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Wednesday, July 25, 2012

Cast Members of ABC's Modern Family Claim that Their Contracts Are Invalid under "7 Year Rule."

Modern family
Yesterday, the cast of ABC's hit sitcom, Modern Family, filed a Complaint for Declaratory Relief against the show's production company, Twentieth Century Fox.  (Ed O'Neill, previously of Married...with Children fame, who is compensated differently than his co-stars, has not joined the lawsuit but plans to do so, according to The Hollywood Reporter).  The stars apparently were negotiating pay increases for future seasons 4 through 9 but were not satisfied with the offers they were receiving.  Twentieth Century Fox (and ABC, the network on which the show airs) reportedly offered to increase each cast member's per-episode compensation from around $65,000 to $200,000 for the next few years.  As negotiations broke down, the stars filed suit.  

The named plaintiffs (including Sofia Vergara, Jesse Tyler Ferguson, Eric Stonestreet, Julie Bowen and Ty Burrell) are relying on an interesting legal strategy.  They claim that their employement agreements are "personal service contracts" that are "illegal and void under California law" because they violate the "Seven-Year Rule."  The Seven-Year Rule is codified in California's Labor Code section 2855(a), copied below:

"Except as otherwise provided in subdivision (b), a contract to render personal service, other than a contract of apprenticeship as provided in Chapter 4 (commencing with Section 3070), may not be enforced against the employee beyond seven years from the commencement of service under it. Any contract, otherwise valid, to perform or render service of a special, unique, unusual, extraordinary, or intellectual character, which gives it peculiar value and the loss of which cannot be reasonably or adequately compensated in damages in an action at law, may nevertheless be enforced against the person contracting to render the service, for a term not to exceed seven years from the commencement of service under it. If the employee voluntarily continues to serve under it beyond that time, the contract may be referred to as affording a presumptive measure of the compensation."

The complaint itself does not quote from the code section.  It merely cites the code section and adds this parenthetical: "(personal service contracts are barred from having terms beyond seven years)."  The complaint also does not explain how the law applies to a contract of a shorter duration that provides the employer (Twentieth Century Fox) with the option to extend it beyond seven years. Without citing any cases, it's hard to tell how this law would be interpreted to apply to the cast employment agreements.  However, I am not a California lawyer so I should not go further without doing more research. Anyone know anything about this law?

If I never look into it more deeply, I at least hope to use this case as an example of the importance of researching individual state law rather than thinking, "All I really need to know I learned in Contracts class."

[Heidi R. Anderson] 

http://lawprofessors.typepad.com/contractsprof_blog/2012/07/cast-members-of-abcs-modern-family-claim-that-their-contracts-are-invalid-under-7-year-rule.html

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Comments

They probably didn't quote the code section in the complaint because it seems their interpretation is different that what the plain language of the statute provides. While the blog post does not provide subsection (b) of the applicable code section, which obviously provides exceptions to the general rule, it seems to me that these types of personal service contracts are enforceable for 7 years max. That is, if there was a 10 year contract to which this code section applies, either party could walk away after the 7th anniversary without any liability. It does not seem to me that the contracts are completely void because they have terms in excess of seven years. The complaint sounds like a stretch to me...

Posted by: Gustav | Jul 27, 2012 8:26:21 AM

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