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This page contains the ruling in the case of Richard Bandler against many others in the NLP community (see also The FAQ page "Who Owns NLP?, describing the legals battles in the NLP Community).

Thanks to Steve Andreas whom forwarded this info to me...

Sender: andreas@uswest.net
Date: Fri, 04 Jun 1999 09:38:19 -0600
From: Steve Andreas
Subject: [Fwd: Summary Judgment]

We have some very good news on the Bandler lawsuit (see below).
Basically, the judge ruled that Bandler is not the sole owner of the Society of NLP, and that the "Bandler group" composed of Chris Hall and 5 others is the owner. While we are not totally out of the woods yet, this ruling blows a big hole in Bandler's effort to own all of NLP. He is appealing this ruling, a process that will likely take 3 months or more, and the trial date does not change. However the basis for the ruling is pretty straightforward, so we do not think that the judge will change the ruling.

Steve Andreas

From: "Bissell, William"
To: "'andreas@uswest.net'"
Subject: Summary Judgment
Date: Thu, 3 Jun 1999 17:32:42 -0700

SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CRUZ

NOT LTD., A California Corporation, Plaintiff,
Vs.
UNLIMITED, LTD., a California corporation,
JOHN T. GRINDER, DOES I through XX, Inclusive, Defendants.
______________________________________ ) ) ) ) ) ) ) ) ) ) ) ) )
NO.: CV78482 (Consolidated with CV 132495) ORDER ON MOTION FOR SUMMARY ADJUDICATION

This matter came on regularly for hearing on May 11, 1999 in Department 9
before the Honorable Robert B. Yonts, Jr. Michael Carroll, Esq.,
appeared for Plaintiffs and Cross Defendants, Bandler, Van Huene and Luzi; Philip Burkhart, Esq.,
appeared for Defendant and Cross-Complainant Christina Hall; William Bissell, Esq.,
appeared for Cross-Defendants NLP Comprehensive, Steve Andreas and Connirae Andreas.

The matter was taken under submission

OWNERSHIP OF THE SOCIETY FOR
NEURO-LINGUISTIC PROGRAMMING

Resolution of the Motion for Summary Adjudication, with respect to most causes of action, turns on whether Hall is a part owner of the Society for Neuro-Linguistic Programming, and a holder of intellectual property rights related to NLP.

Neuro-Linguistic programming (NLP) was developed by John Grinder and Richard Bandler in the mid-1970s.

Hall claims an ownership interest in certain intellectual property rights relating to NLP, as she is part of a group which allegedly acquired such rights from Bandler's corporation, Not Ltd., while that corporation was in bankruptcy. Bandler contends that Not Ltd. never owned those property rights and that, therefore, Hall could not have acquired them. To evaluate these claims, it is necessary to review various transactions preceding the bankruptcy.

Not Ltd. and Unlimited Ltd. formed a partnership in 1979 known as the "Society of Neuro-Linguistic Programming." There is a dispute as to whether the document tendered by Hall, which is unsigned, is a copy of the partnership agreement. That document is dated November 1, 1979. That document is attached to a declaration that Richard Bandler
filed in 1981 in this action in connection with a motion for preliminary injunction. The declaration states,

"By way of agreement, a copy of which is attached hereto and incorporated herein by reference, NOT LTD. has sole and exclusive authority for the licensing, testing and credentialing (sic) of practitioners in Neuro-Linguistic Programming.

Bandler states, in his declaration filed in support of this motion, that he does not recall signing the agreement, and points out that his prior declaration does not state that the agreement is an accurate and complete facsimile of the signed version. Nevertheless, his declaration does state that the purported agreement is effective to transfer the right to license practitioners to Not Ltd., which is the issue here.

Specifically, the agreement states:

NOT LTD. has a division entitled "NOT LTD: DIVISION OF TRAINING AND RESEARCH. Such division shall have the sole authority and responsibility for certification testing and the giving of seminars in Neuro-Linguistic Programming including the right to receive all fees and income therefrom but subject to a 30% royalty based on testing fees to go to and belong to this partnership...

The parties hereto desire to form this partnership to perform and accomplish the concepts and purposes of Neuro-Linguistic Programming and to own all the trademarks, trade names and other proprietary and ancillary rights involved in Neuro-Linguistic Programming.

Bandler contends that the right to intellectual property relating to NLP was never transferred by Bandler or Grinder to their respective corporations. This is contradicted, though, by the language of the partnership agreement between the corporations, which states that the intent is for the partnership to "own all the trademarks, trade names and other proprietary and ancillary rights involved in Neuro-Linguistic Programming."

After the partnership agreement was executed, a dispute arose between Bandler and Grinder. Bandler's corporation, Not Ltd., alleged that Grinder (and Unlimited, Ltd.) was violating the agreement by giving seminars and certifications, and other acts which, by virtue of the partnership agreement, Not Ltd. had the exclusive right to do. The suit was filed in
September, 1981, and settled a month later, in October, 1981. The settlement agreement is between Bandler, Not Ltd., Grinder, and Unlimited Ltd., although Bandler individually is not a party to the suit. That agreement states:

  1. The parties hereby agree to terminate the Partnership
    Agreement entered into on November 1, 1979, a copy of which is attached hereto as Exhibit B and incorporated by reference wherein the Society of Neuro-Linguistic Programming was established. [The Partnership Agreement is not attached to the Settlement Agreement, but it is clear that this refers to the Agreement attached to the complaint.]
  2. Grinder hereby agrees to transfer and does hereby transfer all his interest and that of UNLIMITED, LTD., in said partnership to NOT LTD.
  3. The parties hereby agree that The Society of Neuro-Linguistic Programming shall continue as a sole proprietorship vested in NOT

Bandler argues that the phrase "sole proprietorship vested in NOT LTD." means that the Society is a sole proprietorship belonging to Bandler personally and administered by NOT LTD; but that is not what the word "vested" means. The plain meaning of the phrase is that the Society is to be a business separate from, but belonging to, Not Ltd. That is, the Society is not a corporation itself, but rather is a sole proprietorship, the proprietor of which is the corporation.

Pursuant to this agreement, Not Ltd. became the sole owner of the Society which, as stated in the partnership agreement that created it, was the sole owner of all intellectual property relating to NLP. In 1983, Not Ltd. declared bankruptcy. In the bankruptcy schedules, Not Ltd. did not list any intangible property other than customer lists and good will. Nevertheless, all assets of the corporation were part of the estate, and the trustee received a cash offer from Grinder for the purchase of all rights to NLP from the bankrupt estate for $5,000. The trustee applied to the court to sell those assets to Grinder. The offer was to purchase "whatever right, title and interest your Applicant may have in the said certification right and logo of NLP.

Instead, though, these rights were purchased by a group known as the "Bandler Group." According to Bandler, he put this group together to avoid having Grinder regain control of the marketing of NLP. (Of course, Bandler contends that the corporation did not own the right to market NLP anyway, but he wanted to prevent Grinder from being able to assert such a right by virtue of the bankruptcy sale. As noted above, the documents are clear that the rights were vested in the corporation and not in Bandler personally.)

The Bandler Group consisted of Hall and several other people. Hall contends that Bandler was not part of the Bandler Group, but Bandler, and at least two other members of the group, state that he was. Bandler contends that he formed the Bandler Group and was the "controlling member."

Thereafter, Hall conducted many NLP seminars, often with Bandler's involvement. In spite of the fact that the Society was apparently purchased by the Bandler Group, members of the Bandler Group acted as though Bandler, personally, held the intellectual property rights. Thus, they paid Bandler royalties when they certified NLP practitioners. Hall paid royalties as well.

Hall at some point stopped paying royalties to Bandler. She stopped using Bandler's name on the certificates she issued around 1993.

In 1995, Bandler sent a letter to Hall purporting to terminate her interest in the Bandler Group, followed by a demand that she stop using his intellectual property. But there is no evidence that Bandler had the authority to revoke the property rights which Hall acquired, as part of the Bandler Group, when the Group purchased those rights from the bankrupt estate of Not, Ltd. So under the undisputed evidence, Hall had a right to exercise her rights as an owner of the Society and of the intellectual property rights relating to NLP.

REAL PARTY IN INTEREST

Hall contends that summary judgment should be granted as to the entire complaint on the ground that Bandler is not the real party in interest, since he does not own the intellectual property rights associated with NLP, and which Hall is alleged to have misappropriated.

But there is evidence that Bandler is a member of the Bandler group, so it appears to be proper for Bandler to bring the action, even if the rights are owned by the group as a whole.

The Bandler Group is an unincorporated association organized to purchase the rights to NLP from the bankrupt estate. Members of the Bandler Group jointly own the intellectual property rights associated with NLP. As such, each owner is a real party in interest with respect to the property rights that they jointly own, and that any of them can bring a suit to enforce those rights.

FAILURE TO JOIN NECESSARY PARTIES

Hall argues that the case should be dismissed because each member of the Bandler Group is an indispensable party. Although the Society is owned by the Bandler Group, not all members of the Bandler Group are parties to this suit.

The proper procedure with a nonjoinder of necessary parties is to seek a court order to bring in the missing parties. The absence of an indispensable party is no longer a jurisdictional defect. Witkin, Cal. Procedure (4th ea.) PLEADINGS 925, CCP 389.

The court will not grant summary judgment on this ground.

FIRST CAUSE OF ACTION - CONSUMER LEGAL REMEDIES ACT

The consumer legal remedies act, CC __1750 et seq., was enacted to protect consumers against unfair and deceptive business practices. CC 1760. Under the act, a "consumer" is a person who seeks or acquires goods or services for personal, family, or household purposes. 1761(d). A consumer seeking to bring an action under the act must first, 30 days or more prior to bringing the action, serve a notice on the other party. CC 1782(a).

Hall seeks adjudication of this cause of action on two grounds: first, that plaintiffs are not "consumers" within the meaning of this Act, and second, that plaintiffs did not serve her with the notice required under this Act.

Obviously, bringing an action against a competitor under the Act is a perversion of the purposes of the Act. But that is not the issue here. The first question is whether plaintiffs are persons who acquired or sought services from Hall for personal purposes.

One plaintiff, Dominic Luzi, filed a declaration stating that he did learn about NLP originally as a consumer by reading a book and listening to an audio tape by another defendant, Connirae Andreas. This led him to think that NLP was not so great until he was trained by Bandler personally and was taught the true value of the authentic form of NLP that only Dr. Bandler is qualified to promulgate." He has also "witnessed the awakening and excitement that persons . . . experience when they are finally exposed to the true value of NLP through training seminars given by Dr. Bandler...." Bandler's declaration also states that he has purchased and consumed, for personal use, many NLP products by various people, including Defendants.

So there is a triable issue of fact as to whether Plaintiffs are "consumers" within the meaning of this section.

Hall also argues that plaintiffs did not serve her with the notice required in CC 1782(a):

Thirty days or more prior to the commencement of an action for damages pursuant to the provisions of this title, the consumer shall do the following:

  1. Notify the person alleged to have employed or committed methods, acts or practices declared unlawful by Section 1770 of the particular alleged violations of Section 1770.
  2. Demand that such person correct, repair, replace or otherwise rectify the goods or services alleged to be in violation of Section 1770.

Bandler contends that he complied with this requirement by sending a certified letter to Hall back in 1995 demanding that she stop certifying people as though she were doing so through the Society and discontinue use of his intellectual property. This is not a demand that she "correct, repair, replace or otherwise rectify the goods or services" she provided to Bandler.

Since Bandler has not complied with the notice requirements, adjudication of this cause of action is granted.

THIRD CAUSE OF ACTION - BREACH OF CONTRACT

The Third Cause of Action is for breach of written contract, and alleges that Hall was granted a license to conduct NLP seminars, issue certifications, etc., in consideration for payment of royalties to Bandler.

Because Bandler no longer has the exclusive right to such intellectual property, and Hall purchased an interest in that property from the bankrupt estate, any such written agreement would be superseded by the purchase of the intellectual property rights at issue.

Therefore, this cause of action has no merit. Adjudication is granted.

FOURTH CAUSE OF ACTION -
BREACH OF IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING

This alleges a breach in the implied covenant of good faith and fair dealing in the written agreements alleged in the Third Cause of Action. Hall had a right to exploit the Society for commercial purposes by virtue of having purchased an interest in the Society.

Adjudication of this cause of action is granted.

FIFTH CAUSE OF ACTION - FEDERAL UNFAIR COMPETITION

This cause of action alleges that defendants made various false and misleading claims, including that certificates would be issued by or under the auspices of "Bandler and/or the Society," that they issued NLP certificates that bear the name and/or forged signature of Bandler, and that they issued certificates with the official logo and seal of the Society.

Hall had a right to use the name of the Society, so the only remaining claim is for using Bandler's name.

Hall claims that she stopped using Bandler's name in connection with NLP seminars and the like in 1993. Bandler denies this, and says that Hall continues to claim affiliation with, and endorsement by, Bandler in marketing her seminars, but the attachments to his declaration do not bear this out. They note that Hall is n the only person to complete a 5-year Apprentice with NLP Co-Developer, Richard Bandler." They also quote Bandler singing Hall's praises, and note that she was certified as a Master Trainer, and at a level beyond Master Trainer, by Bandler.

These are not misappropriations of Bandler's name, and Bandler does not contend that the representations are untrue. Hall does use Bandler's name, but does not claim any current affiliation with him or endorsement by him.

Summary adjudication of this cause of action is granted.

SIXTH CAUSE OF ACTION - UNFAIR COMPETITION

This is a state unfair competition claim, and Hall seeks summary adjudication for the same reasons as in the Fifth Cause of Action. But the cause of action alleges some additional acts. Specifically, it alleges that Hall has disparaged Bandler's services.

Hall's motion does not address the claim of disparagement, so the cause of action may have some validity with respect to that claim.

Adjudication is denied.

SEVENTH CAUSE OF ACTION - INFRINGEMENT ON SERVICE MARK

This cause of action alleges that Bandler, through the Society, obtained a registration of the Society's official logo and seal, which creates a presumption that the seal is a valid and protectable service mark owned by the Society which is, in turn, owned by Bandler.

By using the service mark, Hall is alleged to have infringed on Bandler's rights thereto.

Since the service mark was among the intellectual property rights relating to NLP that were transferred to the Bandler Group, Hall has a right to use it.

Adjudication of this cause of action is granted.

EIGHTH CAUSE OF ACTION - MISUSE OF NAME WITHOUT CONSENT

The Eighth Cause of Action alleges that Hall misused Bandler's name, sponsorship, and identification without his consent. Again, the alleged misuse of Bandler's name consists of stating that she had trained with him and so forth. The question here is whether this violates Civil Code 3344.

Appropriating someone's name for commercial purposes is actionable under CC _3344(a):

Any person who knowingly uses another's name . . . in any manner, . . . for purposes of advertising or selling . . . products . . . or services, without such person's prior consent, . . . shall be liable for any damages sustained by the person or persons injured as a result thereof. In addition, in any action brought under this section, the person who violated the section shall be liable to the injured party or parties in an amount equal to the greater of seven hundred fifty dollars ($750) or the actual damages suffered by him or her as a result of the unauthorized use....

Hall contends that the use of Bandler's name in listing her credentials is authorized under 3344(d), which states:

For purposes of this section, a use of a name . . . in connection with any
news, public affairs, or sports broadcast or account, or any political
campaign, shall not constitute a use for which consent is required under
subdivision (a).

Hall contends that using Bandler's name when reciting her qualifications and training is in connection with "public affairs. " The leading case on the "public affairs" exception is Dora v. Front Line Video, Inc. (1993) 15 CA4th 536, 542. That case involved a surfing documentary, and the court held that it came within the category of public affairs; The court stated:

Civil Code Section 3344, subdivision (d) distinguishes between news and public affairs. We presume that the Legislature intended that the category of public affairs would include things that would not necessarily be considered news. Otherwise, the appearance of one of those terms in the subsection would be superfluous, a reading we are not entitled to give to the statute. [citations] We also presume that the term "public affairs" was intended to mean something less important than news. [citations] Public affairs must be related to real-life occurrences. As has been established in the cases involving common law privacy and appropriation, the public is interested in and constitutionally entitled to know about things, people, and events that affect it. For that reason, we cannot limit the term "public affairs" to topics that might be covered on public television or public radio. To do so would be to jeopardize society's right to know, because publishers and broadcasters could be sued for use of name and likeness in documentaries on subjects that do not relate to politics or public policy, and may not even be important, but are of interest.

Here, Hall used Bandler's name to help sell her seminars, by stating that Bandler trained her, by describing the certifications that Bandler bestowed upon her, and by quoting Bandler's comments about her. The question is whether these are public affairs. "Public affairs" is not limited to documentary reports. Even matters which are stated for purposes of self-promotion are exempt from liability if they are matters involving public affairs. Hall's qualifications, and Bandler's opinion (or former opinion) of her work, are matters of interest to anyone interested in NLP, and particularly of interest to those who are considering taking seminars that Hall is giving.

So this exception does apply, and adjudication of this cause of action is granted.

NINTH AND TENTH CAUSES OF ACTION - INTERFERENCE WITH PROSPECTIVE ECONOMIC ADVANTAGE AND CONTRACTUAL RELATIONS

The elements of a cause of action for interfering with contractual relations are:
(1) the existence of a valid contract,
(2) that the defendant had knowledge of the existence of the contract,
(3) that the defendant intended to induce a breach thereof,
(4) that the contract was in fact breached
(5) that this resulted in injury to plaintiff, and
(6) that the breach and resulting injury were proximately caused by defendant's unjustified or wrongful conduct.
Witkin, Cal. Procedure (4th ea.) PLEADING 728.

The elements of interference with prospective economic advantage are similar, but without the requirement of a valid contract. See Witkin, supra 730.

Bandler contends that this claim is based on Bandler's contractual relationships with two trainers, Bernd Dyckoff and Andrei Batko. Dyckoff and Batko have entered into license agreements with Bandler, agreeing to pay Bandler royalties for any person that they train in NLP techniques. However, they have been giving seminars with Hall and have not paid Bandler royalties.

Assuming that Dyckoff and Batko have not been paying royalties to Bandler, the only evidence that Hall caused this is Bandler's declaration that Hall persuaded them not to pay the royalties. This is not a matter within Bandler's persona' knowledge.

Since there is no evidence that Hall used any wrongful conduct to induce these men to breach their contracts with Bandler, adjudication should be granted.

ELEVENTH CAUSE OF ACTION - SPOLIATION OF EVIDENCE

The Supreme Court eliminated the tort of spoliation of evidence in Cedars-Sinai Medical Center v. Superior Court (1998) 18 C4th 1.

Adjudication is granted.

Twelfth Cause of Action - Declaratory Relief

This cause of action seeks a judicial declaration "regarding commercial exploitation of NLP and the Society." There are disputed issues regarding the commercial exploitation of the Society. While it is clear that Hall acquired an interest in the Society as part of the Bandler Group, there is a triable issue of fact as to whether Bandler is also a member of the Bandler Group. So there is a triable issue as to whether Bandler has a right to commercial exploitation of the Society.

The parties also dispute whether NLP, as a technique or a set of knowledge, can be exclusively owned by anyone. It's not necessary to decide that issue at this point, since there is an issue as to whether Bandler has a right to the Society.

Adjudication of this cause of action is denied.

THIRTEENTH CAUSE OF ACTION - ACCOUNTING AND DISGORGEMENT

Bandler seeks an accounting and disgorgement of all gains, profits and advantages derived by defendants from all wrongful activities previously alleged.

If this were merely seeking an accounting of the profits that Hall made by putting on seminars, and so forth, that were contrary to Bandler's wishes, adjudication would be granted. But this cause of action also seeks a disgorgement of profits that she may have made by other wrongful conduct, including disparaging Bandler's name. Since adjudication is denied with respect to the disparagement claim, adjudication of this cause of action is denied as well.


SUMMARY

The Motion for Summary Judgment is denied.

Summary Adjudication is granted as to Causes of Action 1, 3, 4, 5, 7, 8, 9, 10, and 11.

Summary Adjudication is denied as to Causes of Action 6, 12, and 13.

DATED: 5-19-99 SIGNATURE

ROBERT B.
YONTS, JR.

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