Pittsburgh Steeler Rashard Mendenhall announced earlier this week he is suing Champion’s parent company, Hanesbrand Inc., for $1 million. The suit is in response to Champion dropping Mendenhall’s endorsement deal following his controversial tweets regarding the death of Osama Bin Laden. The Legal Blitz checked in with attorney Benjamin R. Mulcahy to discuss Mendenhall’s suit. Mulcahy is a partner with Sheppard Mullin Richter & Hampton LLP and is a founding member of the firm’s sports industry team. His practice includes, but is not limited to, sports marketing and endorsement deals.
How common are “morals clauses” in athlete’s endorsement deals?
Morals clauses are extremely common and customary. The types of conduct covered by morals clauses varies based on several factors and the language is very often negotiated, but it’s rare for an endorsement deal not to include a morals clause. And that’s as you would expect, since the brand is seeking to leverage off the popularity and good-will of the athlete, and if the athlete does something to tarnish that, then the brand isn’t going to get the benefit of its bargain. There are lots of recent examples where a brand has exercised its termination rights because a marquee athlete or other talent has violated her (or more commonly) his morals clause. If Kobe Bryant, Michael Phelps, Michael Vick and Tiger Woods are subject to moral clauses, you can expect that nearly everyone else is, as well.
Mendenhall’s contract includes language that barred him from actions bringing him, “into public disrepute, contempt, scandal or ridicule, or tending to shock, insult, or offend the majority of the consuming public.” His controversial tweets seem to be obviously within this barred conduct, how can he argue otherwise?
He and his representatives can argue whatever they want, probably pointing to the notion that it’s not possible to measure what offends the majority of the consuming public. But the team’s response summed up popular thinking really well. Asking people to withhold judgment on Bin Laden isn’t likely to be defensible as a mere expression of opinion in most circles of this country, and my sense is most people wouldn’t need to take a poll for that.
Mendenhall’s attorney says that this is not about the money, but rather about whether Rashard can express his opinion. When a player signs a “morals clause,” doesn’t he expressly give up the right to express certain opinions?
Yes. If Rashard expressed his opinion that the brands he was being paid to endorse are low quality, that opinion would violate most morals clauses, even if the opinion is genuinely held. His tweets are analogous to that.
How will the court determine if Mendenhall’s comments actually “offended the majority of the consuming public?”
First, the intent of the parties will be evaluated to figure out what that actually means. If it actually means that a poll needs to be taken, a poll will probably be taken, and then the parties will argue about whether the methodology was sound.
If this is ruled a jury question, do you think Hanesbrand would be wise to settle rather than go to trial?
Intuitively, yes, but his threat to take this to trial is about all the leverage he has, so I suspect his representatives will not give that up as a threshold matter.
Does the fact that Hanesbrand never objected to any other of Mendenhall’s controversial tweets help him?
Maybe, but probably not. Most contracts include language that expressly provides that overlooking one breach won’t constitute a waiver of additional or continuing breaches. And there’s always the argument that the cumulative effect of all the conduct pushed the conduct over the edge. That said, some very controversial people are endorsers. It’s the controversy that surrounds them that the brand is seeking to exploit. With an endorser like that, the brand would be well-advised to terminate for controversial conduct that is different from the prior conduct both in quantity or quality, otherwise the talent could argue that the brand might just be getting what they paid for.
When advising your clients, what do you tell them about “morals clauses” or similar provisions? How broad can these provisions be, and what language do try to negotiate for?
It’s all over the map. The two main variables tend to be how much money is being paid and what is the caliber of the talent.