ContractsProf Blog

Editor: Jeremy Telman
Oklahoma City University
School of Law

Monday, September 19, 2022

Follow-up on Former Nebraska Coach Scott Frost's Contract

Scott_Frost_in_Black_Nebraska_Shirt_(cropped)
By Huskerdood - Own work, CC BY-SA 4.0

Last week, we posted about Nebraska's decision to fire its head football coach Scott Frost and pay him $15 million in severance.   Victor Goldberg shared Coach Frost's contract and its two addenda, with me.  You can also find it online here.

One big takeaway from Professor Goldberg's work is that sophisticated parties fashion their own remedies, and those remedies often depart from the default rules set out in the common law.  So too in the realm of coaching contracts.  You might think that a coach who gets a $15 million severance package for early termination of his contract would have to mitigate should he land comparable employment at another school.  Not so here.

As Professor Goldberg notes after reviewing the contracts in his comment here, Coach Frost's initial Dec. 2017 contract provided that, while he had no obligation to mitigate, if he got another coaching job, either in the NFL or with another Division I NCAA team, the severance pay (termed "Liquidated Damages") would be offset (set forth in Section 13(b) of the original agreement).  But the addenda provided for neither a duty to mitigate nor an offset (in paragraph 2 of the 2021 addendum and paragraph 3 of the 2019 addendum).  

The mystery to me is why the addenda, negotiated after Coach Frost and Nebraska football suffered through several losing seasons, would be more generous than the original contract, negotiated when Coach Frost was the hottest coach on the market.  One would have to review the contracts as whole to determine what Coach Frost gave up in exchange for more generous liquidated damages provisions.

September 19, 2022 in Celebrity Contracts, Sports, True Contracts | Permalink | Comments (0)

Thursday, September 15, 2022

The Case of the Nebraska Football Coach's Buyout

Scott_Frost_in_Black_Nebraska_Shirt_(cropped)
By Huskerdood - Own work, CC BY-SA 4.0

You have to be an extraordinary person to be an elite college football coach.  You must be unusually savvy about contracts.  That must be true, because I know a lot about contracts but I can't make any sense of the incentive structures in the contract of former Nebraska head coach Scott Frost (right).  Andrew Doughty of BetMGM has the numbers here.

Coach Frost had an extraordinary second season, leading the University of Central Florida to an undefeated campaign and defeating Auburn in the Peach Bowl.  Nebraska paid $3 million to buy out his contract and then agreed to a seven year, $35 million contract with Coach Frost.  Two dismal years in, the contract was extended through 2026.  After two more dismal years, Nebraska and Coach Frost renegotiated his contract, reducing his annual salary to a miserly $4 million/year.  The buyout structure is complicated, but in the end, Coach Frost is entitled to a $15 million buyout.  If the team had waited until October to buy him out, it would have owed only $7.5 million.  

You might think that Nebraska is not really out that $15 million because Coach Frost has a duty to mitigate.  Except that I seem to recall reading somewhere in  Victor Goldberg's  Rethinking Contract Law and Contract Design that coaches' contracts often specify that there is no duty to mitigate [if someone can find the cite or knows from some other source, please chime in].  Moreover, Coach Frost's record at Nebraska was 16-31 overall, 10-26 against conference opponents, and the team was winless against ranked teams.  When Nebraska landed Coach Frost, he was the most sought-after young coach in college football.  Now, he's asking Kramer's question after a prolonged cigar binge:

Why, you might ask, did Nebraska not wait until October?  Some sportswriters speculate that the timing was dictated by an upcoming game against the Oklahoma Sooners.  Nebraska's athletic director did not want to see his team humiliated by the team he played for.  One would think that even rabid Nebraska football fans would not think that motivation justified a $7.5 million price tag.  But there are other reasons that would surely pass a business-judgment-rule type sniff test.  It seems there are advantages to being the first in the pool when it comes to picking a new head coach.

Has Nebraska learned its lesson?  Coach Frost's resume shows that past performance is no guarantee of future success.

September 15, 2022 in Celebrity Contracts, Commentary, In the News, Sports, True Contracts | Permalink | Comments (3)

Tuesday, August 30, 2022

Dog Bites Man: Trump Entity Is (Allegedly) Breaching Its Contractual Obligations

Truth SocialAccording to media reports, including this one from Drew Harwell in The Washington Post, FPOTUS Donald Trump's Twitter clone, Truth Social, is in financial difficulties.  An SEC S-1 filing from Digital World Acquisition Corp., the company that is supposed to take the Trump Media and Technology Group (TMTG) public, contains all sorts of statements casting doubt on the viability of the enterprise.  Mind you, SEC filings are supposed to protect against claims by investors that they were mislead as to the company's prospects for success.  Pessimism is common.  When I was in private practice helping to deal with the fallout of the post 2000 .com bust, every SEC filing I read about a technology company made the following points:

  • We are bleeding money;
  • We have never made money;
  • We don't know when we ever will make money; and
  • We have invested heavily in companies just like us that are bleeding money, have never made money, and don't know whether they will ever make money.

My job was to explain why my clients nonetheless advised their clients to invest in such companies.

Trump_University_logoPerhaps more alarming is the report that TMTG has stopped paying its bills.  According to WaPo, TMTG stopped paying its web-hosting service, RightForge, in March and is now in arrears to the tune of over $1 million.  As WaPo also notes, the man behind TMTG has a long history of not paying his bills.  Not to mention the fraudulent businesses.  Not to mention the fraudulent charitable organizations.  More alarming still, an SEC investigation into the planned transaction involving TMTG and Digital World has placed the entire deal on hold. 

The FPOTUS has been in the news of late.  Another dog bites man story.  Despite the FPOTUS having posted (that is "truthed") on his site "WE GAVE THEM MUCH," he has also claimed that: (1) the FBI planted incriminating and classified documents; (2) he had declassified the documents; (3) he was entitled to keep the documents, and (4) the documents are subject to executive and/or attorney-client privilege.  All of these shenanigans have somehow not improved traffic on Truth Social, which now is down from a peak of 1.5 million to about 300,000 views per day.  

Our goal on this blog is to overtake Truth Social for page views.  Now that would be a man bites dog story.

August 30, 2022 in Celebrity Contracts, Current Affairs, In the News, True Contracts, Web/Tech | Permalink | Comments (0)

Monday, July 11, 2022

Second Circuit Affirms Dismissal of Roy Moore's Suit against Sacha Baron Cohen

We have covered this case before, but it is a useful reminder of the power of releases.

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, Baron Cohen misrepresented the purposes of the interview.   He pretended to be an Israeli intelligence offer, and he lured Judge Moore into the interview by claiming that the purpose was to present the Judge with an award for his support of Israel.  During the interview, Baron Cohen produced an instrument that he claimed Israel had developed to detect underground tunnels.  Baron Cohen then claimed that it could also detect pedophiles, and, sure enough, it started beeping whenever help up close to Judge Moore's body.  Judge Moore's alleged stalking of women as young as 14 had been an issue in his election campaign.  

The interview did not go well, as you can see below, and the problems go well beyond Baron Cohen's mock unibrow:

In its opinion, the Second Circuit points out the Judge Moore signed a standard consent agreement, which provided in relevant part: 

[Judge Moore] waives, and agrees not to bring at any time in the future, any claims against the Producer, or against any of its assignees or licensees or anyone associated with the Program, which are related to the Program or its production, or this agreement, including, but not limited to, claims involving assertions of . . . (h) infliction of emotional distress (whether allegedly intentional or negligent), . . . (m) defamation (such as any allegedly false statements made in the Program), . . . [or] (p) fraud (such as any  alleged deception about the Program or this consent agreement).

Judge Moore crossed out other language in the Release, but the Second Circuit agreed with the District Court that he agreed to enough to bar his claims for defamation, infliction of emotional distress, and fraud.  

Judge Moore claimed that the entire agreement was the product of fraudulent inducement, but any such claim was barred under New York law because, in the Release, Judge Moore also  confirmed that he was not not "relying upon any promises or statements made by anyone about the nature of the Program or the identity, behavior, or qualifications of any other participants, cast members, or other persons involved in the program,” and that he was “signing this agreement with no expectations or understanding concerning the conduct, offensive or otherwise, of anyone involved in this Program.”  The Second Circuit also agreed with the District Court's rejection of Judge Moore's arguments that New York law does not enforce general releases.  This was not a general release.  It specifically released the defendants from the very claims Judge Moore sought to bring.  

Judge Moore's wife's claims of intentional infliction of emotional distress were barred under the First Amendment.  Judge Moore is a public figure and, given his candidacy for public office, the subject matter of the segment was clearly of public concern.  The court found that "no reasonable person" could have taken it seriously.  Thus, while the representation that the "pedophile detector" was a reliable device was clearly false, in context, nobody would have thought otherwise.  

We may have to revisit this doctrine in a world in which many people believe that "you can't trust the media."  In our current environment, Sacha Baron Cohen is at least as reliable a source as George Stephanopoulos.  I once was engaged in a political debate with a former student, and he pointed me to an article from the Babylon Bee.  When I informed him his source was satire, and he might was well be citing The Onion, he responded, "What difference does that make?"  At that point, I knew that I had lost.  And that all was lost.

July 11, 2022 in Celebrity Contracts, In the News, Recent Cases, Television | Permalink | Comments (0)

Wednesday, February 16, 2022

Comedians' Suit Against Pandora Is No Joke!

According to Rolling Stone Magazine, the estates of some comedians, as well as some comedians who are still alive, are suing Pandora for breach of copyright.  Robin Williams' estate is seeking over $4 million; George Carlins' estate is seeking $8.4 million.  All together, five comedians have filed suit seeking over $40 million collectively.  

Robin Williams
Rolling Stone 
quotes from the complaint:

While it is commonplace in the music industry for companies like Pandora to enter into public performance licensing agreements with performance rights organizations like BMI and ASCAP for musical compositions, these entities do not license literary works. Therefore, it was the responsibility of Pandora to seek out the copyright owners and obtain valid public performance licenses.

The comedians' record labels have shared their recordings on Pandora.  However, the comedians claim, the recordings are separate from the jokes, which remain the intellectual property of their creators.  As Variety explains here, the comedians claim "that they should be treated like singer-songwriters, earning a separate royalty for the underlying 'literary work' in addition to the performance of it."  

Just a quick anecdote about Robin Williams.  I saw him perform live stand-up in San Francisco.  I think it must have been in the late 1980s.  I went with a friend to a comedy club.  At the end of the scheduled performances, the M.C. got up and said, "Hey, Robin Williams is here, and he wants to do a set.  Do you all want to stick around and give him a listen?"  It was late, but it was Robin Williams.  We indicated our enthusiastic assent.  

He was clearly excited to try out some material.  He had more energy than the small space could contain.  The material was raw.  Most of the jokes didn't fly.  He was sweating and agitated.  After about ten minutes, the M.C. came back and, apologizing to Robin Williams, said that by city ordinance, he had to stop.  I guess they were already past the time when comedy clubs were supposed to shut down.  Robin Williams pleaded, could he do one more bit?  The M.C. allowed it.  It was Robin Williams.  The last bit wasn't much better than the others, but he was trying so hard.  He attempted to engage in "safe comedy" by placing a condom over the microphone.  Edgy?  In desperation, the club cut the lights and the mike.  It seemed there was no other way to get him to stop.

It was not the best stand-up I've ever seen, but it was certainly the most memorable.  I loved that he was still so eager for an audience, that he was still so hungry to create new comedy, and ultimately that he, by that time, rich beyond imagining, possessing iconic fame, was still so naked and vulnerable and pathetically desirous of our approval.   

Watching Robin Williams cover himself in inglorious flop-sweat reminded me of Robert Musil's essay, Flypaper.  Musil observes the moment when the flies stop struggling to escape the flypaper's grasp and relax a bit into their fate, freezing in ridiculous poses.  "They no longer hold themselves up with all their might, but sink a little, and at that moment appear totally human."  Never did I see anyone look more human than Robin Williams did as he utterly bombed in a San Francisco comedy club.  

February 16, 2022 in Celebrity Contracts, Music, Recent Cases, Web/Tech | Permalink | Comments (2)

Wednesday, January 19, 2022

Quentin Tarantino gets sued, demonstrating that NFTs are about contracts after all

I’m excited to teach copyright this semester and while I miss teaching contracts, there is a lot of synergy between the two subjects.  So, I was interested to read that the director Quentin Tarantino is being sued by Miramax in an action claiming copyright infringement and breach of contract.  The lawsuit involves Tarantino’s efforts to auction pages of the script from Pulp Fiction as non-fungible tokens or NFTs. 

(Readers of this blog are of course familiar with NFTs, thanks to Juliet Moringiello and Christopher Odinet’s article and Jeremy Telman’s blog post on it here).

The issue is whether Tarantino owns the rights to the NFTs.  That will depend on the contract between Tarantino and Miramax and whether the language the parties used was broad enough to capture this type of technology – technology that wasn’t contemplated at the time the parties entered into their agreement.

 

January 19, 2022 in Celebrity Contracts, Film, Film Clips, Miscellaneous | Permalink | Comments (2)

Tuesday, January 18, 2022

Prince Andrew and the Awesome Power of Contracts Law

Andrew
Image by Titanic Belfast, CC BY 2.0 , via Wikimedia Commons

Here's the problem about writing about the British Royal Family.  If you are someone who cares about the Royals, you know approximately 1.7 million times more about them than I do.  If you don't care about the Royals, nothing in the post will be of the slightest interest to you.  And yet, there is a big story out there; contracts law is at the center of it.  I am somewhat compulsive.  Sigh.  Here we go.

Earlier this month, Sid DeLong posted about the argument that Virginia Roberts Giuffre's suit against Prince Andrew alleging sex trafficking should be dismissed based on a Settlement Agreement and Release that she entered. into with Jeffrey Epstein in 2009. Last week, Judge Lewis Kaplan denied Prince Andrew's motion to dismiss in a 46-page opinion.  In that opinion, Judge Kaplan carefully considers whether Prince Andrew was among the defendants whom the parties intended to release or whether he is a third-party beneficiary of the Agreement.  At this point in the litigation, Judge Kaplan concluded, it is too early to rule definitively on either argument.  Judge Kaplan also rejects the so-called "Dershowitz argument."  That is, because Ms. Giuffre dismissed her claims against Mr. Dershowitz when the Agreement was raised as a potential defense, the same result should obtain here.  Judge Kaplan avoided speculating on why the Release might be helpful to Mr. Dershowitz but insisted in any case to consider independently the Release's applicability to every potential defendant. 

There is more to the opinion, but the rest of it does not really touch on contracts law or the law of third-party beneficiaries, so we will leave it to others to expound.  What interests us for now is the Crown's response to this opinion. 

As Dan Bilefsky of The New York Times reports here, that response was "quick and punishing." Upon learning of Judge Kaplan's decision, Buckingham Palace issued a statement.  It reads, in full:

With The Queen's approval and agreement, The Duke of York’s military affiliations and Royal patronages have been returned to The Queen.

The Duke of York will continue not to undertake any public duties and is defending this case as a private citizen. 

He may no longer use the honorific "His Royal Highness," and he had to surrender his military titles.  The BBC, perhaps a more reliable source on this subject, clarifies, "Like Harry and Meghan, Prince Andrew retains his title HRH but will not use it in any official capacity."  I'll assume you all know to which "Harry and Meghan" the BBC refers, and I will leave it at that.

January 18, 2022 in Celebrity Contracts, Current Affairs, In the News, Recent Cases | Permalink | Comments (1)

Thursday, January 6, 2022

Sid DeLong, Is Prince Andrew a Third-Party Beneficiary of the Giuffre Release?

“Yes Virginia, There is a Santa Clause”: The Giuffre Release
Sidney DeLong

Andrew
Image by Titanic Belfast, CC BY 2.0 , via Wikimedia Commons

Denied the benefits of three years of law school, the general public must learn what it can about contract law in piecemeal fashion, in the school for scandal afforded by news reports of highly publicized cases. Thus, for example, the Stormy Daniels controversy introduced everyone to the law of mandatory arbitration, non-disclosure agreements, and temporary restraining orders.

Seen as a teaching moment, the sexual abuse lawsuit brought by Virginia Roberts nee Giuffre against Prince Andrew may further educate the laity about the arcana associated with general releases and third-party beneficiary law. It also may give an incidental education in the state of legal prose.

Last Monday, the court unsealed a Settlement Agreement and Release entered into by Virginia Roberts (Giuffre’s maiden name) and Jeffrey Epstein (below, right) in 2009. The agreement settled her lawsuit and released all her then-pending tort claims against Epstein. Her allegations included that he trafficked her, while a minor, to his powerful friends, who included politicians, academicians, and “royalty.” The Release states that it was executed in connection with a non-prosecution agreement entered into by a Florida federal prosecutor and Epstein, an agreement that was later to become controversial in itself when he was prosecuted in New York.

In her current lawsuit against Prince Andrew, Giuffre alleges that he was a friend of Epstein who sexually assaulted her on multiple occasions when she was a minor.  Without admitting any of her allegations, he has pleaded as an affirmative defense that she released her claims against him when she signed the Epstein release, even though he was not a party to the Epstein lawsuit and is not named in the release. Instead, he claims that he is an unnamed third-party beneficiary of the release because it extends to “any other person or entity who could have been included as a potential defendant” to the Epstein lawsuit. 

The Settlement Agreement and General Release contains language that, although it is boilerplate familiar to many litigators, would strike most laypersons and many lawyers as bizarre. Like many other forms of contractual boilerplate, release boilerplate grows by accretion and never seems to diminish. As a result, it contains many terms that have no application to this controversy.

Thus, the agreement binds not only Giuffre and Epstein in the singular, but also in the plural:

Virginia Roberts and her agent(s), attorney(s), predecessor(s), successors(s), heir(s), administrator(s), and/or assign(s)/(hereunder, “First Parties”) and Jeffrey Epstein and his agent(s), attorney(s), predecessor(s), successors(s), heir(s), administrator(s), and/or assign(s)/(hereunder, “Second Parties”).

All this means that in form the agreement is between two large groups of people, real and imaginary. More significantly, the agreement also refers to a third group of unnamed persons: “any other person or entity who could have been included as a potential defendant (“Other Potential Defendants”).

The First Parties not only “release“ the Second Parties and the Other Potential Defendants from the Giuffre claims, but also “remise, release, acquit, satisfy, and forever discharge” them.

When the drafter(s) entitled the document a “General” release they were not kidding.  The released claims include not only the tort claims Giuffre brought against Epstein in the lawsuit, but also (take a deep breath)

all, and all manner of, action and actions of Virginia Roberts, including State or Federal, cause and causes of action (common law or statutory), suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, executions, claims, and demands whatsoever in law or in equity for compensatory or punitive damages that said First Parties ever had or now have or that any personal representative, successor, heir, or assign of said First Parties hereafter can, shall, or may have, against Jeffrey Epstein, or Other Potential Defendants for, upon or by reason of any matter, cause, or thing whatsoever (whether known or unknown), from the beginning of the world to the day of this release.

Holmes

For a unique experience, legally trained readers may, for once in their professional life, actually read this passage word-for-word, preferably aloud, and reflect on its meaning. They might then reflect on the fact that no living person fully understands every word of this paragraph. Non-lawyers may be surprised that, as Holmes famously remarked, the law finds no difficulty under the objective theory of contract in holding parties to the terms of agreements that neither of them may correctly understand.

If we had world enough and time, it would be highly rewarding to parse this language, lingering lovingly over each word, imagining what drafting disaster in what ancient agreement led to its inclusion in the ever-growing, immortal mass that is the result. Does anyone remember what a “specialty” is? What “variances” might Epstein have committed against Giuffre, assuming one can commit a variance?

Sadly, courts do not always ignore such boilerplate. In the infamous decision, Hershon v. Gibraltar Building & Loan Assoc., Inc., 864 F.2d 848 (D.C. Cir. 1989) a general release with even more extravagant language that was intended only to settle five business claims was held to have inadvertently cancelled a debt of $265,000 owed by the released party to the releasing party in a completely unrelated and uncontested loan.The majority rested on a rather punitive application of the plain meaning theory of contract, visiting the sins of the drafters on their clients. Under Hershon’s reasoning, the Giuffre release would discharge any claim of any sort that she might have had against anyone who might have been a “possible defendant” in her action against Epstein, such as his insurer.

Jeffrey_Epstein_mug_shotThe unique feature of the release is not that it refers to “the beginning of the world”: they all do. Rather, it is that it extends to “said Second Parties and any other person or entity who could have been included as a potential defendant ('Other Potential Defendants').” In a sea of everyday lawyer prose, the phrase “who could have been included as a potential defendant” sticks out like a sore thumb. The phrase has no settled legal meaning, and so the litigants have focused on it intently, as it limits the scope of the The unique feature of the release is not that it refers to “the beginning of the world”: they all do. Rather it is that it extends to “any other person or entity who could have been included as a potential defendant (“Other Potential Defendants”).” In a sea of everyday lawyer prose, the phrase “who could have been included as a potential defendant” sticks out like a sore thumb. The phrase has no settled legal meaning and so both litigants have focused on it intently, as it limits the scope of the release.  According to NPR, Giuffre’s lawyers, for example, have argued that it did not include Prince Andrew because, inter alia, he could not have been sued in the jurisdiction where the action was brought. His lawyers argue that, although innocent of any wrongdoing, he is clearly in the category of unnamed “royalty” whose crimes were alleged in the Epstein complaint and who might have been sued along with Epstein.

There were easily-imagined reasons for Epstein’s lawyers to employ the ambiguity so as not to name the “powerful friends” that Epstein wanted to shield with this settlement. But in this case, professional coyness might encourage a court sympathetic to the plaintiff to refuse to read their names into the agreement.

A final question is whether a release can be a “third-party beneficiary contract.” First, a release is not a contract as the Restatement defines it because, as Restatement (Second) of the Law: Contracts § 278, cmt. c acknowledges. A release is not a promise that creates rights and duties but instead extinguishes rights and duties. But there is no reason the Release may not be construed to extinguish claims against third parties if that is the intent. Protection of third parties is common in tort settlements.

Under Restatement (Second) of the Law: Contracts § 302, a third party may enforce a promise whenever the promisee manifests an intention that third parties have enforcement rights and that they are appropriate to achieve the promisee’s purposes. If Epstein intended to give the unnamed friends the benefit of the release, it should be “enforceable” by those third parties if the court resolves the issue noted above as to their identity.

Two things raise doubts about whether Epstein manifested an intent that Andrew be able to enforce the release. First, the release seems not to have been disclosed to Andrew until discovery in the pending case. Than alone argues against Andrew being an intended third-party beneficiary.

A second, related doubt about third party rights arises from the following term.

Additionally, as a material consideration in settling, First Parties and Second Parties agree that the terms of this Settlement Agreement are not intended to be used by any other person nor to be admissible in any proceeding or case against or involving Jeffrey Epstein, either civil or criminal. (emphasis added).

Is Prince Andrew an “other person” who is trying to “use the terms” of the agreement? Or does the term “other person” not include the previously mentioned “Other Potential Defendants”? Does the phrase “in any proceeding or case against or involving Jeffry Epstein” modify the clause limiting the intended use by other persons, so that Prince Andrew may argue that he may use the release because this is not a case “against or involving” Epstein?

What lessons might the public learn from this combination of verbal overkill and under-specificity in Settlement Agreement and General Release? Perhaps that lawyers are paid by the word rather than the thought.

January 6, 2022 in Celebrity Contracts, Commentary, Current Affairs, In the News | Permalink | Comments (3)

Tuesday, December 28, 2021

Unilateral Contracts in the News: Found Dog Edition

My students think I hate unilateral contracts.  It's not true.  I hate the statute of frauds and the parol evidence rule.  I'm fine with unilateral contracts.  They are interesting. They are also uncommon.  That is to say, they make up a tiny percentage of the universe of contracts.  That's why they show up in the news.  

As reported in the New York Times, Daniel Sturridge, an English football (soccer) star, made a video after his dog, Lucci, a Pomeranian, disappeared from his Los Angeles home.  In the video, Mr. Sturridge offered a reward, "20 Gs, 30 Gs, whatever" to anybody who helped him to recover the dog.  Soon thereafter, Foster Washington, found the dog.  

Small Dogs
Mr. Sturridge claims that he already paid Mr. Washington a reward.  On Tuesday, a judge found otherwise.  Mr. Sturridge now plays in Australia.  When he was signed as a striker with Liverpool in 2013, the contract was valued at $20 million.  Lucci is valued at $5300.  Mr. Washington has three children and makes $14/hour working as a security guard.  His utterance may have been too vague to be considered a clear offer.  Is it a promise to pay 20 G? 30? Whatever?  Is it an invitation to bargain?  Don't care.  You are rich.  A poor man helped you out, thinking you would honor your pledge to provide a reward.

Pay the man.

December 28, 2021 in Celebrity Contracts, In the News, Recent Cases, Sports | Permalink | Comments (2)

Tuesday, December 7, 2021

More On Compensation Inequity: College Football Edition

Yesterday, I ranted about executive compensation.  Today, I will rant about compensation paid to college football head coaches.  If you think that college football coaches deserve to be, in most states, the highest paid public employees, feel free to tune out.

Recently, a friend recommended that I listen to a story at the start of this Advisory Opinions podcast.  I don't want to ruin the story, I've put it below the fold.   If you want to listen, it just takes up the first two or three minutes of the podcast, which I do not otherwise recommend.

I bring up the story in this context because I recently was conversing with a neighbor who had various criticisms of Dr. Fauci.  Among Dr. Fauci's misdeeds, according to my neighbor, is that he is the highest-paid employee of the federal government.  It's true.  According to Forbes, Dr. Fauci's annual compensation is now over $400,000, and in the decade between 2010 and 2019, he earned $3.6 million.  Okay, so let's use football coaches' salaries to put that in perspective.  

First, according to the New York Times, Louisiana State University (LSU), a public institution, is paying its new coach $9 million/year.  That is well over twice what Dr. Fauci made over ten years.  At the same time, it is paying its former coach $17 million to step aside, so that former coach will be paid nearly five times what Dr. Fauci made over ten years, and he will make it for doing precisely nothing. 

LSU
Second, and this is crucial, Dr. Fauci is the highest paid federal employee because people who understand his role (that is, not Senator Rand Paul), know that he is an incredibly dedicated, effective public servant who has provided unparalleled leadership since the AIDS crisis.  If Dr. Fauci were to leave public service and work in the for-profit bio-tech sector, he could easily command salaries akin to what we pay corporate executives in those fields -- that is, many multiples of what he makes as a public servant.  Before one criticizes Dr. Fauci for making $400,000 a year, consider that the opportunity cost for him to do so by working as public employee is likely $1-2 million/year.

LSU's new coach, on the other hand, is guaranteed a bonus of $500,000 if LSU manages to win half its games, which would be a pretty unimpressive accomplishment for a team that has won three national championships since 2003.  That's right, on top of his salary, which is already twenty-two times higher than Dr. Fauci's, LSU's coach will get a bonus in excess of Dr. Fauci's salary if the team underperforms during his first year as badly as it did this year.

For my money, an Anthony Fauci is worth more than the best football coach in the country.  For my money, investing in great scientists who can guide our country through catastrophic health crises makes more sense than investing in men who can win college football games.  I would also venture to guess that the secondary effects of investing in science, in terms of gains in useful knowledge that can be applied to future medical challenges, greatly outweigh the benefits of having a successful college football team in the state.   As this story from the Guardian makes clear, most college sports programs operate at a loss.  Mad about the high tuition and fees you are paying for your child's education at a public university?  Maybe you should talk to your legislators about the high costs of college sports programs.  And those costs could be cut very easily if every state paid its coaching staff a decent but not excessive wage.  Salaries in line with what full professors in competitive fields like, law, business, medicine, or engineering, seem about right to me.  University presidents are also absurdly overcompensated, given that they take on no downside risk, but that can be a subject for some other post.

And since anybody who disagrees with me probably stopped reading a long time ago, let me add that the United States is the only country in the world that operates this way, and it is wholly irrational.  Universities are primarily about education and research.  Young people who are primarily interested in athletics can pursue that dream through developmental leagues, like the rest of the world has.  Teams in those leagues could be located in or near college towns, and universities that want to create a connection between the teams and their institutions can offer scholarships to the athletes who play on those teams.  Those students may have to attend part-time, as athletics is their day job.  Still, universities could provide support so that those students can succeed either as athletes, or as students, or as both, if they have the requisite aptitudes in both areas.  Given that very few students athletes become professional athletes, and professional athletic careers are very short on average, very little is lost if students choose to try their luck in the lottery of professional sports and then pursue college eduction at the age of 25 or 29.

Continue reading

December 7, 2021 in Celebrity Contracts, Commentary, Sports, True Contracts | Permalink | Comments (0)

Wednesday, November 17, 2021

Jay-Z Convinces a Jury that the Jay-Z-Branded Fragrance Stinks!

Beginning in 2009, Jay-Z, entered into a series of agreements with Parlux Fragrance and parent company Perfumania (Plaintiffs).  The agreements granting them an exclusive license to use the Jay-Z trademark for manufacture, promotion, distribution, and sale of fragrances and related products.

According to the Complaint, the parties agreed that Plaintiffs could use the Jay-Z trademark on certain products and that Jay-Z (right, in a 1988 photo Jay-Z_1988) would not unreasonably withhold permission to use the trademark.   In 2013, Plaintiffs launched Gold Jay Z fragrance.  Plaintiffs maintain that, in order for a celebrity fragrance to succeed, the celebrity has to actively promote it, and they allege that Jay-Z was obligated under a licensing agreement to do so but breached those contractual obligations.

Plaintiffs claim multiple breaches by Jay-Z including: (i) declining to be interviewed, (ii) failing to provide a quote for an upcoming Women's Wear Daily article, (iii) failing to make various promotional appearances at Macy's in support of the product, (iv) declining to provide a quote or statement for the press release in connection with the product launch, (v) or to provide quotes or complete "Q & As" for Elle, Glamour, or Cosmopolitan, and (vi) rejecting five different concepts for a promotional contest involving a giveaway of an 18-carat gold bottle of GOLD JAY-Z created by Jacob the Jeweler valued at $20,000, and instead keeping the prototype gold bottle.

In the litigation, Jay-Z contended that Parlux proceeded with the launch despite knowing these promotional events conflicted with Mr. Carter’s Magna Carta World Tour, which made him unavailable for these promotional events.  In his testimony, according to Allhiphop.com, Jay-Z did not like the promotional work that Plaintiffs put together for the branded fragrances, calling it "B-rate" and called their efforts "crappy, lazy work."

Gold Jay-ZAfter the initial launch, Plaintiffs began developing concepts for additional products for the brand but it was unclear whether these additional requests were included in the original product development plan. Jay-Z and his people felt under no contractual obligation to approve new products under the agreements.  Plaintiffs argued that Jay-Z's refusal to aid them in the development of new products was a breach of his obligations.

Jay-Z and his attorneys broadly argued that Plaintiffs failed to understand how to properly market his luxury brand and protect his products from being sold "on the shelves of Walmart between hand sanitizer and Tic-Tacs," as his attorney said in his opening statement.  Jay-Z counterclaimed, seeking $2.7 million in unpaid licensing fees.

On November 10, 2021, a New York jury, after a three-week trial, took only two hours to reject both parties' breach of contract claims.

Thanks to my research assistant, Alyssa Cross, for helping me with this stinky assignment.

November 17, 2021 in Celebrity Contracts, Recent Cases | Permalink | Comments (0)

Wednesday, November 3, 2021

Carole Baskin Sues Netflix for Breach of Contract. Thanks, Carole!

I'll admit it.  I watched Tiger King.  My students at the time insisted that I do so.  My friends warned me away, because I don't like watching people being cruel to animals.  People told me that you either love it or hate it.  I did neither.  I get the over-the-topness of the series.  That part was fun, but I resented the way the series encouraged identification with its main character, Joe Exotic.  He's a complicated human.  I don't know if anybody merits the treatment they get from our criminal justice system.  But he should not be allowed anywhere near large cats.  I was also dimly aware that fans of the show had adopted Joe Exotic's perspective and treated Carole Baskin as a villain, accepting the false equivalence Joe Exotic tried to establish between his operation, which exploited animals for profit and bred them irresponsibly, and Carole Baskin's animal rescue preserve. 

White Tigers
Image by Zvi Roger, CC BY 3.0, via Wikimedia Commons


Now Tiger King II is about to come out.  Carole Baskin wants no part of it, and she is suing to enjoin use of footage of her from the first shoot in the second series.  She claims breach of contract The Complaint is here.

The Complaint is basically a vehicle for Baskin to tell her side of the story.  Much of it is taken up with the achievements and awards and recognition of her Big Cat Rescue organization.  Joe Exotic is introduced as follows. 

 Joe Exotic . . ., the operator of a private roadside zoo and prolific breeder of big cats and purveyor of cub petting services [sic] sought to discredit and silence the Baskins' [sic] and their advocacy through years of constant and persistent intimidating and libelous social media attacks and physically during one incident at Big Cat Rescue.

The Complaint explains how Joe Exotic retaliated against Ms. Baskin, misappropriating her intellectual property and hiring a hitman to execute her.  The former led to his bankruptcy; the latter led to his prosecution and conviction.  
 
According to the Complaint, Ms. Baskin participated in Tiger King without knowledge of what the show was really about.  She was under the impression that the aim of the documentary was to expose the exploitation and cruelty to animals involved in big cat breeding, a subject-matter aligned with her organization's mission.  Prior to the release of The Tiger King, Ms. Baskin alleges, the producers showed her three videos that were supposed to represent the nature of the project.  These videos left Ms. Baskin with the impression that the producers were engaged in an animal-welfare documentary which would portray her as a heroine.  

The heart of Ms. Baskin's current suit against the producers is her claim that the releases she signed allowing use of footage filmed with her was only with respect to a single "documentary motion picture."  She did not agree to participate in a second series, and when approached by the producers, her response was "No. And lose my number."  That's gold, baby!  If only that were in the new series!  Sorry.  

If you watch the trailer for the new series, linked to in ¶ 36 of the Complaint, prepare to be overwhelmed with the powerful stench of desperation.  Joe Exotic is in prison.  His zoo is shut down.  The film makers chase after similarly despicably situated persons, i.e., other polyamorous, gun-toting, purported animal-lovers, committed to money-making and lawless libertarianism.  Prepare also for unsubstantiated allegations, artfully edited and cross-cut to look as plausible as the rampant criminality and exploitation that was the very stuff of Joe Exotic's business.  The desperation comes from the producers, who, as the breathless editing of the trailer makes clear, no longer have a story to tell but want to mine this vein until it is completely tapped out.  It also comes from Netflix, which has recently made clear that it is committed to the view that the only thing worse than being talked about is not being talked William_H._Macyabout.

It is only because I am not a participant in cancel culture that I will not cancel my Netflix subscription in protest of their decision to release Tiger King II.  Also, the new season of Shameless just became available, and the forthcoming season of Ozark is one of the few things I have to look forward to in this life.

November 3, 2021 in Celebrity Contracts, Commentary, Recent Cases, Television | Permalink | Comments (0)

Tuesday, November 2, 2021

More Unilateral Contract News: Texas GOP Politician Pays out $25,000

Yesterday, we noted that Elon Musk's "offer" to donate $6 billion to solve world hunger was couched in conditions that rendered it non-binding.  Musk's offer likely was not serious.  Rather, it was a more clearly provocative version of the attempted jest in Lucy v. Zehmer.   It was more of a taunt than it was a charitable pledge.  In the alternative, Musk's offer could be characterized as an illusory promise.  Musk demanded proof that the UN World Food Program demonstrate its ability to do the work for which it won the Nobel Peace Prize in 2020.  He likely considered himself the lone arbiter of the adequacy of the evidence, and he was prepared to move the goalposts.

You can vote for your favorite characterization of Musk's Tweet by taking this Twitter poll.  Don't like any of the options?  Leave a comment!

Dan PatrickBut today, we have word of a real offer accepted through completed performance.  We posted ten months ago about Texas Lieutenant Governor Dan Patrick's offer of $25,000 for anyone who comes forward with evidence of voter fraud in connection with the 2020 Presidential election.  There was some skepticism expressed in the comments regarding the enforceability of the offer or of its duration.  One of my students, not satisfied with the efforts of the Republican governor, Republican secretary of state, or the Trump-appointed U.S. Attorney for Georgia, had to be restrained from undertaking her own investigation into electoral fraud in that state.  

But now, via Professor Miriam Cherry's reliable nose for contracts news, we learn from the Dallas Morning News that Dan Patrick (left) has cut his first check.  Alas, it does not relate to systematic voter fraud, and the fraud did not occur in Georgia.  It did occur in another contested state, Pennsylvania, but the fraud consisted of a single case of voter fraud by a Republican voter who tried to vote twice, once on his own behalf, and once for his son, a registered Democrat.  The Dallas Morning News describes the recipient of the $25,000 check as "the scion of a family of Democratic operatives."  What a strange phrase!  Is that on his c.v.?

In any case, let's credit Dan Patrick for doing the honorable thing and paying up.  On the other hand, it's not like he was paying out his own money.  The money came from his campaign war chest, which stands at $23 million right now.  In addition, maybe it is also time for Mr. Patrick to acknowledge what his offer really reveals.  Even with a pretty generous economic incentive (he set up a fund of $1 million), nobody was able to successfully claim the reward by having uncovered evidence of voting fraud by Democrats.  That is extraordinary, and extraordinarily telling.  Mr. Patrick ought to acknowledge that fact and concede that the allegations of election fraud in the 2020 elections had and have no basis in fact. Alas, according to the Dallas Morning News, Mr. Patrick had no comment.

November 2, 2021 in Celebrity Contracts, Current Affairs, In the News, True Contracts | Permalink | Comments (3)

Wednesday, October 27, 2021

Sullivan v. O'Connor Revisited through Linda Evangelista's Suit

Sullivan v. O'Connor is an old chestnut of contracts lore, which we have memorialized in prior posts here and here.  One of the joys of teaching contracts is that musty old cases turn up periodically in new guises.  If none of your students remember Lady Duff, they might remember Maya Angelou or Britney Spears.

Linda Evangelista 2004
Image by jusez from Hong Kong, China - Flickr, CC BY 2.0

Everything old is new again.  Musty old Sullivan v. O'Connor is reborn, as according to the New York Times, the former supermodel Linda Evangelista (left) is suing the company behind a cosmetic procedure known as "CoolSculpting," alleging that her experience with the procedure has left her "brutally disfigured."  And the great thing for us is that her complaint alleges causes of action sounding not only in tort but also in contracts (sort of)!

Ms. Evangelista alleges that Zeltiq Aesthetics, Inc (Zeltiq) marketed its CoolSculpting System, a non-invasive alternative to liposuction surgery, and failed to warn consumers of serious adverse side-effects associated with CoolSculpting, such as paradoxical adipose hyperplasia (PAH).  Rather, Zeltiq claimed that CoolSculpting was "the safe, non-invasive way to reduce fat in common trouble areas that tend to be diet- and exercise-resistant."  

CoolSculpting apparently involves killing fat cells in targeted areas by freezing them.  The dead cells are then absorbed by the body and excreted in the four-six months following treatment.  Ew.

Although Zeltiq disclosed in its SEC filings that PAH was a known side-effect to the CoolSculpting System, Ms. Evangelista alleges that it did not disclose that risk to consumers.  She alleges that her career was cut short in 2016 after she underwent seven rounds of CoolSculpting treatments.  Some of the treated areas swelled rather than reducing, and Ms. Evangelista was diagnosed as suffering from PAH, a risk about which she claims neither Zeltiq nor her dermatologist warned her.

When Ms. Evangelista complained to Zeltiq about her condition, the company offered to pay for corrective liposuction surgery on condition that Ms. Evangelista sign a confidentiality agreement and release.  Ms. Evangelista refused to sign the document but proceeded nonetheless with the corrective surgery, which was painful and required her to wear compression garments for several months, making it impossible for her to work.  Despite two rounds of corrective surgery, each of which required "length and painful" recoveries, Ms. Evangelista's condition did not improve.  As a result, she claims that she suffered permanent disfiguring injuries that have made it impossible for her to work as a model.

She alleges causes of action sounding in products liability, negligence, breach of express and implied warranties, various types of fraud, and a violation of New York's consumer protection statutes.  She also alleges promissory estoppel. 

It's hard to see how she gets to her $50 million in alleged damages on a promissory estoppel claim.  It seems like the best that would get her would be reimbursement for her medical expenses associated with the corrective surgeries.   According to the complaint, that will only get her $38,000.  Similarly, while breach of warranty claims can be quite generous, they cannot be speculative.  Even if she can show her career was cut short due to the side-effects she suffered after treatments, how can we know that, but for that her disfigurement, she would have earned $50 million.  Ms. Evangelista would have to show that the value of contracts that she was forcded to decline due to her condition amounted to $50 million.  

More likely, the warranty and promissory estoppel claims are sideshows.  The main event will be her products liability and tort claims.  She alleges significant mental harms in addition to her physical harms, including severe social anxiety and agoraphobia.  The torts claims seem like a more reliable path towards the stratospheric damages that Ms. Evangelista seeks.

H/T David Oedel

October 27, 2021 in Celebrity Contracts, Famous Cases | Permalink | Comments (0)

Tuesday, October 5, 2021

Scarlett Johansson Settles Black Widow Suit

Black_Widow_(2021_film)_posterAs 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.

October 5, 2021 in Celebrity Contracts, Recent Cases | Permalink | Comments (0)

Wednesday, September 29, 2021

Groundhog Day Moment: Trump Loses a Case Involving a Non-Disclosure Agreement

Groundhog
Neither of these creatures is Bill Murray

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.  

Just kidding. 

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.

September 29, 2021 in Celebrity Contracts, Current Affairs, In the News, Recent Cases | Permalink | Comments (0)

Wednesday, September 8, 2021

Bob Dylan Wins Suit Against Co-Creator of "Hurricane" & Remains the Champion of the World

Guthrie Center
By Peter Greenberg - Own work, CC BY-SA 3.0

Writing as I do from Oklahoma, home state to the Bob Dylan ArchiveLevy 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.

Dylan 1966
Dylan 1966

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 

H/T @NY_Contracts

September 8, 2021 in Celebrity Contracts, Music, Recent Cases | Permalink | Comments (1)

Monday, August 2, 2021

Sid DeLong on the Scarlett Johansson Suit Against Disney/Marvel

INDUCING BREACH OF CONTRACT: A STUDY IN SCARLETT

Sidney W. DeLong

JohanssonThe 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.

August 2, 2021 in Celebrity Contracts, Commentary, Current Affairs, Film, In the News, Recent Cases, Television | Permalink | Comments (0)

Tuesday, July 13, 2021

Roy Moore's Claims Against Sacha Baron Cohen Dismissed

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.

July 13, 2021 in Celebrity Contracts, Recent Cases, Television | Permalink | Comments (0)

Monday, July 12, 2021

Contracts and Promissory Estoppel Issues in the Bill Cosby Case

Bill_Cosby_1965 (1)
Bill Cosby, 1965

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.  

Bill_Cosby_1990
Bill Cosby, 1990

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.

BillCosby 2006
Bill Cosby, 2006

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!

July 12, 2021 in Celebrity Contracts, Current Affairs, Recent Cases | Permalink | Comments (5)