When money and comedy mix, sometimes things can get way too funny. Like at ABC, where even though the station’s comedy Family Tools is still months away from its debut, one of its stars Leah Remini is already locked in a messy squabble with her handlers over her fat pay check from the show. And they have wasted no time in taking the fight to the courtroom in what is shaping up as a classic fight over ‘commissions’ between an agency and its talent.
Here’s what happened: In November 2011, Leah Remini, former star of the CBS sitcom King of Queens, signed on with the talent management company Collective to manage her career. One month earlier, in October 2011, Remini did enter into a talent ‘holding deal’ with ABC, which allowed the station to put her on a show at the network. Later on, the talent ‘holding deal’ led to a new gig for Remini as one of the stars of ABC’s upcoming comedy Family Tools, which premieres in May 2013. However, in October 2012, Remini fires her managers, claiming they didn’t do a good job and refuses to pay them any commissions arising from her work on Family Tools.
Following Remini’s action, the agency sued her in a Los Angeles court for breach of contract, quantum meruit and accounting. (So far, about ten episodes of the show have been shot ahead of its premiere. Remini reportedly gets paid about $100,000 per episode during the show’s first season with a four per cent pay raise for every new season in the future.)
For now, both sides have dug in their heels and have raised the decibel level of the war of words between them. Remini’s people have dismissed the lawsuit as ‘ridiculous’, claiming that she owes nothing to the agency and that in representing Remini the agency truly sucked at their job in various ways, including passing her through three different managers in just one year and giving her an agency manager who slept through important business meetings. For its part, Collective (the agency) claims that Remini’s ‘pattern and practice of failing to pay representatives speaks volumes’ and vows to get paid for its work. Collective explained that when it first came into the picture, it had agreed not to charge any ‘commissions’ on Remini’s fee under the ‘holding deal’ but that it would get paid a commission for any series that arose out of the ‘holding deal,’ such as Family Tools.
In any event, aside from all the flying brickbats and tough talk, this case is still just a breach of contract case. And like any other contract case, when the chips are down, the key question will be whether there was a valid contract and, if so, whether it was breached. And of course, whether the contract was breached would depend on what the terms of the contract were.
To explain a contract in layman’s terms, one can simply say that it is an agreement between two parties to do certain things or to refrain from doing certain things, with the clear understanding that if any of the parties fails to act or behave as agreed, the other party could enforce the agreement in court. And in order to have the ability to go court to enforce the promise, the agreement itself needs to be supported by something of ‘value’ either given up by one party or received by the other party. This something is called ‘consideration’. What this means is that not every promise made by one person to another gives rise to a contract at law. For instance, if I promise my buddy that I’ll give him a ride to Times Square for the ball drop on New Year’s Eve and I fail to show up, he can’t sue me for breach of contract because all I did was promise to do him a favor. He didn’t give me anything of ‘value’ to support that promise.
By the way, since our situation in this case also involves a talent ‘holding deal,’ perhaps we could use it to further explain the meaning of a valid contract. Usually, when an artist or entertainer signs a “holding deal” with a TV station, it’s really just a way for the station or studio to keep the artist on side and outside the reach of its rivals while the station figures out how or in what capacity it wants to put the artist to work. The artist is usually paid a ‘fee’ during the time period that the ‘holding deal’ is in place. In exchange for the fee, the talent in turn promises not to work for any of the station’s rivals during that period. In this scenario, it is obvious that the parties to the agreement are either ‘giving up’ or ‘receiving’ something of ‘value’ to support the promises they’ve made to each other.)
In our case here, we are dealing with an oral agreement between Remini and her managers. But this by itself is no problem because a contract can be in oral or written form, except in those specific situations where the law requires that contracts be in writing for them to be enforceable. However, the fact that this particular contract is merely an oral contract carries its own set of problems, especially since the matter is now in court and, even worse, the parties now disagree as to what the terms of the agreement were. Between all the maneuvering, hair splitting and clever talk involved in a court room trial, it can be an uphill battle to prove up the terms of an oral contract. In the real world, even when contracts are written down in a formal document (or instrument), lawyers can still disagree on the meaning of the words written into the agreement; so, one can only imagine how difficult things can get when nothing is written down at all and the parties are left with lawyers wrangling up a storm about what was promised during negotiations and what was not included. Tough stuff!
Courts have various techniques they use when it comes to finding out what the terms of an oral agreement are. And the courts can use whatever combination of these techniques it chooses in arriving at the answer. For instance, the court could look at how other parties in the industry have handled the payment of commissions in similar situations where a manager was hired during the time between the signing of a ‘holding deal’ and an actual contract, such as the one Remini received for Family Tools. Plus, the court could also look at the way the parties have conducted themselves during the contract to see if anything they have done so far could give any clues as to what they may have agreed to do at the time they entered into the oral agreement.
If, for instance, the court finds that there was in fact an agreement to pay commissions to Collective for its work, as the agency claims, then it won’t help Remini’s side too much to say that Collective employed folks who were sleeping on the job. That may be a good reason to terminate the contract, but the ‘obligation to pay’ on the contract is a whole different story. And this case really seems to be all about whether Remini has an obligation to pay at all, aside from whether the agency did a good job.
This brings us to the talk about quantum meruit, which is one of the claims that Collective is making against Remini. In a breach of contract case, the injured party usually makes a claim for damages against the party who breached the contract. But a quantum meruit case is a different animal altogether. It often comes up in situations where even though a regular contract does not exist between the parties, yet things have been done that make it only ‘fair’ that the party who did those things should be compensated. Thus, unlike in breach of contract situations where claims for damages are based on law, claims in quantum meruit are based instead on notions of equity and fair play.
What usually happens is that the person who performed services for the other person is awarded the ‘reasonable value’ of his or her services. And because there is no contract in existence, it is necessary to show that when the services were being performed, the person who received the benefit of the services knew that the services were being rendered with the expectation that the services would be paid for and were not being rendered for free. The rule here is that “equity would not assist a volunteer.” So, in plain language, the whole purpose of a quantum meruit claim is to prevent the ‘unjust enrichment’ of one party at the expense of the other party.
So, in the Remini case where there is actually a contract in existence, as both sides admit, a claim for quantum meruit does not exactly seem like the right fit. As it happens, this is mostly a case at law rather than at equity. Yet, considering the difficulties and uncertainties of proving up the terms of an oral agreement, if the court should end up deciding that the parties did not in fact establish a valid contract, then things may well end up on the quantum meruit route, considering that Collective did perform services under the working relationship that existed between both sides, prior to Remni’s firing of the agency.
In addition, Collective also has a claim for ‘accounting’ against Remini. Well, it is fair to simply note that ‘accounting’ claims are commonplace in situations like this one where money is being claimed in a lawsuit and only one side has access to all the records concerning the money. If Collective wins, the court will probably order an ‘accounting’ since Remini’s side has all the information here and she reportedly has not paid any commissions to Collective for any of the ten episodes she has already worked on.
So, what’s the big lesson from all this? And who wins? Well, long story short, an oral contract is simply not a good idea, especially in a situation where the parties intend or hope to collaborate on a long term basis, as with most talent management situations. Going to court on an oral agreement in any situation can be like walking through a minefield. Translation: Calling the odds of winning or losing a case such as this is a tough one and so much can happen as the case proceeds. The better option in situations like this one is to have a written agreement in a formal document.
And when doing so, it is always smarter to state the terms of the agreement in as much detail as possible in order to eliminate unnecessary disagreements. (By the way, most written agreements would probably have been able to avoid the big problems we have in Remini’s case by simply stating clearly when commissions would become due as between the ‘holding deal’ and Remini’s work on Family Tools.)
In the end, it has to be said that a well negotiated written agreement between folks who already are familiar with each other gives both parties a damn good opportunity to control the expectations from their working relationship. And this is the one big advantage of contracts in general, when compared to other areas of the law like torts, where total strangers could simply barge into someone’s life with some wrongful act and force that person to sue them. But oral contracts are a different story altogether and it is hard to see what, if any, advantages they bring to either side.
Please stay tuned for my upcoming book “Comedy Under Attack…”. Coming out soon!