Charlie Sheen's Contract: Was There Actually a Morals Clause? (ANALYSIS)

7 REP Charlie Sheen
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The actor began rehab in late January.

Warner Bros. Television has answered Charlie Sheen's legal threats with a letter delivered to the actor's attorney, Marty Singer, that provides the most public detail to date as to what is actually in Sheen's contract with the studio.

For the past month, since Sheen has engaged his media blitz, there's been numerous reports about a lack of morals clause in Sheen's contract. However, WBTV certainly seems to be making the case that Sheen's outrageous conduct constitutes a breach of the deal. 

In its letter, WBTV points to this contractual clause:

"If Producer in its reasonable but good faith opinion believes Performer has committed an act which constitutes a felony offense involving moral turpitude under federal, state or local laws, or is indicted or convicted of any such offense, Producer shall have the right to delete the billing provided for in this Agreement from any broadcast or other uses which are threafter made of the episode(s) in which Performer appears. In addition, to the extent such event interferes with Performer's ability to fully and completely render all material services required hereunder or Producer's ability to fully exploit the Series, Producer shall have the right to treat such act as a default under the applicable provisions hereof." (boldface ours)

Is the reference to "moral turpitude" a killer for Sheen?

Legal experts don't think it's that simple.

Barry Peek, an entertainment labor attorney at Meyer, Suozzi, English & Klein, says this isn't the standard "morals clause" language in contracts.

Typically, performers agree in contracts to conduct themselves in a way so as not to bring negative press or disparagement to a show. In contrast, says Peek, this one is very specific. "They are talking about a felony," he says. "It's going to be a matter of fact whether they can prove a reasonable good faith belief he actually committed a felony (such as drug distribution), and Warner's problem is they continued to negotiate the contract and employ him despite the troubles. It's going to be a stretch."

That said, WBTV points to other elements of Sheen's contract that may make more winning arguments in court. Specifically, the television studio argues that Section 14 of Sheen's contract defines "Force Majeure" default provisions very broadly. According to the contract, WBTV is allowed to declare a default if:

"Producer is prevented from or hampered or interrupted or interfered with in preparing or producing the Series or any Program thereof or in utilizing Performer's services reason of any other cause or causes of any similar nature or beyond our control, or by reason of the death, illness, disfigurement, Default or Incapacity of a member of the continuing principal cast of the series..." (boldface ours again)

Similar to its statement at the time that "Two and a Half Men" was suspended, WBTV stresses Sheen's incapacitated "condition" and says that "facts establish a serious material change in Mr. Sheen's attributes that rendered him unwilling or unable to perform his essential duties."

Peek believes that WBTV has a better shot at arguing this line of reasoning, but will still have to establish in court (or an arbitration) that the actor's condition had degraded. To do this, WBTV could introduce outtakes that show Sheen missing his marks, instances when the actor showed up late to work, or point to early statements about the need for rehab. The argument might still be countered by the notion that WBTV had entered into its contract with eyes wide open about Sheen's troubles, but perhaps the studio will attempt to show it had a reasonable expectation that Sheen would enter himself into treatment and get needed help.

Finally, WBTV presents an argument we previously hinted at in our legal analysis of the dueling claims. The studio can argue that he breached his job responsibilities by bringing negative attention to the show in his media interviews. Specifically, the contract states:

"Any publicity, paid advertisements, press notices and other information with respect to the...Series shall be under Producer's sole control (exclusing normal, incidental, non-derogatory publicity relating solely to Performer's involvement with the...Series...). Therefore Performer shall not issue nor consent to, nor authorize any person or entity to release any such information without Producer's express prior written approval."

This clause is standard boilerplate in an entertainer's contract, but could eventually become important as a judge or arbitrator weighs Sheen's behavior of the last month. WBTV also indicates in its letter that Sheen's conduct has caused the studio "substantial damages," with the implication being that the actor will be countersued for lost profits if he decides to pursue his intention to sue. As first reported here, Warner Bros. has already hired big lawyers in anticipation of a major legal showdown, and Chuck Lorre has brought his own team on board