CONTRACTS II

CREATIVE CONTROL (director/actor)

Case: Goudal v. Cecil B. DeMille Pictures Corp. (Cal. App. 1931)

1920's movie star, Jetta Goudal, was under contract to def. Def. exercised the option to renew her contract twice, then, in the middle of the third year, terminated her for "failure to perform the conditions of the contract."

Did the evidence offered show she failed to perform the conditions?

-"special, unique" services

-conflicting testimony

-3d renewal

No failure to perform pp. 722-723

 

MORALS CLAUSE

HUAC--H.R. Un-American Activities Committee was charged, among other things, to "stamp out the 'threat' of Communist-shaped movies to the American way of life."

From "don't ask, don't tell' to the 'Waldorf-Astoria' Declaration: the wavering attitude of Hollywood studios. p. 726

Case: Loew's, Inc. v. Cole (9th Cir. 1950)

Writer, Lester Cole, had refused to answer the question: 'are you now or have you ever been a member of the Communist party'?

MGM fired him under the "morals clause" of his contract. p. 729

[Movie: "Goodnight and Good Luck"]

Case: Nader v. ABC Television, Inc. (S.D.N.Y. 2004)

Nader's role in "All My Children" was that of Dimitri Marick (1991-1999). In Aug. 1997 he was arrested for DUI and resisting arrest, but no action was taken by ABC. In 1999 his character was written out of the script. In 2000, ABC decided to reinstate the character and entered into a new contract with pl. In Feb. 2001, pl. was arrested with charges of selling cocaine and resisting arrest. He was suspended while the charges were under investigation, then terminated in Mar. 2001 under the morals clause. p. 346

PUBLISHER OBLIGATIONS: "satisfactory product"

Case: Harcourt Brace Jovanovich v. Goldwater (S.D.N.Y. 1982)

advancement of royalties

$65,000--signing

$75,000--delivery/acceptance of satisfactory manuscript

$60,000--publication

p. 661--obligation to edit: "the publisher has a very considerable discretion as to whether to refuse a manuscript on the ground that it is unsatisfactory to the publisher in form and content."

"It cannot be, however, that the publisher has absolutely unfettered license to act or not act in any way it wishes and to accept or reject a book for any reason whatever. If this were the case, the publisher could simply make a contract and arbitrarily change its mind and that would be an illusory contract. It is no small thing for an author to enter into a contract with a publisher and be locked in with that publisher and prevented from marketing the book elsewhere."

"It is clear, both as a matter of law and from the testimony in this case, that there is an implied obligation in a contract of this kind for the publisher to engage in appropriate editorial work with the author of a book. Both plaintiff's and defendants' witnesses testified to this effect, based on the custom of the trade." p. 747

CONTRACT RIGHTS IN STORY IDEAS

"Treatments" cannot be protected by copyright law, but may be protected by contract law.

See case notes involving the movies, "Philadelphia," and "The Taming of the Shrew," pp. 616-619.

Case:

Art Buchwald v. Paramount Pictures, Corp. (Cal. App. 1990) p. 621

In 1982 Art Buchwald prepared an 8 page screen treatment for "It's a Crude, Crude World." The treatment was registered with the WGA. A shortened version was presented to Paramount and Eddie Murphy was specifically discussed as the star.

In 1983 Paramount changed the title to "King for a Day" and registered it with the MPAA. Paramount contracted with Buchwald to purchase the rights to the concept. It extended the option while looking for a writer. The concept was discussed with Eddie Murphy. During the year "King for a Day" was described as political satire inspired by Art Buchwald.

In 1984 Buchwald's option was extended twice.

In 1985 the project was abandoned.

In 1986 Buchwald contracts with Warner Bros.

In 1987 Paramount starts the development of "Coming to America" (story by Eddie Murphy and Arsenio Hall).

In 1988 Warner cancels plans for "King for a Day" because it is too similar to "Coming to America."

Issue:

The 1983 contract between Buchwald and Paramount contained a provision that if a feature length motion picture was made "based on" Buchwald's concept, he would be paid $265,000 and 19% of the profits.

*access

*similarity

 

CALCULATING ROYALTIES/PROFITS--movies

Buchwald II ("net profit")

"Coming to America" make $350 million in box office receipts, but Paramount claimed that was $18 million short of making a net profit. Buchwald contracted for 19% of net profit and 19% of nothing is nothing. He and his partner, Bernheim, had spent about $1 million litigating the case.

The court noted that the contract was one of "adhesion"--

*"drafted by the party of superior bargaining strength"

*"relegating to the subscribing party only the opportunity to adhere to the contract or reject it"

Issue: Was the contract "unconscionable"?

2-prong analysis:

*"bargaining naughtiness"

-an unfair surprise

-bargaining power so one-sided as to be oppressive

*"shocks the conscience" See p. 770.

Buchwald III--damages

($150,000 to Buchwald and $750,000 to Bernheim)

Paramount appealed, but settled for a little over $1 million.

[Another CA judge ruled that virtually the same net profits formula used by Warner Bros. was not unconscionable.]

 

CALCULATING ROYALTIES/PROFITS--music

Unlike movies and book publishing, in the music industry, the standard contract requires the artist/group to finance the production of recordings.

-production costs for master tape and video

-3% royalty to producer

-packaging costs (artwork)

-'free' promotional records

This leaves the artist with a 10% royalty, but there are club appearances, tours, and mechanical royalties (6.6 cents--latest proposal 9 cents) as well as payments from BMI and ASCAP.