We’ve never reposted a blog, but in light of Ryan Lochte’s being robbed, then exaggerating being robbed and now maybe not exaggerating so much, and Colin Kaepernick’s decision to sit out the National Anthem, we thought this oldie but goodie on celebrity endorsers and morals clauses was worth dusting off.
One quick update on the post. The case we wrote about ultimately settled on undisclosed terms.
Court Refuses to Dismiss Celebrity Endorsement Breach Of Contract Case
We don’t usually blog about celebrity endorsements, unless the issue relates to the FTC’s endorsement guides or blogging restrictions, but something recently in the news caught our eye and might not have caught yours (unless like one of us you were hypothetically surfing MSNBC Sports during lunch).
Most endorsement contracts have a morals clause that provides for cancellation that essentially are designed to give the company an excuse to terminate the endorsement deal if they think the celebrity has done something that might make the company look bad. The athletic apparel company Champion no doubt thought it was looking at the classic situation for which such clauses are drafted when one of its endorsers, Steelers running back Rashard Mendenhall tweeted that no one should celebrate the death of Osama bin Laden and questioned whether the collapse of the twin towers was really the result of hijacked planes. However, after he was terminated, Mendenhall fired back and filed suit against Hanesbrands, the parent company of Champion.
Recently a federal district court judge in North Carolina refused to dismiss Mendenhall’s lawsuit. Mendenhall, in his lawsuit posed the question as to whether “an athlete employed by as a celebrity endorser loses the right to express opinions simply because the company whose products he endorses might disagree with some (but not all) of these opinions.”
Mendenhall’s morals clause barred actions that would tend to bring him “into public disrepute, contempt, scandal or ridicule, or tending to shock, insult or offend a majority of the consuming public.” The judge found that the morals clause could not be triggered simply because the company disagreed with Mendenhall’s comments. Instead, the judge held that further factual development was necessary so that the court could make a finding as to the nature of the public’s response to Mendenhall’s tweets.
In other words, according to the judge it’s not enough for the company to think that it’s endorser has just turned off a whole lot of people, they also have to show it factually, at least under the wording of the current morals clause.
So Hanes will have another day in court and will have the opportunity to present evidence. We suspect that Hanesbrands can probably make some kind of showing that the public as a whole was actually offended. However, companies who think they’re protected from a celebrity endorser who posts a video of himself torturing puppies (we originally just made this up as an extreme example but click here) and cute kittens might want to take a second look at their contract language.