Can Scarlett Johansson Win Against Disney?

in the world. She's suing Walt Disney, claiming it broke its promise when it released her latest film, Black Widow, simultaneously in movie theaters and on the Disney Plus streaming service. Joining me is Bobby Sports, a partner at Quinn Emmanuel. Did this lawsuit come as a surprise to those in the entertainment industry and No. Yes in the sense that it is surprising that Disney would have engaged in this conduct and not have resolved it the way other companies

have to avoid litigation, most notably Warner Brothers. No, in the sense that everybody who has been following the migration to streaming has predicted that sooner or later, a major talent, and Scarlett Johansen is certainly a major talent, would get mistreated and feel compelled to sue tell Us about her allegations. Well,

it's two things. First, the basic allegation is she had a contract with Marvel, and Marvel promised to compensate her both with a cash payment upfront when she made the movie and additional payments based on the box office performance of the movie, so there'd be fixed payments at each

level of specified box office results. And what happened is everyone who made that contract did it on the basis that there would be a major theatrical release, and therefore, as the picture performed well in theaters, she'd earned more money. But Disney frustrated that by making a picture available at the same time it was in theaters on its Disney Plus service, and it gave people an incentive to not go to theaters and watch it at home. And so

what she's saying is, look, you breached the contract. You promised me a big theatrical release from which I could earn additional money, and you ruined it. And the proof of that is the survey results and other information that show a large number of people who watched that movie who would have gone to see it in theaters, stayed home and watched it on Disney plus, so it's a breach of her contract. That's the basic part of the lawsuit.

What makes this one more interesting is she didn't sue Marvel, the party she had the contract with, for breach of contract. Instead, she sued Disney for inducing Marvel tortiously breach her contract. So she has the prospect not only of getting contract damages, but getting punitive damages. So let's just say this doesn't

settle and it goes to court. Could it end up being a question of the language in the contracts, specifically that her contract guaranteed a wide theatrical release for Black Widow, but not necessarily an exclusive theatrical release. I'm sure Disney will argue that Marvel didn't breach the contract because it was not promised to be an exclusive theatrical release. But I think there are two problems with that. First, at the time people negotiated this contract, nobody thought that theatrical

would be anything other than exclusive. It's always been exclusive. Every window, every studio's release pattern is exclusive, and that's

what protects it against cannibalizing by the downstream windows. So every movie is always available only in theaters, and that's what the studios say, when they advertised the movies, so everyone expected it to be that way, and nobody would have thought if you didn't say exclusively in theaters in a contract negotiated pre COVID, you were giving the studio the right to cannibalize it with its own streaming service. But the other thing is, even without that language, you've

frustrated the expectations of the parties. And even if it's not a breach of the express contract under California law, it is likely a breach of what's called the implied covenant of good faith and fair dealing. So I think she comes out on top on that argument. Should she have sued Marvel as well as Disney? Is it all that you did ensue Marvel? No, we, those of us who watched this, have been assuming that this would happen,

because this is how we prosecute similar cases. If she sued Marvel, she was bound by an arbitration provision and this would never see the light of day, which is what Marvel would want. And so she still has a claim against Marvel, but it's more to her advantage to make this a public fight and maybe even shame Disney into settling. What she's asserting against Disney is tortious interference with contract inducing breach of contract. These are tort claims.

Now they depend on mar of all having breached her contract, But if you look at her complaint, there is no claim for pure breach of contract. It's just the torts and it's just against Disney. The theory is that basically, the executives at Disney told Marvel, this picture is going to be released day and date on Disney Plus and you'll just have to live with it. So Johansson is asserting tortious interference, doesn't she have to show intentional and

unjustified inducement of a breach of the contract. Well, she has to show the contract was breached, and she has to show that Disney knew that she had a contract when Disney told Marvel that the picture would be released day and date on Disney Plus. In terms of the wrongfulness, that's actually an element of a slightly different claim called interference with prospective economic advantage, which really isn't at play here.

And that's when two parties are negotiating a contract and a third party swoops in does something wrongful to induce one of the parties not to do business with the other party and instead do business with the interloping third party. That's not really an issue here. She alleges that Disney should have delayed the release of the movie. It's surrendered hundreds of millions of dollars in theater ticket sales by releasing the picture when it knew that theatrical market was weak.

But is there a point for Disney to come back and say, well, you are ready delayed the release for an entire year, and we had other movies coming up. I think that's a fair argument for Disney to make unless the contract specifies a time period within which the picture has to be released, either a certain number of months after its completed or between the months of X and Y in a given year. And yes, I think Disney does have latitude to say, you know, we waited

around long enough and the time had finally come. There was a good window. It's the summer blah blah blah. Yes, that's an art meant Disney will advance. So Disney and Response revealed that she'd made twenty million dollars on the movie so far, without the back end profits it said the suit had. So Disney and Response revealed that she'd

made twenty million dollars on the movie so far. It said the suit had no merit and called it especially sad and distressing in its callous disregard for the horrific and prolonged global effects of the COVID nineteen pandemic. Is this a little more personal than you'd expect from Disney? I don't know if it's more personal than I'd expect from Disney per se. It is more personal that I would expect from anybody in Disney's position, you know, but if Disney certainly wants to be viewed as a talent

friendly studio, then yes, it's more personal than necessary. And it's not only tone deaf. It's a stupid argument, I mean, really really stupid, because what they're saying essentially is we paid you twenty million dollars and that's a lot of money. You should be happy with that, and no matter what we did to destroy the rest of a contract, that's just tough luck, and that's the wrong signal descent. I think Disney was very foolish to have made that that point.

I mean, look, Disney is in business to make money, and they desired her talents, her skills and her ability to attract an audience by making promises to her. They need to honor their promises. The pandemic has nothing to do with this, I mean nothing whatsoever. If that were Disney, really what Disney was motivated to do that? Why are they charging people for Disney Plus during a pandemic when people are out of work and you know, stuck at home. They should be giving it away for free. I mean,

they don't behave that way. So I think what they're saying is just shallow and instance here and way way way out of line. You know, they didn't have to release this day and date on Disney Plus. That had nothing to do with the pandemic. They made a calculated business decision that it was a Disney Plus his interest to make this movie available as soon as possible, and

they had every right to do that. But they if they wanted to do that, they needed to protect everybody who's compensation was tied to the theatrical performance of the movie because they were harming it. That's all that's at stake here, And for Disney to try to turn this into some pandemic related matter where they're all doing very well. They're making money from these motion pictures to me is preposterous.

Are these kinds of disputes between talent and studios unusual or is it junce that they're usually carried on behind closed doors, not in courts. It's both of those. Most talent wants to work. They don't want to be viewed as difficult or troublemakers, so they don't want to sue under any circumstances, and if they do, they'll arbitrate because their contracts require that, because the studios want this to

be done as much in private as possible. So losses like this are rare, But there are plenty of arbitrations going on that no one hears about. It reads about between talent and studios or between financiers and studios over these back end deals. So a streaming going to be handled in the contract language from now on, absolutely, absolutely, starting certainly by mid two thousand twenty, the talent lawyers saw this coming and they just changed the structure of

the deals. But in fact, Disney itself on the TV side, was one of the first studios to go out to its TV talent, showrunners, actors and the like and say, you know what TV business is changing. We're going to change our method of back end compensation and instead of providing a percentage of profits from the exhibition, we're going to pay you bonuses based on the number of episodes that are produced, the number of seasons, awards and the like, and moved to a different system. And it's also been

happening on the feature film side. So this lawsuit and others like it are really unique to this point in time. As the industry transitions into this new streaming world, has consolidation in the industry hurt the position of talent. What I've I've observed is it's changed the dynamic where failure is better rewarded and success is less rewarded. And so you know, if you zoom back and look at it, the consolidation has allowed for a lot more content to

be created, and that's good for talent. It has affected their back ends. So you will never see the kind of money that people made and that careers were based on a Norman Lear for example. More recent entrepreneurs, you're not going to see that kind of reward. But what you are seeing is much bigger upfront payment to creators called showrunners, people who create the idea for a series

or create the idea for a movie franchise. These people are getting huge amounts of money up front because you have Netflix, you have Amazon Prime of Hulu, they're all in the streaming business. There's a war talent, and so it's been very good for them. What it has not been good for is the back end. So the money is just shifting up front, and what that means, frankly, is more risk for the studios, more upfront money for talent, less money paid out on the success. So it's just

changed the dynamic in both directions. So the big question what do you think will happen in Johansson's case? So I predict that what Disney is going to do is tie this lawsuit up for at least a year and a half or two in the court and it will really not go forward because what I predict Disney will do is argue that this claim needs to be arbitrated.

And even if Disney is wrong about that, and I think they are wrong about that, the way of the California legal system works is if you petition a court to compel the plaintiff to arbitrate, even if you lose, you have an automatic right to appeal and the case goes nowhere. It is stayed until the California Court of Appeal has a chance to weigh in on that, and that can add a year and a half two years to the case where nothing will happen. There's no depositions,

there's no documents, and there's certainly no trial. So this case is going to languish for a long time. I predict, just knowing how studios like to take advantage of arguments. There's likely an arbitration clause in her contract with Marvel, but how does Disney force her into arbitration? If it's in her contract with Marvel, they will urge the court to give that a very broad read and say that her assertion of tourist claims against Disney is really just

an attempt to avoid her agreement to arbitrate. And it doesn't matter if they're wrong. They don't really care if they're wrong. They win simply by making the argument and then appealing it and slowing the case down. Do you think it will eventually settle? I don't know. Probably most cases do. I think it's in everyone's interest to settle, but I don't know. Thanks Bobby, that's Bobby Shorts of Quinn Emmanuel and that's it for this edition of the

Bloomberg Law Show. I'm June Grosso and your list the name to Bloomberg. This is Bloomberg Law with June Brusso from Bloomberg Radio. Before the CDC issued its latest coronavirus eviction moratorium, President Joe Biden anticipated that it might be struck down by the courts in light of the Supreme Court's decision on the last moratorium. The bulk of the constitutional scholarship says that it's not likely to pass Constitutional Must number one, but there are several key scholars who

think that it may and it's worth the effort. But the present you could not. The Court's already ruled on the present eviction moratorium, and it only took the day for landlord groups to challenge the new moratorium, which bands evictions in places hit hardest by the coronavirus for sixty days. Joining me is Anthony christ, a professor at the Georgia State University College of Law, explain the legal basis for

the challenge to the eviction moratorium. So essentially, what we have here is a question of statutory interpretation, and the CDC is relying on a four statute which basically said that the partner of Healthy Human Services, the CDC, they have the power to basically do almost whatever they think, in their judgment, is necessary to prevent the transmission of

communicable diseases, either internationally or across state line. There's a second part to that statute which kind of talks about in greater detail the types of regulations that those folks

have the power to enforce. So the argument is that the CDC power here is rather constrained, and that there isn't this kind of wide sweeping ability for the CDC in public health officials in the federal government to do whatever they want, including an eviction moratorium, which the CDC argues is nest sarry to stem the tide of COVID transmission across state line, and the c d C basically went back to the drawing board to come up with a moratorium that's a little different from the last one.

They've now pegged it in this new order to disease prevalence, so places where there's the highest matter transmission of COVID, the CDC is issuing the vital moratorium with the argument again which is the same as last time, the argument being that if people are kicked out of their homes and they're either rendered homeless or that they have to go into some other congregate setting or moved into other households, so that actually will contribute to the spread of COVID.

And so I think by being slightly more tailored to imposing the moratorium on high transmission areas, I suspect there is an attempt there to say that this is quarely within that first part of the provision that gives federal officials wide discretion in stopping transmission and spread of communical disease, and in this case in COVID. You know, whether I think that's going to be ultimately persuasive to court, I

doubt it. But I suspect that's really the idea here, being we're going to argue that this is slightly different and so the arguments need to be rehashed out in court. Whereas you know, the real Estate Association is continuing to make the same arguments as our landlords, which is that

to succeed the federal government's power. So this is the same group that took the last moratorium to the Supreme Court, and the Supreme Court by a five to four vote allowed that to stay in place, but there was a warning there from the only justice who wrote about it, Justice Brett Kavanaugh. So essentially, Justice Cavanaugh took the position that in order for the CDC in the federal government to take this action, that it would require a specific

authorization from Congress. So he was signaling that he believed that the action exceeded the CDC statutory authority under the

Public Health Act. However, he was willing to kind of show some restraints and not have the Court day the moratorium order, citing the fact that there are some problems in the distribution of funding which has already been allocated to assist tenants who have been struggling as a result of COVID, and so given the fact that at the time of order came to the Supreme Court that the previous order only had a few more days left, and given the difficulty of getting tenant assistant funds out, that

he was weighing the equities of the situation and determined that, notwithstanding the fact that he thought was we unlawful, that the courts should not intervene at that particular time, given that the harms would fall on tenants much more so than it would fall on the landlords challenging the action. For Gealstices Clarence Thomas, Samuel Alito, Neil Gorsuch, and any Coney Barrett voted against the moratorium, and Kavanaugh basically said

he would. So then are there five votes saying the c d C doesn't have the authority to issue a nationwide eviction more torium. I suspect that's right. You know, if I had to put a bet on it, I would bet on the side of there being at least five, if not just vote to keep the CDC from enforcing

the moratorium or having more touring in place. So I don't think that this will survive, although arguably this is slightly different to the extent that it's been much more tailored towards public health interests than in the broader more touring that had been placed before, right, the moratorium being not tied to disease prevalence anyway, But I don't think that they would alsoly matter to Justice Cavanaugh or the other four justices who said that they would have lifted

the moratorium. Did the White House sort of shoot itself in the foot with President Biden's comments on Tuesday. Listen to what he said. Whether that option will pass constitutional measure with this administration, I can't tell you. I don't know. There are a few scholars who say it will and others who say it's not likely to. But at a minimum, by the time it gets litigated, we will probably give some additional time. So basically he's saying we're buying time here.

I mean, the Supreme Court and courts generally will listen to scholars when they want to, and they'll disregard scholary opinions when they don't. I mean, I wish the Supreme Court was site my law review racles all the time, right, But they're just not going to unless they want to. And it's relevant. So the opinions of folks on the legal academy generally aren't just not going to be dispositive of what the Supreme Court or any federal court for

that matter, is going to do. So it might be that, you know, it's not necessarily the most politically artful or perhaps most strategic thing to do to admit that there's a heavy argument against the constitutionality of what you want to do, but it's it's going to make any significant difference in the outcome, although I will point out that the plaintiff realtors here have made a lot of pay of that comment and some of the commentary surrounding this

from Democrats, where there's been kind of a concession essentially that Justice calv a concurring somehow basically controlling laws. The National Apartment Association has filed a lawsuit to recover damages it says its members suffered as a result of the moratorium. Is there an argument to be made that getting damages after the fact is the better way to go here?

I think that's the real question, because it seems to me that if you're trying to balance the equities and balance the harms, the real irreparable harms here are not to the landlord, there to the tenants. Landlords hopefully are going to be paid once individuals are able to secure the federal funding that's been allocated to a system. I don't think anyone doubts that landlords are going to be completely made whole. That's not true of pennants who will

be kicked out. You can't backtrack someone's experience being homeless. You can't backtrack uprooting children from schools. You just can't undo that kind of harm. Thanks for being on the show. That's Anthony christ of the Georgia's University College of Law. And that's it for this edition of the Bloomberg Law Show. I'm June Grasso, and you're listening to Bloomberg