HENDRICKS & LEWIS PLLC, a Washington professional limited liability company, Plaintiff-Appellee,

v.
GEORGE CLINTON, an individual, Defendant-Appellant.
No. 13-35010.

United States Court of Appeals, Ninth Circuit.
Argued and Submitted February 4, 2014 Seattle, Washington.
Filed June 23, 2014.
Amended August 26, 2014.

Eric Michael Fong (argued), Fong Law, Port Orchard, Washington, for Plaintiff-Appellee.
Katherine Hendricks (argued), Hendricks & Lewis, Seattle, Washington, for Defendant-Appellant.

Before: Raymond C. Fisher, Ronald M. Gould, and Morgan Christen, Circuit Judges.
Order, Opinion by Judge Christen

ORDER

The Opinion filed June 23, 2014 is hereby amended. The amended opinion is filed concurrently with this
Order.

With these amendments, the panel has unanimously voted to deny the petition for rehearing. Judges
Gould and Christen have voted to deny the petition for rehearing en banc, and Judge Fisher has so
recommended. The full court has been advised of the petition for rehearing en banc and no judge has
requested a vote on whether to rehear the matter en banc. Fed. R. App. P. 35.

Defendant-Appellant's petitions for rehearing and rehearing en banc are DENIED. No additional petitions
for rehearing or rehearing en banc will be entertained.

OPINION

CHRISTEN, Circuit Judge.

George Clinton appeals the district court's order appointing a receiver, assigning four master sound
recording copyrights to the receiver, and authorizing the receiver to use the copyrights to the extent
necessary to satisfy monetary judgments a law firm obtained against him. Clinton also raises several
issues for the first time on appeal, including fraud on the court and judicial estoppel. We have
jurisdiction under 28 U.S.C. 1291 and we affirm.

I. FACTS

A. H&L's Judgments Against Clinton

George Clinton is a musician, bandleader, and touring performance artist. Hendricks & Lewis (H&L) is a
law firm that represented Clinton in various disputes from March 2005 to August 2008. H&L billed
Clinton $3,341,650.32 for its work, received $1,000,578.87 in payment, and wrote off approximately
$600,000 of the remaining balance. This left $1,779,756.29 due. H&L initiated arbitration to secure
payment of the balance, and an arbitration panel issued an award in favor of H&L. Clinton did not
participate in the arbitration proceedings. H&L petitioned the Western District of Washington for an
order confirming the arbitration award, and, in May 2010, the district court entered judgment for H&L
against Clinton in the amount of $1,675,639.82, plus interest. The court entered a second judgment
awarding H&L an additional $60,786.50 in attorneys' fees and costs in July 2010.

B. H&L's Judgment Collection Efforts

H&L pursued a variety of judgment collection efforts, including garnishments, levies, and liens in several
districts across the country. Clinton's attorney declared that these actions created a financial
"stranglehold" so that Clinton "[c]an't pay his taxes. Can't pay his lawyers. Now, it is going to affect his
touring and his ability to make a living at 72 years old."

C. Ownership History of the Masters

In July 1975, Clinton, through his production company, Thang, Inc., entered into a recording contract
with Warner Bros. Records in which Clinton agreed to make master recordings of his performances with
the group Funkadelic ("the Masters"). Clinton had previously entered into a valid and binding agreement
with Thang to render his services as a recording artist solely and exclusively for Thang.

The recording contract between Thang and Warner Bros. provided that Warner Bros.:

shall own in perpetuity throughout the world all right, title and interest in and to all the results and
proceeds of [Thang's] and [Clinton's] services and performances hereunder, including the sole and
exclusive ownership of any and all masters . . ., the copyrights therein throughout the universe, and the
right to extend or renew such copyrights, and [Thang] and [Clinton] acknowledge that they shall at no
time have any right, title or interest in the foregoing.

The agreement further provided that Thang:

acknowledges and agrees that [Warner Bros.] is and shall be the owner of all rights of copyright in
records embodying the results and proceeds of [Clinton's] services . . ., including the exclusive right to
copyright same as "sound recordings" in the name of [Warner Bros.] to renew and extend such
copyrights (it being agreed that for this purpose [Thang] and [Clinton] are deemed [Warner Bros.'s]
employees for hire) and to exercise all rights of the copyright/proprietor thereunder. To the extent, if
any that [Thang] or [Clinton] may be deemed an "author" of such "sound recordings", [Thang] and
[Clinton] further grant to [Warner Bros.] a power of attorney, irrevocable and coupled with an interest
for [Thang] and [Clinton] and in [Thang] and/or [Clinton's] name, to apply for and obtain and on
obtaining same, to assign to [Warner Bros.], all such renewal copyrights.

Clinton signed a substantially similar agreement with Warner Bros. in May 1979. Under these
agreements, the Masters at issue in this appeal"Hardcore Jollies," "One Nation Under a Groove,"
"Uncle Jam Wants You," and "The Electric Spanking of War Babies"were created, and Warner Bros.
registered the copyrights in those recordings as "works made for hire" in its name as author.

In August 1982, to resolve a separate dispute involving Clinton, Warner Bros., and other parties, Clinton
and Warner Bros. entered into a settlement agreement under which Warner Bros. agreed to "relinquish
its ownership of the Clinton Masters" at issue in this appeal, if or when Clinton entered into an
agreement with a third party to distribute and sell records produced from the Masters. Clinton's
ownership of the Masters was eventually confirmed through litigation in 2005 when the Central District
of California issued an order that Clinton "is the sole owner of [the Masters] and has been the sole
owner of the Masters since 1993." Clinton subsequently sued third parties for copyright infringement of
the Masters.

II. PROCEDURAL HISTORY

In July 2011, approximately one year after H&L secured its judgments for past-due attorneys' fees
against Clinton, Clinton sued H&L in the Western District of Washington alleging various theories of legal
malpractice. H&L asserted judgment collection counterclaims and moved for an order authorizing the
sale of the Masters to satisfy the judgments it had secured against Clinton. In April 2012, H&L initiated a
separate action in the Western District of Washington seeking an order for a judgment debtor
examination of Clinton. H&L subsequently filed a motion in this separate action for the appointment of a
receiver and for an order directing the assignment of the Masters to the receiver. H&L's counterclaims in
the malpractice action were severed and consolidated with the action initiated by H&L, which is at issue
here.[1]

In November 2012, the district court found that "[d]espite numerous efforts to enforce [the subject]
judgments in this and other district[s], plaintiff has recovered less than $340,000." The district court
appointed a receiver in an order specifying that the receiver:

shall have all of the rights, powers, duties, and authority vested in him under [applicable Washington
law], including but not limited to authority and control over the Funkadelic master sound recordings
"Hardcore Jollies," "One Nation Under a Groove," "Uncle Jam Wants You," and "The Electric Spanking of
War Babies," in order to maximize the value of the sound recordings for the benefit of the parties and to
make whole the judgment creditor, [H&L]. Receiver shall, to the greatest extent possible, maximize the
income stream from the Funkadelic master sound recordings without selling or otherwise permanently
disposing of the copyrights. Ideally, the Receiver will utilize the copyright and sound recordings over a
one or two year period to satisfy the judgments and pay the expenses of the receivership before
returning the copyrights and master sound recordings to [Clinton]. Notwithstanding the Court's
preference for returning the recordings and copyrights to [Clinton] after his debts are satisfied, the
Receiver has the authority to sell or permanently dispose of any or all of the master sound recordings.

(Emphasis added). The district court also ordered that it would have to pre-approve any sale of the
Masters.[2]

In entering its order, the district court considered the text and legislative history of Copyright Act
201(e), which protects individual authors from the involuntary transfer of their copyrights. The district
court ruled that Clinton was not entitled to 201(e) protection because he "is either an assignee of the
original author or he has previously transferred the copyrights voluntarily." The district court noted that
the initial agreements between Warner Bros. and Clinton, and between Warner Bros. and Thang,
specifically granted the copyrights in the sound recordings to Warner Bros. The court concluded that
Warner Bros. was the original "author" of the Masters under both the Copyright Act and the parties'
contract, and that Clinton was not eligible for protection under 201(e) of the Copyright Act. The district
court reasoned that Clinton, who obtained ownership of the Masters in 1993, is an assignee, not the
author for purposes of the Act. In the alternative, the court reasoned that even if it found Clinton was
the original author, he voluntarily transferred the copyrights to Warner Bros., thus making himself
ineligible for protection under 201(e). Finally, the district court concluded that the Masters recording
copyrights, like any other species of non-exempt personal property, are subject to judicial sale or
assignment to satisfy a judgment.

Clinton appeals.

III. DISCUSSION

"We review de novo the district court's interpretations of the Copyright Act." Rossi v. Motion Picture
Ass'n of Am. Inc., 391 F.3d 1000, 1002-03 (9th Cir. 2004). The appointment of a receiver is reviewed for
abuse of discretion. See Cameron v. Groveland Improvement Co., 54 P. 1128, 1128 (Wash. 1898); King
Cnty. Dep't of Cmty. & Human Servs. v. Nw. Defenders Ass'n, 75 P.3d 583, 586 (Wash. Ct. App. 2003).
"Because a court invokes judicial estoppel at its discretion, we review the application of judicial estoppel
to the particular facts of a case for abuse of discretion." Johnson v. Oregon, 141 F.3d 1361, 1364 (9th Cir.
1998).

A. Clinton's Copyrights in the Masters are Subject to Execution to Satisfy Judgments Entered Against
Him.

Federal Rule of Civil Procedure 69(a) governs execution proceedings. It provides:

[t]he procedure on executionand in proceedings supplementary to and in aid of a judgment or
executionmust accord with the procedure of the state where the court is located, but a federal statute
governs to the extent it applies.

Fed. R. Civ. P. 69(a)(1). We therefore look to Washington law, which generally allows money judgments
to be enforced by execution: "All property, real and personal, of the judgment debtor that is not
exempted by law is liable to execution." Wash. Rev. Code 6.17.090. Washington law does not
specifically address whether copyrights, like other types of property, are subject to sale or assignment in
order to satisfy a judgment, but federal law establishes that copyrights are alienable. 17 U.S.C.
201(d)(1) provides that "[t]he ownership of a copyright may be transferred in whole or in part by any
means of conveyance or by operation of law."

We know of no federal statutory law directly addressing whether copyrights are subject to execution to
satisfy a judgment. Both H&L and the district court relied on federal common law, specifically Ager v.
Murray, 105 U.S. 126 (1881). The Ager court ruled that if a patent holder refused to assign his patent to
satisfy a judgment entered against him, the trustee was authorized to execute the assignment on his
behalf. Id. at 132. Though Ager involved a patent rather than a copyright, the district court's analogy to
patent law is rooted in our case law. Our court has said that where copyright case law is lacking, "it is
appropriate to look for guidance to patent law `because of the historic kinship between patent law and
copyright law.'" Harris v. Emus Records Corp., 734 F.2d 1329, 1333 (9th Cir. 1984) (quoting Sony Corp. of
Am. v. Universal City Studios, Inc., 464 U.S. 417, 439 (1984)). Indeed, Ager itself discusses patents and
copyrights in tandem. See 105 U.S. at 127-28 ("[T]he provisions of the patent and copyright acts,
securing a sole and exclusive right to the patentee, do not exonerate the right and property . . . from
liability to be subjected by suitable judicial proceedings to the payment of his debts."). The authority
cited by the district court is helpful, but Rule 69 requires that state law controls execution proceedings
absent express statutory authority, not federal common law. See Fed. R. Civ. P. 69(a)(1).

Our court confronted an analogous issue in Office Depot, Inc. v. Zuccarini, 596 F.3d 696 (9th Cir. 2010),
where we considered whether internet domain names are subject to execution in California. Consistent
with Rule 69, in Office Depot our court first looked to California law because there is no specific federal
statute addressing whether domain names may be the subject of judgment execution efforts. Because
California law permits writs of execution against intangible assets generally, and because domain names
are intangible personal property, we held that internet domain names are subject to execution in
California. Id. at 701-02.

Here, Rule 69 required that the district court look to Washington law in the absence of a federal statute
addressing whether copyrights may be subject to execution procedures, and Washington law provides
that "all property, real and personal," is subject to execution. Johnson v. Dahlquist, 225 P. 817, 818
(Wash. 1924). This rule, known as the "Johnson rule," was first articulated when a previous version of
Wash. Rev. Code 6.17.090 was in effect, but, subject to narrow exceptions that are not applicable
here, Washington courts continue to follow it. See MP Med. Inc. v. Wegman, 213 P.3d 931, 935-36
(Wash. Ct. App. 2009). As Ager recognizes, copyrights, like patents, are a form of intangible personal
property. 105 U.S. at 129-30. Therefore, unless an exception or exemption applies, Washington law
permits H&L to execute against Clinton's copyrights in the Masters.

Clinton challenges the district court's reliance on Washington's admittedly broad and general execution
statutes and the district court's analogy to patent law. He argues that 201(e) of the Copyright Act
precludes H&L's execution efforts. For the first time on appeal, he also argues that 304(c) of the
Copyright Act prohibits execution against his copyrights because he enjoys the inalienable right to
terminate the assignment of his copyrights to Warner Bros.[3] As discussed below, both arguments fail.

B. Copyright Act 201(e) Does Not Protect Clinton from the Involuntary Transfer of His Copyrighted
Works.

Clinton argues that 201(e) of the Copyright Act protects the subject copyrights from H&L's judgment
collection efforts. Neither the statute's plain text nor its legislative history supports Clinton's argument.

We begin with the statutory language. Section 201(e) provides:

When an individual author's ownership of a copyright, or of any of the exclusive rights under a
copyright, has not previously been transferred voluntarily by that individual author, no action by any
governmental body or other official or organization purporting to seize, expropriate, transfer, or
exercise rights of ownership with respect to the copyright, or any of the exclusive rights under a
copyright, shall be given effect under this title, except as provided under title 11.

17 U.S.C. 201(e) (emphases added). A leading authority on copyright law explains:

The stated purpose of this prohibition was to "protect foreign authors against laws and decrees
purporting to divest them of their rights under the United States copyright statute, and would protect
authors within the foreign country who choose to resist such covert pressures." More particularly it was
feared that the Soviet Union, by its accession to the Universal Copyright Convention on February 27,
1973, would be enabled to enforce censorship in the United States of the works of its dissident authors
through the device of seizing the ownership of such works, and then by enforcing the American
copyright therein, enjoin any public distribution within the United States.

3 Melville B. Nimmer & David Nimmer, Nimmer on Copyright 10.4 (footnote omitted). The legislative
history of 201(e) explains that "[t]he purpose of this subsection is to reaffirm the basic principle that
the United States copyright of an individual author shall be secured to that author, and cannot be taken
away by any involuntary transfer." H.R. Rep. 94-1476, at 123 (1976), reprinted in 1976 U.S.C.C.A.N.
5659, 5739.[4]

The parties dispute whether Clinton, Thang, or Warner Bros. was the "author" of the Masters within the
meaning of the Copyright Act. If the Masters were "works made for hire" under 17 U.S.C. 101,[5] then
Warner Bros. would be the author of the works, not Clinton. See 17 U.S.C. 201(b) ("In the case of a
work made for hire, the employer or other person for whom the work was prepared is considered the
author for purposes of [the Copyright Act], and, unless the parties have expressly agreed otherwise in a
written instrument signed by them, owns all of the rights comprised in the copyright."). If Warner Bros.
is the author of the Masters, the protection afforded by 201(e) is plainly unavailable to Clinton.

We need not resolve the authorship dispute here, however, because 201(e) is of no help to Clinton
whether or not he is the author of the Masters. Section 201(e) protection does not apply where a
copyright was previously "transferred voluntarily by that individual author." There is no question that
Clinton transferred any interest that he had in the Masters to Warner Bros., and, as part of a settlement
arising from unrelated litigation, Warner Bros. subsequently agreed to transfer ownership back to
Clinton. These voluntary transfers are a sufficient basis for rejecting Clinton's argument that he enjoys
201(e) protection as the author of the master sound recordings.

Relying on the contention that 201(e) must be read in harmony with the termination provisions of
304(c) of the Copyright Act, Clinton also argues that his voluntary transfer of the Masters was an
unenforceable legal fiction. We understand this argument to be that these provisions enable authors to
reclaim transferred copyrights, without limitation, to protect them from unequal bargaining positions
caused by the impossibility of determining a work's value until it has been exploited. Clinton implies that
the termination provisions in 304 should be applied to void his original agreement to transfer his
copyrights to Warner Bros.

We decline to consider Clinton's 304 argument, which he raised for the first time in his motion for
reconsideration of the district court's order appointing a receiver. "A party does not properly preserve
an issue for appeal by raising it for the first time in a motion for reconsideration." Self-Realization
Fellowship Church v. Ananda Church of Self-Realization, 59 F.3d 902, 912 (9th Cir. 1995). The district
court ruled that the motion for reconsideration was untimely, and it never considered the merits of the
inalienable termination rights argument. Clinton does not argue that the district court abused its
discretion in so ruling, and he identifies no exceptional circumstances that warrant our consideration of
his argument for the first time on appeal. See Gieg v. DDR, Inc., 407 F.3d 1038, 1046 n.10 (9th Cir. 2005)
("An appellate court will not consider arguments not first raised before the district court unless there
are exceptional circumstances.").

C. The District Court Did Not Abuse Its Discretion by Appointing a Receiver to Manage or Sell Ownership
of These Copyrights.

Federal Rule of Civil Procedure 66 governs the appointment of receivers in federal court. We
acknowledged in Office Depot that the federal rules qualify as federal statutes for purposes of Rule
69(a). 596 F.3d at 701. While Rule 66 prevails over state law to the extent it applies, it does not provide
a different standard for the appointment of a receiver than the one found under Washington law.
Therefore, we consider Washington law when reviewing the district court's order appointing a receiver.

The Washington Act Relating to Receiverships conveys broad authority to judges to appoint receivers. A
receiver may be appointed if the court "determines that the appointment of a receiver is reasonably
necessary and that other available remedies either are not available or are inadequate." Wash. Rev.
Code 7.60.025(1). This statute provides that a receiver may be appointed, in relevant part: "[a]fter
judgment, in order to give effect to the judgment," id. 7.60.025(1)(c); "[t]o the extent that property is
not exempt from execution, at the instance of a judgment creditor either before or after the issuance of
any execution, to preserve or protect it, or prevent its transfer," id. 7.60.025(1)(e); upon attachment of
personal property "when the court determines that the nature of the property or the exigency of the
case otherwise provides cause for the appointment of a receiver," id. 7.60.025(1)(g); and "as may be
provided for by law, or when, in the discretion of the court, it may be necessary to secure ample justice
to the parties," id. 7.60.025(1)(nn).

Washington appellate courts have acknowledged that trial courts have broad discretion to appoint
receivers, but this discretion "should be exercised with caution in view of all the facts and circumstances
of the particular case." Nw. Defenders Ass'n, 75 P.3d at 586; see MONY Life Ins. Co. v. Cissne Family
L.L.C., 148 P.3d 1065, 1067 (Wash. Ct. App. 2006) ("A trial court abuses its discretion when its decision is
manifestly unreasonable, or exercised on untenable grounds, or for untenable reasons." (internal
quotation marks and citation omitted)). The district court cited 7.60 generally, and found that "[a]
receivership is necessary to ensure justice to the parties and to preserve [the Masters] for the benefit of
the parties and to make whole the judgment creditor," H&L. Without citing authority, Clinton argues
that the district court's "generic, conclusory" statement that a receivership is necessary was inadequate,
and that the court was required make specific findings to justify appointing a receiver. This argument is
not persuasive.

The record shows that the district court heard the parties' arguments and was fully aware of Clinton's
claim that the sale of the Masters would be a hardship for him. It recognized that H&L had valid
judgments against Clinton, and that H&L had only recovered a portion of Clinton's total debt. The district
court was concerned that Clinton would not be able to satisfy this debt in a reasonable amount of time.
It also knew that Clinton needed some income to support himself. The court's clear goal was to have a
receiver manage these assets so that Clinton could satisfy the judgment and have control of the assets
returned to him, if possible. It was well aware that the parties had discussed various proposals allowing
them to share the royalties generated by the Masters, but that after years of fighting over the debt in
multiple fora, they had failed to come to such an agreement. In short, the district court balanced the
equities, and did not abuse its discretion in determining that appointing a receiver was "necessary to
secure ample justice to the parties." Wash. Rev. Code 7.60.025(1)(nn).[6]

D. Clinton May Raise Claims of Fraud on the Court and Judicial Estoppel for the First Time on Appeal, But
Both Claims are Meritless.

1. Fraud on the Court

Clinton argues for the first time on appeal that H&L perpetrated fraud on the district court. H&L argues
that because this issue was not raised below, it should not be considered on appeal, citing Weisman v.
Charles E. Smith Mgmt., Inc., 829 F.2d 511, 514 (4th Cir. 1987) ("We believe that the district court is the
proper forum to determine in the first instance whether there is sufficient basis to overturn the
judgments on the grounds raised. That court is in the best position to decide whether any fraud was
perpetrated upon it or other untoward action occurred. . . .").

"Courts have inherent equity power to vacate judgments obtained by fraud." United States v. Estate of
Stonehill, 660 F.3d 415, 443 (9th Cir. 2011) (citing Chambers v. NASCO, Inc., 501 U.S. 32, 44 (1991)); see
also Dixon v. Comm'r, 316 F.3d 1041, 1046 (9th Cir. 2003) ("Courts possess the inherent power to vacate
or amend a judgment obtained by fraud on the court."). We have held that "[w]hen we conclude that
the integrity of the judicial process has been harmed . . . and the fraud rises to the level of `an
unconscionable plan or scheme which is designed to improperly influence the court in its decisions,' we
not only can act, we should." Dixon, 316 F.3d at 1046 (quoting England v. Doyle, 281 F.2d 304, 309 (9th
Cir. 1960)).

Though we are free to consider this argument for the first time on appeal, Clinton's claim that H&L
perpetrated an "unconscionable scheme" is without merit. Clinton first alleges that H&L "fabricated an
image" that Clinton refused to pay his debts. He cites H&L's statement to the district court that "Clinton
has not voluntarily paid any amounts due," and attempts to rebut it by noting that "in fact, Mr. Clinton
voluntarily paid $106,453." But Clinton fails to mention that H&L had to serve separate levies on entities
that were believed to owe Clinton royalties in order to satisfy this much of its judgment. These
payments were not "voluntary," and Clinton's accusation to the contrary is unsupported.

Clinton also argues that H&L's alleged misrepresentations were "intentional" and "designed to defraud
the court by painting an image of hopelessness and utter failure in its attempt to get paid." This
argument is belied by the record. H&L repeatedly described its judgment collection efforts in detail to
the district court, including successes, failures, and inconclusive outcomes. For instance, H&L filed a
status report with the district court in which it spent eighteen pages detailing its various judgment
collection efforts and summarizing the amount of money it had recovered as of the date of the report. In
his reply brief for this appeal, Clinton admits that H&L's "accounting is correct."

Clinton also argues that H&L falsely represented to the district court that Clinton refused to negotiate.
Clinton seems to rely on H&L's assertion that "Clinton refused to engage in such discussions" from 2008
until H&L sought arbitration on the debt, and H&L's representation that Clinton "refus[ed] to
participate" in the arbitration proceedings. This argument is unpersuasive because Clinton did not
participate in the arbitration proceedings, and it is unclear how an alleged failure to negotiate before
arbitration is relevant now.

Finally, Clinton argues that H&L did not convey accurate information to the district court when, at oral
argument on H&L's motion to authorize sale of the Masters, H&L's attorney responded to the court's
question about whether the Masters were also at issue in related California proceedings. Clinton quotes
H&L's attorney as telling the district court that "[t]here is nothing that relates to the same property [in
the California proceedings]. . . . While [the Masters] weren't part of the motion [in the California
proceedings], I'm not sure they were ever even mentioned except in the very limited context that is
referred to in the briefs." The language Clinton quotes is a selective representation of the exchange
between H&L's counsel and the district court. A more complete reading of the transcript shows that
H&L's counsel explained that the royalty streams at issue in California do not pertain to the Masters but
to other works. She also explained that the California action did not involve transfer of copyrights. We
find no merit to the argument that H&L perpetrated a fraud on the court.

2. Judicial Estoppel

Clinton also argues that the district court improperly allowed H&L to take a position inconsistent with
arguments it made in the California proceedings regarding its knowledge of Clinton's assets and his
willingness to pay the judgments against him. H&L correctly notes that Clinton raises a different judicial
estoppel theory on appeal than he did in the district court, but a "court invokes judicial estoppel at its
discretion" and we consider Clinton's argument on appeal.[7] Yanez v. United States, 989 F.2d 323, 326
(9th Cir. 1993).

The Supreme Court observed in New Hampshire v. Maine, 532 U.S. 742, 743 (2001), that "[c]ourts have
recognized that the circumstances under which judicial estoppel may appropriately be invoked are not
reducible to any general formulation," and that "[a]dditional considerations may inform the doctrine's
application in specific factual contexts." The Court listed the following factors for consideration:

First, a party's later position must be clearly inconsistent with its earlier position. Second, courts
regularly inquire whether the party has succeeded in persuading a court to accept that party's earlier
position, so that judicial acceptance of an inconsistent position in a later proceeding would create the
perception that either the first or the second court was misled. Third, courts ask whether the party
seeking to assert an inconsistent position would derive an unfair advantage or impose unfair detriment
on the opposing party if not estopped.

Id.

Clinton's argument does not satisfy the first New Hampshire factor; he has not shown that H&L took
clearly inconsistent positions with respect to its knowledge of Clinton's assets. H&L never asserted, as
Clinton suggests, that it has "no idea or way of knowing what Mr. Clinton's assets" are. H&L's statement
that it lacks knowledge and information to identify "other assets" and "continues to search for assets
and possible avenues of collection" is consistent with its assertion that it "proceeded against known
assets but continues to search for `other' assets."

E. Clinton Failed to Raise His Preemption, Erie Doctrine, and Due Process Arguments in the District
Court.

On appeal, Clinton's brief suggests a preemption argument, an argument based on the Erie doctrine,
and an alleged due process violation. As we have observed, an appellate court generally "will not
consider arguments not first raised before the district court unless there are exceptional circumstances."
Gieg, 407 F.3d at 1046 n.10. Clinton did not argue that there are exceptional circumstances for
considering these issues, but in any case we find them to be without merit.

Clinton claimed at oral argument before our court that he raised a preemption argument in opposition
to H&L's motion for sale of the copyrights. The brief to which Clinton refers only makes a general
reference to the U.S. Constitution's Supremacy Clause. Clinton conceded at oral argument that he did
not raise his Erie argument in the district court. On appeal, this part of his brief urges our court to certify
to the Washington state supreme court the question whether a copyright is subject to execution to
satisfy a judgment, but he cites no authority for the implied contention that we are obligated to certify
this question. In re Complaint of McLinn, 744 F.2d 677, 681 (9th Cir. 1984) ("Use of certification rests in
the sound discretion of this court."). Clinton did not raise his due process argument before the district
court. In any case, this portion of his appellate brief merely repeats his contention that the district court
abused its discretion by appointing a receiver. We have already rejected this argument.

CONCLUSION

The district court's order appointing a receiver and authorizing the sale of copyrights is AFFIRMED.

[1] The district court subsequently dismissed Clinton's legal malpractice claims, and this court affirmed
that ruling. See Clinton v. Hendricks & Lewis PLLC, No. 12-35791, 2014 U.S. App. LEXIS 3131 (9th Cir. Feb.
20, 2014).

[2] Neither of the parties challenged the qualifications of the court appointed receiver.

[3] 17 U.S.C. 304(c) sets out the conditions under which transfers and licenses to copyrights are subject
to termination.

[4] The statute permits court ordered transfers to pay off creditors in Title 11 bankruptcy proceedings.
Neither party argues that this affects the outcome of the appeal, but it is consistent with our general
ruling that, at least in circumstances where special exemptions or protections do not apply, copyrights
are intangible property subject to judgment collection efforts.

[5] The Copyright Act defines a work made for hire as:

(1) a work prepared by an employee within the scope of his or her employment; or

(2) a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a
motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as
an instructional text, as a test, as answer material for a test, or as an atlas, if the parties expressly agree
in a written instrument signed by them that the work shall be considered a work made for hire.

17 U.S.C. 101.

[6] We express no view as to whether a receiver will remain necessary if other income streams, not
contemplated at the time the district court appointed a receiver, become available to satisfy H&L's
judgment.

[7] In the district court, Clinton argued that H&L previously relied on California law regarding obligations
flowing from prior attorney/client relationships and that, in the Washington action, H&L relied on
Washington law. On appeal, Clinton's judicial estoppel argument is based on H&L's alleged change of
position regarding its knowledge of Clinton's assets and his willingness to satisfy H&L's judgments.

HENDRICKS & LEWIS, PLLC, Plaintiff,
v.
GEORGE CLINTON, Defendant.
Case No. C12-0841RSL
United States District Court, W.D. Washington, Seattle.
November 27, 2012.
ORDER APPOINTING RECEIVER AND AUTHORIZING SALE OF COPYRIGHTS
ROBERT S. LASNIK, District Judge.
This matter comes before the Court on plaintiff's "Motion for Appointment of a Receiver" (Dkt. # 31 in
the above-captioned matter) and "Corrected Motion [] for an Order for Sale of Copyrights in Partial or
Full Satisfaction of Judgments. (Dkt. # 73 in C11-1142RSL). Having reviewed the memoranda,
declarations, and exhibits submitted by the parties and having heard the arguments of counsel, the
Court finds as follows:
Plaintiff Hendricks & Lewis, a law firm, obtained two judgments against its former client, defendant
Clinton, in the amounts of $1,675,639.82 and $60,786.50. Despite numerous efforts to enforce those
judgments in this and other district, plaintiff has recovered less than $340,000. Hendricks & Lewis
therefore seeks appointment of a receiver to take control of the copyrights in four Funkadelic master
sound recordings owned by defendant, to sell the copyrights, and to recover the outstanding judgment
amounts from the proceeds. Defendant argues that (1) the doctrine of claim preclusion bars plaintiff's
attempts to recover on the judgment in this district and (2) the Copyright Act precludes the forced
transfer of copyright ownership and therefore bars the relief plaintiff seeks. Each argument is
considered below.
A. CLAIM PRECLUSION
In 2010, Hendricks & Lewis registered the larger of its two judgments in the United States District Court
for the Central District of California pursuant to 28 U.S.C. 1963. It then filed an action in that district
seeking to have Clinton's royalty streams from third-parties (such as Capitol Records) assigned to
Hendricks & Lewis in an attempt collect on the judgment. The Honorable Otis D. Wright II denied
Hendricks & Lewis' motion for assignment of royalties on September 27, 2011. That denial is now on
appeal to the Ninth Circuit. Clinton argues that Hendricks & Lewis is barred from seeking to execute the
judgments at issue in this case under the doctrine of claim preclusion.
The Court has already rejected this argument in a related litigation. See Clinton v. Hendricks & Lewis,
C11-1142RSL, Dkt. # 38 at 3-5 (W.D. Wash. Feb. 27, 2012). Plaintiff has again failed to show that this
attempt to recover on the underlying judgments is duplicative of the previously-filed California action. A
judgment creditor may enforce a judgment through one or more supplemental collection proceedings
filed anywhere the judgment debtor has property subject to levy. While each of these proceedings seek
the same relief, i.e., the collection of money or assets to satisfy the outstanding judgment, it does not
necessarily mean that every attempt to assert the rights of a judgment creditor is "duplicative" for
purposes of the doctrine of claim preclusion. Otherwise judgment debtors who hold assets in multiple
jurisdictions could force a creditor to chose one district in which to seek execution and forego any
amounts that cannot be recovered in that district. Such limitations would frustrate the enforcement of
federal judgments. Because the California and Washington enforcement actions seek the recovery of
different assets and there is no risk that Judge Wright's determination that Hendricks & Lewis was not
entitled to the assignment of royalties under California law will be disturbed regardless of how this
Court rules on plaintiff's request for assignment and judicial sale of four specific copyrights, the doctrine
of claim preclusion does not apply. The Court once again finds that the two actions are not duplicative,
despite the fact that they are based on the same underlying judgments.
B. SECTION 201(e) OF THE COPYRIGHT ACT
Clinton also argues that the relief sought by Hendricks & Lewis, namely the forced sale of copyrights, is
prohibited by federal law. Pursuant to 17 U.S.C. 201(e):
When an individual author's ownership of a copyright, or of any of the exclusive rights under a
copyright, has not previously been transferred voluntarily by that individual author, no action by any
governmental body or other official or organization purporting to seize, expropriate, transfer, or
exercise rights of ownership with respect to the copyright, or any of the exclusive rights under a
copyright, shall be given effect under this title, except as provided under title 11.
The leading authority on copyright calls 201(e) "a curious provision," and rightly so. 3 Melville B.
Nimmer and David Nimmer, Nimmer on Copyright 10.04 (Matthew Bender, Rev. Ed. 2012). The
provision had its genesis in the Cold War, but its reach and application in today's world has gone largely
unanalyzed and is difficult to discern.
In 1973, Congress deemed a bar on involuntary transfers necessary in order to keep the Soviet Union
from seizing ownership of works produced by dissident authors and enforcing the American copyright to
prevent public distribution of the works in the United States. 119 Cong. Rec. S5613-S5614 (daily ed. Mar.
26, 1973) (statement of Sen. John L. McClellan). A stated purpose of the provision was to protect
"foreign authors," and the initial drafts of 201(e) were aimed at acts "of a foreign state or nation."
Nimmer 10.04 n. 2; 1 Paul Goldstein, Goldstein on Copyright 5.1.6.1 at 5:20.1-5:21 n.72 (3d ed. Supp.
2008). The provision as enacted, however, is not limited to acts by foreign governments. Rather, it is a
seemingly expansive bar against the use of government power to force an author to transfer any of the
exclusive rights under a copyright.
In In re Peregrine Entertainment, Inc., 116 B.R. 194, 206 n.16 (C.D. Cal. 1990), the court construed
201(e) "as dealing with actions initiated by governmental bodies, not with those where, as in the case of
a judgment lienholder, the instruments of government are merely acting in furtherance of private
objectives." The court concluded that the "section has no application to governmental actions taken in
the sphere of private law where the government is merely enforcing private rights and is not the
ultimate beneficiary." Id. The language of the statute does not support this conclusion, however. There
is no indication that only acts initiated by the government are precluded. The statute bars not only the
seizure, expropriation, or exercise of the rights of ownership by any governmental entity, but also the
forced transfer of rights by those entities. If the statute were construed to allow the government to
transfer copyrights as long as a private party initiates the action, the evil Congress intended to avoid
could be accomplished simply by generating a money judgment against the author.
Nor does the legislative history of 201(e) suggest that Congress intended to allow the government to
force an author to give up his copyright as payment for an unrelated debt. The legislative history states
that "[t]he purpose of this section is to reaffirm the basic principle that the United States copyright of an
individual author shall be secured to that author, and cannot be taken away by any involuntary
transfer." H.R. Rep. No. 1476 (1976), reprinted in 1976 U.S.C.C.A.N. 5739. When originally passed, the
only types of transfers that escaped 201(e)'s reach were voluntary sales/relinquishments and transfers
triggered by the author's overt conduct and subsequent operation of law, such as the initiation of
voluntary bankruptcy proceedings or the utilization of a copyright as security for a loan. In such
instances, Congress deemed the author to have consented to the transfer so that it was not involuntary
for purposes of 201(e). Congress quickly realized, however, that bankruptcy proceedings under Title 11
can be imposed on the debtor and would not necessarily fall within the implied consent rationale.
Congress therefore felt it necessary to amend 201(e) in 1978 to specifically exclude from its reach
transfers ordered by the court to pay off creditors in a bankruptcy proceeding under Title 11. Pub. L. 95-
598, 313, 92 Stat. 2676 (1978). Given this legislative history, the Court finds that Congress chose its
words with care to accomplish the goal of precluding all involuntary transfers of copyrights from an
individual author unless specifically excluded.
[1]
While the policy judgments inherent in the Peregrine
Entertainment decision and championed by Goldstein are eminently reasonable, such judgments must
be made by Congress, not the courts.
Nevertheless, the Court finds that Mr. Clinton is not entitled to the protections of 201(e) because he is
either an assignee of the original author or he has previously transferred the copyrights voluntarily.
Section 201(e) does not apply if the author is not an "individual" or if the copyright or an exclusive right
thereunder has "previously been transferred voluntarily by that individual author." Once again, there is
almost no case law discussing or applying these limitations. They are, however, consistent with
Congress' goal of protecting dissident authors' rights to control and disseminate their works. Because
the works of corporate entities did not excite Congress' concern in the Cold War context, only works of
"individual" authors are protected from involuntary transfer. Congress was also not interested in
protecting works that the individual author had already relinquished to a third party. Thus, the special
protections afforded by 201(e) are waived if the author was willing to voluntarily divest himself or
herself of control over the work.
In this case, Mr. Clinton created the Funkadelic master sound recordings "Hardcore Jollies," "One Nation
Under a Groove," "Uncle Jam Wants You," and "The Electric Spanking of War Babies" pursuant to a
contract with Warner Bros. "In the case of a work made for hire, the employer or other person for
whom the work was prepared is considered the author for purposes of [the Copyright Act], and, unless
the parties have expressly agreed otherwise in a written instrument signed by them, owns all of the
rights comprised in the copyright." 17 U.S.C. 201(b). The initial agreements between Warner Bros. and
Clinton (or his production company) specifically granted the copyrights in the sound recordings to
Warner Bros. Thus, Warner Bros. was the original "author" of the work under both the Copyright Act
and the parties' contract. Clinton, who obtained ownership of the sound recordings in 1993 pursuant to
a settlement agreement with Warner Bros., is merely an assignee, not the author. Even if the Court were
to entertain the possibility that Clinton were the original author of the sound recordings at the moment
they were created, he voluntarily transferred the copyrights to Warner Bros. Either way, Clinton is not
entitled to the protections of 201(e).
[2]
Absent those protections, the copyrights at issue are, like any
other species of property, subject to judicial sale or assignment in order to satisfy a judgment. See Ager
v. Murray, 105 U.S. 126 (1881) (pre- 201(e) case directing patent holder to assign his rights in the
patent so they could be sold to pay judgment or, if the patent holder failed to execute the assignment,
appointing a trustee to execute the same).
Having determined that the relief sought by plaintiff is not barred by the Copyright Act, the Court finds
that good and sufficient grounds exist for the appointment of a receiver pursuant to the Washington Act
Relating to Receivership, RCW Ch. 7.60. A receivership is necessary to ensure justice to the parties and
to preserve the Funkadelic master sound recordings "Hardcore Jollies," "One Nation Under a Groove,"
"Uncle Jam Wants You," and "The Electric Spanking of War Babies" for the benefit of the parties and to
make whole the judgment creditor, plaintiff Hendricks & Lewis, PLLC. It is FURTHER ORDERED that:
(1) Appointment of Receiver
Gayle E. Bush of Bush Strout & Kornfeld LLP, 5000 Two Union Square, 601 Union Street, Seattle, WA
98101, is appointed as custodial receiver ("Receiver") of the Funkadelic master sound recordings
"Hardcore Jollies," "One Nation Under a Groove," "Uncle Jam Wants You," and "The Electric Spanking of
War Babies." Receiver shall, within five (5) days of the date of this Order, submit to the court a
receivership bond in the amount of $10,000.00 conditioned upon the faithful performance of his duties
herein and compliance with the orders of this Court. The costs of the bond will be reimbursed to the
Receiver from the assets of the receivership estate unless the Court finds that the bond has been
forfeited. The Receiver shall not be subject to the control of any of the parties to this matter, but shall
be subject only to the Court's direction in the fulfillment of his duties.
(2) Powers and Duties of Receiver
(a) The Receiver shall have all of the rights, powers, duties, and authority vested in him under the
Washington Act Relating to Receivership, RCW Ch. 7.60, including but not limited to authority and
control over the Funkadelic master sound recordings "Hardcore Jollies," "One Nation Under a Groove,"
"Uncle Jam Wants You," and "The Electric Spanking of War Babies," in order to maximize the value of
the sound recordings for the benefit of the parties and to make whole the judgment creditor, plaintiff
Hendricks & Lewis, PLLC. Receiver shall, to the greatest extent possible, maximize the income stream
from the Funkadelic master sound recordings without selling or otherwise permanently disposing of the
copyrights. Ideally, the Receiver will utilize the copyright and sound recordings over a one or two year
period to satisfy the judgments and pay the expenses of the receivership before returning the copyrights
and master sound recordings to defendant. Notwithstanding the Court's preference for returning the
recordings and copyrights to defendant after his debts are satisfied, the Receiver has the authority to
sell or permanently dispose of any or all of the master sound recordings.
(b) The Receiver shall take immediate control and possession of the Funkadelic master sound recordings
"Hardcore Jollies," "One Nation Under a Groove," "Uncle Jam Wants You," and "The Electric Spanking of
War Babies" and shall take whatever additional steps, if any, are necessary to have the copyrights in the
sound recordings assigned to him. Defendant George Clinton (and/or his agents, employees, companies,
or partnerships as necessary to effectuate the transfer) shall transfer each of the master sound
recordings and/or copyrights to the control and possession of the Receiver and shall cooperate with the
Receiver by taking all other necessary and appropriate actions to allow the Receiver to carry out the acts
described in this Order.
(c) The Receiver shall have authority to use, sell, lease, or otherwise dispose of the Funkadelic master
sound recordings "Hardcore Jollies," "One Nation Under a Groove," "Uncle Jam Wants You," and "The
Electric Spanking of War Babies" pursuant to RCW 7.60.260. Except as may otherwise be ordered by this
Court, the public notice period for disposition of any or all of the master sound recordings shall not be
less than thirty (30) days. As noted above, the preferred course of action is for the Receiver to maximize
the income stream from the Funkadelic master sound recordings without selling or otherwise
permanently disposing of the copyrights.
(d) The Receiver is authorized to contract with, hire, pay, direct, and discharge all persons reasonably
deemed necessary by the Receiver, in his sole discretion, for the maintenance, use, and liquidation of
the Funkadelic master sound recordings "Hardcore Jollies," "One Nation Under a Groove," "Uncle Jam
Wants You," and "The Electric Spanking of War Babies" in his efforts to maximize the value of the sound
recordings for the benefit of the parties and to make whole the judgment creditor, plaintiff Hendricks &
Lewis, PLLC.
(e) Upon disposition of the Funkadelic master sound recordings "Hardcore Jollies," "One Nation Under a
Groove," "Uncle Jam Wants You," and "The Electric Spanking of War Babies," return of the master sound
recordings to defendant, and/or completion of the Receiver's duties hereunder, the Receiver shall move
the Court to be discharged. The Receiver shall continue to perform the duties set forth in this Order with
the aim of maximizing the value of the Funkadelic master sound recordings "Hardcore Jollies," "One
Nation Under a Groove," "Uncle Jam Wants You," and "The Electric Spanking of War Babies" for the
benefit of the parties and to make whole the judgment creditor, plaintiff Hendricks & Lewis, PLLC, until
discharged by the Court.
(3) Fees and Expenses of Receiver
Receiver shall be entitled to utilize the services of his law firm and to charge as fees the standard hourly
rates for himself and the law firm's services in carrying out his duties as Receiver. The Receiver and his
law firm shall be reimbursed for all reasonable costs expended in this matter and shall provide monthly
notice of the fees he and his staff incurred and the services provided. In addition, the Receiver shall,
within one business day of incurring or contracting to incur any third-party expense of over $100, give
notice of the expense to plaintiff, defendant, any other person or entity that has requested notice, and
any person or entity that has asserted a lien against the Funkadelic master sound recordings "Hardcore
Jollies," "One Nation Under a Groove," "Uncle Jam Wants You," and "The Electric Spanking of War
Babies." If no written objection served on all interested parties is made to the fees or expenses within
ten (10) calendar days following the date of notice, the fees and expenses shall be deemed approved as
being fully and finally earned. The approved fees and expenses shall be paid from the assets of the
receivership estate and shall be a first priority lien on the Funkadelic master sound recordings "Hardcore
Jollies," "One Nation Under a Groove," "Uncle Jam Wants You," and "The Electric Spanking of War
Babies," with priority over all other liens including statutory liens. If the interested parties are unable to
resolve an objection to a fee or expense within thirty (30) days of the date of such objection, any party
may file a motion with the Court to resolve the objection.
(4) Reporting and Court Approvals
Within sixty (60) days of this Order,
[3]
the Receiver shall file: (i) an inventory of all property acquired; (ii)
a report of his activities; and (iii) the professional fees and expenses incurred to date. Thereafter, the
Receiver shall file a quarterly report of his operations and financial affairs in the above-captioned matter
that includes the information set forth in RCW 7.60.100, with the first such report due on April 5, 2013.
The Receiver is expressly relieved from the monthly reporting requirement of the statute.
If the Receiver determines that the sale of one or more of the Funkadelic master sound recordings
"Hardcore Jollies," "One Nation Under a Groove," "Uncle Jam Wants You," and "The Electric Spanking of
War Babies" is the best way to maximize the value of the sound recordings for the benefit of the parties
and to make whole the judgment creditor, plaintiff Hendricks & Lewis, PLLC, he shall petition the Court
for approval at least sixty (60) days before the scheduled sale, setting forth a plan for notifying all
interested parties (including any lienholders) and the public, a statement regarding the existence and
amount of any outstanding liens, and the estimated proceeds of the sale. If the Court approves the sale,
the copyrights to the Funkadelic master sound recordings "Hardcore Jollies," "One Nation Under a
Groove," "Uncle Jam Wants You," and "The Electric Spanking of War Babies" will, unless otherwise
ordered by the Court, be sold free and clear of any liens, whether or not the sale will generate proceeds
sufficient to fully satisfy the claims secured by the sound recordings, and all security interests and liens
encumbering the sound recordings shall attach to the proceeds of the sale, net of reasonable expenses
incurred in the disposition of the sound recordings, in the same order, priority, and validity as the liens
had with respect to the sound recordings as of the date of this Order
(5) Distribution of Funds
During the term of the Receiver's appointment and until further order of the Court, the Funkadelic
master sound recordings "Hardcore Jollies," "One Nation Under a Groove," "Uncle Jam Wants You," and
"The Electric Spanking of War Babies" shall remain under the Court's exclusive jurisdiction. Proceeds of
the sale, lease, or other disposition or use of the Funkadelic master sound recordings "Hardcore Jollies,"
"One Nation Under a Groove," "Uncle Jam Wants You," and "The Electric Spanking of War Babies" shall
be deposited by the Receiver in an FDIC-insured account established at an insured financial institution
until a final order of the Court is entered regarding distribution of the funds.
(6) Non-Interference
The judgment debtor is prohibited from the sale, transfer, or other disposition of the Funkadelic master
sound recordings "Hardcore Jollies," "One Nation Under a Groove," "Uncle Jam Wants You," and "The
Electric Spanking of War Babies" unless and until the Receiver is discharged. Defendant George Clinton
and his agents, employees, companies, and partnerships are hereby restrained from interfering with the
Receiver's efforts to maximize the value of the sound recordings or from taking any actions that would
reduce the value of the sound recordings.
For all of the foregoing reasons, plaintiff's "Motion for Appointment of a Receiver" (Dkt. # 31 in the
above-captioned matter) and "Corrected Motion [] for an Order for Sale of Copyrights in Partial or Full
Satisfaction of Judgments. (Dkt. # 73 in C11-1142RSL) are GRANTED. Plaintiff shall provide statutory
notice of entry of this Order to defendant.
Because the legal issues raised in this case are novel, the Court has not found any reported case
authorizing the relief afforded herein, and there is no just reason for delaying defendant's ability to seek
appellate review prior to execution despite this Court's continuing jurisdiction over this matter, the Clerk
of Court is directed to enter partial judgment in favor of plaintiff and against defendant pursuant to Fed.
R. Civ. P. 54(b). This Order is hereby STAYED for thirty days to give defendant an opportunity to file a
Notice of Appeal. If a timely Notice is not filed, this Order shall automatically become effective at the
end of the thirty-day period. If defendant files a Notice of Appeal, this Order shall go into effect, if at all,
upon final disposition of the appeal.
[1] But see Goldstein 5.1.6 at 5:21 (acknowledging that the "implied consent rationale does not extend to the
judicial sale of a copyright at the instance of unsecured creditors," but arguing that "section 201(e)'s express
political objectives suggest that these transfers, too, should be exempted).
[2] At oral argument, defendant took the position that when Warner Bros. conveyed the copyrights in the master
sound recordings back to Clinton in settlement of their dispute, the original "for hire" agreement was "ripped up."
According to defendant, the destruction of the document effectively erased the original agreement from existence,
retroactively changing the reality of the parties' relationship such that the works were not made "for hire" and
Clinton became the original "author" of the works. Defendant offers no support for this extraordinary theory.
There is no contractual provision, case law, or point of logic that would bestow upon Clinton the title of "author"
more than a decade after he contractually acknowledged Warner Bros.' statutory claim of authorship.
[3] If defendant files a Notice of Appeal in this action, the initial report shall be due within sixty days of the final
disposition of the appeal.