Scarlett Johansson v. Disney

While the media may have decided that Disney have lost their battle against Scarlett Johansson, the legal question surrounding the issue is extremely important.

Johansson, who has starred in 9 Marvel movies over her decade acting as Black Widow, claims that the Walt Disney Co. breached her contract last month, when the Black Widow movie was released in theatres and on Disney+. She argues that because her compensation depends largely on how well the film performs at the box office, with the at home release reducing her earnings. There is a fundamental issue that constantly arises in discourse surrounding the lawsuit. Compensation is contingent on a future event, a ‘trigger’: closing a deal, hitting a sales target, or selling a certain number of copies of an album, or a book. The question that stands therefore, is whether the party that is making a payment is obliged to allow the triggering event to take place?

We can consider an example: if an associate, who has been promised a bonus when they reach $2 million in annual sales, reaches $1.5 million, can their employer move them to a lower paid job to avoid paying the bonus? No, they would be acting in ‘bad faith’. It is not in ‘good faith’, because it undermines the underlying assumption that they would be maintaining that role, with the intention of not having to pay the bonus.

There are critics of the notion of ‘good faith’, arguing that it gives judges too great a degree of discretion to rewrite agreements. However, the standard is enforced anyway, and film studios have been successfully sued for breach of ‘good faith’ in agreements. Two key examples of this are the 1983 case of Smithers v Metro Goldwyn Mayer Studios Inc., and the 2010 case of Ladd v Warner Bros Entertainment Inc.

Johansson’s case against Disney relies on the determination of what background assumption they shared, alleging in her complaint, that the parties understood the contractual promise that Black Widow would have ‘wide theatrical release’, meaning it ‘would remain exclusively in movie theatres for a period of between approximately 90 and 120 days.’ Johansson also asserts that this is the industry standard and Marvel’s own practice, and that, by releasing the film on Disney+ at the same time as its cinema entrance, the shared assumption was violated. Johansson and her lawyers argue that ‘good faith’ would have meant negotiating a settlement before moving Black Widow to the simultaneous release on the big screen and at home. Her complaint also notes that Warner Bros Entertainment Inc. negotiated $200 million in deals with various actors, who also had compensation linked to their film’s performance in cinemas, whereas Disney allegedly refused to discuss the matter.

Under California law, as she is suing Disney rather than Marvel, Johansson must prove that Disney committed a tort by forcing its subsidiary to act in faith. Her complaint attempts to do so by arguing that the compensation of Disney executives relies on the growth of Disney+, therefore they are at cross-purposes.

Disney released a statement in which they called the lawsuit ‘especially sad and distressing in its callous disregard for the horrific and prolonged global effects of the COVID-19 pandemic.’ Legal commentators suggest that if this approach is foretelling of their legal defense, one can expect the argument that the motive for joint release is not in bad faith at all, rather that, in order to avoid large crowds of people going to cinemas, risking Covid-19 infection, they allowed people the option to watch at home. This is not a bad argument, though it may remain down to the courts to decide which party to the contract should bear the risk surrounding the pandemic.

Ultimately, both sides make good points in this case and whatever the outcome, it will likely shape the future of Hollywood and entertainment law.