An Inherent Contradiction: Corporate Discretion in Morals Clause Enforcement

• Author: Todd J. Clark
• Position: Todd J. Clark is a Professor of Law at North Carolina Central University.
• Pages: 1-67

An Inherent Contradiction: Corporate Discretion in Morals Clause Enforcement Todd J. Clark  TABLE OF CONTENTS Introduction ...................................................................................... 1 I. Morals Clauses ............................................................................... 10 II. Historical Development of the Implied Obligation of Good Faith ................................................................................. 22 A. Bad Faith in Contract Negotiation and Formation ................... 27 B. Bad Faith in Raising and Resolving Contract Disputes ........... 28 C. Bad Faith in taking Remedial Action ...................................... 28 D. Bad Faith in Performance and Enforcement ............................ 29 III. Contracts in Violation of Public Policy .......................................... 30 IV. The Rashard Mendenhall Case ....................................................... 32 V. Discretionary Enforcement ............................................................ 37 A. Profit Maximization and Wealth Concentration ...................... 40 B. Lack of Corporate Diversity .................................................... 43 C. Lack of Judicial Diversity ........................................................ 49 VI. The Solution ................................................................................... 51 VII. The First Amendment and Freedom of Speech .............................. 59 Conclusion .............................................................................66 INTRODUCTION Freedom of expression is a fundamental right in any well-established democracy. 1 This right promotes the free flow of information, thoughts, Copyright 2017, by TODD CLARK.  Todd J. Clark is a Professor of Law at North Carolina Central University. First, I would like to thank God for putting me in a position to write about and shed light on issues that I find compelling. I would also like to thank my mother, Dora L. Clark, my father, Sherwood Hill, and my aunt, Selena Comer for all of their love and support. Additionally, I would like to thank my son, Jordan K. 2 LOUISIANA LAW REVIEW [Vol. 78 and ideas. Freedom of expression prohibits leaders from manipulating their power, stifling progress, and eliminating the voice of change. Inherent in the freedom of the right to express is the right to oppose. 2 Expression that goes against the status quo “serves a vital social function in offsetting or ameliorating the normal process of bureaucratic decay.” 3 It empowers the citizens of a democratic nation with the means to promote and maintain justice by challenging majority ideas about fairness, equality, and justice. Through this exercise, [a] nation's unity is created through blending individual differences rather than imposing homogeneity from above; that the ability to explore fullest range of ideas on a given issue was essential to any learning process and truth cannot be arrived upon unless all points of view are first considered; and that by considering free thought, censorship acts to the detriment of material progress. 4 This fundamental right to freedom of expression is threatened by the use of morals clauses in celebrity endorsement deals. Morals clauses are contractual provisions that provide corporations with an express, unfettered right to terminate an athlete or celebrity spokesperson’s endorsement contract when the endorser acts in a manner deemed socially reprehensible Clark, for serving as part of my motivation for writing. Hopefully, my writings and work as a professor will one day inspire him to achieve his greatest potential. In addition, I would like to thank Professor andré douglas pond cummings, Professor Reggie Mombrun, Professor Grace Wigal, and Professor Mary Wright for all of the time they dedicated to helping me improve as both a scholar and a law professor. Anything that I have managed to do well as a member of the academy is largely a function of their dedication and vested interest in my success. I am also grateful to Professor andré douglas pond cummings, Professor Kimberly Cogdell Granger for reading drafts of my article. I also appreciate the scholarship grant provided by North Carolina Central School of Law that supported the production of this article. Finally, I am extremely grateful for the assistance provided by my research assistant Alexis White who worked diligently to help me organize my citations and to prepare this article for publication. 1. “Congress shall make no law . . . abridging the freedom of speech.” U.S. CONST. amend. I. 2. RANDAL MARLIN, PROPAGANDA AND THE ETHICS OF PERSUASION 240– 41 (2002). 3. Thomas I. Emerson, Toward a General Theory of the First Amendment, 72 YALE L.J. 877, 884 (1964). 4. See RHONA K. M. SMITH & CHRISTIEN VAN DEN ANKER, THE ESSENTIALS OF HUMAN RIGHTS 127 (2005) (discussing one of the earliest defenses advanced by John Milton, English Poet and political writer, in favor of freedom of speech in his work, “Areopagitica”). 2017] AN INHERENT CONTRADICTION 3 by corporate leadership. 5 Such provisions typically are included in standard endorsement contracts and give the corporation wide latitude to cancel the agreement upon an act by the celebrity spokesperson perceived as detrimental to the corporation’s brand and image. 6 Providing corporations with such broad discretion impairs social progress because morals clauses can stifle thought-provoking and change-oriented speech. The very essence of the First Amendment is subjugated to a meaningless idea of grandeur because modern-day corporations now have an unbridled right to temper speech in the private context through the use of broadly drafted morals clauses. This reality is inherently dangerous because a corporation has the right to regulate or restrict speech based upon its assessment of how society will view the endorser’s expression. This idea fundamentally is flawed for several reasons. First, given that corporations are driven primarily by profit maximization, it is unnatural to assign to them moral authority. Second, because white Americans— specifically, white American males—occupy the overwhelming majority of corporate leadership, the initial determination about what conduct is morally reprehensible will be made by a homogenous group of people who often views the world from a uniform perspective. Third, if morality is determined by calculating what the majority of the spending population thinks, 7 then such a determination will favor white Americans’ conceptions of morality because the majority of wealth in the United States 5. Fernando Pinguelo & Tim Cedrone, Morals? Who Cares About Morals? An Examination of Morals Clauses in Talent Contracts and What Talent Needs to Know, 19 SETON HALL J. SPORTS 348, 351 (2009). 6. Id. 7. See, e.g., Toni Lester, “Finding the ‘Public’ in ‘Public Disrepute” – Would the Cultural Defense Make a Difference in Celebrity and Sports Endorsement Contract Disputes? - The Case of Michael Vick and Adrian Peterson, 6 PACE INTELL. PROP. SPORTS & ENT. L.F. 21 (2016) (explaining that conceptions of morality often are influenced by racial and cultural factors as evidenced by an ESPN poll that reflected that 57% of black Americans believed that the media is biased against black athletes while only seven percent of white Americans held the same belief. The poll further reflected that black people believe that “the media unfairly criticizes black athletes more than white athletes, while the white fans suggest there is no difference in the media's handling of various cases.”); see also Jennifer Agiesta, CNN poll: Americans split on anthem protests, CNN (Sept. 30, 2017, 2:29 AM), http://www.cnn.com/2017/09/29/politics /national-anthem-nfl-cnn-poll/index.html (highlighting a poll that found that 59% of whites said that kneeling during the National Anthem is wrong, whereas 82% of blacks said that it's the right thing to do) [https://perma.cc/9TQT-X65V]. 4 LOUISIANA LAW REVIEW [Vol. 78 is concentrated in the hands of white Americans. 8 Fourth, due to an incomplete understanding of the truth and a natural desire for people to maintain the status quo—even when it is wrong or unjust—determining what is morally acceptable is often difficult and normally takes time. Finally, broadly drafted morals clauses present a Hobson’s choice 9 for celebrity endorsers by placing the endorser in the unfair and unreasonable position of sacrificing their freedom of expression, particularly concerning social justice issues, for monetary gain. American history is riddled with athletes and entertainers who have expressed themselves in ways that were deemed morally wrong at the time of expression; after the passage of time and social enlightenment, however, the same expression was championed as morally acceptable. Based on the discretion that corporations have to evaluate morality, they can terminate endorsement contracts prematurely according to their own biased perceptions of morality before this enlightenment process occurs. Muhammed Ali exemplifies this truth. In 1966, legendary boxer Muhammed Ali 10 famously remarked, “I ain’t got no quarrel with them Viet Cong. No Viet Cong ever called me nigger,” after he refused to serve in the army during the Vietnam War by claiming conscientious objector status. 11 When the public pressed Ali further about his refusal to serve, he eloquently remarked, You want me to do what the white man says and go fight a war against some people I don’t know nothing about-get some freedom for some other people when my own people can’t get theirs? We’re over there so that the people of South Vietnam can be free. But I’m here in America and I’m being punished for upholding my beliefs. 12 8. Matt Bruenig, The Top 10% of White Families Own Almost Everything, DEMOS (Sept. 5, 2014), http://www.demos.org/blog/9/5/14/top-10-white-families -own-almost-everything [https://perma.cc/93HR-J8ZC]. 9. A Hobson’s choice literally means...