24 Mar Force Majeure And Entertainment Work In The Time of Coronavirus
A performance contract is a written agreement—entered into between a performer like Billie Eilish or Donald Glover and a production company or event presenter like Live Nation or AEG—for a performance to take place at a public or private venue. Like most contracts, performance contracts contain material terms like a description of the performance to take place, the date, time, and location, and payment. Performers range from musicians, comedians, spoken-word artists, and puppeteers. (Yes, that is still a thing, and it is alive and well at the Bob Baker Marionette Theatre, which recently relocated to Highland Park, CA and I highly recommend.)
Public venues range from the Hollywood Bowl to the Smell in Downtown Los Angeles, and everything in between. Private venues can range from . . . well, I am not in-the-know enough to give you a single example, but you get the idea. For example, recording artist Orville Peck enters into a contract with Goldenvoice to perform at Coachella, Stagecoach, and even Pappy & Harriet’s, a venue with a 350-person capacity as opposed to the droves of music fans corralled into the polo grounds for both Coachella and Stagecoach. As a fan, you may be very excited to go see Mr. Peck at Pappy & Harriet’s, assuming you were fortunate enough to get tickets. It’s such an intimate venue, which is the perfect venue for Mr. Peck’s brand of intimate songwriting. But alas, COVID-19 has arrived and caused the events to be “rescheduled.”
How could they just “reschedule” the event? And what happens if the event is cancelled altogether? But fans, this is not about you, for the moment. Invariably, lurking in the written contract is a force majeure clause. Force majeure clauses are contract provisions that excuse a party’s nonperformance when acts of God or other extraordinary events prevent a contracting party from fulfilling a contractual obligation. For at least a century, such clauses have explicitly contemplated epidemics. Peterson v. Noots, 255 F. 875, 879 (9th Cir. 1919). COVID-19 has certainly proved to be one of those extraordinary events or . . . an act of God? That part is a philosophical question. We’re concerned with what’s legal. Under government mandates restricting public gatherings, our performers, production companies, and event presenters are exercising these clauses at a record. Indeed, force majeure is de rigueur. It stands in the way of the entertainment industry and its ability to do what it does best: entertain us all when we need it most.
Many performers, production companies, and event presenters began exercising force majeure clauses even before local governments issued mandates out of concern for themselves and their audiences. Now that the government has banned public gatherings, all parties have begun to exercise them. Thus, it is important to understand how the force majeure clause works. Courts consider the following when determining whether a force majeure clause is applicable: (1) whether, under the terms of the contract, the event qualifies as force majeure; (2) whether it was foreseeable that there was a risk of nonperformance and whether the party took steps to mitigate; and (3) whether performance is truly impossible. See Watson Labs, Inc. v. Rhone-Poulenc Rorer, Inc., 178 F.Supp.2d 1099, 1108-14 (C.D. Cal. 2001) (citing Gulf Oil Corp. v. Fed. Energy Reg. Comm’n, 706 F.2d 444, 453-54 (3d Cir. 1983) and E. Air Lines, Inc. v. McDonnell Douglas Corp., 532 F.2d 957 (5th Cir. 1976)).
Courts focus is on whether the clause contemplates the specific type of event a contracting party claims caused (or will cause) nonperformance. Generally, the courts interpret force majeure clauses narrowly. A clause won’t be effective unless it specifically mentions the intervening event. Even assuming that the clause lists the force majeure event, the contracting party has a legal obligation to mitigate any foreseeable risks of nonperformance. The party asserting a claim of force majeure to excuse nonperformance must establish that it took reasonable steps to avoid contractual interruption. See Sorbo v. Universal City Studios, LLLP, L.P., 2009 WL 931688 *4-*7 (Cal. App. 2009) (holding that the plaintiff failed to demonstrate that he was incapable of performing under the contract, and that he could not then use the force majeure clause as a sword to assert a fraud claim against the studio because it is a shield to insulate nonperformance, despite the plaintiff’s herculean efforts to the contrary). Moreover, in some jurisdictions the party must establish that performance is actually impossible instead of just impracticable. In those stricter jurisdictions, a force majeure clause will not excuse nonperformance just because it is economically inconvenient to satisfy a contractual obligation. Accordingly, performers, production companies, and event presenters alike should carefully review the language of any force majeure clauses in their written contracts, and consult an attorney on the applicable law when determining their risks of nonperformance based on a force majeure clause, or in evaluating whether opposing parties were legally justified in refusing to perform.