Factors Etc., Inc. And Boxcar Enterprises, Inc. v. Pro Arts, Inc. And Stop and Shop Companies, Inc.

MANSFIELD, Circuit Judge

(dissenting):

I respectfully dissent. I agree with the majority that, despite the contrary assumption of all parties in Factors I, New York conflict of laws analysis would call for the application of Tennessee law to determine if Elvis Presley’s right of publicity survived his death. However, with the utmost of respect for our distinguished and able colleagues on the Sixth Circuit, I see no warrant, if we disagree on the merits, for blindly following its decision in Memphis Development Foundation v. Factors Etc., Inc., 616 F.2d 956 (6th Cir.), cert. denied, 449 U.S. 953, 101 S.Ct. 358, 66 L.Ed.2d 217 (1980), any more than we would defer to the decision of any other circuit court with which we might, as has occurred on numerous occasions, disagree or conflict. The reasoning of Memphis Development is not in any way derived from the local law of Tennessee. Its result is inconsistent with that of nearly every other case which has considered the issue,1 including the Sixth Circuit’s own prior ruling on the preliminary injunction issued by the district court in Memphis Development and our opinion in Factors I. It is also contrary to all current views of scholarly commentators on the subject.2

The majority starts with the proposition that deference is owed to the “interpretations” (Maj. opin., p. 281) by a federal court of the law of a state within its jurisdiction, a principle with which I find no need to disagree. However, it then states that the “issue for this Court ... is whether, and under what circumstances, a ruling by a court of appeals, interpreting the common law of a state within its circuit, should be recognized as authoritative by the other federal courts of the nation.” (Maj. opin., p. 282). With this statement of the issue I must disagree. Here there was no interpretation of any Tennessee law by the Sixth Circuit, only a declaration of what that court thought would be a preferable general common law rule for that state. The issue before us, therefore, is whether a federal court of appeals, called upon to anticipate what general common law rule with respect to a legal question might be appropriate for a state having no law whatsoever on the subject, must adhere to the diversity decision of a sister federal court of appeals within whose boundaries the state is located. Resolution of this issue requires us to look into the reasoning behind the policy of deference which the majority would apply and decide whether it is to be applied mechanically on a geographical basis or is instead subject to any limitations.

*285The weight given by higher federal courts to state law rulings made by federal judges sitting in that state results from the supposed greater familiarity that such a judge will have with the local law and the methods and tendencies of the state courts. As Wright states:

“As a general proposition, a federal court judge who sits in a particular state and has practiced before its courts may be better able to resolve complex questions about the law of that state than is some other federal judge who has no such personal acquaintance with the law of the state. For this reason federal appellate courts have frequently voiced reluctance to substitute their own view of the state law for that of the federal judge. As a matter of judicial administration, this seems defensible.” C. Wright, Federal Courts § 58 at 271 (3d ed. 1976) [footnote omitted].

To a lesser extent a federal court of appeals might conceivably be considered to have more familiarity with the law of a state within its boundaries than would another federal court of appeals. Even this premise is open to serious question, however, for a number of reasons. Unlike a state court or a federal district court within a single state, the court of appeals of a circuit in which several states are located, which disposes of diversity appeals as only a small percentage of its business, is not likely to gain any special familiarity with the law of one of the states within its boundaries. The Sixth Circuit, for instance, physically encompasses seven different states. Of 1,823 appeals filed with it in 1980, only 212, or 11.6% (compared with an average for all circuits of 12.5%) were diversity suits and these originated not solely from Tennessee but from all seven states. See 1980 Annual Report of the Director, Administrative Office of the United States Courts, Table A-12.

These facts weaken and, indeed, may even destroy the assumption that the able Sixth Circuit has some special knowledge or expertise in Tennessee law to which deference must be paid. In this case, for instance, it would be more logical to assume that, if familiarity with a particular state’s law is to be the standard for deference, the United States district judge for the Western District of Tennessee, Judge Harry W. Wellford, who in a well reasoned opinion held Elvis Presley’s property right in his name and image for commercial purposes to be descendible, see 441 F.Supp. 1323 (W.D. Tenn.1977), had superior expertise with respect to Tennessee law. On the issue before us MacGregor v. State Mutual Life Assurance Co., 315 U.S. 280, 62 S.Ct. 607, 86 L.Ed. 846 (1942), cited by the majority, is of no assistance for the reason that there the circuit court merely affirmed the “interpretation placed upon purely local law by a Michigan federal judge of long experience,” id. at 281, 62 S.Ct. at 607. Here, in contrast, the Sixth Circuit did not affirm Judge Wellman’s decision, but reversed it.

Moreover, it is perfectly clear that the Sixth Circuit’s decision in fact in no way depended on existent local law or methods. The opinion makes no effort, as is sometimes done, to determine what other states the Tennessee courts tend to look to, cf. Yost v. Morrow, 262 F.2d 826, 828 n.3 (9th Cir. 1959); Wilmington Trust Co. v. Mutual Life Insurance Co., 76 F.Supp. 560 (D.Del. 1948), much less to be guided by analogous principles of Tennessee law, cf. Winston Corp. v. Continental Casualty Co., 508 F.2d 1298 (6th Cir. 1975). Instead, it expressly states at the outset that,

“Tennessee courts have not addressed this issue directly or indirectly, and we have no way to assess their predisposition. Since the case is one of first impression, we are left to review the question in the light of practical and policy considerations, the treatment of other similar rights in our legal system, the relative weight of the conflicting interests of the parties, and certain moral presuppositions concerning death, privacy, inheritability, and economic opportunity.” 616 F.2d at 958.

It then relies on John Rawls’ A Theory of Justice (1971) and the Restatement of Torts in evaluating these general considerations. *286Clearly, familiarity with Tennessee law and practice was of no consequence in the Sixth Circuit’s endeavor. We, however much “outsiders” (Maj. op., p. 283), are as fully qualified effectively to “declare” Tennessee law in such fashion as our sister circuit.

If under these circumstances we were to bow to the Sixth Circuit’s declaration of Tennessee law, it would have to be for reasons other than those underlying the usual deference given to federal judges who are experienced in the local law and practice of states located within their boundaries. The majority seeks to find such a basis in the overall “functioning of diversity jurisdiction” (Maj. op., p. 282). First it argues that recognizing the authoritativeness of the Sixth Circuit’s ruling would enhance the “orderly development of state law” (Maj. op. p. 282). But our refusal to be bound by the Sixth Circuit here would not affect the development of Tennessee law at all. It is conceded as a matter of settled law that any Tennessee court decision or state legislation would wipe out the future significance of both Memphis Development and our decision. Moreover, the notion that consistency among the circuits will better “focus state legislative efforts on the appropriateness of a statutory change” (Maj. op., p. 282) is speculative at best and perhaps ill founded. If Tennessee constituents were laboring under conflicting federal court declarations of rights and duties, the legislature would be more likely to act sooner than if all decisions were consistent.

Second, while noting that lawyers must frequently advise clients concerning unsettled issues of law, the majority argues that failure to follow Memphis Development would promote uncertainty and “create needless diversity in the exposition of state substantive law” (Maj. op., p. 282). This ignores the fact that our development and formation of lasting rules of common law depends heavily on healthy differences of opinion. Soundness must not be sacrificed on the altar of consistency. If two members of this panel would “probably uphold a descendible right of publicity, were [they] sitting on the Tennessee Supreme Court” (Maj. op., p. 282), and the third would certainly do so, I think we should so hold rather than retreat behind unsupportable deferential niceties.

Even the consistency achieved under the majority’s rule is fortuitous and arbitrary. Had the Memphis Development case arisen, for example, in the Ninth Circuit and had that circuit, without reference to Tennessee law or practice, declared that Tennessee law should not allow descendibility, would we be required to follow that version unless we could prove it wrong on some local basis overlooked by the Ninth Circuit? Apparently the majority, which would “determine the authoritativeness of Memphis Development with regard to the territorial scope of the Sixth Circuit” (Maj. op., p. 283 n.7), would agree that such a Ninth Circuit decision would be entitled to no more weight than the usual persuasive authority of a sister circuit with which, for good reason, we might disagree. The only difference here, where the Sixth Circuit eschewed any Tennessee law basis for its declaration, is that its physical geography includes that state. In my view the lack of logic behind the majority’s geographical reasoning is further demonstrated by the fact that if we had stated our holding in Factors I to be a declaration of our view of Tennessee law, which we would certainly have done if the parties had not at that time agreed that New York law governed, the Sixth or any other circuit would have been free to take a contrary view and thus create the very inconsistency which the majority seeks to avoid.

In the unusual situation here, where an initial court of appeals diversity declaration is in no way derived from the law or practice of the state and interprets no existing state law, we should feel free to reach a different result if sound reasons recommend it, regardless of the unpersuasive views of the sister circuit from which the initial declaration emanated. Where, as here, the Sixth Circuit itself had no Tennessee law basis for its choice and we are persuaded that other reasons dictate a contrary decision (or prediction), there is no *287logical justification for a rule that would permit us to depart from the Sixth Circuit’s views only upon a showing of “a clear basis in Tennessee law for predicting that the Tennessee courts . . . would conclude that the Sixth Circuit’s prediction was incorrect” (p. 283) [emphasis added].

Turning to the merits, sound principles commend a different result from that reached in Memphis Development on the issue of whether Elvis Presley’s right of publicity survived his death.3 Because the issue was fully addressed in Factors I and because the discussion there is consistent with the vast majority of other authorities considering the problem, see notes 1 & 2 supra, I will not rehash at length the elements supporting the Factors I result. The gist of the reasoning is that the right of publicity involved here is in the nature of a valuable property right, representing the fruits of an individual’s investment in the commercial development of the use of his personality. It differs from a mere right of privacy, which is purely personal in nature and hence only protected from invasion as long as the individual lives. Where the publicity right is developed through commercial investment and exploitation of the individual during his lifetime, it should be treated just the same as any other intangible property right owned by him and be devisable or descendible at death. Further, the public policy of providing incentives for individual enterprise and investment of capital and energy argues for allowing an individual to pass the fruits of his labors along to others after his death. To maintain, as Memphis Development did, that “leaving a good name to one’s children is sufficient reward in itself for the individual,” 616 F.2d at 959, is “rather harsh on those who have invested their efforts in their name, rather than in the stock market, and constitutes a rather heavy burden to impose on creativity.” Felcher & Rubin II, supra, at 1132.

The parade of horrors conjured by the Sixth Circuit in Memphis Development to resist this reasoning is unreal. First, merely being a public figure (e. g., Gandhi, Napoleon, Revere, or the others mentioned at 612 F.2d at 959) is not enough to create a descendible property right. That right exists only by virtue of the individual’s commercial development4 of his persona and is limited to commercial products. Second, it is not analogous to “titles” and “offices,” referred to by the Sixth Circuit, which are not alienable by law and not the result of commercial development any more than are “trust,” “friendship” or “enmity,” also referred to by that court. Id. Third, there are several answers to the Sixth Circuit’s concern over how long the property interest lasts after the death of the individual and whether it is taxable. As a practical matter the ability to continue to exploit most commercially developed personalities through the sale of products after their death will last but a few years at most, diminishing because public interest in purchasing the products will decline. Further, *288limits could be placed on the duration of the right by analogy to the copyright statute. See Lugosi v. Universal Pictures, 603 P.2d 425, 446-47 (1979) (Bird, C. J., dissenting). Whether the property right is taxable to the individual’s estate will depend on interpretation of the Internal Revenue Code, but there is every indication that receipts from the sale of products after death will be taxable to the seller as gross income. Fourth, free speech would not be inhibited by continuing to restrict the sale of such products only to licensees even after death. A biography, documentary or news article would not be the kind of merchandise covered by the right of publicity.5 Just as it is during an individual’s life, the right can be treated with the flexibility needed to avoid genuine conflicts with First Amendment freedoms. Compare Paulsen v. Personality Posters, Inc., 59 Misc.2d 444, 299 N.Y.S.2d 501 (Sup.Ct.1968) (protecting a Pat Paulsen for President poster as newsworthy), with Factors I, supra, 579 F.2d at 222 (rejecting claim that the In Memory poster was privileged as celebrating a newsworthy event).6

The above reasons make the Factors I approach the appropriate rule for Tennessee just as for New York, and I am satisfied that they would persuade the Tennessee courts, if faced with the issue, to follow the majority rule and hold that Elvis Presley’s right of publicity survived his death. Additionally, it would be rational for the Tennessee courts to adopt a policy enhancing the continued growth of Nashville and Memphis as centers for the lives and activities of music industry personalities. The Factors I rule obviously promotes this, while the Memphis Development rule threatens it.

Having concluded that as a matter of Tennessee common law the right of publicity asserted by Factors in this case should be held to survive Presley’s death, I address certain of Pro Arts’ other arguments against affirmance, which the majority, because of its decision on deference grounds, does not consider (Maj. op., p. 283 n.8). Appellees contend (1) that Factors is collaterally estopped by the Memphis Development decision from maintaining this suit; (2) that federal copyright law preempts the state law of publicity in this area, and (3) that the apparent nationwide scope of the injunction issued against Pro Arts by the district court is improper. In my view none of these additional points calls for reversal of the judgment below. The first claim is that Memphis Development, decided more than four months prior to entry of the judgment appealed from here, created a defensive issue preclusion against Factors because the dispositive issue in that case, as here, is whether under Tennessee law Presley’s right of publicity, transferred to Factors, survived his death and this issue was decided by the Sixth Circuit adversely to Factors after a full and fair opportunity for Factors to litigate the issue. With the abandonment of the mutuality of estoppel requirement in New York, Schwartz v. Public Administrator, 24 N.Y.2d 65, 70, 298 N.Y.S.2d 955, 959, 246 N.E.2d 725 (1969), and in the federal system, BIonder-Tongue Laboratories, Inc. v. University of Illinois Foundation, 402 U.S. 313, 91 S.Ct. 1434, 28 L.Ed.2d 788 (1971), Pro Arts asserts that Factors is bound by the adverse Memphis Development ruling and may not relitigate it here.

*289Under ordinary circumstances, Memphis Development, even if erroneously decided, might have a preclusive effect. But application of issue preclusion in a suit against different parties is not automatic; it requires weighing of policy considerations, a process left largely to the district court’s discretion, Parklane Hosiery Co. v. Shore, 439 U.S. 322, 331, 99 S.Ct. 645, 651, 58 L.Ed.2d 552 (1979); Restatement (Second) of Judgments § 88 (Tent. Draft No. 2) (in determining whether to invoke collateral estoppel against a litigant the court may take into account “other circumstances [which] make it appropriate that the party be allowed to relitigate the issue”). In this litigation the policies behind collateral es-toppel are not served by using the Memphis Development decision as a bar.

This is not a ease where the plaintiff is simply trying, by switching adversaries and bringing a new suit, to relitigate issues already lost, a course which is to be discouraged because of the needless waste involved in multiple litigation. Indeed, Memphis Development is not really a prior determination at all. The present ease was actually begun first. Both suits then proceeded simultaneously. Further, the present suit was the first and only one brought by the plaintiffs. The Memphis Development Foundation thereafter sued Factors in the Western District of Tennessee for a declaratory judgment. Factors counterclaimed for a preliminary injunction on the basis of our earlier decision. This relief was granted and the injunction was even affirmed by the Sixth Circuit, which changed its mind only after permanent relief had been granted by the district court in Tennessee. Our own circuit having first had jurisdiction over the issues and having actually adjudicated them for preliminary injunction purposes, the refusal to apply collateral estop-pel below in this case cannot be said to permit relitigation. Moreover, the issue here may be seen as one of pure law. Application of any type of collateral estoppel to such an issue is questionable. See McGrath v. Gold, 36 N.Y.2d 406, 369 N.Y. S.2d 62, 330 N.E.2d 35 (1975); Restatement (Second) of Judgments § 88(1) (Tent. Draft No. 3).

Pro Arts’ next contention, that in view of its valid copyright in the In Memory poster the federal copyright statute preempts Factors’ state law publicity rights, was fully discussed and rejected by the district court. I agree with Judge Tenney’s conclusion that the right protected here is not equivalent to any within the general scope of federal copyright law and so is not preempted by the 1909 Act, as interpreted in Goldstein v. California, 412 U.S. 546, 93 S.Ct. 2303, 37 L.Ed.2d 163 (1973), which controls this case. It would likewise not have been preempted under § 301 of the new 1976 Act, 17 U.S.C. § 301, if the events had occurred after 1978.

The right of publicity protects an interest which copyright does not. That interest is the individual’s ability commercially to maintain and exploit his fame and persona. Copyright merely protects the holder from the taking of specific expressions or arrangements he or she had created. The right of publicity, on the other hand, protects against the unauthorized appropriation of an individual’s very persona which would result in unearned commercial gain to another. If this right is not the equivalent of a copyright interest during the person’s life (as Pro Arts concedes) it is equally not the equivalent after he has died and it has been devised. Other courts which have considered the preemption argument in this exact context have reached the same conclusion as that arrived at by the district court here. See Apigram Publishing Co. v. Factors Etc., Inc., Civ. No. C78-525 (N.D. Ohio July 30, 1980); Lugosi, supra, 603 P.2d at 448 (Bird, C. J., dissenting) (issue not reached by majority opinion).

Finally, with certain limits, I would allow the district court’s relief to extend nationwide. The issue here on the merits is whether or not Elvis Presley’s right of publicity was devisable. Having concluded that it is, I would not fragmentize or qualify it by holding that it is to be recognized only in certain of our 50 states and not in others, depending on the local rule of the state. Cf. Goldstein, supra, 412 U.S. at 558, 93 S.Ct. at 2310. To do so would be to *290promote multiple litigation, the very evil against which estoppel is directed. On the other hand, whether certain acts by a defendant amount to an infringement of that right in a state might depend on the local law of the jurisdiction where the wrong occurred. See, in connection with the tort of unfair competition, Purcell v. Summers, 145 F.2d 979, 989 (4th Cir. 1944); 4 Callman, Unfair Competition, Trademarks and Monopolies § 93.2 at 424; 1A Pt. 2 Federal Practice, Par. 0.311[1 — 1] at 3170 (“Some state courts will consider the law of each state where the wrong occurred.”) I would therefore allow a defendant to show that conduct considered to be infringing in one state would not be so held under the rule of other states. The injunction could then be tailored accordingly. In any event, the practical likelihood of such a problem is not shown.

For the reasons outlined I believe Factors did have a valid and enforceable property right in the commercialization of Presley’s persona and would therefore affirm the judgment of the district court granting it relief.

. Decisions holding that the right of publicity will survive death include Hicks v. Casablanca Records, 464 F.Supp. 426 (S.D.N.Y.1978); Factors Etc., Inc. v. Creative Card Co., 444 F.Supp. 279 (S.D.N.Y.1977) (companion to the Pro Arts case which was affirmed by us in Factors I); Price v. Hal Roach Studios, Inc., 400 F.Supp. 836 (S.D.N.Y.1975). The position of the California Supreme Court is somewhat unclear. In Lugosi v. Universal Pictures, 160 Cal.Rptr. 323, 603 P.2d 425, (1979), and Guglieimi v. Spelling-Goldberg Productions, 160 Cal.Rptr. 352, 603 P.2d 454, (1979), the majority of the Court held that the rights of publicity involved in those cases did not survive the death of the individuals in question. But it has been suggested that the ruling in Lugosi, on which Guglieimi was in turn based, depended on the finding that Bela Lugosi had not exploited his right during life. See Lugosi, supra, 603 P.2d at 447 n.33 (Bird, C. J., dissenting); Felcher & Rubin, The Descendibility of the Right of Publicity: Is There Commercial Life Añer Death?, 89 Yale L.J. 1125, 1126 n.5 (1980) (“Felcher & Rubin II”). Without deciding whether or not this reading of Lugosi is justified, it is clear that any requirement of exploitation during life is fully met in this case. See Factors I, supra, 579 F.2d at 222 n. 11; note 4 infra.

. See, e. g., Felcher & Rubin II, supra; Felcher & Rubin, Privacy, Publicity, and the Portrayal of Real People by the Media, 88 Yale L.J. 1577 (1979) (“Felcher & Rubin I”); Pilpel, The Right of Publicity, 27 Copyright Soc’y Bull. 249 (1980) (“Pilpel”); Note, Lugosi v. Universal Pictures: Descent of the Right of Publicity, 29 Hastings L.J. 751 (1978); Note, The Right of Publicity — Protection for Public Figures and Celebrities, 42 Brooklyn L.Rev. 527 (1976); Comment, Transfer of the Right of Publicity: Dracuia’s Progeny and Privacy’s Stepchild, 22 U.C.L.A.L.Rev. 1103 (1975). And see additional authorities collected in Lugosi, supra, 603 P.2d at 446 n.30 (Bird, C. J., dissenting).

. In Felcher & Rubin II, supra, at 1132 n.30 it is suggested that the overall result in Memphis Development “may be justifiable on other grounds, however. The statue of Presley, itself, being readily characterized as art, not merchandise, is protected by the First Amendment, and is outside the scope of publicity rights... . Replicas of the statue could conceivably fall within the same protected category.”

. The question of whether or not this factor is essential to survival of the right was reserved as unnecessary to the decision in Factors I. See 579 F.2d at 222 n.l 1. I would require proof of some form of exploitation along the lines outlined by the district court in Hicks, supra, 464 F.Supp. at 429:

"... it would appear that a party claiming the right must establish that the decedent acted in such a way as to evidence his or her own recognition of the extrinsic commercial value of his or her name or likeness, and manifested that recognition in some overt manner, e. g., making an inter vivos transfer of the rights in the name (Factors), or posing for bubble gum cards (see Haelan Laboratories, Inc. v. Topps Chewing Gum, Inc., 202 F.2d 866 (2d Cir.), cert. denied, 346 U.S. 816, 74 S.Ct. 26, 98 L.Ed. 343 (1953)).”

See Felcher & Rubin I, supra, at 1613-20 and Felcher & Rubin II, supra, at 1130-31, for arguments in support of an even sterner application of this requirement. But cf. Lugosi, supra, 603 P.2d at 447 n.33 (Bird, C. J., dissenting); Pilpel, supra, at 257.

. Indeed, even “fictionalized” uses of public figures’ names or lives in commercial books or movies, though not qualifying as biography, may be protected by the First Amendment. See Hicks, supra; Gugiieimi, supra (Bird, C. J., concurring). I leave the merits of this issue for a case which presents it.

. In her dissent in Lugosi, again reaching a question not addressed by the majority, Chief Judge Bird said:

“... I am sensitive to the fact that enforcement of the right of publicity may conflict with freedom of expression in some cases. However, such a conflict is not presented in this case. Plaintiffs challenged Universal’s licensing of Lugosi’s likeness in his portrayal of Count Dracula in connection with the sale of such objects as plastic toy pencil sharpeners, soap products, target games, candy dispensers and beverage stirring rods. Such conduct hardly implicates the First Amendment." 603 P.2d at 449.