Even in flexible written language matters

Always get things in writing.

In a landscape of legal caution, that sounds trite and condescending, but it is what’s at play in the Hollywood Foreign Press Assn.’s case against Dick Clark Prods. Much of their suit comes down to what was left out of a long-term contract to produce the Globes, namely, a clause that would have explicitly given the HFPA veto power as the Clark company negotiated new rights deals with NBC.

Luckily for the HFPA, California courts and the federal judges charged with interpreting California state law have been more flexible than elsewhere in allowing outside evidence in gleaning the meaning of a written contract. Not so luckily for the HFPA, even California has a high hurdle for allowing such evidence.

At the center of the case is a 1993 amendment to its original agreement in which DCP was given the option to produce the show through 2005, as well as “any extensions, renewals, substitutions or modifications of the NBC Agreement, and to exploit such productions in all media through the world in perpetuity.”

What they didn’t do is spell out the words “with the HFPA’s consent.”

Reading the clause as it is, the HFPA appears to be all but giving away its most valuable asset.

That notion, the org suggests, actually works in its favor, as it is a mistake so obvious that it “strains credulity” imagining that they would actually cede such control to DCP. In fact, after becoming aware of the missing language in October, the HFPA is now seeking to get it put in.

So if HFPA’s consent was so important, why wasn’t it in the 1993 agreement?

A person familiar with the organization’s legal strategy spells it out: It falls into the category of things so obvious as to be overlooked. Not only was it a given at the time the agreement was made that the HFPA would have consent, DCP understood this too, and that was borne out by years of documentation in which they worked together without heading to court. But things began to change when Red Zone Capital, run by Washington Redskins owner Dan Snyder, acquired Dick Clark Prods. in 2007. According to the HFPA, DCP’s new owners “surreptitiously” negotiated an agreement with NBC last October to extend the network’s rights to the Globes until 2018.

The case is likely to involve the “parol evidence rule,” or the doctrine that a written contract is what it says it is, with a series of legal hurdles to allow consideration of other factors to glean its intent.

The more obvious cases in which outside evidence is allowed are those that involve a term that can mean two different things, as was the case with a protracted suit in which one of Gene Roddenberry’s ex-wives had a divorce settlement that gave her half the income from profit participation in “Star Trek.” That divorce was in 1969, so the question was whether “Star Trek” meant just the original series or the bonanza of movies and merchandising that followed.

The Golden Globe Awards case is different, because “it is not just picking on a word or phrase. What seems to be going on here is an entire clause. That can almost make it a bit harder,” says Benjamin Shatz, co-chair of Manatt, Phelps & Phillips’ appellate practice group. “Again, it is a slightly different twist on things. It is almost like saying, ‘We all meant we were supposed to do this other obligation, we all knew it at the time, so it is OK.’ That is a pretty hard sell, but it may be that they have the facts to prove this.”

California, Shatz says, “is a little bit more generous in allowing people to make these arguments.” But a host of factors have to be considered by the courts, among them whether alleged interpretation of the contract directly contradicts the written words. If so, such “extrinsic” evidence fails, he notes.

Red Zone and DCP contend that the HFPA’s claim of consent does “fundamentally change” the meaning of an unambiguous agreement.

They cite a 2007 California appellate court opinion in a case involving Robert Wagner, who claimed that a “subsidiary rights” provision in his contract with Spelling-Goldberg Prods. in the mid-1970s entitled him to half of the profits from Columbia Pictures’ “Charlie’s Angels” feature films. Even though Wagner offered a letter from Spelling-Goldberg’s counsel that assured he’d be entitled to profits from “any and all sources,” the court noted the clause wasn’t in the contract. The outside evidence, the court wrote, “does not explain the contract language, it contradicts it.”

U.S. District Court Judge Valerie Baker Fairbank has scheduled a hearing on March 7. Of course, that’s not in time for Sunday when, as they have for so many years, DCP and HFPA will be working together on the Globes.

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