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A Restaurant and Chef Lawyer on the Paula Deen Scandal

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Photo: Paula Deen / Facebook

sidmanpic.JPGIn the wake of the scandal surrounding Paula Deen's deposition transcripts and her subsequent firing from the Food Network, Eater reached out to restaurant/chef attorney Steve Sidman for clarification on a few matters. Sidman represents several big players in the national food scene, including Grant Achatz/Nick Kokonas, Hugh Acheson, Richard Blais, Curtis Duffy, and more.

That said: Sidman does not currently represent, nor has he ever represented, Paula Deen, the media outlets, or the brands involved in this matter. He tells Eater, "Although I have read the complaint, the deposition transcripts, and an enormous amount of the press coverage of the issues, I have not read the various agreements in question – I am responding based on the fact that I represent established chef-restaurateurs, entertainers and other public figures for a living, and so my responses are necessarily generalized on that basis." He adds that "these responses are my own and do not reflect the thoughts or beliefs of any of my clients." All clear? Good, now let's try to make some sense of all this.

If Deen's contract with the Food Network hadn't conveniently been up at the end of the month, it would have been much, much trickier to cut her loose, right?
That's what's so fascinating about all of this: despite what the deluge of schadenfreude would lead you to conclude, she was not actually fired, per se. By all public accounts, including its own statement, the network simply let her go. Her agreement with the company, apparently, was up for renewal at the end of June, and the company decided not to renew. It is highly likely that the agreement was for a series of contract periods, with the company having the option to extend the agreement, and the company decided not to exercise that option. Assuming that was the case, that enabled the network theoretically to avoid having to find other justifications for ending the relationship.

Had that not been the case, you're absolutely right: the possible legal justification for letting her go would have been much more difficult to navigate, because, again, according to publicly available information and accounts of the situation, the decision to let her become a free agent had nothing to do with contractual performance, or the lack thereof. No one was talking about her failure to perform, ratings dips for her shows [Ed.: her ratings were in fact down], declining ad revenues, or anything of the sort. You don't have a 10+ year run without being a total pro at some level. It all had to do with the other matters at the periphery of her professional relationship.

So if they hadn't had that easy out, what kind of options would they have been looking at?
One relatively predictable provision that would have come into play would have been a so-called "morals" clause, which provides for certain remedies (especially termination) in various situations that aren't themselves directly related to contractual performance, but rather to the extra-contractual behavior of the talent. These tend to be found more frequently in the context of product endorsements than in broadcast agreements or publishing deals, but it's not unheard of to find them in media deals of all sorts. Sometimes they're tied into confidentiality, non-disclosure and non-disparagement provisions, but, more often than not, they stand alone.

Look, as it relates specifically to Ms. Deen and her network, this particular matter is not an issue of free speech or civil rights or labor & employment law, let alone high-minded notions of "values" or "purpose" or anything of the sort, although some people want to spin it as such. This is plainly and simply about commerce, and public relations as it relates to commerce. My sense is that, at the end of the day, a team of professionals at the network and its parent company (likely hunkered down in some conference room, with a whole host of publicists and crisis management mavens, bad coffee and stale cronut knockoffs) did the following cost-benefit analysis: do the costs of continued association with Ms. Deen outweigh the benefits of such association? And, at least as far as the network was concerned, they concluded that, yes, they did. And they moved quickly and surgically to mitigate the damage and, again, by quirk of timing, they apparently were able to do so without much (public) legal wrangling.

Do these types of morality clauses tend to list specific actions or are they sort of generic?
The list of covered activities typically is very broad, and very much drafted in favor of the network. In fact, one concept that you almost always find in these sorts of provisions is that they also apply to conduct that merely "tends to" have a certain negative effect. In other words, often times, actual, measurable damage, or actual defamation, is not even necessary in order for these clauses to be invoked.

Obviously, as someone who represents the artist/talent (chef or not), I try to have these provisions as narrowly tailored as possible. Chefs, actors, recording artists, authors, athletes and other creative types come from all walks of life, and, in the end, they're all human and fallible. And things happen sometimes that they wish hadn't. Attorneys who represent creative talent must be acutely aware of that at every turn. However, networks, publishers, labels, sports teams and the like have millions of dollars invested in their brands, and so they demand an available "out" at the slightest hint of trouble or impropriety.

Those are the contrasting interests at play, and, in representing talent, I always try to be cognizant of the danger that, with apologies to The Bard, "the lawyer doth protest too much?." In other words, I try to make the clients aware that, if we push back too hard on the morals clause, it potentially raises red flags with the other side.

What types of activities do morality clauses seek to prevent, generally?
Certain specific (and predictable) behaviors are typically identified: conviction of a crime is the truly obvious one (although sometimes it goes so far as to encompass arrest or even allegation, without conviction). The crimes in question tend to be serious: felonies; crimes involving "moral turpitude"; etc. Other issues that I frequently see involve the talent's being under the influence of (or possessing, or distributing, etc.) controlled substances, illegal drugs, alcohol and the like, both while rendering services or otherwise in the public eye. Of course, we're dealing with creative types here, so there is some play at the margins in terms of what the threshold is that gives rise to a right to terminate.

Where it really gets interesting is when you get into the greyer areas: actions that deal with a brand's reputation that aren't in-and-of-themselves crimes or potentially criminal activities (such as might be revealed in leaked deposition testimony). The contractual provision in question generally involves activities that bring (or tend to bring) the brand into "public disrepute or contempt," or scandal or ridicule or the like, or which "shock or offend" or "disparage" or "reflect unfavorably." That is a much more nuanced analysis, at best: who gets to make that call? By whose standards? Those of the nation? A certain desired customer base or constituency? Who determines that? [The recent, most paradigmatic example is the Tiger Woods situation: moral and ethical issues aside, he broke no law, but that did not stop Gillette and, I believe, Tag Heuer cutting ties with him.]

At the end of the day, of course, the company will say it's their call: they're footing the bill; they're engaging the talent; and, accordingly, they have the right to use their "good faith business judgment" to make those determinations. That's where the fight is at – whether the activities or statements or associations of the talent shock, offend, disparage, etc., to the level at which termination is merited and legally justifiable. Then, once the termination right is invoked, it becomes an issue of what, if anything, the talent is entitled to. Nothing? Payment only for services rendered to-date? Partial payment? Payment through the end of the then-current contract period? And what about contingent compensation such as royalties? That's where the fun really starts. However, it appears that the network didn't have to engage in this level of analysis. It simply let the contract run its course.

What sort of legal recourse might either the Food Network or any of her endorsement deals pursue? Is there a chance they might, I don't know, sue her for loss of profits?
I highly doubt any company associated with Ms. Deen would pursue legal recourse (if at all) beyond what they're entitled to under contract. Again, not having read any of her agreements, it's almost impossible to say with certainty what those remedies are. Having not been in the room, it's impossible to say what was considered and rejected. However, it's already a PR nightmare for everyone concerned on both sides of this deal and, while there are many out there who support the decision not to move forward, there are many who do not.

Going after Ms. Deen might be viewed as unnecessarily vindictive, if not completely frivolous, both as a matter of law and in the court of public opinion. However, my sense is that Ms. Deen, having been as wildly successful as she has been and for as long as she has, had the benefit of highly skilled legal and business counsel in crafting these agreements, so I'd find it hard to believe that her attorneys allowed her to agree to any sort of performance or profit guarantee. More to the point, other than the "morals clause" issues previously discussed, no brand is alleging that she has been anything other than a model endorser. By all accounts, they have made a ton of money off of her, and she off of them.

So that said, to what extent could a brand continue making money off her after ties are cut?
To my knowledge, there's really nothing stopping any of the brands with which she is associated from continuing to commercial exploit her products and services. Assuming there is no provision prohibiting them from doing so (such as a reversion of ownership rights or an outright and immediate termination of a license), the network can continue to broadcast the shows, subject only to their obligations to continue to make any payments that might become due.

The same is true for her book publishers. The same is more-or-less true for the companies that manufacture and distribute her merchandise – the difference there is that merch companies are frequently required to stop selling product within a certain time after the contract ends (called a sell-off period); they can push existing inventory out the door during the sell-off period, and, once that's over, the inventory is either destroyed or given or sold to the talent at some reduced rate.

Is there a chance she could get some kind of severance out of this?
"Severance" payments take many forms, although, in this instance, if the network is simply letting the agreement expire of its own terms, it's highly unlikely that she would be receiving any. That having been said, is it possible that she could receive a "thanks for the memories" payment (that might possibly be in the form of consideration paid for her continued silence and a waiver of any claims she might have against the network)? Sure, it's possible. However, again, assuming public accounts of the situation are essentially accurate, she would not have a claim against the network for wrongful termination or breach based on the end of the relationship if the term simply was allowed to expire.

Additionally, is it possible that some compromise was reached that would allow certain items of merchandise to continue to be sold online via the network's web portal, and for her videos to remain there, too? Yes. It will be very, very interesting to see how that aspect of it plays out because, as of today, she's still up there, as are all her products, although there are reports from eater.com itself that her shows have been pulled off the air, at least for the foreseeable future. Plus, there are other contractual relationships in play as well. They're waiting to see how this week goes, as are we all.

· All PaulaDeenGate Coverage on Eater [-E-]
· All Paula Deen Coverage on Eater [-E-]
Steve Sidman. [Photo: Sidman Law]

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