Lawyer for Superman Heirs Loses Privilege Claims

(CN) - An attorney for the creators of Superman waived attorney-client privilege by giving the government legal documents that were allegedly stolen by another lawyer and shopped to D.C. Comics, the 9th Circuit ruled Tuesday.

A dispute has been brewing for years over the rights to the iconic and lucrative superhero, whom writer Jerry Siegel and illustrator Joe Shuster created in the 1930s. D.C. Comics and Warner Brothers claim that attorney Marc Toberoff tried to take control of the copyright himself by manipulating Siegel and Shuster's heirs into breaking decades-old agreements.

Around 2006, David Michaels, a lawyer working for Toberoff, "abscond[ed] with copies of several documents from the Siegel and Shuster files," sending them to D.C. Comics, including "a cover letter, written in the form of a timeline, outlining in detail Toberoff's alleged master plan to capture Superman for himself."

D.C. Comics gave the allegedly stolen documents over to an outside attorney and began a quest to obtain them through discovery. Toberoff refused to hand them over, saying the documents were protected by attorney-client privilege because they involved communication with the heirs. A magistrate judge eventually ordered production of some of the documents - including the timeline - and D.C. Comics received them in 2008.

Relying on the timeline-cover letter, D.C. Comics filed a 2010 complaint against Toberoff, the heirs and others.

Since then, "Toberoff has continued to resist the use of any of the documents taken from his offices, including those already disclosed to D.C. Comics and especially Michaels' letter," according to the 9th Circuit.

Just after D.C. Comics sued, the U.S. Attorney's Office in Los Angeles, acting on a request from Toberoff, issued a Grand Jury subpoena for the documents as part of an investigation into the alleged theft. After Toberoff complied by producing unredacted copies of the documents, D.C. Comics moved for the same access.

A magistrate judge again ruled for D.C. Comics, finding that Toberoff's voluntary disclosure waives attorney-client privilege. Toberoff appealed to the 9th Circuit with a writ of mandamus, arguing that privilege remained because he merely disclosed the documents to the government.

The three-judge appellate panel rejected this claim, however, while criticizing the attorney-producer's business model.

"Having set his sights on Superman, Toberoff approached the heirs with an offer to manage preexisting litigation over the rights Siegel and Shuster had ceded to D.C. Comics," Judge Diarmuid O'Scannlain wrote for the court. "He also claimed that he would arrange for a new Superman film to be produced. To pursue these goals, Toberoff created a joint venture between the heirs and an entity he owned. Toberoff served as both a business advisor and an attorney for that venture. The ethical and professional concerns raised by Toberoff's actions will likely occur to many readers, but they are not before this court."

The panel, which included Chief Judge Alex Kozinski, found that "voluntarily disclosing privileged documents to third parties will generally destroy the privilege," and that this does not change just because the third party is the government.

"Given that Congress has declined broadly to adopt a new privilege to protect disclosures of attorney-client privileged materials to the government, we will not do so here," O'Scannlain wrote.

Editor's Note: In an amended opinion published May 11, 2012, the court added that "there has been no finding of wrongdoing on the part of Mr. Michaels."

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