K Question

(Study Tips, Dealing With Stress, Maintaining a Social Life, Financial Aid, Internships, Bar Exam, Careers in Law . . . )
User avatar
johansantana21
Posts: 855
Joined: Sat Jul 23, 2011 7:11 pm

K Question

Postby johansantana21 » Sat Nov 19, 2011 10:51 pm

For injured employer's, what would be the damages in this case?

Original contract was for $50k for an actor in a movie. Actor breached.

Reasonable cover contract, the only one available, was for $500k.

The movie with the original actor was expected to make $10million in profits.

The movie with cover contract actor makes $100million in profits.

Would the damages still be: Cover Contract minus Original Contract?

So 500k-50k=450k that the breaching actor has to pay?

User avatar
Extension_Cord
Posts: 592
Joined: Mon Sep 05, 2011 3:15 pm

Re: K Question

Postby Extension_Cord » Sat Nov 19, 2011 11:04 pm

johansantana21 wrote:For injured employer's, what would be the damages in this case?

Original contract was for $50k for an actor in a movie. Actor breached.

Reasonable cover contract, the only one available, was for $500k.

The movie with the original actor was expected to make $10million in profits.

The movie with cover contract actor makes $100million in profits.

Would the damages still be: Cover Contract minus Original Contract?

So 500k-50k=450k that the breaching actor has to pay?


I think the P will have to mitigate its consequential damages, meaning it can hire a new actor of similar quality and the breaching actor will pay the difference between the new actors salary - their expected salary (50k).

User avatar
johansantana21
Posts: 855
Joined: Sat Jul 23, 2011 7:11 pm

Re: K Question

Postby johansantana21 » Sat Nov 19, 2011 11:43 pm

Extension_Cord wrote:
johansantana21 wrote:For injured employer's, what would be the damages in this case?

Original contract was for $50k for an actor in a movie. Actor breached.

Reasonable cover contract, the only one available, was for $500k.

The movie with the original actor was expected to make $10million in profits.

The movie with cover contract actor makes $100million in profits.

Would the damages still be: Cover Contract minus Original Contract?

So 500k-50k=450k that the breaching actor has to pay?


I think the P will have to mitigate its consequential damages, meaning it can hire a new actor of similar quality and the breaching actor will pay the difference between the new actors salary - their expected salary (50k).


So if the only actor available was for $10million, was the new actor foisted onto them and the old actor has to pay $10million minus $50k?

User avatar
Extension_Cord
Posts: 592
Joined: Mon Sep 05, 2011 3:15 pm

Re: K Question

Postby Extension_Cord » Sat Nov 19, 2011 11:56 pm

johansantana21 wrote:
Extension_Cord wrote:
johansantana21 wrote:For injured employer's, what would be the damages in this case?

Original contract was for $50k for an actor in a movie. Actor breached.

Reasonable cover contract, the only one available, was for $500k.

The movie with the original actor was expected to make $10million in profits.

The movie with cover contract actor makes $100million in profits.

Would the damages still be: Cover Contract minus Original Contract?

So 500k-50k=450k that the breaching actor has to pay?


I think the P will have to mitigate its consequential damages, meaning it can hire a new actor of similar quality and the breaching actor will pay the difference between the new actors salary - their expected salary (50k).


So if the only actor available was for $10million, was the new actor foisted onto them and the old actor has to pay $10million minus $50k?


Good question, I don't know. My guess is as long as the P reasonably mitigated then yes. I would be interested in hearing from others that have finished Ks.

User avatar
SilverE2
Posts: 931
Joined: Wed Aug 20, 2008 10:04 pm

Re: K Question

Postby SilverE2 » Sun Nov 20, 2011 2:06 am

I'm pretty sure there will be no damages in this case, the value of the contract is viewed from the point of view of the non-breaching party, the film company.

Contract 1, the value was 10 mil minus the cost to employ the actor, 50k
Contract 2, the value was 100 mil minus 500k.

They come out ahead in contract 2.

User avatar
johansantana21
Posts: 855
Joined: Sat Jul 23, 2011 7:11 pm

Re: K Question

Postby johansantana21 » Sun Nov 20, 2011 2:29 am

SilverE2 wrote:I'm pretty sure there will be no damages in this case, the value of the contract is viewed from the point of view of the non-breaching party, the film company.

Contract 1, the value was 10 mil minus the cost to employ the actor, 50k
Contract 2, the value was 100 mil minus 500k.

They come out ahead in contract 2.


This is what I thought but not sure what would happen because the cover contract does cost more and it was reasonably made.

somethingdemure
Posts: 70
Joined: Sun Jun 19, 2011 8:28 pm

Re: K Question

Postby somethingdemure » Sun Nov 20, 2011 3:09 am

Both damages and mitigation capability must be proven. No one can prove the original movie would have made $10 million, or any amount, because it was never made. The $10 million figure is a red herring, especially since it's called "expected," which leads you reasonable to believe it's a factor into "expectancy damages" - but your damages are the profit you can prove you would have made but for the breach.

Second, you have a huge causation issue. I can't see how it would be possible to prove that the actor caused the changed profits. It's just as likely that profits would have been $100.45m if the actor hadn't breached. It was an unexpected hit.

Damages are $450k.

User avatar
buckilaw
Posts: 840
Joined: Fri May 07, 2010 1:27 am

Re: K Question

Postby buckilaw » Sun Nov 20, 2011 3:29 am

Normally in an employment situation like this damages would be determined by the figuring salary of the cover (assuming it's a reasonable cover) minus cost avoided / breaching actor's salary. So the baseline damages are as you say 450k.

The tricky thing here is whether or not the breaching argue can successfully argue that his employer is in a better position due to his breach because of the 100 mil take from the movie. If he can argue that they are better off then their damages would be zero. The only plausible way the breaching actor could argue this is if he drew a distinction between himself and the cover actor and the increase in revenue can be reasonably attributed to the cover actor's performance. This might not be too difficult to do because actor's tend to have different followings; essentially the beaching actor wants to argue that actors are unique and the breach was a good thing for his employer. For instance, Daniel Craig and Nic Cage might get paid the same but one probably fits better into a given role and the movie may do better. This argument is plausible but I can't think of any precedent to support it.

The studio could make a good case against the breaching actor's argument. We are already assuming the cover actor is approximately as good as the breaching actor (we have to otherwise the cover wouldn't be reasonable and then the problem would be easy) so the difference in expected revenue with the breaching actor in the film and the actual revenue with the cover actor might not be attribute to the cover actor, they could have made the same amount of money with either actor meaning that the employer is 450k worse off.

But the best argument the employer could make would simply be to refer to run of the mill employment cases. Because in those cases - as far as I have seen - a breaching plaintiff has never even argued that his employer was better off because they left their job. In short, courts have been adjudicating cases like these for a very long time, the type of evidence the breaching actor is relying on likely isn't relevant and shouldn't be considered. What's more, if a court engaged in such an analysis here then they would be obligated to do so in every subsequent employment case where the employer brings damages for breach. How can this evidence (increase in revenue due to breach) be measured with employees that work in HR or accounting? How can the court rule on the evidence one way or the other when the evidence isn't amenable to favoring plaintiff or defendants (for all we know the studio might have made even more money had the breaching actor not breached!)?

The employer has the stronger argument here because there is no precedent to support the plaintiff's defense and the defense if allowed would be impossible to administer/evaluate. Employer's damages are 450k the cost of the cover, because we can't be certain how the studio would have performed with the breaching actor in the film damages for lost profit and defenses that the employer are better off are unworkable.




Return to “Forum for Law School Students”

Who is online

Users browsing this forum: Google Adsense [Bot] and 12 guests