Brett Daniels, a professional magician, collaborated and contracted with defendants Simon Painter and Timothy Lawson on a variety of live magic shows and a potential magic show for television. Daniels performed in many live magic shows as one of the group’s largest attractions, using his method and choreography to make large vehicles appear out of thin air. Daniels owns the proprietary rights to the concept, apparatus, and method of operation of his “Appearance Illusion,” for which he’s known throughout the magic community. Daniels ceased performing in the live magic shows, but continued to contribute creatively to the business. Daniels played a large part in scouting talent for the show, recruiting all but one of the initial performers in the show. Additionally, Daniels used his TV connections to help further the prospects of a TV magic show.
The situation escalated when a Venezuela tour date was added by Painter and Lawson. After arriving in Venezuela, the materials and equipment of the acts were seized. Daniels claims that this was a plan by Painter and Lawson and that they would not assist him in leaving the country. While dealing with a serious illness for five days, Daniels had to threaten legal action before Painter and Lawson provided him with a ticket out of the country. The relationship soured quickly after this trip. Soon after, the defendants stopped paying Daniels the 10% of the act fee budget stated in their contract, and cut his contact off with talent he had recruited.
Daniels sued for breach of oral and written contract, breach of TV agreement, copyright infringement, unjust enrichment, misappropriation of trade secrets, breach of fiduciary duties, and more. The federal court ordered the parties to arbitration and the arbitrator found in favor of Daniels and awarded him $2,607,287.40.
Defendants Painter and Lawson filed a motion with the federal court to reconsider this award arguing the arbitrator disregarded the law and made mistakes. First, defendants argued that Daniels operated as a talent agent without a license in violation of the Talent Agencies Act (TAA), thereby voiding the contract. The arbitrator found that Daniels did not act as a talent agent, but instead in a role similar to a casting director, and that the contract was still valid. Second, defendants argued that MagicSpace should not be held joint and severally liable because it was not a party to the contract. The arbitrator disagreed because the contract specified that it applied to other entities working with Painter, Lawson, and the show. Lastly, defendants argued that the arbitrator disregarded California law by failing to reduce future damages to present cash value. But the Ninth Circuit places the burden on defendants to put forth evidence to reduce future damages. Alma v. Mfs. Hanover Tr. Co., 684 F.2d 622, 626 (9th Cir. 1982). Because defendants failed to introduce evidence, the arbitrator was not required to reduce future damages.
The court found that the arbitrator had considered and discussed these issues, and did not find Defendants’ arguments persuasive. Citing Kyocera, the Court held that to overturn an arbitrator’s decision, the decision must be “completely irrational” or a manifest disregard of the law, creating an extremely high standard. Kyocera Corp. v. Prudential-Bache T Servs., 341 F.3d 987, 998 (9th Cir. 2003); 9 U.S.C. § 9. Here, the court found that there was no evidence that the arbitrator misapplied the law with knowledge or intent to ignore the law. Additionally, the defendants had the burden to prove the arbitrator’s decision to be “completely irrational,” which burden was not met. U.S. Life Ins. Co. v. Superior Nat’l Ins. Co., 591 F.3d 1167, 1173 (9th Cir. 2010). Despite defendants’ best efforts, the $2.6 million award did not disappear because they could not prove an intentional misapplication of the law by the arbitrator. The court affirmed the arbitrator’s finding that Painter, Lawson, and their respective companies were jointly and severally liable for the final award, and also affirmed defendants’ continued obligation to pay Daniels his original rate of 10% of the act fee budget each year from their contract.
The citation for the court’s ruling is Daniels v. Painter, No. CV 16-3782-RSWL-E, 2018 U.S. Dist. LEXIS 120140 (C.D. Cal. July 16, 2018).