Turner Entertainment Co. v. DeGeto Film GmbH

Brief Fact Summary.

A contract between an American entertainment conglomerate and a German cooperative, for the cooperative to broadcast certain programs via satellite throughout Germany was scrutinized.

Synopsis of Rule of Law.

No specific rule of law was promulgated by the court.

Facts.

The Defendant-Appellant, Degeto Film GmbH (the "Defendant"), is the exclusive agent for all the other defendants, German public broadcasters.  These broadcasters form a cooperative referred to as ARD.  ARD is funded by royalty fees and under German law, must provide the entire German population with programming.  MGM/UA originally signed an agreement with the Defendant in 1984, but after a series of transactions, the Plaintiff-Appellee Turner, (the "Plaintiff"), now stands in MGM/UA's shoes.  ARD paid $60 million to MGM/UA for an exclusive right to telecast certain licensed works to the German speaking public.  The agreement allows ARD to telecast the licensed works "by all means and methods now or hereafter known including but not limited to … DBS [direct broadcasting satellite] and/or communication satellite for purposes of so-called home television reception."  The works had to be broadcast in German and telecasted to the licensed audience, virtually all of German-speaking Europe.  "Because the reception area, or 'footprint,' of satellite broadcasts does not easily conform to the political and cultural boundaries that comprise the licensed territory, the parties included an exception to the strict definition in the contract of the licensed territory."  The exception is termed "overspill", and the agreement only includes "a contextual definition of overspill", nothing specific.   Instead of broadcasting on a DBS satellite, ARD began broadcasting in April 1991 on the ASTRA 1B satellite, an FSS satellite.  FSS satellite signals can be received much easier than DBS signals.  The ASTRA 1B satellite has "a footprint over five times the size of the licensed territory; the footprint encompasses most of Europe."  The agreements drafters did not foresee "such an easy method of reaching a pan-European audience would become a standard mode of broadcasting during the life of the Agreement."  In March of 1993, the Plaintiff learned ARD wished to broadcast a program over the ASTRA 1B satellite in August 1993.  The Plaintiff contended that "transmitting licensed works via ASTRA violates the Agreement." 
•    Concurrent lawsuits were filed in Germany and the United States.  The German court held "that because of its extensive range, ARD had no absolute right under the Agreement to broadcast via ASTRA."  Irrespective of that holding, however, the court observed "the parties had not contemplated the current circumstances involving the new technology and [   ] ARD was compelled as a practical matter to broadcast outside the licensed territory in order to fulfill its legal obligation to bring its telecasts to the German public."  Pursuant to this gap in the contract, the German Court felt compelled to apply "the doctrine of good faith dealing" to the dispute, and as such, "attempted a supplemental interpretation of the contract to determine a result that parties bargaining in good faith would have negotiated."  Consequently, "[t]he German court determined that Turner should permit ARD to use the satellite in order to properly fulfill its legal obligations.  However, the court determined that ARD would have to pay an increased fee for the privilege, to be determined by that court at a later date." The Northern District of Georgia granted the Plaintiff a preliminary injunction, but this injunction was stayed pending these proceedings.

Issue.

"[W]hether a federal court, which properly has jurisdiction over an action, should exercise its jurisdiction where parallel proceedings are ongoing in a foreign nation and a judgment has been reached on the merits in the litigation abroad."
•    Was the German court's "supplemental interpretation" of the contract consistent with the "gap filling" allowed by Georgia law and general common law "inconsistent with the provisions of the contract as written"?

Held.

The court addresses three goals courts should consider when addressing this type of issue:  "1) a proper level of respect for the acts of our fellow sovereign nations–a rather vague concept referred to in American jurisprudence as international comity; (2) fairness to litigants; and (3) efficient use of scarce judicial resources."
•    No, it was consistent.  First, "the Agreement expressly gives ARD a right to telecast 'by all means and methods now or hereafter known including but not limited to … DBS and/or communication satellite for purposes of so-called home television reception.' " The court recognizes the importance of "the grant also expressly provid[ing] that the 'telecast can originate any place in the universe for reception only in the Territory as defined in paragraph 4 below (inclusive of legitimate overspill as set forth in ¶ 2(f) below).' " As such, "deny[ing] ARD the right to utilize the ASTRA satellite would conflict with the provisions of the Agreement."  Second, "the German court reasonably concluded that the parties did not contemplate an overspill of the magnitude which results from recent technology, including the ASTRA satellites." Therefore, "the German court employed its 'supplemental interpretation' and filled the gap in the contract in accordance with its determination of good faith dealings by the parties as to unforeseen eventualities."

Discussion.

It is interesting to think about what the effect of an opposite decision would have been.  The ARD had a legal obligation to provide programming to the entire German population.  The satellite the Plaintiff wished for it ARD to use could not reach the entire German population.