$1M Sanction Against Stan Lee’s Daughter Is Reversed by the Ninth Circuit

Steven T. Lowe

On December 6, 2021, the Ninth Circuit refused to back a ruling from a California judge that the daughter of the late Marvel comic book writer, Stan Lee, deserved to be sanctioned $1 million for her failed lawsuit against a company her father co-founded, concerning ownership of her father’s name and likeness. JC Lee accused her father’s business partners at Pow Entertainment Inc. of creating a scheme to “loot” the right to market Lee’s name after his departure from Marvel Comics.

The panel of Ninth Circuit judges reversed a ruling by U.S. District Judge Otis D. Wright ordering JC Lee to pay $1 million in sanctions and holding her attorney liable for $250,000 of the bill for filing such a “meritless” case in the first place. The decision stated that “the district court abused its discretion when it imposed sanctions” on Lee and her attorney, Jonathan Freund of Freund Legal LLP.

However, the panel rejected JC Lee’s bid to revive her case against Pow, finding that Judge Wright was correct to “throw it out” because Lee would have no luck pursuing a case that her father’s business partners at Pow orchestrated a scheme to “loot” his intellectual property. Nonetheless, the panel judges said there was “no evidence that Lee’s filing was clearly frivolous, legally unreasonable, or brought for an improper purpose.”

Stan Lee had sued Pow himself, accusing the company of making $1 billion by stealing his identity, likeness, name, and image and selling it off to a Hong Kong company called Camsing International. However, shortly before his death, Lee agreed to drop the suit.

JC Lee’s lawsuit brought forth some prior allegations of intellectual property theft that Judge Wright found to be barred by a principal called res judicata or claim preclusion, which means a cause of action may not be relitigated once it has been resolved on the merits. In this case, lawyers for Pow were able to pull up a 2010 ruling from a New York judge which held that the statute of limitations regarding the transaction had run (i.e., too much time had passed since the transaction) and the plaintiffs “cannot wait a decade to enforce their rights.” The Ninth Circuit said, “Lee’s amended complaint depends on the enforceability of the Stan Lee Media agreement which was previously found unenforceable.”

During oral arguments in December 2021, U.S. Circuit Judge, the honorable Marsha Berzon suggested that Judge Wright was “extremely exasperated with the Stan Lee Media people” and annoyed at dealing with another lawsuit over an avoided contract, but, she added, “he is sanctioning the wrong people.”

Lee is represented by Craig Huber of C Huber PC.

Jonathan Freund and Freund Legal LLP are represented by Ian Shelton of Eversheds Sutherland LLP.

Pow Entertainment is represented by Chaz Rainey of Hamrick & Evans LLP

The case is Joan Lee v. Pow Entertainment Inc. et al., case number 20-55928, in the U.S. Court of Appeals for the Ninth Circuit.

* Lowe & Associates (“The Firm”) is an entertainment and business law firm located in Beverly Hills, California. The firm has extensive experience handling cases involving intellectual property law having provided top-quality legal services to its clients since 1991. The Firm is recognized for its many achievements, including successfully litigating many high-profile cases.

Find us at our website at www.LoweLaw.com