Monday, April 19, 2021
Last year, Jerry Falwell, Jr. (pictured, far right) resigned as President and Chancellor of Liberty University, a Christian educational institution founded by his father. As reported in the Washington Post, he was to receive $10.5 million in compensation in exchange for resigning and agreeing not to work for another university for two years. Although Falwell stated that there was no legal "cause" for his resignation, reasonable minds might differ about that. The Post points to his allegedly racist and anti-Muslim remarks, and his attempts to silence dissent at Liberty, but that conduct does not seem to have been the source of the problem. The complaint does not reference it.
Rather, Liberty's complaint indicates that the Board called for Falwell's resignation because he had displayed erratic behavior, posing for revealing photos in questionable taste and showing signs of alcoholism severe enough to warrant treatment. Falwell himself stated that his wife had had an extramarital affair and that he was resigning, in part because he was bored and in part because he did not want his wife's conduct to reflect poorly on the university.
Liberty now seeks to recover Falwell's $10 million severance payment. Most of Liberty's allegations relate to rather tame but also highly peculiar episodes of debauchery just scandalous enough to be inappropriate for a university president and certainly off-brand for Liberty. The most important allegation is that Falwell concealed from the university his wife's affair with Giancarlo Granda and also concealed Granda's alleged blackmail of the Falwells, a scam that allegedly went on for years.
Count one of the complaint alleges breach of contract/conversion. I am not sure why those two causes of action are lumped into one. The allegations in that count suggest other causes of action as well, such as theft of trade secrets, misappropriation of funds, and breach of fiduciary duty, but perhaps under Virginia law, all of those are captured under breach/conversion. The factual allegations are that Falwell did not use his Liberty e-mail to conduct Liberty business, that he shared confidential information with third parties, and that he stored information relating to his business dealings on Liberty's behalf on servers to which Liberty does not have access. Liberty estimates its damages relating to this claim at $250,000, a number that it acknowledges it may need to revisit.
Count two alleges breach of fiduciary duty, but again there seem to be several breaches here. First, when Liberty negotiated a generous compensation package with Falwell in 2019, Falwell failed to disclose that his wife had engaged in an extramarital affair and that the family was being blackmailed by her former paramour. Had Liberty known these facts, it would not have entered into the 2019 agreement, which required the generous severance package that Liberty now seeks to recover. Falwell also failed to disclose his alcoholism, which caused him to engage in conduct harmful to Liberty's reputation.
In Count three, Liberty repeats its prior allegations but now characterizes them as a conspiracy under Virginia statutory law. The statute entitles Liberty to treble damages, and thus Liberty seeks to recover $30 million instead of just $10 million, plus punitive damages.
Ordinarily, it would be an odd thing to require a party to a contract to disclose that their spouse had engaged in an extramarital affair and that the couple was now being blackmailed by a jilted lover. Arguably, it is not odd here, as Liberty's reputation is linked to Falwell's. I'm not sure how a court can draw that line, but perhaps the Martha Stewart case is instructive.
It's a bit hard to tell what is going on here. After he was terminated, Falwell sued Liberty for defamation. Falwell took a voluntary dismissal of the suit, without prejudice to re-filing. Liberty appended his complaint to its complaint, and Falwell's complaint is the source for many of Liberty allegations in its suit. Oops. One would expect that both parties would be happy to move on, rather throwing bad money after other bad money. None of this reflects well on the board. After all, why would any university promise to pay a president departing under a cloud $10 million? Falwell's lavish lifestyle and vacations could not have entirely escaped the attention of the board.
Perhaps alcoholism is more of a symptom than a cause. Where did I read something about a camel and a needle?
Friday, January 8, 2021
As the New York Times reports, Simon & Schuster has decided not to publish Senator Josh Hawley's book "The Tyranny of Big Tech." According to the Times, Simon & Schuster explained that, while it likes to present different viewpoints, "we take seriously our larger public responsibility as citizens, and cannot support Senator Hawley after his role in what became a dangerous threat.” Simon & Schuster regularly publishes books by and about political figures, including books critical of the current President by Bob Woodward, Mary L. Trump, and John Bolton, and books supporting the current President by Sean Hannity and Tucker Carlson.
In 2017, Simon & Schuster similarly withdrew from its commitment to publish a book by right-wing provocateur Milo Yiannopoulos. Yiannopoulos sued, but later dropped the suit. Senator Hawley (above, right) seems to be headed down the same path. He Tweeted out his response to the "woke mob" at Simon & Schuster as follows:
Josh Hawley is a graduate of Yale Law School. That should mean that he is off-the-charts smart in testable ways. And perhaps this is a very smart thing for a politician to say in order to appeal to people on Twitter who don't know the difference between contractual rights and First Amendment rights. This blog is not the Senator's target audience, but for what it's worth we are not impressed.
Shall we start with "Orwellian?" There is nothing Orwellian about what Simon & Schuster has done. It is not conflating black and white, day and night, lies and truth, war and peace. It's not clear why Senator Hawley accuses Simon & Schuster of having "redefined" Hawley's conduct as "sedition." The company's statement doesn't mention sedition. But you can check out 18 U.S.C. § 2834 and decide for yourself whether the shoe fits.
Simon & Schuster has decided to withdraw from a contractual obligation because it disapproves of the Senator's actions. It's a private corporation; it knows that a contract entails a promise to perform or to pay damages. It apparently stands ready to do the latter. Of course, it may not be necessary for Simon & Schuster to pay damages, because Senator Hawley may be able to mitigate his damages by publishing with another publisher.
But there is something Orwellian about Senator Hawley's claim that he was "representing his constituents" by challenging the results of elections in other states. Senator Hawley's senior colleague, Roy Blunt, did not think his senatorial duties required him to challenge the certification of ballots in the Presidential election. Knowing everything Senator Hawley knows and sharing his political perspective, Senator Blunt, siding with 90 judges who had reviewed the claims, concluded that there was insufficient evidence to sustain objections to the ballots. The Kansas City Star has concluded that Senator Hawley has "blood on his hands" and calls for him to resign.
Senator Hawley next says that this is no mere contract dispute; it's an assault on the First Amendment. It's not clear that it is a contract dispute. It likely is a breach of contract, but Simon & Schuster may not dispute that it has breached. It may allow Senator Hawley to retain his advance, and both parties will move on.
Simon & Schuster has not assaulted the First Amendment because the First Amendment only protects us against government infringements of our free speech rights. Simon & Schuster is not the government. It doesn't have to publish speech of which it disapproves. It can "cancel" Senator Hawley, if by "cancel" Senator Hawley means shun and disapprove of on moral or political grounds.
I very much doubt that Senator Hawley will see Simon & Schuster in court. He does not mean that literally. He does not mean it figuratively. This is all just theater. Fortunately, this variety of theater is not likely to result in bloodshed. For Senator Hawley, it's just a fundraising opportunity.
Wednesday, October 14, 2020
The Trump Administration is once again suing to enforce one of its non-disclosure agreements (NDAs) with one of its former employees. In this case, the defendant is the ex-BFF of Melania Trump (pictured), Stephanie Winston Wolkoff, author of Melania and Me: The Rise and Fall of My Friendship with the First Lady. That book is no-doubt a White-House memoire all that will enjoy lasting fame alongside those of George F. Kennan, Robert McNamara, and Henry Kissinger. Among its substantive revelations is the bombshell that Melania Trump really doesn't care what people think of her. Who would have guessed that?
According to the complaint, Ms. Wolkoff was volunteered to serve as the First Lady's advisor and signed a "Gratuitous Services Agreement" in which she promised to maintain strict confidentiality with respect to all "nonpublic, privileged or confidential information." Her official duties involves advising the First Lady on speeches, appearances and policies. Her unofficial duties apparently involved taping her private conversations with the First Lady, which is, you know, just what good friends do. According to the government, Ms. Wolkoff's non-disclosure obligations continued after she left her volunteer position and had no end date.
As with the Mary Trump book and the John Bolton book, and the Stormy Daniels case (not to mention the Omarosa case), this suit comes too late to prevent the harm that an NDA is supposed to prevent. The book has been published and became a New York Times #1 bestseller; the recordings of Ms. Wolkoff's conversations with the First Lady have gone viral. The purpose of the suit (we imagine) is not to prevent disclosures but to disgorge profits made in violation of the NDA. If the purpose of such suits is to deter future violations, the strategy seems to be failing. So, perhaps the motivation is pure cussedness. A fine use of tax dollars and the resources of the federal government.
And it may not work. According to this article on Politico, in addition to wasting government resources, the case may be frivolous. The article cites Brad Moss, a national security attorney, as follows: "The case law has been expressly clear for decades that former officials cannot be contractually censored for anything other than classified information. . . ." The complaint identifies no classified information disclosed in Ms. Wolkoff's book. Indeed, the case may in the end reveal that the White House's NDA's are overbroad and unenforceable.
B.J. Thomas, can you take us out?
Friday, July 17, 2020
Teachers Tell Reese Witherspoon She Should Have Paid Attention During her Contracts Course in "Legally Blonde"
According to the New York Times Draper James, the fashion label of Reese Witherspoon (pictured in movie poster, right), posted the following on Intagram on April 2:
Dear Teachers: We want to say thank you. During quarantine, we see you working harder than ever to educate our children. To show our gratitude, Draper James would like to give teachers a free dress. To apply, complete the form at the link in bio before this Sunday, April 5th, 11:59 PM ET. (Offer valid while supplies last - winners will be notified on Tuesday, April 7th.)
School teachers were so excited about the offer that they crashed Draper James site. Over one million applications were submitted, but Draper James only had 250 dresses to give away. The company attempted to mollify the teachers by offering 30% off on their merchandise, but the teachers were unimpressed, and they got a bit salty. As one put it on Twitter:
Wow. @draperjames clearly doesn't know how much teachers make. "We love teachers! Here's 30% off our ridiculously expensive dresses." If I'm spending over $100 on an "everyday dress," it better also grade essays.
The company tried to apologize; it announced that it was making a donation to a charitable organization that helps teachers. Too late. As Principal Skinner illustrates (first 30 seconds are most relevant here, it's a big mistake to make a teacher mad.
The teachers filed this class action complaint, alleging breach of contract, promissory estoppel, restitution and various statutory claims under California law. Draper James moved to dismiss. The words in the original Instagram post: "apply," "valid while supplies last," and "winners" all suggest that we are not dealing with an offer here. Stay tuned.
Friday, May 8, 2020
In 2013, as we reported here, Rock & Roll Hall of Fame producer Quincy Jones (right) brought suit seeking $30 million from MJJ production. Jones alleged that he was entitled royalties and remix fees in connection with his role in making three Michael Jackson records, Off the Wall, Thriller, and Bad. Jones alleged that MJJ had violated his contractual rights by using music from those records in the posthumous Jackson documentary This Is It and in two Cirque du Soleil shows. In 2017, a Los Angeles jury awarded Jone $9.4 million in royalties in connection with "This Is It."
This week, a California appellate court reduced that award by $6.9 million, finding that the trial court had inappropriately allowed the jury to decide issues of contractual interpretation that should have been decided by the court. The appellate court found that the jury misinterpreted the extent of Jones' entitlement to payment under the contract and that some of the claims were too speculative to be a basis for recovery.
The appellate court first held that § 4(a) of Jones's Producer Agreements entitled him only to a 10% royalty fee on record sales. Jones was not entitled to licensing income, nor was he entitled to fees for remixing Masters. In the alternative, the appellate court held that remix damages were too speculative to be recoverable.
According to the court, the Producer Agreements gave Jones a right of first opportunity to remix the Masters, and Michael Jackson (with his family, left) had paid Jones a share of all license fees for use of Masters for some time. However, between 1993 and 2008 Jackson released remixes without offering Jones the opportunity to participate. After Jackson's death in 2009, the remixes of the Masters were used in This is It, which grossed $500 million.
The appellate court's interpretation of ¶ 4(a) turned on its determination that extrinsic evidence proffered by Jones was inadmissible. The trial court erred in permitting the jury to consider that evidence, and the jury's erroneous award was informed by that inadmissible evidence. The court held that the Producer Agreement did not require Jackson to pay Jones remixing fees and that extrinsic evidence revealed no latent ambiguity regarding that term.
Hat tip: Rachel Arnow-Richman
Monday, November 11, 2019
"There's something that you all need to understand," Madonna said during her Las Vegas concert, "and that is, that a queen is never late."
Maybe so, but concertgoer Nate Hollander is suing her and concert promoter Live Nation for breach of contract. Hollander claims that first announcing the concert start time to be 7.30 p.m. and then changing it to 10.30 is a breach of contract. No refund has been offered, he alleges, and attempts to resell the tickets will not make up for the money lost as tickets have now "suffered an extreme loss of value" because of the time change, Hollander further alleges. Each ticket cost approx. $340.
Does Hollander have a point? For those who are not night owls, it is certainly an inconvenience to have to be out and about until mightnight if they had hoped to hit the sack earlier. Sure, a big name like Madonna will, hopefully, cause a perhaps much-needed adrenaline rush, but what about having to pay babysitters for very late hours worked, increased difficulty getting home on public transportation or shared rides that late, etc.
Notwithstanding the fact that concert tickets to see big names often increase dramatically in value on the secondary market if the show is sold out (if it is even contractually possible to resell the tickets), it does not seem, however, like any true loss had been suffered here. Madonna still performed and thus provided the benefit of the bargain even if not perfectly so. The tickets were still honored. It was still a night out in Las Vegas. There really was no reason to have to resell tickets, so any value allegedly lost in the deal is speculative.
For law teaching purposes, this case may, though, still be interesting when discussing material v. minor breach with our students.
Thursday, August 22, 2019
For artists, master recordings — the original recordings of musicians' work — are vital musically, historically and financially. In most situations, labels own those masters. But many musicians, both prominent and independent ones, have tried to hang on to their masters. As Prince famously told Rolling Stone back in 1996, "If you don't own your masters, your master owns you."
Taylor Swift is the most recent major artist to want to own her own masters, but can’t because of earlier contractual provisions. This will change with her newest album, Lover, which she will own outright. The masters of her first five albums were and are, per her contracts with Big Machine, owned by that company and, now, its contractual assignees. However, Taylor has stated that “my contract says that starting November 2020 … I can record albums 1 through 5 all over again — I'm very excited about it. ... I think artists deserve to own their work. I just feel very passionately [sic] about that."
Of course, Swift now also has significant contractual bargaining powers that she did not while an early teenaged recording artist. Still, girl power! Does this make her a “nasty woman”?.. And if so, isn't this a compliment?!
Thursday, July 11, 2019
Ja Rule mostly dismissed from Fyre Festival case, with the possibility of one pesky tweet coming back to haunt him
If you're not familiar with the debacle of Fyre Festival, you can watch two documentaries about it, or catch up on the Wikipedia page. The tl;dr version is: It was billed as a luxury music festival that would blow Coachella out of the water, and was canceled on the day it was to start, leaving attendees, who had paid thousands of dollars to attend, stranded with FEMA tents for accommodation. The festival had some big names associated with it, co-founded by Ja Rule and promoted on social media by people like Kendall Jenner and Bella Hadid. Ja Rule was sued, along with Billy McFarland, CEO of Fyre Media, who has already pleaded guilty to fraud in connection with the festival and has been sentenced to prison.
Now, there's a recent ruling out of the Southern District of New York in In re Fyre Festival Litigation, 17-cv-3296 (PKC) (see links at end of blog post), that might succeed in dismissing Ja Rule from the case. The plaintiffs have been granted a very limited leave to amend with respect to one specific tweet, so Ja Rule might stay in the case on the basis of that tweet.
The case has contract claims against Fyre Media, but this opinion focuses on individuals, Ja Rule and Grant Margolin, former Chief Marketing Officer for Fyre Festival. Neither Margolin nor Ja Rule was a party to the contract at issue in the case, so this decision doesn't take up the contract issues, but it is interesting on the fraud issue, so I'm blogging it anyway (also, how can you not blog a court opinion that has a footnote explaining what "FOMO" means?). Fraud requires pleading with particularity, and the plaintiffs fail to meet this burden. Although they allege many allegedly fraudulent statements, they fail to allege when many of those statements were made or whether the defendants knew at the time that the statements were untrue. After all, the defendants could have made the statements about Fyre Festival with every intention of delivering on their promises of an incredible festival.
The one exception to this is a particular tweet at issue by Ja Rule. The plaintiffs properly allege the date of that tweet, which was the day before the festival was scheduled to start (and instead was canceled). The tweet reads, "The stage is set!!! In less than 24 hours, the first annual Fyre Festival begins. #festivallife" The plaintiffs also allege that Ja Rule must at least have been reckless in continuing to encourage people to attend a festival whose stage was not at all set. The plaintiffs trip up when it comes to alleging reliance on their part on the tweet, but the court gives them leave to amend to try to fix this failure. The court does not give the plaintiffs leave to amend any of the other failings of the complaint because of delay on the part of the plaintiffs.
The court also discusses some negligence issues as well as tortious interference and unjust enrichment claims. When it comes to tortious interference, there were no allegations that Ja Rule or Margolin interfered with or caused Fyre Festival's inability to perform the contract, merely that they knew Fyre Festival would not be able to perform. As for the unjust enrichment claim, the court warns that this is not a catch-all cause of action and cannot be used to cure the defects in the other causes of action.
Wednesday, June 26, 2019
I had been paying attention to this case out of the Western District of Washington, Moi v. Chihuly Studio, Inc., Cause No. C17-0853RSL (behind paywall), because it raises interesting copyright authorship issues. The case is a lawsuit brought by a person who was one of Chihuly's assistants, who create artwork in Chihuly's name under Chihuly's supervision. The plaintiff worked for Chihuly in this way for fifteen years, until a falling-out between Chihuly and another of the assistants resulted in the deterioration of the plaintiff's relationship with Chihuly as well. The plaintiff filed this lawsuit alleging co-authorship of 285 artworks and requesting compensation for his work on them. You can read more about the lawsuit here.
As I said, I was paying attention to this case for the copyright authorship analysis, which follows the Aalmuhammed test and finds that, because the plaintiff did not exercise control, he is not an author of the artworks, despite his copyrightable contributions to the artworks. The authorship test analysis also considers the lack of contract between the plaintiff and Chihuly as indicating that Chihuly did not intend to share authorship with the plaintiff.
That same lack of contract dooms the plaintiff's attempt to seek compensation for his work. Because there's no contract, the plaintiff's cause of action is promissory estoppel, but Chihuly's promises over the years to compensate plaintiff by keeping track of which artworks plaintiff had contributed to were, in the court's view, too vague to constitute promises that the plaintiff could have relied on. The plaintiff confessed that he had no idea what his eventual compensation might be or when he would receive it, just that he trusted Chihuly to treat him "fairly." Promises forming the basis of promissory estoppel need to be clear and definite, and Chihuly's statements were simply too vague. Considering that plaintiff couldn't even say what they meant, the court refused to enforce them.
This is, once again, a lesson in making sure you have a clear and complete understanding with someone, and not just vague platitudes.
Wednesday, May 29, 2019
Was Leaving Neverland a breach of contract by HBO based on its airing of a 1992 Michael Jackson concert?
HBO's Leaving Neverland documentary, detailing the allegations of sexual abuse leveled at Michael Jackson, has resulted in an interesting lawsuit in the Central District of California, Optimum Prods. v. Home Box Office, CV 19-1862-GW(PJWx) (behind paywall).
Because Jackson is dead, there is no defamation claim to be brought; therefore, this lawsuit is grounded in a contract between Jackson and Optimum's predecessor entity and HBO regarding televising one of Jackson's concerts from his Dangerous world tour, which HBO aired in October 1992. The contract contained a provision prohibiting HBO from making "any disparaging remarks concerning" Jackson. Optimum alleges that HBO has breached this provision by airing the Leaving Neverland documentary.
Naturally the contract also contained an arbitration provision, which provided that the parties would choose an arbitrator and, if they couldn't agree, eventually the Superior Court of the State of the California for the County of Los Angeles would select the arbitrator. Optimum initially filed its complaint in state court, but HBO removed it to federal court based on diversity jurisdiction. Optimum does not dispute the existence of diversity jurisdiction but argues that the arbitration provision also acts as a forum selection provision requiring the litigation be heard by California Superior Court in Los Angeles County.
The court declines to construe the arbitration provision as conferring exclusive jurisdiction to California state court. The arbitration provision does not discuss exclusive jurisdiction at all. The plain language of the provision only provides the state court with one responsibility: choosing an arbitrator if the parties can't agree on one. That is not a conferral of exclusive jurisdiction.
There is also a dispute between the parties over whether the suit needs to be arbitrated. The court is torn on that issue. The American Arbitration Association's rule that arbitrability of a contract be decided by the arbitrator came into effect after the parties had signed the 1992 contract, and the court is hesitant to apply it retroactively. There is precedent to support retroactive application but the court thinks it doesn't make sense to pretend that the parties "clearly and unmistakably" agreed to be bound by rules that did not even exist. None of the precedent provided to the court was binding, so the court requests that the parties discuss the issue further at an upcoming hearing.
Monday, April 29, 2019
Would we really say that Weinstein's company's directors didn't approve of his pattern of sexual misconduct?
This, strictly speaking, isn't really a contract case, although there is an employment contract at issue so I guess that's how it got caught in my filter. But I read it and thought that this case is raising important enough issues that we should be discussing them.
The case is David v. The Weinstein Company LLC, 18-cv-5414 (RA), out of the Southern District of New York, and it's a case centering around the alleged sexual assault perpetrated by Harvey Weinstein on the plaintiff. The story the plaintiff tells is a familiar one to those who have read the Weinstein reporting, that "Weinstein asked her to meet him in his hotel room to discuss potential acting roles, and then, on one occasion, forcibly raped her." This decision isn't so much about Weinstein's conduct, though, as it is about the former directors of Weinstein's companies, who the plaintiff contends "enabled Weinstein's sexual misconduct, making them liable for general negligence and negligent retention or supervision."
The court dismisses the claims against the directors, and the reasons why were what caught my eye about this case. Plaintiff's allegations were that the directors were aware of Weinstein's harassing behavior toward women, based on a number of things: a written communication within the company calling his behavior a "serial problem" the company had to deal with; the characterization by a company executive of Weinstein's female assistants as "honeypot[s]" to lure actresses into meetings with Weinstein; a formal complaint by an employee about Weinstein's behavior; an employee memo summarizing two years' worth of allegations of sexual harassment and misconduct by Weinstein and characterizing the company as a "toxic environment for women"; the settlement of many sexual misconduct claims against Weinstein; and at least one police investigation into Weinstein's behavior.
None of the allegations established negligence on the part of the directors, according to the court. First of all, the directors did not owe the plaintiff a duty of care, and there is no case law that directors of a company can be held liable for an employee's tortious act. The plaintiff pointed to the fact that the directors renewed Weinstein's contract in 2015 with a provision that prevented Weinstein from being fired for sexual misconduct as evidence that they were enabling Weinstein's conduct, but the court found that this was "a far cry from them approving of Weinstein's sexual assault." While the court admitted that the directors "were not without moral culpability," their actions were not negligence as a legal matter.
Nor did the plaintiff assert a claim for negligent retention or supervision. The plaintiff did not show that Weinstein's sexual assault took place on the company's premises, since she asserted it happened at a hotel not affiliated with the directors. While the plaintiff argued that Weinstein used company credit cards to pay to the hotel room and lured her to the hotel room under the guise of a business meeting regarding employment by the company, that was regarding the company, not the directors sued here.
As a matter of law, the court's reasoning makes sense.
As a matter of recognition of how oppressive power structures work, this decision is terrible.
When I learned negligence way back in law school, I remember so many discussions about the policy behind it, about not wanting to hold people to a generalized duty to protect everyone on the planet, about how we decide proximate causation, about how it's really at heart about what we want to hold people liable for and what we don't.
So this decision makes sense in terms of worrying about generalized duties, of not dismissing the culpability of those committing the intentional tortious act. But it doesn't make sense in terms of thinking about the type of society we want to live in. The Weinstein reporting tells a story of serial abuse that was systemically protected for years by the power structure around Weinstein. To say that nobody else in the power structure was sexually assaulting women is a true statement of legal fact, but also seems disingenuous at this point. Weinstein's abuse was so widespread and lasted so long not only because of Weinstein but also because of the entire operation around him deflecting culpability for it.
The negligence analysis in this case feels like it's operating in a vacuum, which is kind of how we teach our students to think, presenting them with discrete hypotheticals, but might not be the best or most effective way to set up a fair legal system that protects the most vulnerable and least powerful in society. The societal discussion about the oppressive system that permitted Weinstein (and others) to perpetrate so much abuse has just begun, and maybe we should include how the legal system interacts with those power structures in the discussion. If negligence is all about policy decisions about who you need to protect and how much, then maybe we should have a policy discussion about how to make those decisions, especially if we're making them in the context of an abusive pattern that might be obscured by looking at things in isolation.
The plaintiff's allegations in this case contain many damning examples that many people around Weinstein knew about the disturbing pattern of sexual misconduct, and made affirmative choices to find ways to use the power structure to protect Weinstein. I appreciate the court's statement that the directors might be morally culpable but not legally culpable, and I recognize that law and morals are two different things. But I don't know that I agree that the director's actions are "a far cry from them approving of Weinstein's sexual assault . . . ." Given the allegations about what the directors knew and how they reacted to that knowledge, I think we could read their actions as indicating that they were a far cry from disapproving of Weinstein's sexual assault.
Monday, April 22, 2019
Don't just stand there, let's get to it: Second Circuit orders payment of "Vogue" royalties (aside, I hadn't listened to "Vogue" in a while, and it totally started my week off right!)
A recent case out of the Second Circuit, Pettibone v. WB Music Corp., 18-1000-cv, caught my eye because I teach the underlying copyright dispute driving this contractual dispute. You can listen to the case's oral argument here.
Pettibone composed the song "Vogue" with Madonna and entered into a contract with Warner where Warner collected the royalties for the song and split them with Pettibone. In 2012, Pettibone and Warner were sued for copyright infringement. They each had their own counsel and each bore their own costs in successfully defending the lawsuit, both in the trial court and on appeal. (You can read the appellate court decision here. We talk about it in my Transformative Works and Copyright Fair Use class when we do a unit on music.)
After the conclusion of the copyright suit, Warner withheld over $500,000 worth of royalties from Pettibone, claiming that under Section 8.1 of the agreement between Warner and Pettibone, it was allowed to withhold the royalties to pay for its defense of the copyright infringement suit. Section 8.1 read in part, "Each party will indemnify the other against any loss or damage (including court costs and reasonable attorneys' fees) due to a breach of this agreement by that party which results in a judgment against the other party . . . ."
Pettibone sued, arguing that he had never breached the agreement and therefore Section 8.1 did not permit Warner to withhold any royalties. The district court found that Section 8.1 "unambiguously requires Pettibone to indemnify Warner for the attorneys' fees and costs," and dismissed Pettibone's complaint.
In another example of ambiguous understandings of ambiguity, the appellate court here reversed the district court's holding, instead finding that Section 8.1 is "pock-mocked with ambiguity." In the Second Circuit's opinion, a better reading of the section was that, if there was no breach, each party should carry its own attorneys' fees and costs. In fact, Section 8.1 went on to read that "each party is entitled to be notified of any action against the other brought with respect to [the song 'Vogue'], and to participate in the defense thereof by counsel of its choice, at its sole cost and expense" (emphasis added). A fair reading of the section, the Second Circuit said, was that it required Pettibone to indemnify Warner if Pettibone breached the contract, but not otherwise.
Warner was the party that drafted the contract, and could easily have stated that indemnification happened in the event of any allegations, not just any breach. That was not, though, how the contract was drafted.
The effect of Warner's argument would be to shift a million dollars' worth of attorneys' fees onto Pettibone, just because there was a lawsuit, "regardless of merit or frivolousness." The Second Circuit found that to be "an extraordinary result" not justified by the section's ambiguous language. Therefore, the Second Circuit ordered reversal of the district court's dismissal, judgment for Pettibone, and calculation of the royalties improperly withheld from Pettibone, as well as consideration of Pettibone's request for attorneys' fees in connection with the instant action and appeal.
Friday, March 1, 2019
I have already blogged about one contract dispute over the new stage adaptation of "To Kill a Mockingbird."
Now, with that dispute settled, the former adversaries (Harper Lee's estate and the producers of the current stage adaptation) have joined forces to shut down small productions across the country of the previous stage adaptation of the novel. As the New York Times reports, the problem seems to have arisen from the conduct of Dramatic Publishing Company, which has the right under a contract signed with Harper Lee in 1969 to license theater companies to produce the original stage adaptation of the novel. The problem is that, allegedly, those rights were limited in times when a "first-class dramatic play" of "To Kill a Mockingbird" was playing in New York or on tour. However, Dramatic has apparently continued to license the play's production without adhering to the restrictions that the current play's producers argue should have kicked into place. Many small theater companies have found themselves caught in the fallout of this contractual dispute, through no fault of their own.
h/t to Eric Chiappinelli, Professor of Law at Texas Tech!
Monday, December 3, 2018
Sorry for being absent lately. Blame exam season! So this is slightly old news but I plan to bring it up in my Entertainment Law class in the spring, so I was doing a sprint through the news reporting on it: Taylor Swift and her new contract.
Sunday, October 7, 2018
Here's me poking my head out from a weekend of midterm grading to thank Banksy for a situation right out of a contracts hypothetical.
Thank you to Eric Chiappinelli and Jennifer Taub for the heads-up!
Wednesday, August 1, 2018
Yet another contract aspect has emerged to the Harvey Weinstein situation, beyond the NDAs with the accusers, the contracts between lawyers and private investigators, and the complicated situation with the National Enquirer. Now insurance policies have stepped into the fray. According to this article, Weinstein's insurance companies are denying coverage based on alleged exclusions of "blatantly egregious and intentionally harmful acts." Weinstein, as his defense has stated, denies the accusations against him and counters that the insurance companies are siding with the accusers in order to get out of paying their obligations.
According to the insurers, Weinstein is facing eighteen lawsuits and other claims that have been filed in the past year. Naturally, Weinstein's defense is costing a great deal of money. Whether the insurance companies need to pay out under the policies (and which insurance companies need to pay out) probably depends on the exact wording of the policies, which seem to all be slightly different. For instance, one carrier was providing "crisis assistance" in the event of "significant adverse regional or national media coverage." Another was apparently a policy for legal defense that according to Weinstein explicitly included criminal investigations.
Tuesday, April 10, 2018
In case you missed it in the onslaught of news we're subjected to these days, the agreements settling several of the sexual harassment claims against Bill O'Reilly have been made public, thanks to a federal judge overruling the contracts' confidentiality clauses ("Strict and complete confidentiality is the essence of this agreement," reads one). You can read about them all over, including the New York Times, CNN, ThinkProgress, and Vogue.
The contracts say the usual things that we have come to expect regarding the confidentiality of the accusations but at least one of them contains the added twist that, should any incriminating documents come to light, the woman settling the claim is required to declare them to be "counterfeit or forgeries." The truth of the statement is irrelevant; the contract evidently requires the woman to lie and say they're counterfeit and forgeries even if they're genuine.
Another interesting part of that "counterfeit or forgeries" contract is that the accusing woman's attorney agrees not to cooperate in any other action against O'Reilly and, indeed, agrees to switch sides and advise O'Reilly "regarding sexual harassment matters." This sounds like it raises all sorts of ethical issues. They're brought up in the other articles I've linked, and Bloomberg has a rundown of the ethical issues as well.
Things lurking in these confidential agreements...
Wednesday, March 21, 2018
Slate has a piece analyzing the enforceability of the liquidated damages provision in Stormy Daniels's contract with Donald Trump, quoting several very keen legal minds. (Disclaimer: including mine ;-))
Thursday, March 15, 2018
The New York Times reports that an upcoming Broadway production of "To Kill a Mockingbird" is embroiled in a contract dispute. The new production features a script by Aaron Sorkin, governed by a contract that requires it to keep to "the spirit of the Novel." Author Harper Lee's estate believes the play's new script has breached this contract provision.
The crux of the disagreement seems to be that Sorkin's script apparently updates the novel's depiction of racial politics and shifts Atticus Finch's developmental arc. Atticus, well-known as the crusading heroic lawyer at the center of the novel, apparently begins the play "as a naive apologist for the racial status quo" who eventually develops into the Atticus familiar from the novel. Sorkin in an interview described Atticus as evolving in part through interactions with a black character, Calpurnia, whose role Sorkin had expanded in the play as compared to the book.
Lee's estate is objecting to the "massive alteration" of the novel, but the play's producers contend that, although the play is "different" from the novel, it is still true to the novel's spirit, pointing out that Lee's novel's universe was itself expanded and complicated by the recent publication of "Go Set a Watchman," in which an older Atticus is portrayed as a racist and segregationist.
As anyone who's sat in an English class might agree, "the spirit of a novel" is rather vague and can be the source of much contentious disagreement. Literature can be a very personal experience, and what stands out as the vitally important part of a novel to one person can barely register to another. We could probably as a society reach a consensus on what "the spirit" of "To Kill a Mockingbird" might be, but I still don't think that would be of much assistance in resolving this dispute. There are, I think, two approaches to adapting a novel, and one is a requirement to be faithful to the letter, and the other is to be faithful in a more abstract way. I suspect that both parties here actually agree about what the spirit of "To Kill a Mockinbird" is but that Lee's estate believes the former approach to adaptation to be the only acceptable one, and that the producers of the play believe the latter to be acceptable. This reminds me of a recent New Yorker article on the proper role of translators.
(As an unabashed fan of Sorkin's writing, as soon as I read the first paragraph of the article, I have to admit my reaction was: "Let me guess, the script sounds like Aaron Sorkin instead of Harper Lee." I haven't seen the script, of course, but there are few writers in my experience whose style is as instantly recognizable as Sorkin's.)
Wednesday, March 7, 2018
That's going to be the blog's new slogan.
Frances McDormand briefly made contract law trend on Twitter by using "inclusion rider" as her important two-word closing. At the time, there was only one result for "inclusion rider" when you Googled it. Now, if you Google it, you get a million results of articles explaining what an "inclusion rider" is. But here's the original video from Stacy Smith which was the one result before McDormand made it a cultural conversation.
I've had a series of blog posts over the past few years discussing the ways in which private contract law has been used to obscure systemic discrimination and abuse and harassment (a bunch of them are linked in this post). This is a nice suggestion for a way to use private contract law to try to correct some of the problems we've now exposed.