Tuesday, October 5, 2021
As Sid Delong noted in his post about the case from August, Ms. Johannson's litigation strategy was unusual and a bit mysterious. She sued Disney for tortiously interfering with her contractual relations with Marvel, a Disney subsidiary, without suing Marvel for breach of contract. The case was catnip for law profs interested in contracts, torts, remedies, the Marvel movies, and Ms. Johansson.
Alas, as is so often the case, Ms. Johansson settled her claims against Disney. The details of the settlement have not been made public. However, in separate statements, the parties seem to have decided to kiss and make up.
As reported on the BBC, Disney's content chairman said of Ms. Johansson, "We appreciate her contributions to the Marvel Cinematic Universe and look forward to working together on a number of upcoming projects," and he proceeded to plug a forthcoming movie. Even though the report is on the BBC, let's not forget that Disney owns ABC, so it never forgets to Always Be Celling.
For her part, Ms. Johansson, whose Black widow character is a Russian assassin turned Avenger, said "I'm incredibly proud of the work we've done together over the years and have greatly enjoyed my creative relationship with the team." More of a whimper than a bang.
Will the actor be haunted for sucking up so shamelessly in order to move on with her career, just as the Natasha Alianova character (the Black Widow) is haunted by the fact that in her attempt to assassinate General Dreykov, she gravely injured his daughter, Antonia Dreykov (Taskmaster)? We're just asking questions here.
Wednesday, September 29, 2021
You know that moment in the film Groundhog Day when Bill Murray's character wakes up to "I Got You Babe" and thinks the DJs have screwed up and played yesterday's tape by accident? If I just went with the headline "Trump NDA Ruled Unenforceable," you would have shaken your head and yelled at your computer, "Dude, refresh your feed!" After all, we've already run stories about unenforceable Trump nondisclosure agreements (NDAs) here and here and here and here.
And now comes the case of Omarosa Manigault Newman (Omarosa) who wrote a book about her time in the Trump White House. In 2018, the Trump Campaign sought arbitration to enforce an NDA into which Omarosa alleged entered in 2016. According to NBC News, Omarosa alleges in her book, Unhinged: An Insider's Account of the Trump White House that Trump was a racist and also that he was in severe mental decline during his Presidency. Not having read the book, I can only wonder whether Omarosa cited as evidence of that decline her own hiring to work in the White House based on her appearance in three separate season of Mr. Trump's reality television show, The Apprentice.
According to The New York Times, the arbitrator deemed the Trump NDA too vague to be enforced. It apparently prohibited Omarosa from revealing confidential information, but that term was defined so broadly as to capture just about anything, including mere opinions critical of Mr. Trump. In addition to ruling in Omarosa's favor, the arbitrator also granted her attorneys' fees. Gracious as always, Trump issued a statement, reprinted in Rolling Stone, in which he acknowledged defeat and praised Omarosa for besting him on the law and the facts.
He said: “I gave Omarosa three attempts at The Apprentice and she failed. At her desperate request I gave her an attempt at the White House and she failed there too, people truly hated her.”
Stephanie Grisham's tell-all about Melania Trump is due out next week. Stay tuned.
Wednesday, September 8, 2021
Writing as I do from Oklahoma, home state to the Bob Dylan Archive, Levy v. Zimmerman caught my eye. What's that you say? How can there be a Bob Dylan archive in Tulsa, Oklahoma? Why, it makes perfect sense if you think about it. It's right next to the Woody Guthrie Center (right). You should come and visit! And if you're hungry after that, you can come to my home city, OKC, and dine at Nonesuch, America's best new restaurant, according to Bon Appetite! Just sayin'.
Anyway, back in the early 70s, Bob Dylan collaborated with Jacques Levy to write ten songs, seven of which, including "Hurricane," were included in Dylan's 1975 album Desire (my second favorite Dylan album after Blood on the Tracks). I'm confused as to why Bob Dylan, America's great minstrel, needs help writing songs, but such are the uncontested facts. Levy was entitled to royalties on the songs, and he received $1 million. Levy died in 2004, but his estate and his publishing company seek an additional $1.75 million. Dylan sold his catalog of 600 songs to Universal Music Group (Universal) for $300 million, and plaintiffs allege that $1.75 million is their fair share of that sale.
As in the case that was the subject of yesterday's post, we are dealing here with a creator who contracts away his intellectual property rights in exchange for royalties. The court found that Dylan was the copyright holder and that Levy had no claim for breach of contract arising under the catalog sale to Universal.
This ruling was largely based on the contracts designation of Levy as an "employee" hired to help with composition and entitled only to limited royalties. Plaintiffs attempted to counterpunch, arguing that limiting the contract to that characterization elevated form over substance. They produced detailed expert testimony from Bob Kohn, who characterized the relationship between Dylan and Levy as giving rise to "joint works" and a shared "undivided interest" in the songs.
Mr. Kohn was fighting above his weight class. Justice Barry Ostrager of New York's Supreme Court, New York County cut him to ribbons:
In sum, the "expert" affidavit offered by Bob Kohn purporting to interpret the 1975 Agreement is inadmissible to offer an opinion as to the legal rights and obligations of the parties under the unambiguous contract . . . . Kohn's opinion is, in any event, unpersuasive as it distorts the plain language in the Agreement. Defendants' limited citation in their moving papers to Kohn's treatise does not change that result, as the Court is not relying on any extrinsic evidence to interpret the Agreement.
As Mr. Levy might have put it, Justice Ostrager
could take a man out with just one punch
But he never did like to talk about it all that much
"It’s my work", he’d say, "and I do it for pay
And when it’s over I’d just as soon go on my way"
He ruled based on the unambiguous meaning of the agreement:
[T]he Agreement unambiguously limits plaintiffs' compensation rights to 35% of monies received by Dylan for licensing rights granted to third-parties for the performance and use of the Compositions but not for any portion of the proceeds from Dylan's sale of his complete copyrights related to the Compositions that were explicitly vested in him alone pursuant to the express terms of the 1975 Agreement.
Justice Ostrager also dismissed Plaintiffs' claims against Universal as third-party beneficiaries of the catalog sale. Plaintiffs could make no claim to the status of third-party beneficiaries to that sale. He likewise dismissed their tortious interference claim. Absent a breach of contract, there can be no such claim.
In a case such as this, it seems inevitable that one of the parties would lament:
How can the life of such a man
Be in the palm of some fool’s hand?
To see him obviously framed
Couldn’t help but make me feel ashamed
To live in a land
Where justice is a game
Monday, August 2, 2021
INDUCING BREACH OF CONTRACT: A STUDY IN SCARLETT
The tort of inducing breach of contract continues to fascinate. In Periwinkle Entertainment Inc. v The Walt Disney Co., Scarlett Johansson (left), the star of Black Widow sued Disney for tortiously inducing Marvel Studios, a subsidiary of Disney, to breach its contract with her. The complaint alleges that Marvel entered into a contract with Johansson to act in Black Widow. Because Johansson’s compensation was largely to be determined by box office receipts, the contract required Marvel to make an exclusive “wide theatrical release” of the film for a period of time, “the standard exclusive theatrical window.” Instead, citing the COVID pandemic, Disney caused its subsidiary Marvel to release the movie simultaneously with Disney’s release of the movie through its streaming service, Disney+. Viewers were permitted to watch the movie without going to theaters, which Johansson alleges diverted revenues from theaters, costing her millions.
The complaint provokes several questions. Johansson sued only Disney, not Marvel. Normally, claims of tortious inducement against a third party are joined with claims for breach of contract against the contract breacher. Various reasons relating to preclusion on factual and legal issues dictate that the all defendants should be bound by the same action. Then why did Johansson not sue Marvel as well as Disney? Did its contract contain a mandatory arbitration clause (and if not, why not?)? If it did, then the arbitration clause, if well-drafted, should have included claims against Marvel’s parent, Disney. That shoe may drop later.
The complaint pleads two counts of tortiously inducing breach. Normally a parent company should not be liable for causing a subsidiary to breach a contract. A court usually ignores the separate identities of parent and sub in claims that have concerted activity as an element (cf. the “bathtub conspiracy” cases in antitrust). But here it seems that the parent had an economic motive to divert revenue from the sub to its streaming services and away from Johansson by causing the sub to delay theater release of the film, in violation to its contractual obligation to Johansson. That seems to justify treating Disney as a separate, third-party who is a stranger to the contract with the sub.
A final question concerns remedies. Perhaps because it was hastily drafted, the complaint is sparse on its remedial prayers, seeking only punitive damages in the separate counts, but adding a catch-all ad damnum for all money damages caused by the tort. Damages for inducement usually equal the expectation damages for breach of the underlying contract. But these expectation damages may be speculative, given the uncertainties of the imaginary box office receipts that would have occurred with a weeks-long exclusive theater release.
But the tort claim, if established, should also justify a restitutionary remedy against Disney, measured by its unjust enrichment resulting from its wrongdoing. That calculation too, may be complex, however if one must determine how much of its streaming revenues were caused by its wrongdoing.
If another reminder were needed, Periwinkle demonstrates anew that Contracts and Remedies students should be familiarized with the tort of wrongfully inducing breach of contract as another weapon in their litigation arsenal.
Tuesday, July 13, 2021
In 2018, Roy Moore, former Chief Justice of the Alabama Supreme Court, former U.S. Senate candidate agreed to be interviewed by Sacha Baron Cohen. As is his wont, Cohen misrepresented the purposes of the interview. It did not go well, as you can see below, and the problems go well beyond Cohen's mock unibrow:
Moore and his wife sued Cohen for intentional infliction of emotional distress and fraud. Moore added an additional cause of action for defamation.
In a ruling issued today, Judge John P. Cronan of the S.D.N.Y. dismissed Moore claims, as barred by a contractual waiver, and dismissed Mrs. Moore's claims as barred by the First Amendment. We have covered Mr. Cohen's encounters with the law of waivers before (linking to five other posts!). The outcomes have been pretty uniform. The only twist here is that Mrs. Moore didn't sign a waiver, but that's where the First Amendment comes in. Read all about it on some other blawg.
As to the contracts issues, Mr. Moore signed a consent agreement that expressly waived each of the claims that he attempted to bring. One might be concerned that the law should not protect those who knowingly commit fraud but get away with it because they made you sign a consent agreement in which you waived any fraud claim. New York law refuses to enforce "general releases." But this agreement was not a general release, and even if it were, even a general releases is enforceable where, as here, the release language clearly, unambiguously, and specifically encompasses the claims brought.
Monday, July 12, 2021
Well-known actor and comedian William (Bill) Cosby, who was sentenced to 3-10 years in prison for sexual assault, was recently released. The grounds for release? Breach of a promise not to prosecute.
Back in 2005, District Attorney Bruce L. Castor, Jr. who investigated allegations of sexual assault brought by Andrea Costand, determined that a criminal trial against Mr. Cosby could not be won. He issued a signed press release in which he announced that "insufficient, credible, and admissible evidence exists upon which any charge against Mr. Cosby could be sustained beyond a reasonable doubt." D.A. Castor issued the press release in order to prevent Mr. Cosby from invoking his Fifth Amendment not to testify in any civil suit that Ms. Costand might bring. Ms. Costand brought that suit, which resulted in a $3.38 million settlement, but not until after Mr. Cosby had been deposed and had admitted to some of the acts that Ms. Costand alleged. He admitted that he had given her Benadryl tablets, but claimed that the ensuing sexual encounter was consensual. He also admitted that he had provided quaaludes to other women with whom he wanted to have sex.
Fast forward ten years, and we have a new D.A., Risa Ferman, who decided to reopen the case against Mr. Cosby and use the deposition testimony. When Mr. Cosby objected, the trial court found that a press release announcing an exercise of prosecutorial discretion is not a contract. What D.A. Castor was offering was transactional immunity, but the trial court found that he had not done so in accordance with the relevant Pennsylvania statute. Immunity comes from a court, not from the exercise of a prosecutor's discretion. Even a prosecutor's promise not to prosecute could be withdrawn. They don't even have to cross their fingers. Moreover, no promissory estoppel claim could be made out, because reliance on any alleged promise from the prosecutor would have been unreasonable.
In Mr. Cosby's appeal to the Supreme Court of Pennsylvania, Middle District, the relevant issue was:
Where: (a) [District Attorney Castor] agreed that [Cosby] would not be prosecuted in order to force [Cosby’s] testimony at a deposition in [Constand’s] civil action; (b) [the district attorney] issued a formal public statement reflecting that agreement; and (c) [Cosby] reasonably relied upon those oral and written statements by providing deposition testimony in the civil action, thus forfeiting his constitutional right against self-incrimination, did the Panel err in affirming the trial court’s decision to allow not only the prosecution of [Cosby] but the admission of [Cosby’s] civil deposition testimony?
The Supreme Court affirmed the trial court's finding that prosecutor Castor had not granted Mr. Cosby immunity from prosecution. However, the Supreme Court overturned the trial court's determination with respect to Mr. Cosby's reliance claim, holding that:
[W]hen a prosecutor makes an unconditional promise of non-prosecution, and when the defendant relies upon that guarantee to the detriment of his constitutional right not to testify, the principle of fundamental fairness that undergirds due process of law in our criminal justice system demands that the promise be enforced.
In explaining its decision, the Supreme Court says lots of nice things about how prosecutors have vast powers and ought to be subject to principles of fundamental fairness. I don't have the expertise in criminal law to know whether fundamental fairness dictated that Mr. Cosby must be released. I suspect that very few criminal defendants, lacking Mr. Cosby's resources, would be able to win their releases based on claims that the prosecutor had treated them unfairly.
As a general matter, the reliance claim would seem weak in other, comparable contexts. Here, immunity could only be granted through a particular process, and that process was not followed. In an ordinary contractual context, a court would likely find unreasonable reliance on a vague promise when that promise could only be effected through following some well-established procedure that was not followed in this instance. It would be one thing if Mr. Cosby were on his own, but he was a sophisticated party represented by able counsel. But the Supreme Court held that sophistication is not part of the inquiry here and concluded that it was reasonable for Mr. Cosby to rely on the conclusions and advice of counsel. Whether or not their reliance was reasonable seems not to matter.
There was also some question of actual reliance here. Mr. Cosby's testimony in depositions was consistent with what he had already told investigators in the criminal proceedings. He admitted to providing Ms. Costand with Benadryl; he admitted to sex acts with her afterwards. He claimed that the sex was consensual. How can he claim reliance on a promise of non-prosecution when he had already admitted to facts to which he testified in deposition? True, he also admitted to other acts, but to the extent that those acts subjected him to criminal prosecution, it is hard to see how a promise not to prosecute him with respect to his relationship with Ms. Constand is relevant to his choice to testify as to prior acts. But the Supreme Court found that Mr. Cosby is entitled to a presumption that he only testified in reliance on D.A. Castor's promise that he would not be criminally prosecuted. Fruits of the poison tree, I suppose.
The Supreme Court rejected the option, favored by the concurring and dissenting Justices, to simply suppress the evidence obtained through Mr. Cosby's depositions and grant a new trial. Instead, the Court characterized its remedy as a grant of specific performance of D.A. Castor's promise not to prosecute. That strikes me as an odd formulation. Specific performance is not a remedy for promissory estoppel; it is a remedy for breach of contract. And if we say that, but for his reliance on D.A. Castor's promise, Mr. Cosby would have invoked his Fifth Amendment rights in his depositions, that might have led to a remedy akin to what the concurring and dissenting Justices proposed. But the majority could have reached its conclusions without speaking of specific performance. As a result of the broken promise, Mr. Cosby was denied his due process rights, and the appropriate remedy is to vacate his conviction and enjoin any future prosecution relating to the subject matter of D.A. Castor's promise.
Thanks to Sydney Scott, for her research assistance!
Tuesday, June 29, 2021
As reported in Isaac Chotiner's New Yorker article, Lebron James’s Agent Is Transforming the Business of Basketball, Rich Paul has been changing the way athletes and agents negotiate with teams. Paul, the agent for LeBron James and other N.B.A all-stars, started his agency, Klutch, nine years ago.
Paul and James became friends in 2002 when James -- only seventeen—was expected to be N.B.A.’s No.1 draft pick. When the two first met, Paul was twenty-one and selling vintage jerseys out of his trunk. James took an interest in one of the jerseys, the two struck up a friendship and stayed in touch. They bonded over being Black kids who grew up in the inner city and the difficulties that come with that. That background has given Paul a unique advantage when advising young players with similar experiences growing up. Paul's mother struggled with drug addiction. His father died of cancer while he was in college. He would have finished, he said, because it was important to his father. But after his father died, Paul's business ambitions took over.
Their contractual relationship began the summer of 2003, when James signed with the Cleveland Cavaliers. James began paying Paul a salary of $48,000. According to Chotiner, James regarded the payments as “an investment in what the relationship could become.” A few years later, Paul began working for James then-agent Leon Rose, at Creative Artists Agency (CAA).
Paul left CAA and formed Klutch Sports Group in 2010 after the controversial announcement made by James on “The Decision” —an ESPN live broadcast—in which he declared he was leaving the Cavaliers. James declared “I’m going to take my talents to South Beach and join the Miami Heat.” The press took a very dim view of "The Decision," but James has no regrets (or will admit to none), and his move from Cleveland to Miami became the model for later moves by star players who want to dictate where they play and with whom they play.
Paul began to develop powerful influence in the N.B.A with James as his star client. They have become associated with “player empowerment.” Player empowerment is the influence that athletes wield as they change teams and build new fan bases. The argument in favor of player empowerment is that too much control has been in the hands of teams who can trade a player on a whim. Players should have some say in where they work and live. This philosophy allows the league’s best athletes to have the most leverage because they bring in the fans, jersey sales, and general revenue. Paul believes players should have more power over who and where they sign with.
The dynamic between the league, athletes, and player empowerment, is intertwined with race. Historically, basketball—a majority Black sport—has always been run by white owners. As players have become increasingly more outspoken about politics, the league has had to follow suit, like embracing the Black Lives Matter movement.
The dynamic in NBA player contracts has certainly changed, at least at the top of the NBA food chain. The game used to be that owners would lock in young players to multi-year contracts. If the players underperformed or became injury-prone, the owners retained the ability to trade them. If the players exceeded expectations, they were systematically underpaid until their contract came up for re-negotiation. Sorry Scottie Pippen. Now, the star players can reverse the option. With Paul's help, they star prospects can now negotiate generous contracts but retain some contractual flexibility to move to different teams, and the league and the owners seem relatively powerless to prevent them from doing so.
Critics of player empowerment say it has put too much power in the hands of players. Bomani Jones, a sports journalist for ESPN state that player empowerment is a catchall for the fact that the league has done a terrible job empowering team, and that the N.B.A. has a problem with real estate; they have teams in places where young Black men do not want to live.
Although Paul is proud and willing to fight for his clients, he struggles with the impression that he is constantly battling with teams. He said that perception is all wrong. “What I am focused on was how to educate the athletes. It’s one thing to be a black man in America it’s a totally different thing to be a black athlete.”
For Black athletes, Paul explained, the sudden wealth of an NBA contract comes with a ‘black tax.’ Black tax is the difference in experience black athletes face compared to that of white athletes. For some Black athletes, their number of dependents is higher, their education may be lower, their financial literacy lower, and their family infrastructure is lesser. Paul and others at Klutch say they see their job not only as making money for players, but also teaching them how to spend it. Furthermore, family members of young athletes historically have only seen White men in a position of agent or head coach, so that is who they tend to seek out and listen to. It is difficult for Paul to represent White athletes because they do not seek him out and they do not expect or trust Black agents.
Klutch became known for driving hard bargains, especially for James. Paul's reputation was cemented when James joined the Lakers in 2018. The following year, Paul pressured New Orleans Pelicans to trade Anthony Davis to the Lakers—which cemented the roster that enabled the Lakers to win the NBA championship in 2020. Paul's strategy has aggressive: he let it be known David was demanding a trade and that the he really wanted to be traded to the Lakers. Davis's value to the Pelicans dipped precipitously. He didn't want to play for the team and he didn't want to risk injury. Paul effectively called the bluff of the owners. They disapproved of the tactics, but Paul forced them to recognize the market power their star players wield. The N.B.A. fined Davis fifty thousand dollars for the trade demand. Why even bother?
Paul’s success has led to debate about what it takes to be a good agent. Paul cannot match his rivals in formal education. Most other agents are lawyers or have lawyers. But Paul understands the business, and he understands the psychology of the players, the agents, and the "Euro men in their fifties" who still make the decisions for teams. Now for Paul’s star clients, the job is about finding new ways to wield power, including using the media. In 2018 Paul negotiated an unconventional deal for NBA prospect Darius Bazley. Bazley reneged on a commitment to play for Syracuse University but was later paid $1 million for an internship at new balance. The next year the NCAA announced a new rule: agents could not represent college athletes unless they themselves had a college degree. Then James took to Twitter and dubbed the new regulation #TheRichPaulRule. Within a week the NCAA rescinded the rule.
Chotiner's article provides a behind-the-scenes look at how Paul recruits clients. He recounts a Zoom call between Paul and an NBA-prospect's mother. Paul encourages the young athlete to talk about his teammates and his team mentality, about his enthusiasm for playing defense and being a play-maker rather than just a scorer or showboater. The mother quickly grasps that the strategy is to spout cliches to counteract the prejudices about young Black athletes her son is likely to encounter. But to her, it sounds like forcing her son to repress his personality and bow before these new White masters. Paul is playing the long game. For him, it is not about bowing down to anyone. it's about achieving a balance that enables young stars to rise.
Once players rise to stardom, they have more freedom to speak for themselves. Klutch has athletes speak out on political or social issues. Michael Jordan would not even say whether he preferred classic Coca-Cola or new Coke. James has spoken out on the killing of George Floyd, police brutality, and Georgia’s restrictive voting laws. Paul said that however the players decide to involve themselves is up to them, and that they should not be tone-deaf to things happening around them.
The new model works well for the star players, but does it improve the sport? From my perspective in Oklahoma City, I still hear complaints about Kevin Durant's abandonment of the Thunder. I hear this from White fans, and I suspect that, while the NBA's popularity bridges racial gaps in the U.S., the people buying (unbelievably expensive) seats in stadiums and (unbelievably expensive NBA gear) are mostly White.
I've only been here a year, and with COVID, people aren't thinking much about attending sporting events (other than college football, which never stopped here), but nobody has ever brought up the Thunder in conversation with me since I arrived. I follow basketball a little, but I can't name a single Thunder player. I follow the Bulls, but I know at the start of every season that the Bulls do not have three all-stars, so they will not be in serious competition for the championship. Seems like a doomed model for small-market cities like New Orleans, Oklahoma City, and the New York Knicks.
Still, it seems preferable to baseball contracts where, for some reason, owners lock themselves in to multi-year contracts valued in the hundreds of millions of dollars with players who are nearing their peaks and will be paid tens of millions late in their careers. Such older players often are of limited value to the club, often relegated to the roll of designated hitter. I wonder whether, for that reason, the average age on American League teams is a bit higher than on National League teams. On the one hand, perhaps it is nice that these players get to enjoy the riches denied them in their primes. On the other hand, it must frustrate elite athletes to compete and under-perform. It also hurts their teams, because salary caps prevent baseball teams with older, expensive players from trading for top players still in their prime.
Thanks to ContractsProf Blog Intern, Alyssa Cross, for her research assistance!
Tuesday, June 15, 2021
Yesterday, we posted about a boxing match. Today, we move on to mixed martial arts.
Have you ever wanted a behind-the-scenes look at how YouTuber "influencers" make money? I certainly have. I asked my daughter what seemed to me the obvious question: Why would anybody take seriously an endorsement from an "influencer" when you know that influencers get paid to endorse products and that their endorsement is thus effectively meaningless? Her shrug, accompanied by an eye-roll spoke volumes.
Fortunately, Jed Rakoff, of the Southern District of New York, just decided an influencer case, Brueckner v. You Can Beam, LLC, that reveals quite a few details about how these deals work (H/T New York Contract Decisions Twitter Feed), although I admit I still don't really understand the premise behind these deals.
Josh Brueckner (Brueckner), for those who don't know, is a professional mixed martial arts athlete and influencer. On February 1, 2020, he entered into an agreement with You Can Beam LLC (Beam), a nutritional supplements company. The agreement provided that Brueckner would post (i) at least six promotional Instagram posts a year about Beam's nutritional supplements, (ii) at least one Instagram story per week mentioning a Beam product, and (iii) at least one YouTube video a month on Brueckner's YouTube channel, including Brueckner's coupon code and a link to the You Can Beam website in any YouTube videos. Even if the video was not about Beam’s products, Brueckner was required to link his coupon code in the description box. In exchange, he was to be paid a monthly fixed rate of $15,000 and a commission of $4 per unit sold using Brueckner's coupon code or link. Wow, so that's how that works. Thanks, Judge Rakoff!
The initial term of the agreement was one year, but then came COVID. On March 17, Beam told Brueckner to “hold off” on the posting due to COVID-19 restrictions, because "everything with this virus has put us on hold unfortunately.” Beam still paid Brueckner his $15,000 for March, but they also sent him a termination notice dated April 8, 2020. Contending that the termination was not in accordance with the contract terms, Brueckner filed suit on April 28th. I'll say this for him, he's quick. Beam counterpunched, alleging that Brueckner had been in breach of the agreement since February 28th, when Beam had sent him notice that he had failed to include a link and discount code in his YouTube videos as required under the parties' agreement. Beam's counterpunch failed to land.
Brueckner moved for summary judgment, and he won. Beam's sent its February 28 notice to the wrong address. As a result, Brueckner was never properly put on notice that he was in breach. Moreover, Brueckner clearly cured the alleged breach within the 10-day period provided for in the agreement. As a result, he was not in breach when Beam instructed him to "hold off" on his influencing activities, and it was thus Beam, not Brueckner that was in breach. The Court granted Brueckner’s motion for summary judgment, finding Beam liable on Brueckner's breach of contract claim and dismissing Beam's breach of contract counterclaim.
Brueckner sought an additional $75,000 for the five months on the contract. It is not clear if he could also seek to recover the $4 per sale he would have been entitled to but for Beam's breach. As a side note, if you can offer reductions on each sale via coupon and pay an influencer $4 per sale, doesn't it seem like your product is overpriced? Or is it common that most of what we pay for goes to marketing and not product. Do I pay more for Progressive Insurance than Geico because Progressive has to pay Flo, while Geico stiffs its gecko?
H/T to ContractsProf Blog Intern Sydney Scott (left) for research on this post.
Monday, June 14, 2021
If you watched boxing legend Floyd Mayweather's exhibition bout against YouTuber Logan Paul, you should not have been disappointed. That's because your expectations should have been very low. I know very little about boxing, but I learned in researching this piece that Mayweather is a boxer, not a puncher, so he was unlikely to injure Logan Paul dramatically. Logan Paul, on the other hand, although nearly twenty years younger and far bigger, was unlikely to land any clean blows on Mayweather. And that is what ensued. Mayweather landed nearly twice as many punches while throwing about half as many. Paul demonstrated that he could take a punch and that he, quite literally, has thick skin, which likely serves him well in his line of work.
But there is one area in which the exhibition match delivered quite the wallop: contractual controversy. This fight, after all, was about making money. According to legalreader.com, Mayweather sued the fight's promoter, PAC Entertainment Worldwide, when he did not receive an initial payment of $30 million, a portion of his guaranteed $100 million take, which was due in March. The fight was supposed to take place in Dubai, but PAC could not pull that off. Mayweather claimed that PAC's breach meant that he no longer had to perform and he was owed $122.6 million. For that amount of money, I too would be willing to not fight Logan Paul. The fight occurred in Miami last week, organized by a different promoter.
Whether and how much Mayweather can recover may turn on his take from the June 6th event. Presumably Mayweather was only going to fight Logan Paul once. Whatever he made will be subtracted from his provable damages as mitigation. We'll see if we hear more about this in the coming months.
H/T to ContractsProf Blog Intern Alyssa Cross (left) for research on this post.
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.