Monday, December 27, 2010
Singer Teena Marie (born Mary Christine Brockert) has died, apparently of natural causes, in Los Angeles at the age of 54. To rhythm and blues devotees, Ms. Marie was known for her numerous hits, but to entertainment lawyers and law students she is one of the parties in the precedent-setting Motown v. Brockert (160 Cal.App.3d 124).
Asked the court,
[D]oes an option guarantee $6,000 a year at some time in the future satisfy the statutory requirement of "a contract in writing ... where the minimum compensation ... is at a rate of not less than six thousand dollars per annum ...."
One of Teena Marie's songs is entitled "Don't Turn Your Back On Me." Here, it could be said, we answer her plea.
IV. A Clause in a Personal Services Contract Giving the Employer the Option to Pay the Employee at Least $6,000 a Year Does Not Satisfy the Minimum Compensation Requirement for Injunctive Relief.
(A) From the statutory language it appears the Legislature was referring to contracts which guarantee the performer a minimum of $6,000 per year from the outset.
 The availability of injunctive relief from breach of contract is limited by section 3423, subdivision Fifth, to "a contract in writing for the rendition ... of personal services ... where the minimum compensation for such service is at the rate of not less than six thousand dollars per annum." (Italics added.) The most reasonable, common sense reading of this language is that "minimum compensation for such service" refers back to the "contract in writing for ... personal services." To be subject to specific enforcement, the contract must have as one of its terms a compensation provision providing for payment at the minimum rate of $6,000 per year. In other words, agreeing to payment of the minimum compensation is not a condition precedent to the granting of injunctive relief; it is a threshold requirement for admission of the contract into the class of contracts subject to injunctive relief under the statute. fn. 7
This reading of the statute is implicit in the Foxx and MCA decisions. In Foxx the court found the contract did not meet the minimum compensation requirement of section 3423 even though the potential for earning $6,000 a year or more existed under the contract. (244 Cal.App.2d at pp. 231, 236.) Similarly, under the option clause, the artist has merely the potential of earning $6,000 a year; there is no guarantee this compensation will ever be paid. Distinguishing Foxx, the court in MCA observed, "Unlike [Olivia [160 Cal.App.3d 136] Newton-John], who is guaranteed minimum annual compensation of $200,000 in the form of nonreturnable advances in addition to any royalties she may receive, Foxx' sole compensation was in the form of royalties contingent upon prospective sales which could amount to nothing." (90 Cal.App.3d at pp. 22-23.) We believe the option clause is analogous to the contingent payment rejected in Foxx. It is nothing more than a new arrangement of an old song.
(B) The option clause would defeat the legislative intent to limit injunctive relief to contracts where not only the services are special or unique but the performer herself is a person of distinction in her field at the time of entering the contract.
The language of section 3423 and the Fifth subdivision in particular is clearly language of limitation. (Poultry Producers etc. v. Barlow, supra, 189 Cal. at p. 288; Lemat Corp v. Barry, supra, 275 Cal.App.2d 671, 678.) It will be remembered subdivision 5 as originally drafted would have excepted from the prohibition against injunctive relief any personal services contract. (See Discussion, ante, at p. 130.) The bill was amended to add the stipulation the contract must provide for minimum compensation at the rate of $6,000 per year.
While the legislative history does not explicitly state the intent of the minimum compensation amendment it is reasonable to believe Senator Lyon, who introduced the bill, and Senator Chamberlin who proposed the minimum compensation amendment, both members of the Judiciary Committee, fn. 8 were familiar with Lumley v. Wagner, Anderson v. Neal Institutes Co. as well as other leading cases on the subject and that the amendment was intended to incorporate the policies reflected in those decisions.
We begin our review with Lumley itself, Johanna Wagner was not an unknown member of a chorus line at the time her case arose. She was one of Europe's best known opera singers, niece of Richard Wagner and "cantatrice of the Court of His Majesty the King of Prussia." (Light, supra, at p. 144; 23 Encyclopedia Britannica (1942) at p. 278; Lumley v. Wagner, supra, 42 Eng. Rep. at p. 687.) Her contract with Lumley called for her to perform at Her Majesty's Theatre in London twice a week for three months at the rate of 100 pounds per week; (id, at p. 688) a significant sum considering the wage of a unionized bricklayer in London at the same time was less than two pounds per week. (23 Encyclopedia Britannica, supra, at p. 270.) [160 Cal.App.3d 137]
It was not uncommon for courts of that time to distinguish Lumley v. Wagner on the ground that there the services of an exceptional artist and a considerable sum were involved. Among the best known of these cases are Whitwood Chem. Co. v. Hardman, supra, 2 Ch. 416, fn. 9 Arthur v. Oakes (7th Cir. 1894) 63 F. 310 fn. 10 and Dockstader v. Reed (1907) 121 App.Div. 846 [106 N.Y.S. 795]. fn. 11 Thus, at the time section 3423 was amended there was a discernible trend toward enforcing negative covenants against the "prima donnas" but not the "spear carriers." (See Carter v. Ferguson (1890) 58 Hun. 569 [12 N.Y.S. 580, 581]; and see generally, 11 Williston on Contracts, supra, ? 1450, pp. 1042-1043; 5A Corbin on Contracts, supra, ? 1209, p. 417; 4 Pomeroy, Equity Jurisprudence (5th ed. 1941) ? 1343, p. 943.)
Aside from the Lumley line of cases there is an even older judicial tradition which helps to explain why the California Legislature sought to limit injunctive relief to performers of star quality.  A fundamental reason why courts will not order specific performance of personal services contracts is because such an order would impose on the courts a difficult job of enforcement and of passing judgment upon the quality of performance. (See 11 Williston on Contracts, supra, ? 1423, pp. 782-783; 5A Corbin on Contracts, supra, ? 1204, p. 400; Poultry Producers etc. v. Barlow, supra, 189 Cal. 278, 288-289; Light, supra, at p. 143.) As Corbin observes in his treatise, "An artist does not work well under compulsion, and the court might find it difficult to pass judgment upon the performance rendered." (5A Corbin, supra, ? 1204, p. 400.)
As the court in Lumley candidly admitted, it had no power to compel Madame Wagner to sing at Lumley's theatre but the injunction prohibiting her from performing elsewhere might well accomplish the same result. (42 Eng. Rep. at p. 693.) Thus there is a danger an artist prohibited from performing elsewhere may feel compelled to perform under the contract and, under the stress of the situation, turn in an unsatisfactory performance. This [160 Cal.App.3d 138] would lead to further litigation between the parties on the adequacy of the artist's performance; the very thing the courts traditionally sought to avoid. (See, e.g., Bethlehem Engineering Export Co. v. Christie (2d Cir. 1939) 105 F.2d 933, 935 [125 A.L.R. 1441] (Hand, J.).) There is less likelihood of this conundrum arising if the performer is of great renown. Such a performer may well choose not to perform rather than risk her reputation by delivering a sub-par performance. fn. 12 (See Clark, supra, at pp. 690, fn. 11.)
In 1919 the sum of $6,000 a year was more than five times the average national wage of $1,142. (Historical Statistics of the United States (1976) at p. 164, Table: Average Annual Earnings of Employees: 1900 to 1970.) This is equivalent to setting the minimum compensation figure at $100,000 today. (Based on the 1982 median income level of $20,171. See Statistical Abstract of the United States (1984) at p. 459, Table 754.) By selecting such a large sum, the Legislature indicated an intent injunctive relief not be available against a performer, however capable, who had not yet achieved distinction. The fact the bill was further amended to provide the services must be special is a further indication the Legislature intended the statute to apply only to persons who had attained "star quality" no matter how special their services might be.
Without doubt the passage of time has diluted the effect of this legislative intent but the option clauses before us would totally wash it away. It would allow a record company to bind the entire student body of "Rydell High" to personal services contracts (and pay them nothing) on the off-chance one of them turns out to be Olivia Newton-John.
It is no answer to say that by the time Motown and Jobete sought injunctive relief to enforce the exclusivity clauses Teena Marie had become a star. Motown and Jobete did not contract with a star. By their own admission they contracted with a "virtual unknown." Nothing in section 3423 prevents the companies from seeking damages from Teena Marie for breach of the exclusivity clause. fn. 13 That section merely says for reasons of public policy the exclusivity clause of a contract can only be enforced by injunction when the contract is with a performer of requisite distinction as measured by the compensation the employer is willing to pay. fn. 14 Moreover, as we explain [160 Cal.App.3d 139] below, allowing the companies, once they judge the artist to have achieved star quality, to enforce the exclusivity clause by injunction would violate the concept of fundamental fairness which is also embodied in section 3423.
[1c] (C) The option clause violates the concept of fundamental fairness embodied in Civil Code section 3423.
We agree with the court in Foxx, supra that the $6,000 minimum compensation requirement was intended to balance the equities between employer and performer. (244 Cal.App.2d at p. 236.)  This is quite clear when section 3423 is read in connection with Civil Code section 3391, subdivision 2, which provides specific performance cannot be enforced against a party as to whom the contract is not "just and reasonable." Taken together those sections demand a minimum standard of fairness as a condition on equitable enforcement of an exclusivity clause in a personal services contract. (See Light, supra, at p. 153.)
"As one grows more experienced and skillful there should be a reasonable opportunity to move upward and to employ his abilities to the best advantage and for the highest obtainable compensation." (De Haviland v. Warner Bros. Pictures (1944) 67 Cal.App.2d 225 [153 P.2d 983], 235.) "[A]ny agreement that limits a person's ability to follow his vocation must be strictly construed ...." (Lemat Corp. v. Barry, supra, 275 Cal.App.2d at pp. 678-679.) Therefore, "[a]n injunction which forbids an artist to accept new employment may be a harsh and powerful remedy. The monetary limitation in the statute is intended to serve as a counterweight in balancing the equities. The Legislature has concluded that an artist who is not entitled to receive a minimum of $6,000 per year by performing his contract should not be subjected to this kind of economic coercion." (Foxx, supra, 244 Cal.App.2d at p. 236.)
If we were to hold the option clause satisfies section 3423, we would nullify the $6,000 compensation requirement as a counterweight on the employer. Whereas the $6,000 compensation requirement was intended to balance the equities, the $6,000 option clause is intended to allow record companies to avoid payment of minimum compensation while retaining the power of economic coercion over the artist. (Statutory Minimum Compensation, supra, at p. 508; Light, supra, at p. 165; Schlesinger, supra, at p. 29.) This is accomplished in two ways. First, the option clause gives the company the coercive power of a credible threat of injunctive relief without it having to guarantee or pay the artist anything. The threat of a prohibitory injunction may be just as effective as the injunction itself in discouraging the artist from seeking more lucrative employment. (Statutory Minimum Compensation, supra, at p. 519.) Second, in practice, the company will [160 Cal.App.3d 140] exercise its option to pay minimum compensation only when it is certain the artist intends to breach the exclusivity clause by performing for another and, even then, only when exercising the option is necessary to enable the company to assert in court the contract does indeed provide for the statutory minimum compensation. (Light, supra, at p. 165.) Of course, by then, the company's agreement to pay the artist a minimum of $6,000 a year is meaningless. If the artist was not already earning far in excess of that amount from royalties, the artist's worth to the company would not justify the expense of litigating the case. The record company is in fact merely "electing" to pay that which it would have to pay anyway as a result of royalties from sales. fn. 15 (Schlesinger, supra, at p. 29.)
[1d] Based on the foregoing we conclude the option clauses in the Motown and Jobete contracts do not support equitable relief in the form of an injunction restraining Teena Marie from performing for other employers.
More about the lawsuit from Teena Marie herself, in a 2006 NPR interview with NPR's Ed Gordon here.