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Business News/ Opinion / Columns/  Does Scarlett Johansson have a case against Walt Disney Co?
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Does Scarlett Johansson have a case against Walt Disney Co?

She has a point about lost earnings while the studio points at covid

Johansson claims that Disney refused to discuss a revised deal post-covidPremium
Johansson claims that Disney refused to discuss a revised deal post-covid

In the court of public opinion, Disney may well lose its battle with Scarlett Johansson. But the legal question has implications for business well beyond the borders of the Marvel Cinematic Universe and the actor who has for more than a decade portrayed the character Black Widow. Johansson claims that the Walt Disney Company breached her contract last month when it released the eponymous film simultaneously in movie theatres and on the Disney+ streaming service. Since her compensation depends in large part on how well the film does on the big screen, Johansson argues, its home availability reduces her potential earnings. The lawsuit has fans in a whirl, but the issue at its core arises constantly. Compensation is frequently contingent on a future event, often called a ‘trigger’: hitting a sales target, closing a deal, etc. Is the party making the payment obliged to allow the trigger event to take place?

Consider a real-estate associate who’s promised a bonus if she hits $2 million in annual sales. When she reaches $1.5 million, can the employer reassign her to a desk job to avoid paying? Probably not. Most courts would say that the company is acting in bad faith if that’s its only motivation. Now consider a professional football player who will get a bonus of $2 million if he is on his team’s roster when the National Football League’s year starts, which is typically in March. In February, the team drops the player. Should the player sue (or file a grievance), he’ll lose.

What’s the difference between the cases? The court would say that the associate and the realtor signed the contract on a shared assumption that she would have the opportunity to try earning her bonus. The bad faith comes in violating that assumption so as not to pay. In the NFL player’s case, both parties knew that professional teams regularly drop players to avoid paying ‘roster bonuses’, a practice that the collective bargaining agreement seems to take as a given. Thus no underlying assumption is violated.

Critics of the ‘good faith’ standard consider it too amorphous, giving judges near-unfettered discretion to rewrite agreements, but it is enforced nevertheless, and film studios have more than once been successfully sued for breaching it.

Like the examples of the professional athlete and the sales associate, Johansson’s case will turn on a determination of exactly what background assumption the parties shared. In her complaint, she alleges that the parties understood that the contractual promise that Black Widow would enjoy “wide theatrical release" meant that the film “would remain exclusively in movie theatres for a period of between approximately 90 and 120 days." She asserts that this was the industry standard and Marvel’s own practice. By releasing it on Disney+ at the same time as its theatre debut, according to this argument, the studio violated this shared assumption. Good faith, according to the actor, would have meant negotiating a settlement before shifting Black Widow to a simultaneous theatrical and online release. She points out that Warner Bros, prior to moving all 2021 films to joint release, shelled out a reported $200 million in deals with various stars whose compensation was linked to theatre performance. Disney, she says, refused to discuss the matter.

Still, there’s a peculiarity to Johansson’s claim. She’s not suing Marvel. She’s suing Disney, which, she argues, committed a tort by inducing its subsidiary to act in bad faith. Others have noted how unusual it is to claim that a company induced a breach by its own subsidiary—the two are usually treated as a single entity—but Hollywood battles have their own curious byways, and when the dust settles everybody has to work together. To prevail under California law, Johansson must show that Disney intended to induce Marvel to act in bad faith. The complaint tries to meet this requirement in part by arguing that the compensation of top Disney executives turns on the growth of Disney+, putting them at cross-purposes with her.

A statement from Disney calls the lawsuit “especially sad and distressing in its callous disregard for the horrific and prolonged global effects of the covid-19 pandemic." If this approach presages the studio’s legal defence, we can expect Disney to argue that its motive for the joint release of Black Widow was benign: to avoid inducing large numbers of theatre-goers to risk infection rather than staying safely at home. Not a bad argument, either—although legal scholars might reply that the court should still decide which party to the contract should bear the pandemic risk.

Both sides make good points. Want a prediction of the outcome? Here’s one: By the dawn of autumn in the September twilight, the case will have been settled. In an industry so sensitive to image, protracted legal wrangling helps nobody. And a year hence, whether theatres are booming once more or largely empty, nobody will remember that this dispute.

Stephen L. Carter is a Bloomberg Opinion columnist and a professor of law at Yale University.

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Published: 05 Aug 2021, 10:22 PM IST
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