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Victory: December 2015: Victory for the Academy of Motion Picture Arts and Sciences

December 2015

On behalf of the Academy of Motion Picture Arts and Sciences, the firm recently vindicated the enforceability of the Academy’s right of first refusal to buy back Oscar statuettes for $10. Doing so required Quinn Emanuel to litigate a rarely invoked aspect of property law, “equitable servitude,” as applied to a unique piece of personal property, the Oscar statuette.

The case found its genesis in 1951, when the Academy  adopted a corporate bylaw that restricted the ability of any winner—and the winner’s heirs and successors in perpetuity—to  sell the statuette without offering it first to the Academy for $10. This restriction was implemented in  two  ways.   First, all future nominees were required to sign a “winner’s agreement” that obligated them and their heirs. Second, the bylaw stated that any member of the Academy  who had previously been awarded an Oscar was subject to the restriction whether or not they ever signed a “winner’s agreement.” The Academy’s stated goal was to prevent an  Academy Award from becoming an article of commerce to be bought and sold—it had to be earned.

Over the years, various  heirs and auction houses have challenged these restrictions on alienability. The most recent case, however, is the first time a court has addressed the enforceability of the bylaws as a contract for a right of first refusal without a signed winner’s agreement. More importantly, the court here affirmed as a matter of law that a restriction on alienability can run with the chattel, binding the winner’s successors to the Academy’s right of first refusal. The briefs and the court’s opinion cited cases and legal commentaries going back to the 16th century.

Last year, Sanders auction house, which was on notice of the Academy’s legal position because of prior attempts to auction Oscar statuettes, purchased for $79,800 an Oscar awarded to Joseph Wright in 1942 for Best Color Art Direction in My Gal Sal. Sanders advertised the statuette for its own auction, seeking over one hundred thousand dollars. On behalf of the Academy, the firm threatened to seek a court order blocking the sale.  Sanders withdrew the item from auction but sought a judicial declaration invalidating the Academy’s right of first refusal agreement entirely. The trial court, however, denied Sanders’ motion for summary judgment and ruled in the Academy’s favor. Restrictions on the alienability of personal property are rare, but citing an array of cases and authorities going back to the 16th century, the court affirmed the Academy’s rights entirely. Shortly thereafter, with the Academy’s affirmative summary judgment motion pending (and the judge’s inclination now apparent), Sanders capitulated, signing a stipulated judgment and agreeing to surrender the Oscar to the Academy for $10.