The opinion of the court was delivered by: Stanton, District Judge.
The motion is denied. The stay of discovery in this action,
in effect since March 6, 1991, is vacated.
In a November 1987 licensing agreement (the "Licensing
Agreement") the Estate granted SNC exclusive rights to license
Warhol's artwork, trademarks and copyrights (sometimes
collectively referred to as "Warhol works") to third parties
for use on various products ("Licensed Products").
The Licensing Agreement contains a limited arbitration
clause, which requires disputes under some sections of the
agreement to be arbitrated, and thus leaves those under other
sections to be litigated. Certain rights, duties and
representations in the Licensing Agreement, particularly the
Estate's duties and representations regarding Warhol works,
are set forth both in sections which are subject to
arbitration (see Licensing Agreement § 13) and in others which
are not (see id. §§ 2(a), (b), 4(b), 8(a), 9(iv), (vi)).
In February 1990 SNC sued the Estate, Schlaifer Nance & Co.
v. Estate of Warhol, 742 F. Supp. 165 ("Warhol I"), claiming
that the Estate had fraudulently induced it into the Licensing
Agreement, and had breached the Agreement by false
representations, by refusing to approve the sale of Licensed
Products, and by permitting other entities to sell Licensed
Products, among other things.
The parties are proceeding on some of the Warhol I issues
before a panel of three arbitrators in Atlanta, Georgia (the
In discovery related to Warhol I, the Estate produced to SNC
a copy of a September 29, 1989 agreement between the Estate's
principal beneficiary, the Andy Warhol Foundation for the
Visual Arts, Inc. (the "Foundation"), The Dia Art Foundation
and the Carnegie Institute (the "Museum Agreement"). It
provided for the establishment of an "Andy Warhol Museum,"
which has not yet occurred.
SNC claimed to the arbitrators that the Estate violated
arbitrable provisions of the Licensing Agreement when, in the
Museum Agreement, it granted rights to Warhol works.
Without objection from the Estate, SNC has introduced the
Museum Agreement into evidence before the arbitrators, as well
as testimony concerning the prospective sale of Licensed
Products at the Warhol Museum and whether the Museum Agreement
breached the Licensing Agreement. However, the panel has
excluded testimony respecting the value of the trademark, "The
Andy Warhol Museum" (the "Museum Trademark"), holding that
although SNC had asserted damage claims for the Estate's
prospective permission for the Museum's sale of Licensed
Products, SNC had not in the arbitration claimed that
transferring the Museum Trademark breached the Licensing
Accordingly, SNC brought this action ("Warhol II"), alleging
that the Museum Agreement violated its rights under various
nonarbitrable provisions of the Licensing Agreement, including
"the right to produce or license others to produce Licensed
Products and the right to register, own and use the trademark,
`The Andy Warhol Museum.'" (Warhol II Complaint ¶ 28). SNC also
sues for anticipated future violations of those rights, as well
as breach of its right of first refusal under the Licensing
Agreement. It further claims that the Estate failed to give it
proper notice of transfer to the Foundation of its rights under
the Licensing Agreement.
Under Fed.R.Civ.P. 56, summary judgment shall be granted "if
the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show
that there is no genuine issue as to any material fact and
that the moving party is entitled to a judgment as a matter of
law." Fed.R.Civ.P. 56(c). Purely legal questions, such as the
application of claim preclusion rules here,
are properly resolved ...