Why The ‘Moral Clause’ Should Make A Comeback in Entertainment Agreements
In a new teaser released this month by Netflix for the final season of House of Cards, audience members’ speculations have been confirmed regarding the fate of Frank Underwood, the character played by actor Kevin Spacey. Our question is: are you surprised that he’s been killed off?
As more accusations of sexual assault and abuse are being brought against Hollywood actors, it is getting more and more difficult to separate the actor from the characters they play. House of Cards for example, a spectacular show highlighting the inner workings of modern day corruption in politics, has become almost impossible to watch, in our opinion, without thinking of the sexual assault allegations, including one involving a minor, against Spacey. While Spacey was initially scheduled to return for the show’s sixth and final season, Netflix suspended the drama when multiple accusations of sexual misconduct came out against the actor before ultimately firing him and resuming production. Spacey claimed Netflix could not legally fire him from the show because his contract did not contain a morality clause.
A moral clause is a contractual provision that allows an employer (for example, the studio or production company) to terminate its relationship with an individual (e.g. an actor) if their behaviour breaches the expectations outlined in the contract.
While the enforceability of these clauses is quite complex, particularly when interpreting what constitutes irreprehensible and objectionable behaviour or conduct that may negatively impact production, not inserting express moral clauses could also be detrimental.
In the case of both Kevin Spacey, and fellow Netflix star Danny Masterson, who was let go from the show The Ranch after allegations of rape were brought forward, an implied moral clause was apparently cited by Netflix to justify termination. An implied moral clause is a principle that has been established under common law in both New York and California, that prohibits an individual from behaviour that is detrimental to the company and their image. Thus, in both Spacey’s and Masterson’s cases, an obligation of good conduct was considered implied and was recognized as grounds to terminate their agreements. Even though both actors were let go, Netflix had to fulfill their obligation under the contract and paid both actors in full. Had a moral clause actually been included in their contracts, Netflix may have been able to unilaterally terminate the agreements without pay and even taken punitive action against the actors.
With the numerous accusations of sexual misconduct in Hollywood of late, it may be worth production’s time to consider inserting a ‘moral clause’ in their entertainment agreements once again. Moral clauses were popular during the time of old Hollywood. In 1920, comedian Roscoe Arbuckle signed a multi-million contract with Paramount Pictures. One year later, actress Virgina Rappe fell ill and died after attending a party hosted by the comedian. Arbuckle was arrested and charged with Ms. Rappe’s rape and murder. Although Arbuckle was acquitted of all charges, his reputation was destroyed by the accusations, his career was destroyed and Paramount lost millions of dollars. This case is said to have motivated Universal Studios to be the first movie studio to start inserting moral clauses into all their contracts with talent. Thereafter, movie studios used moral clauses heavily, particularly in the 1940s and 1950s. These clauses in essence policed an entertainer’s private life, ensuring that they were behaving in a way that was in line with the studio’s public image. However, the Director’s Guild of America and the Writer’s Gild of America have both previously banned the use of morality clauses.
Moral clauses can protect production companies by prohibiting employees from engaging in misconduct or immoral acts. This can result in a deduction in pay or complete termination and puts the power of the situation back into the hands of the production company.
In an entertainment contract, a moral clause may look like the following example:
The Actor shall not commit any act or do anything which might tend to bring Actor into public disrepute, contempt, scandal, or ridicule, or which might tend to reflect unfavourably on the Network, any sponsor of a program, any such sponsor’s advertising agency, any stations broadcasting or scheduled to broadcast a program, or any licensee of the Network, or to injure the success of any use of the Series or any program.
–Professor Eric Goldman, Contract Exercises
In the time of the #MeToo movement, with Hollywood being forced to be accountable for the conduct of their employees, the idea of inserting morality clauses into an entertainment agreement is inherently appealing as a way to deter misconduct and to protect their investments. They should not have to maintain association with talent charged with sexual harassment for fear of invoking breach of contract due to wrongful termination, which could result in paying damages.
The promotion of moral rights clauses, perhaps even mutual ones between production and talent, is a step in the right direction to overcoming this challenge.
For an interesting read on moral clauses making a comeback in Hollywood negotiations as ‘sex abuse insurance’ in light of #MeToo, check out this article in the Hollywood Reporter.