ContractsProf Blog

Imus Might Sue CBS for Breach of Contract

As most readers presumably know, Don Imus was fired from CBS last month after he made "racially insensitive remarks" about the Rutgers women's basketbal team. Rumors are circulating that Imus might sue CBS for $40 million for breach of contract. Apparently Imus' argument is that the contract encouraged him to be "controversial" and "irreverant" and CBS promised him a warning before it could fire him.

Tonight, CNN's Anderson Cooper was boasting "exclusive access" to Imus' contract. CNN reports this excerpt from the contract:

"Company [CBS Radio] acknowledges its familiarity with the program Conducted by Artist [Imus] on the station [WFAN] prior to company's ownership thereof and it, and its familiarity with the reviews and comments, both favorable and unfavorable concerning Artist and his material by critics, reviewers and writers of the various media both in New York and nationally. Company acknowledges that Artist's services to be rendered hereunder are of a unique, extraordinary, irreverent, intellectual, topical, controversial and personal character and that programs of the same general type and nature containing these components are desired by Company and are consistent with Company rules and policies."

Interesting contract-related development. Certainly, copies of the entire contract should surface soon. Stay tuned.

[Meredith R. Miller]

Generalized Economic Interest: No Defense to Tortious Interference

It was previously noted that, last month, White Plains Coat & Apron v. Cintas was argued before the New York Court of Appeals.  (For a recap of the facts: see the original post).  The Second Circuit had certified the following question to New York's highest court:

“Does a generalized economic interest in soliciting business for profit constitute a defense to a claim of tortious interference with an existing contract for an alleged tortfeasor with no previous economic relationship with the breaching party?”

In a unanimous decision written by Chief Judge Kaye, the New York court answered the question in the negative.  The court's analysis is after the jump:

It is a familiar proposition that one "who intentionally and improperly interferes with the performance of a contract (except a contract to marry) between another and a third person by inducing or otherwise causing the third person not to perform the contract, is subject to liability to the other for the pecuniary loss resulting to the other from the failure of the third person to perform the contract." *** Though long a part of our law, this commonly asserted tort continues to generate a spate of decisions, with sometimes varying views. At bottom, as a matter of policy, courts are called upon to strike a balance between two valued interests: protection of enforceable contracts, which lends stability and predictability to parties' dealings, and promotion of free and robust competition in the marketplace.

While New York law recognizes the tort of interference with both prospective and existing contracts, "greater protection is accorded an interest in an existing contract (as to which respect for individual contract rights outweighs the public benefit to be derived from unfettered competition) than to the less substantive, more speculative interest in a prospective relationship (as to which liability will be imposed only on proof of more culpable conduct on the part of the interferer)." ***

In a contract interference case-as here-the plaintiff must show the existence of its valid contract with a third party, defendant's knowledge of that contract, defendant's intentional and improper procuring of a breach, and damages.*** In response to such a claim, a defendant may raise the economic interest defense-that it acted to protect its own legal or financial stake in the breaching party's business. The defense has been applied, for example, where defendants were significant stockholders in the breaching party's business; *** where defendant and the breaching party had a parent-subsidiary relationship; FN7 where defendant was the breaching party's creditor; *** and where the defendant had a managerial contract with the breaching party at the time defendant induced the breach of contract with plaintiff.***

A defendant who is simply plaintiff's competitor and knowingly solicits its contract customers is not economically justified in procuring the breach of contract.*** In other words, mere status as plaintiff's competitor is not a legal or financial stake in the breaching party's business that permits defendant's inducement of a breach of contract. We do not subscribe to the District Court's view that "the only answer is to go out and do it also to the other guy." Rather, the answer is succinctly articulated in the New York Pattern Jury Instructions: "When the defendant is simply a competitor of the plaintiff seeking prospective customers and plaintiff has a customer under contract for a definite period, defendant's interest is not equal to that of plaintiff and would not justify defendant's inducing the customer to breach the existing contract." *** To conclude otherwise-to answer the certified question in the affirmative-would blur the distinction between tortious interference with existing, enforceable contracts and tortious interference with prospective contractual relations, where, as a matter of policy, the balance of interests is different.

Finally, we note that protecting existing contractual relationships does not negate a competitor's right to solicit business, where liability is limited to improper inducement of a third party to breach its contract. Sending regular advertising and soliciting business in the normal course does not constitute inducement of breach of contract.*** A competitor's ultimate liability will depend on a showing that the inducement exceeded "a minimum level of ethical behavior in the marketplace."***

(Emphasis in the original; footnotes omitted).

White Plains Coat & Apron v. Cintas.

[Meredith R. Miller]

Limerick of the Week

The end is near!!  Not only is the semester (and for some readers, the first year of law school) nearly over.  But I am almost out of Limericks.  Contracts Limericks, that is.  I still have a boatload of business associations Limericks (bwahaha!), but those will have to appear on a different blog, I suppose.

So, where would contracts profs be without celebrity contracts?  I mean, is there anything more certain to promote student interest than a law suit featuring Clint Eastwood?  Can any contract prof resist inviting Sondra Locke to ask herself, "Do I feel lucky?"  And then add, "Well do ya, punk?"  Now that's educatin'!  Of course, the time may eventually come when referencing "Dirty Harry" is about as hip as referencing "True Grit."  It's already quite hard to get students to care much about Shirley MacLaine.  And I think this is one reason why Sullivan v. O'Connor has dropped out of most casebooks.  On the other hand, in a few years, it should be possible to build an entire curriculum around Anna Nicole Smith.

Locke v. Warner Brothers

There once was an actress named Locke
Whose Ratboy is said to be schlock
Old Clint and Warner
Thought they could scorn her
In bad faith.  Now they're in hock.

[Jeremy Telman]