Wednesday, September 05, 2018

R-E-S-P-E-C-T Her Postmortem Rights of Pub-lic-i-ty?: The Aretha Franklin Estate May Test Michigan Law

by Diane Klein

When she died on August 16, 2018, Aretha Franklin became the latest major musical star to die intestate (as Prince did in 2016), leaving her family and fans grieving - and her heirs facing some complex issues of state and federal estate law.

The first step - determining who her heirs are - is easy.  Franklin was the mother of 4 sons - Clarence (born in 1956, when Aretha was just 12 and named after her own father), Edward (born in 1957), Kecalf Cunningham, and Ted White, Jr. - all of whom survived her, and who will share her estate equally under Michigan law.  Of course, without a will, dividing an estate into equally-valued shares is not so easy (how do you divide eighteen Grammy awards four ways?), and niece Sabrina Garrett Owens, selected just before Franklin's death by her sons to serve as personal administrator, will have her work cut out for her.

But the real complication lies elsewhere - in the recognition, valuation, and taxation of a somewhat unusual asset, Aretha Franklin's postmortem right of publicity.
The "right of publicity" itself is a relatively new idea, simultaneously an extension and the mirror image of the right of privacy.  For celebrities, the right of privacy is not only the right to be let alone (which all of us share), but also the right to prevent others from commercially exploiting one's name, image, and likeness (for example, by taking and selling compromising photographs).  The right of publicity vests that right in the celebrity themselves - to profit from the commercial exploitation of one's name, image, and likeness. We might think of it as the difference between using the tort of invasion of privacy to prevent a former lover or paparazzo from disseminating a "sex tape", in order to suppress it (right of privacy); from doing so in order to go into that business oneself (right of publicity).

Many trace the right of publicity to a 1953 decision written by Judge Jerome Frank, in a case about bubble-gum cards.  As he said there,
It is common knowledge that many prominent persons (especially actors and ball-players), far from having their feelings bruised through public exposure of their likenesses, would feel sorely deprived if they no longer received money for authorizing advertisements, popularizing their countenances, displayed in newspapers, magazines, busses, trains and subways.
The right was first recognized in California in 1979, in Lugosi v. Universal Pictures.  Although the California Supreme Court affirmed the right, it also held that it must be exercised during the celebrity's lifetime - in other words, it is not descendible.  A second California Supreme Court case the same year, Guglielmi v. Spelling-Goldberg Productions, applied Lugosi to the same effect in a case related to Rudolph Valentino.  But other cases decided around the same time, including the "Laurel and Hardy" case (Price v. Hal Roach Studios), supported the descendibility of the right.

In the ensuing decades, a number of states recognized such a descendible right, including Florida, by statute; Georgia, in a case brought by the Martin Luther King, Jr. estate (which eliminated any requirement that the celebrity have exploited his or her own name or likeness during life); and Tennessee, in a case about Elvis Presley.  A case over Tennessee Williams involved the conflict of New York and Florida law; when bandleader Louis Prima's widow sued the Olive Garden over a commercial using "Oh Marie," the conflict of laws between Nevada, New Jersey, and Louisiana on descendibility was central to the analysis.  California eventually came around, and enacted a statute protecting this right for 70 years after the death of the person, retroactive to apply to persons who died even before the statute was enacted (in 1985).

Franklin died domiciled in Michigan, and so the question arises: does Michigan recognize a postmortem descendible right of publicity?  The answer is not clear. 

One leading expert on the right of publicity, Loyola-Los Angeles Law School Prof. Jennifer Rothman, describes Michigan as a "likely yes" on the postmortem right, stating, "Federal courts have recognizes that the right of publicity is descendible, and at least one state appellate court has agreed."  She cites three cases in support.  But the 2009 state case she cites, Aaron v. Treadwell, concerned a living plaintiff.  Her second case, a lower court opinion in a 2001 Sixth Circuit case related to furniture design, had "concluded that a post-mortem right of publicity exists under Michigan common law," but this point was dicta in the appellate opinion.

The third case cited by Rothman is even less helpful.  In a 2016 misappropriation case arising from Target stores' sale of materials using Rosa Parks' name, image, and likeness, the Eleventh Circuit Court of Appeals, applying Michigan law, rejected the claim of the owners of Rosa Parks' right of publicity, balancing the right against 1st Amendment rights relating to matters of public interest.  In Rosa and Raymond Parks Institute for Self-Development v. Target Corp., although the Court acknowledged Michigan's "common law right of publicity," it also stated that such rights "are not absolute," and must be balanced against the "qualified privilege to communicate on matters of public interest."

Of the three cases cited by Rothman, by far the most recent, and the only one involving an actual deceased "celebrity," held against the owners of the publicity right.  Moreover, in balancing it against the 1st Amendment, the Court did not treat the right as a property right, at all.  As a result, I am more skeptical than Prof. Rothman that Aretha Franklin's heirs will be able to assert ownership of a descendible right of publicity in her name, image, and likeness.  (But then, I am also more supportive of recognition of this property right than Rothman, who has remarked, "I am not convinced that property rights in a deceased personality [sic] should extend beyond death.")

In some cases, the postmortem rights of publicity may be among the most valuable assets of the estate of a dead celebrity - especially one who did not manage their finances well.  (Aretha Franklin, with an estimated estate of $80 million, is not in that category.)  Even for those who leave behind very valuable copyrights or trademarks, the continuing right to license a deceased superstar's name and likeness is incredibly lucrative.  (The estate of Kurt Cobain, who died in 1994, is estimated at $450 million.) 

While it might seem that Owens, in her role as personal administrator, would therefore be duty-bound to advocate for the postmortem right of publicity because it would enlarge the estate, the reality is more complex.  In order to avoid facing a large additional tax bill, the administrator acting on behalf of Franklin's heirs may choose - as Prince's heirs did in Minnesota - not to seek to vindicate the right under state law.

And that is because, in recent years, the IRS has become increasingly aggressive in its valuation of publicity rights, hitting back hard at heirs who seemingly grossly undervalue it.  In December 2017, the IRS settled with the Whitney Houston estate on just this issue.  (Houston died in 2012.) The IRS valued her postmortem rights of publicity at $11.7 million - while the heirs claimed just $200,000.  But that discrepancy dwarfs that of the Michael Jackson publicity rights valuation dispute, still churning in 2017, eight years after this death: the estate set the value at $2105, while the IRS claimed it was more like $434 million.

While Franklin's postmortem rights of publicity are potentially hugely valuable (though probably not in the Michael Jackson stratosphere), whatever valuation is reached, the taxes will come due long before those intangible assets have been monetized.  Her heirs may find themselves forced to commercialize her image, or liquidate other estate assets, to satisfy a tax bill based on an inherently speculative valuation of an admittedly intangible asset whose value is hard to predict.

Two years after Prince's death, the estate attorneys have collected nearly $6 million, but the heirs (his siblings) are yet to receive a penny of a fortunate estimated at $200 million.  Jimi Hendrix's 1970 death intestate set off a legal battle aspects of which were still being actively litigated in 2004.  The Houston and Jackson estates have been mired in years of wrangling with the IRS.  We can only hope the Franklin heirs obtain a more expeditious resolution, and enjoy a more peaceful legacy, of the estate of the "Queen of Soul."

4 comments:

Joe Miller said...

I think the Georgia Supreme Court's 1982 decision upholding a common law right of publicity claim by heirs is also relevant. It's Martin Luther King, Jr. Center for Social Change v. American Heritage Products, Inc., 296 S.E.2d 697 (Ga. 1982). Here's a link to the Google Scholar copy: https://scholar.google.com/scholar_case?case=1102676940012657150&hl=en&as_sdt=80006

Diane Klein said...

It is not relevant to Michigan law. The primary point of MLK, Jr. Center for Social Change is that the celebrity's failure to exploit his or her right of publicity during their own life does not bar a descendible right. Again - not precedential. If the heirs or IRS seek recognition of the right, the Michigan court will not be bound by any other state.

Joe Miller said...

Not bound, of course, but open to persuasion, surely. Many states recognize a common law right of publicity. Georgia now has a 36-year track record of a common-law right that survives death and that heirs can enforce. I think a court inclined to favor the existence of a right will find much to use in, and thus be quite influenced by, the MLK case.

Diane Klein said...

So, first, the blog post actually cited to the MLK case. And second, there is an equally well-developed history in California (for example), and in New York (for another example). I don't see any reason why a Michigan court would find Georgia jurisprudence on this (a state with far fewer dead celebrities than CA or NY) especially persuasive. The Michigan Rosa Parks case (arguably like the MLK case, and not like Franklin) triggers perhaps-significant 1st A issues. The balancing the court engaged in there is not compatible, in my view, with treating this as a true property right (a taxable asset of the estate) - and that is the real issue, I think. Why would heirs seek to vindicate a right that will literally cost them millions, right now, and is inherently difficult to value?