Standoff at the Golden Globes: The Big Rumble in the Backroom

On January 16, celebrity British comedian Ricky Gervais will host the 68th Annual Golden Globes ceremony with all its usual fanfare and more. Only this time there are such dark clouds gathering on the horizon that the awards ceremony of January 2011 may well be the last time that we’ll see the Globes the way we have known the event for almost two decades now.

Here’s what happened: On November 17, 2010, the Hollywood Foreign Press Association (HFPA), owner and creator of the Globes, sued the show’s producer Dick Clark Productions (DCP) and its parent company Red Zone Capital (RZC) for breach of contract and trademark infringement and sought a court order (injunction) that would stop DCP and Red Zone from acting as though they are still connected with the Globes after January 2011. (One month earlier, in October, DCP, without consulting HFPA, had gone ahead to sign an extension of the broadcast rights to the show with NBC for the period after January 2011 until 2018. As it happens, the agreement between the owner (HFPA) and the producer of the Globes (DCP) expires after this month’s show and they have not signed a new agreement to continue their collaboration. ) DCP claims it acted correctly under its contract and that the owner’s lawsuit has no merit.

Now the big question: Can DCP enter a new agreement with NBC without first getting the OK from HFPA? Well, it depends!

First, under contract law, DCP can make a deal with outsiders like NBC on behalf of HFPA if DCP can be regarded as the “agent” of HFPA. In the real world, their contract does not need to name DCP as HFPA’s agent in order for DCP to be able to act under what is known as “apparent authority” when it deals with outsiders like NBC. The real question here would be whether there were things done over the course of the collaboration between HFPA and DCP that could lead outsiders like NBC to “reasonably” suppose that DCP could act for HFPA to grant extensions of broadcast rights to NBC without NBC actually ever dealing with HFPA.

The situation of apparent authority is even a bigger deal if the contract between HFPA and DCP is silent on how extensions of broadcast rights under the agreement may be made. Of course, the flip side is that if NBC knew as a fact that DCP did not have such authority, then NBC would be on its own. In another context, that would be kind of like someone knowingly buying a stolen car. To be sure, NBC itself had a huge incentive to jump at an extension deal: Last year’s broadcast fetched NBC its largest audience in that time slot in six years for a non-sport show.

However, if it turns out that DCP had no grounds upon which it could act as HFPA’s agent in granting the extension to NBC, HFPA may have a whole bunch of options as it plays offense. The first obvious option is that HFPA could act exactly the way it has just done in suing DCP for breach of contract and to get a court order to stop DCP in its tracks and perhaps banish it from the Globes.
Plus, if they can prove, as their lawsuit claims, that DCP acted in “bad faith” (meaning in this case an improper motive to “steal” the show from the owners), then it can win a lot of money in what is called “punitive damages.”

And as long as HFPA is on war footing, it could also choose to be aggressive and set its sights on other unexpected targets, like NBC. For example, in many states, including California, it could go after both NBC and DCP together in a lawsuit seeking damages against them for civil conspiracy to induce a breach of contract. It seems easier to talk about conspiracy here considering that NBC had been dealing with both parties for many years.

With regard to HFPA’s allegation that DCP scuttled its negotiations with Facebook, the odds of making out an “interference with contract” case with this one are pretty long since HFPA did not yet a valid contract with Facebook at the time of the alleged intrusions by DCP.

In the end, as with all litigations, only the Court will resolve the issue one way or the other between the “owner” and the “producer” of the Globes. But the best chance of the Golden Globes returning after 2011 as we know it, with its light mood and comic quips intact, would be for both parties (who have worked well together for several years) to reach an amicable out-of-court settlement among themselves at close quarters. Otherwise, the cold hands of a legal judgment would force a settlement upon them as though they were a bunch of troublesome strangers needing to be kept miles apart from one another. That would leave us with a different Golden Globes if and when it returns after that.

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