Contract – Professional Athlete – Endorsement Deal – Morals Clause – Controversial Tweets – Osama bin Laden’s Death – New York Law

Mendenhall v. Hanesbrands, Inc. (Lawyers Weekly No. 12-03-0460, 17 pp.) (James A. Beaty, Ch.J.) 1:11-cv-0570; M.D.N.C.

Holding: While plaintiff admits there was some negative reaction to his tweets about Osama bin Laden’s death, he also allegedly received positive responses. A dispute of fact exists between the parties as to the nature of the public’s response to plaintiff’s May 2, 2011 tweets. Furthermore, based on defendant’s varying accounts of its reason for terminating the parties’ endorsement deal, plaintiff has stated a plausible claim that defendant breached the contract when defendant purported to terminate the contract pursuant to its morals clause.

Defendant’s motion for judgment on the pleadings is denied.

Facts

Plaintiff agreed to promote defendant’s products pursuant to a talent agreement. The agreement included a morals clause: “If Mendenhall commits or is arrested for any crime or becomes involved in any situation or occurrence (collectively, the “Act”) tending to bring Mendenhall into public disrepute, contempt, scandal, or ridicule, or tending to shock, insult or offend the majority of the consuming public or any protected class or group thereof, then we shall have the right to immediately terminate this Agreement. [Defendant’s] decision on all matters arising under this Section 17(a) shall be conclusive.”

In January 2011, plaintiff began using Twitter to express controversial (and non-controversial) opinions.

After President Obama announced Osama bin Laden’s death, plaintiff’s May 2, 2011 tweets, among other things, castigated people for celebrating death and for judging others.

On May 4, 2011, plaintiff issued an explanatory letter which included an apology.

On May 6, 2011, defendant announced its intent to terminate the talent agreement.

Analysis

The talent agreement provides that it is to be governed by New York law.

Plaintiff alleges that he performed under the talent agreement and remained available to perform even after defendant purported to terminate the agreement.

Plaintiff contends that defendant breached the agreement and the covenant of good faith and fair dealing by terminating the agreement.

The complaint alleges that, in a May 5, 2011 letter, defendant purported to terminate the agreement pursuant to the morals clause, while also issuing a public statement to ESPN on May 6, 2011, which indicated that defendant ended its business relationship with plaintiff for another reason: because defendant strongly disagreed with plaintiff’s comments. Mere disagreement with plaintiff’s comments would not have triggered defendant’s termination rights under the morals clause. If the termination was based on mere disagreement with plaintiff’s statements, defendant may have breached the covenant of good faith and fair dealing.

Defendant contends, “Plaintiff’s statements caused an almost instantaneous public uproar,” and defendant attached to its answer news reports relating to plaintiff’s May 2, 2011 tweets. Since plaintiff challenges the authenticity of the news reports, they are not properly before the court for purposes of a motion for judgment on the pleadings.

Although the complaint alleges that, in response to “some negative reaction,” plaintiff issued an explanation of his May 2, 2011 tweets, the complaint makes no blanket admission as to the nature of the public’s response to plaintiff’s May 2, 2011 tweets as being consistent with the characterization that defendant suggests is covered by the morals clause. In fact, plaintiff alleged that he received supportive tweets from members of the public in response to his May 2, 2011 comments.

A dispute of fact exists between the parties as to the nature of the public’s response to plaintiff’s May 2, 2011 tweets. Furthermore, plaintiff has stated at the very least a plausible claim for breach of the implied covenant of good faith and fair dealing.

Motion denied.