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The rollout of a big lawsuit in Hollywood doesn’t always speak to its chances of success, but then again, this is a town that obsesses over public image, and there are absolutely times when something can be read by how litigation is groomed and then marketed. The bold, sure-to-be-influential, but perhaps legally dubious case filed by Scarlett Johansson on Thursday belongs in this category. The first thing that anyone should understand about her suit alleging she was short-changed by the Black Widow release is that the actress (or at least her reps) wanted this dispute to go public in a big way. A headline in The Wall Street Journal timed to the court filing was no accident.
Why is the legal case potentially weak? That’s certainly not the assessment that many in the talent community wish to hear. Actors, directors and writers have very real concerns about being fairly compensated in an industry whose business model is shifting in real time plus legitimate gripes that these huge conglomerates are making moves to benefit their digital platforms, contractual obligations to Hollywood’s top creatives be damned. Johansson’s suit may indeed be forerunner for more litigation from others who will be watching this case closely. That said, her suit has some surprising vulnerabilities.
The explanation why Disney should be the betting favorite against Johansson begins with the very fact that it’s not every day that an A-list star sues a huge studio. That’s not quite the same as saying that these headline-makers aren’t bringing legal claims. In fact, they are. All the time. We just don’t know about it. Simply put, these disputes most often occur behind the closed doors of arbitration.
Undoubtedly, Johansson has an arbitration clause in her deal with Marvel. For all of Thursday’s headlines (true as they technically may be) that Johansson is alleging that her contract to star in Black Widow was breached when Disney decided to put the superhero movie on Disney+ the same day that it premiered in theaters, she’s not formally asserting breach of contract as a cause of action in her lawsuit. To do so would almost certainly mean a straight ticket to arbitration. Instead, Johansson is making the sideways legal claim that Disney, as parent company, caused Marvel, its subsidiary, to breach contractual obligations.
Why does it matter that Johansson is pursuing this fancy tortious interference claim instead of a straight contract breach, not to mention fraud claims, too, for leading her to believe she’d achieve box office bonuses by starring in the movie? Well, for starters, it shows the actress indeed senses advantage to putting and keeping this case in open court.
Unfortunately for Johansson, it also highlights how there’s not much guarantee it will stick there. Disney’s first move in this case is very likely to be a motion to compel arbitration on the argument that gamesmanship can’t evade an agreement to privately litigate this type of dispute. (John Berlinski, the Kasowitz partner representing Johansson, has to understand the odds. Before his high-profile win in the Bones case, he used a similar tactic to avoid arbitration in that dispute over Hulu streaming and failed. Luckily, he ran into an arbitrator who saw “reprehensible fraud” anyway.)
Even if this dispute avoids going dark in arbitration and gets judged on the merits, Disney may still hold some winning cards.
In her complaint (read here), Johansson bases her theory of a breached deal on a contract that states “if Producer in its sole discretion determines to release the Picture, then such release shall be a wide theatrical release of the Picture (i.e., no less than 1,500 screens).”
According to the suit filed by the actress, “At the time the Agreement was entered, it was well understood by the parties and Disney that a ‘theatrical release’ referred to an exclusive release in theatres for an extended period of time that was roughly 90-120 days. With the exception of certain less-valuable, direct-to-video releases, it has long been custom and practice in the film industry for feature films to have at least a 90-day exclusive theatrical release before they are released on home video.”
The problem is that the contract doesn’t explicitly say “exclusive,” and as far as industry custom and what was understood by the parties, that was before a pandemic disrupted pretty much everything.
Given a virus that was causing movie theaters to close and moviegoers to stay away from the ones that were open, Disney can certainly defend itself by saying the decision to stream was warranted. In contract law, there’s also a concept called “frustration of purpose” where contractual duty is excused upon an unforeseen event (hello, COVID-19) that impedes performance.
And Disney’s defense won’t end there. Expect the company to attempt to justify its actions.
In her complaint, Johansson suggests that Disney decided to release this film when “it knew the theatrical market was ‘weak,’ rather than waiting a few months for that market to recover.”
But even if it’s true that Disney wanted to use Black Widow to prop up Disney+, remember that this was a movie that was originally set to be released in May 2020. Months? Disney already had delayed the release an entire year. And with the delta variant of COVID-19 causing concern throughout the world, there’s not much guarantee of an improved theatrical market in a few months. Also, there are a lot of delayed blockbusters being crowded for release later this year. Furthermore, look at this specific film. It’s part of the Marvel Cinematic Universe, and while fans understood it to be a prequel, it still makes sense that Disney wouldn’t want to wait too long after Avengers: Endgame to get it out. Not when the MCU is moving to its next stage and not when Black Widow introduces key new characters to the ongoing saga like Yelena Belova (Florence Pugh).
In other words, Johansson can point to industry custom, but this moment in Hollywood’s history is truly unprecedented. Does that excuse the $50 million in box office bonuses she expected? We’ll see, but surely Johansson is not the only one facing disappointing financial returns during this pandemic, and Disney should and does get some discretion on the best way to leverage its content.
So with that context, Johansson’s camp appears to have decided their best strategy was to go public. Tell Wall Street about troubles lurking on Disney’s streaming front. Present the possibility that Disney’s financials could get examined in open court. In short, use that leverage to wring a settlement.
It’s very possible that Disney will make a deal, if merely to keep its top talent happy. One also has to presume the two sides have already engaged in negotiations and couldn’t come to a mutually satisfactory number. That could change (with the terms of resolution kept private), but for our money, while this lawsuit may have made a splashy day-and-date premiere, it’s also the kind of case that could easily bomb.
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