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Speaker 1: This is Bloomberg Law with June Bresso from Bloomberg Radio.

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Speaker 1: Part was an avenger, I mean mistakes and a lot

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Speaker 1: of enemies. As Natasha Romanov, Scarlett Johansson is an elite

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Speaker 1: spy trained in the martial arts who has no fear

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Speaker 1: and fights much bigger bad guys, and in real life,

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Speaker 1: movie star Johansson is taking on the biggest entertainment company

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Speaker 1: in the world. She's suing Walt Disney, claiming it broke

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Speaker 1: its promise when it released her latest film, Black Widow,

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Speaker 1: simultaneously in movie theaters and on the Disney Plus streaming service.

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Speaker 1: Joining me is Bobby Sports, a partner at Quinn Emmanuel.

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Speaker 1: Did this lawsuit come as a surprise to those in

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Speaker 1: the entertainment industry and No. Yes in the sense that

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Speaker 1: it is surprising that Disney would have engaged in this

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Speaker 1: conduct and not have resolved it the way other companies

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Speaker 1: have to avoid litigation, most notably Warner Brothers. No, in

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Speaker 1: the sense that everybody who has been following the migration

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Speaker 1: to streaming has predicted that sooner or later, a major talent,

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Speaker 1: and Scarlett Johansen is certainly a major talent, would get

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Speaker 1: mistreated and feel compelled to sue tell Us about her allegations. Well,

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Speaker 1: it's two things. First, the basic allegation is she had

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Speaker 1: a contract with Marvel, and Marvel promised to compensate her

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Speaker 1: both with a cash payment upfront when she made the

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Speaker 1: movie and additional payments based on the box office performance

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Speaker 1: of the movie, so there'd be fixed payments at each

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Speaker 1: level of specified box office results. And what happened is

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Speaker 1: everyone who made that contract did it on the basis

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Speaker 1: that there would be a major theatrical release, and therefore,

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Speaker 1: as the picture performed well in theaters, she'd earned more money.

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Speaker 1: But Disney frustrated that by making a picture available at

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Speaker 1: the same time it was in theaters on its Disney

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Speaker 1: Plus service, and it gave people an incentive to not

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Speaker 1: go to theaters and watch it at home. And so

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Speaker 1: what she's saying is, look, you breached the contract. You

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Speaker 1: promised me a big theatrical release from which I could

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Speaker 1: earn additional money, and you ruined it. And the proof

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Speaker 1: of that is the survey results and other information that

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Speaker 1: show a large number of people who watched that movie

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Speaker 1: who would have gone to see it in theaters, stayed

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Speaker 1: home and watched it on Disney plus, so it's a

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Speaker 1: breach of her contract. That's the basic part of the lawsuit.

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Speaker 1: What makes this one more interesting is she didn't sue Marvel,

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Speaker 1: the party she had the contract with, for breach of contract. Instead,

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Speaker 1: she sued Disney for inducing Marvel tortiously breach her contract.

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Speaker 1: So she has the prospect not only of getting contract damages,

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Speaker 1: but getting punitive damages. So let's just say this doesn't

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Speaker 1: settle and it goes to court. Could it end up

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Speaker 1: being a question of the language in the contracts, specifically

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Speaker 1: that her contract guaranteed a wide theatrical release for Black Widow,

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Speaker 1: but not necessarily an exclusive theatrical release. I'm sure Disney

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Speaker 1: will argue that Marvel didn't breach the contract because it

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Speaker 1: was not promised to be an exclusive theatrical release. But

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Speaker 1: I think there are two problems with that. First, at

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Speaker 1: the time people negotiated this contract, nobody thought that theatrical

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Speaker 1: would be anything other than exclusive. It's always been exclusive.

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Speaker 1: Every window, every studio's release pattern is exclusive, and that's

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Speaker 1: what protects it against cannibalizing by the downstream windows. So

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Speaker 1: every movie is always available only in theaters, and that's

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Speaker 1: what the studios say, when they advertised the movies, so

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Speaker 1: everyone expected it to be that way, and nobody would

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Speaker 1: have thought if you didn't say exclusively in theaters in

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Speaker 1: a contract negotiated pre COVID, you were giving the studio

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Speaker 1: the right to cannibalize it with its own streaming service.

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Speaker 1: But the other thing is, even without that language, you've

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Speaker 1: frustrated the expectations of the parties. And even if it's

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Speaker 1: not a breach of the express contract under California law,

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Speaker 1: it is likely a breach of what's called the implied

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Speaker 1: covenant of good faith and fair dealing. So I think

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Speaker 1: she comes out on top on that argument. Should she

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Speaker 1: have sued Marvel as well as Disney? Is it all

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Speaker 1: that you did ensue Marvel? No, we, those of us

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Speaker 1: who watched this, have been assuming that this would happen,

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Speaker 1: because this is how we prosecute similar cases. If she

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Speaker 1: sued Marvel, she was bound by an arbitration provision and

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Speaker 1: this would never see the light of day, which is

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Speaker 1: what Marvel would want. And so she still has a

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Speaker 1: claim against Marvel, but it's more to her advantage to

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Speaker 1: make this a public fight and maybe even shame Disney

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Speaker 1: into settling. What she's asserting against Disney is tortious interference

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Speaker 1: with contract inducing breach of contract. These are tort claims.

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Speaker 1: Now they depend on mar of all having breached her contract,

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Speaker 1: But if you look at her complaint, there is no

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Speaker 1: claim for pure breach of contract. It's just the torts

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Speaker 1: and it's just against Disney. The theory is that basically,

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Speaker 1: the executives at Disney told Marvel, this picture is going

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Speaker 1: to be released day and date on Disney Plus and

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Speaker 1: you'll just have to live with it. So Johansson is

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Speaker 1: asserting tortious interference, doesn't she have to show intentional and

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Speaker 1: unjustified inducement of a breach of the contract. Well, she

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Speaker 1: has to show the contract was breached, and she has

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Speaker 1: to show that Disney knew that she had a contract

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Speaker 1: when Disney told Marvel that the picture would be released

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Speaker 1: day and date on Disney Plus. In terms of the wrongfulness,

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Speaker 1: that's actually an element of a slightly different claim called

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Speaker 1: interference with prospective economic advantage, which really isn't at play here.

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Speaker 1: And that's when two parties are negotiating a contract and

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Speaker 1: a third party swoops in does something wrongful to induce

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Speaker 1: one of the parties not to do business with the

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Speaker 1: other party and instead do business with the interloping third party.

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Speaker 1: That's not really an issue here. She alleges that Disney

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Speaker 1: should have delayed the release of the movie. It's surrendered

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Speaker 1: hundreds of millions of dollars in theater ticket sales by

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Speaker 1: releasing the picture when it knew that theatrical market was weak.

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Speaker 1: But is there a point for Disney to come back

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Speaker 1: and say, well, you are ready delayed the release for

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Speaker 1: an entire year, and we had other movies coming up.

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Speaker 1: I think that's a fair argument for Disney to make

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Speaker 1: unless the contract specifies a time period within which the

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Speaker 1: picture has to be released, either a certain number of

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Speaker 1: months after its completed or between the months of X

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Speaker 1: and Y in a given year. And yes, I think

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Speaker 1: Disney does have latitude to say, you know, we waited

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Speaker 1: around long enough and the time had finally come. There

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Speaker 1: was a good window. It's the summer blah blah blah. Yes,

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Speaker 1: that's an art meant Disney will advance. So Disney and

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Speaker 1: Response revealed that she'd made twenty million dollars on the

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Speaker 1: movie so far, without the back end profits it said

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Speaker 1: the suit had. So Disney and Response revealed that she'd

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Speaker 1: made twenty million dollars on the movie so far. It

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Speaker 1: said the suit had no merit and called it especially

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Speaker 1: sad and distressing in its callous disregard for the horrific

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Speaker 1: and prolonged global effects of the COVID nineteen pandemic. Is

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Speaker 1: this a little more personal than you'd expect from Disney?

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Speaker 1: I don't know if it's more personal than I'd expect

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Speaker 1: from Disney per se. It is more personal that I

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Speaker 1: would expect from anybody in Disney's position, you know, but

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Speaker 1: if Disney certainly wants to be viewed as a talent

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Speaker 1: friendly studio, then yes, it's more personal than necessary. And

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Speaker 1: it's not only tone deaf. It's a stupid argument, I mean,

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Speaker 1: really really stupid, because what they're saying essentially is we

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Speaker 1: paid you twenty million dollars and that's a lot of money.

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Speaker 1: You should be happy with that, and no matter what

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Speaker 1: we did to destroy the rest of a contract, that's

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Speaker 1: just tough luck, and that's the wrong signal descent. I

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Speaker 1: think Disney was very foolish to have made that that point.

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Speaker 1: I mean, look, Disney is in business to make money,

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Speaker 1: and they desired her talents, her skills and her ability

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Speaker 1: to attract an audience by making promises to her. They

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Speaker 1: need to honor their promises. The pandemic has nothing to

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Speaker 1: do with this, I mean nothing whatsoever. If that were Disney,

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Speaker 1: really what Disney was motivated to do that? Why are

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Speaker 1: they charging people for Disney Plus during a pandemic when

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Speaker 1: people are out of work and you know, stuck at home.

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Speaker 1: They should be giving it away for free. I mean,

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Speaker 1: they don't behave that way. So I think what they're

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Speaker 1: saying is just shallow and instance here and way way

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Speaker 1: way out of line. You know, they didn't have to

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Speaker 1: release this day and date on Disney Plus. That had

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Speaker 1: nothing to do with the pandemic. They made a calculated

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Speaker 1: business decision that it was a Disney Plus his interest

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Speaker 1: to make this movie available as soon as possible, and

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Speaker 1: they had every right to do that. But they if

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Speaker 1: they wanted to do that, they needed to protect everybody

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Speaker 1: who's compensation was tied to the theatrical performance of the

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Speaker 1: movie because they were harming it. That's all that's at

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Speaker 1: stake here, And for Disney to try to turn this

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Speaker 1: into some pandemic related matter where they're all doing very well.

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Speaker 1: They're making money from these motion pictures to me is preposterous.

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Speaker 1: Are these kinds of disputes between talent and studios unusual

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Speaker 1: or is it junce that they're usually carried on behind

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Speaker 1: closed doors, not in courts. It's both of those. Most

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Speaker 1: talent wants to work. They don't want to be viewed

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Speaker 1: as difficult or troublemakers, so they don't want to sue

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Speaker 1: under any circumstances, and if they do, they'll arbitrate because

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Speaker 1: their contracts require that, because the studios want this to

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Speaker 1: be done as much in private as possible. So losses

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Speaker 1: like this are rare, But there are plenty of arbitrations

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Speaker 1: going on that no one hears about. It reads about

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Speaker 1: between talent and studios or between financiers and studios over

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Speaker 1: these back end deals. So a streaming going to be

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Speaker 1: handled in the contract language from now on, absolutely, absolutely,

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Speaker 1: starting certainly by mid two thousand twenty, the talent lawyers

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Speaker 1: saw this coming and they just changed the structure of

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Speaker 1: the deals. But in fact, Disney itself on the TV side,

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Speaker 1: was one of the first studios to go out to

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Speaker 1: its TV talent, showrunners, actors and the like and say,

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Speaker 1: you know what TV business is changing. We're going to

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Speaker 1: change our method of back end compensation and instead of

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Speaker 1: providing a percentage of profits from the exhibition, we're going

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Speaker 1: to pay you bonuses based on the number of episodes

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Speaker 1: that are produced, the number of seasons, awards and the like,

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Speaker 1: and moved to a different system. And it's also been

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Speaker 1: happening on the feature film side. So this lawsuit and

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Speaker 1: others like it are really unique to this point in time.

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Speaker 1: As the industry transitions into this new streaming world, has

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Speaker 1: consolidation in the industry hurt the position of talent. What

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Speaker 1: I've I've observed is it's changed the dynamic where failure

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Speaker 1: is better rewarded and success is less rewarded. And so

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Speaker 1: you know, if you zoom back and look at it,

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Speaker 1: the consolidation has allowed for a lot more content to

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Speaker 1: be created, and that's good for talent. It has affected

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Speaker 1: their back ends. So you will never see the kind

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Speaker 1: of money that people made and that careers were based

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Speaker 1: on a Norman Lear for example. More recent entrepreneurs, you're

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Speaker 1: not going to see that kind of reward. But what

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Speaker 1: you are seeing is much bigger upfront payment to creators

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Speaker 1: called showrunners, people who create the idea for a series

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Speaker 1: or create the idea for a movie franchise. These people

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Speaker 1: are getting huge amounts of money up front because you

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Speaker 1: have Netflix, you have Amazon Prime of Hulu, they're all

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Speaker 1: in the streaming business. There's a war talent, and so

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Speaker 1: it's been very good for them. What it has not

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Speaker 1: been good for is the back end. So the money

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Speaker 1: is just shifting up front, and what that means, frankly,

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Speaker 1: is more risk for the studios, more upfront money for talent,

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Speaker 1: less money paid out on the success. So it's just

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Speaker 1: changed the dynamic in both directions. So the big question

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Speaker 1: what do you think will happen in Johansson's case? So

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Speaker 1: I predict that what Disney is going to do is

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Speaker 1: tie this lawsuit up for at least a year and

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Speaker 1: a half or two in the court and it will

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Speaker 1: really not go forward because what I predict Disney will

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Speaker 1: do is argue that this claim needs to be arbitrated.

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Speaker 1: And even if Disney is wrong about that, and I

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Speaker 1: think they are wrong about that, the way of the

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Speaker 1: California legal system works is if you petition a court

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Speaker 1: to compel the plaintiff to arbitrate, even if you lose,

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Speaker 1: you have an automatic right to appeal and the case

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Speaker 1: goes nowhere. It is stayed until the California Court of

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Speaker 1: Appeal has a chance to weigh in on that, and

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Speaker 1: that can add a year and a half two years

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Speaker 1: to the case where nothing will happen. There's no depositions,

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Speaker 1: there's no documents, and there's certainly no trial. So this

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Speaker 1: case is going to languish for a long time. I predict,

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Speaker 1: just knowing how studios like to take advantage of arguments.

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Speaker 1: There's likely an arbitration clause in her contract with Marvel,

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Speaker 1: but how does Disney force her into arbitration? If it's

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Speaker 1: in her contract with Marvel, they will urge the court

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Speaker 1: to give that a very broad read and say that

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Speaker 1: her assertion of tourist claims against Disney is really just

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Speaker 1: an attempt to avoid her agreement to arbitrate. And it

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Speaker 1: doesn't matter if they're wrong. They don't really care if

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Speaker 1: they're wrong. They win simply by making the argument and

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Speaker 1: then appealing it and slowing the case down. Do you

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Speaker 1: think it will eventually settle? I don't know. Probably most

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Speaker 1: cases do. I think it's in everyone's interest to settle,

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Speaker 1: but I don't know. Thanks Bobby, that's Bobby Shorts of

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Speaker 1: Quinn Emmanuel and that's it for this edition of the

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Speaker 1: Bloomberg Law Show. I'm June Grosso and your list the

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Speaker 1: name to Bloomberg. This is Bloomberg Law with June Brusso

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Speaker 1: from Bloomberg Radio. Before the CDC issued its latest coronavirus

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Speaker 1: eviction moratorium, President Joe Biden anticipated that it might be

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Speaker 1: struck down by the courts in light of the Supreme

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Speaker 1: Court's decision on the last moratorium. The bulk of the

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Speaker 1: constitutional scholarship says that it's not likely to pass Constitutional

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Speaker 1: Must number one, but there are several key scholars who

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Speaker 1: think that it may and it's worth the effort. But

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Speaker 1: the present you could not. The Court's already ruled on

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Speaker 1: the present eviction moratorium, and it only took the day

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Speaker 1: for landlord groups to challenge the new moratorium, which bands

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Speaker 1: evictions in places hit hardest by the coronavirus for sixty days.

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Speaker 1: Joining me is Anthony christ, a professor at the Georgia

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Speaker 1: State University College of Law, explain the legal basis for

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Speaker 1: the challenge to the eviction moratorium. So essentially, what we

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Speaker 1: have here is a question of statutory interpretation, and the

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Speaker 1: CDC is relying on a four statute which basically said

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Speaker 1: that the partner of Healthy Human Services, the CDC, they

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Speaker 1: have the power to basically do almost whatever they think,

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Speaker 1: in their judgment, is necessary to prevent the transmission of

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Speaker 1: communicable diseases, either internationally or across state line. There's a

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Speaker 1: second part to that statute which kind of talks about

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Speaker 1: in greater detail the types of regulations that those folks

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Speaker 1: have the power to enforce. So the argument is that

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Speaker 1: the CDC power here is rather constrained, and that there

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Speaker 1: isn't this kind of wide sweeping ability for the CDC

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Speaker 1: in public health officials in the federal government to do

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Speaker 1: whatever they want, including an eviction moratorium, which the CDC

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Speaker 1: argues is nest sarry to stem the tide of COVID

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Speaker 1: transmission across state line, and the c d C basically

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Speaker 1: went back to the drawing board to come up with

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Speaker 1: a moratorium that's a little different from the last one.

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Speaker 1: They've now pegged it in this new order to disease prevalence,

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Speaker 1: so places where there's the highest matter transmission of COVID,

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Speaker 1: the CDC is issuing the vital moratorium with the argument

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Speaker 1: again which is the same as last time, the argument

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Speaker 1: being that if people are kicked out of their homes

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Speaker 1: and they're either rendered homeless or that they have to

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Speaker 1: go into some other congregate setting or moved into other households,

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Speaker 1: so that actually will contribute to the spread of COVID.

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Speaker 1: And so I think by being slightly more tailored to

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Speaker 1: imposing the moratorium on high transmission areas, I suspect there

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Speaker 1: is an attempt there to say that this is quarely

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Speaker 1: within that first part of the provision that gives federal

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Speaker 1: officials wide discretion in stopping transmission and spread of communical disease,

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Speaker 1: and in this case in COVID. You know, whether I

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Speaker 1: think that's going to be ultimately persuasive to court, I

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Speaker 1: doubt it. But I suspect that's really the idea here,

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Speaker 1: being we're going to argue that this is slightly different

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Speaker 1: and so the arguments need to be rehashed out in court.

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Speaker 1: Whereas you know, the real Estate Association is continuing to

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Speaker 1: make the same arguments as our landlords, which is that

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Speaker 1: to succeed the federal government's power. So this is the

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Speaker 1: same group that took the last moratorium to the Supreme Court,

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Speaker 1: and the Supreme Court by a five to four vote

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Speaker 1: allowed that to stay in place, but there was a

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Speaker 1: warning there from the only justice who wrote about it,

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Speaker 1: Justice Brett Kavanaugh. So essentially, Justice Cavanaugh took the position

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Speaker 1: that in order for the CDC in the federal government

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Speaker 1: to take this action, that it would require a specific

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Speaker 1: authorization from Congress. So he was signaling that he believed

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Speaker 1: that the action exceeded the CDC statutory authority under the

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Speaker 1: Public Health Act. However, he was willing to kind of

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Speaker 1: show some restraints and not have the Court day the

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Speaker 1: moratorium order, citing the fact that there are some problems

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Speaker 1: in the distribution of funding which has already been allocated

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Speaker 1: to assist tenants who have been struggling as a result

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Speaker 1: of COVID, and so given the fact that at the

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Speaker 1: time of order came to the Supreme Court that the

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Speaker 1: previous order only had a few more days left, and

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Speaker 1: given the difficulty of getting tenant assistant funds out, that

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Speaker 1: he was weighing the equities of the situation and determined that,

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Speaker 1: notwithstanding the fact that he thought was we unlawful, that

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Speaker 1: the courts should not intervene at that particular time, given

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Speaker 1: that the harms would fall on tenants much more so

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Speaker 1: than it would fall on the landlords challenging the action.

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Speaker 1: For Gealstices Clarence Thomas, Samuel Alito, Neil Gorsuch, and any

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Speaker 1: Coney Barrett voted against the moratorium, and Kavanaugh basically said

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Speaker 1: he would. So then are there five votes saying the

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Speaker 1: c d C doesn't have the authority to issue a

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Speaker 1: nationwide eviction more torium. I suspect that's right. You know,

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Speaker 1: if I had to put a bet on it, I

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Speaker 1: would bet on the side of there being at least five,

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Speaker 1: if not just vote to keep the CDC from enforcing

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Speaker 1: the moratorium or having more touring in place. So I

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Speaker 1: don't think that this will survive, although arguably this is

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Speaker 1: slightly different to the extent that it's been much more

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Speaker 1: tailored towards public health interests than in the broader more

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Speaker 1: touring that had been placed before, right, the moratorium being

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Speaker 1: not tied to disease prevalence anyway, But I don't think

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Speaker 1: that they would alsoly matter to Justice Cavanaugh or the

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Speaker 1: other four justices who said that they would have lifted

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Speaker 1: the moratorium. Did the White House sort of shoot itself

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Speaker 1: in the foot with President Biden's comments on Tuesday. Listen

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Speaker 1: to what he said. Whether that option will pass constitutional

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Speaker 1: measure with this administration, I can't tell you. I don't know.

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Speaker 1: There are a few scholars who say it will and

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Speaker 1: others who say it's not likely to. But at a minimum,

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Speaker 1: by the time it gets litigated, we will probably give

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Speaker 1: some additional time. So basically he's saying we're buying time here.

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Speaker 1: I mean, the Supreme Court and courts generally will listen

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Speaker 1: to scholars when they want to, and they'll disregard scholary

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Speaker 1: opinions when they don't. I mean, I wish the Supreme

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Speaker 1: Court was site my law review racles all the time, right,

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Speaker 1: But they're just not going to unless they want to.

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Speaker 1: And it's relevant. So the opinions of folks on the

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Speaker 1: legal academy generally aren't just not going to be dispositive

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Speaker 1: of what the Supreme Court or any federal court for

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Speaker 1: that matter, is going to do. So it might be that,

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Speaker 1: you know, it's not necessarily the most politically artful or

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Speaker 1: perhaps most strategic thing to do to admit that there's

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Speaker 1: a heavy argument against the constitutionality of what you want

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Speaker 1: to do, but it's it's going to make any significant

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Speaker 1: difference in the outcome, although I will point out that

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Speaker 1: the plaintiff realtors here have made a lot of pay

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Speaker 1: of that comment and some of the commentary surrounding this

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Speaker 1: from Democrats, where there's been kind of a concession essentially

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Speaker 1: that Justice calv a concurring somehow basically controlling laws. The

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Speaker 1: National Apartment Association has filed a lawsuit to recover damages

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Speaker 1: it says its members suffered as a result of the moratorium.

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Speaker 1: Is there an argument to be made that getting damages

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Speaker 1: after the fact is the better way to go here?

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Speaker 1: I think that's the real question, because it seems to

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Speaker 1: me that if you're trying to balance the equities and

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Speaker 1: balance the harms, the real irreparable harms here are not

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Speaker 1: to the landlord, there to the tenants. Landlords hopefully are

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Speaker 1: going to be paid once individuals are able to secure

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Speaker 1: the federal funding that's been allocated to a system. I

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Speaker 1: don't think anyone doubts that landlords are going to be

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Speaker 1: completely made whole. That's not true of pennants who will

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Speaker 1: be kicked out. You can't backtrack someone's experience being homeless.

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Speaker 1: You can't backtrack uprooting children from schools. You just can't

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Speaker 1: undo that kind of harm. Thanks for being on the show.

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Speaker 1: That's Anthony christ of the Georgia's University College of Law.

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Speaker 1: And that's it for this edition of the Bloomberg Law Show.

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Speaker 1: I'm June Grasso, and you're listening to Bloomberg