained lesser attorney’s fees under the compromise agreement as against that which he could have gained if the LA Decision dated September 27, 1998 was executed. Unless there is a showing that the complainants actually received an amount higher than that stated in the settlement agreement, it cannot be said that Atty. Agustin was unlawfully prejudiced. There is no proof submitted supporting such inference.
Under the above circumstances, Herrera cannot be made solidarily liable for Atty. Agustin’s fees which, as a rule, are the personal obligation of his clients, the complainants. However, pursuant to his undertaking in the joint compromise agreement, Herrera is solely bound to compensate Atty. Agustin at the rate of ten percent (10%) of the total settlement agreement.42 Since the entire provisions of the joint compromise agreement are not available in the records and only the relevant portions thereof were quoted in the CA Resolution dated September 30, 2005, the Court deems it reasonable to impose a period of ten (10) days within which Herrera should fulfill his obligation to Atty. Agustin.
WHEREFORE, premises considered, the petition is hereby DENIED. The Resolution dated September 30, 2005 of the Court of Appeals in CA–G.R. SP No. 85556 is AFFIRMED.
Pursuant to his undertaking in the joint compromise agreement, respondent Alejandro Cruz–Herrera is ORDERED to pay, give, deliver to Atty. Emmanuel D. Agustin ten percent (10%) of the total settlement agreement within a period of ten (10) days from notice hereof. Both of them are hereby REQUIRED to report compliance with the foregoing order within a period of five days thereafter.
2 Penned by Associate Justice Jose L. Sabio, Jr., with Associate Justices Jose C. Mendoza (now a Member of this Court) and Arturo G. Tayag (retired), concurring; id. at 37–39.
3 Complainant Josephine Solano was a line leader while the rest of the other complainants were assemblers; id. at 44.
6 Issued by LA Aliman D. Mangandog; id. at 43–53.
19See CA Resolution dated September 30, 2005, id. at 37–38.
23Cosco Philippines Shipping, Inc. v. Kemper Insurance Company, G.R. No. 179488, April 23, 2012, 670 SCRA 343, 350–351.
24 518 Phil. 53 (2006).
25 Id. at 63, citing Gutierrez v. Sec. of the Dept. of the Labor and Employment, 488 Phil. 110, 121 (2004).
27See J–Phil Marine Inc. and/or Candava v. NLRC, 583 Phil. 671, 676 (2008).
29Czarina T. Malvar v. Kraft Food Phils., Inc., and/or Bienvenido Bautista, Kraft Foods International, G.R. No. 183952, September 9, 2013.
30Magbanua v. Uy, 497 Phil. 511, 520–522 (2005).
32 330 Phil. 291 (1996).
34 G.R. No. 167415, February 26, 2010, 613 SCRA 742.
36University of the East v. Secretary of Labor and Employment, G.R. Nos. 93310–12, November 21, 1991, 204 SCRA 254, 263, 265.
37 P35,000.00 multiplied by 11 complainants. See CA Decision dated September 30, 2005; rollo, pp. 37–39.
38Rayos v. Atty. Hernandez, 544 Phil. 447, 461 (2007).
40Bach v. Ongkiko Kalaw Manhit & Acorda Law Offices, 533 Phil. 69, 85 (2006).

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