Much like the zombies in Michael Jackson’s Thriller music video, a 28-year-old arbitration clause has risen from the dead.
After HBO aired the 2019 controversial documentary Leaving Neverland, which chronicled, in extreme detail, Michael Jackson’s alleged sexual misconduct against young boys, the Estate of Michael Jackson (the “Estate”) forcefully denied any accusations of wrongdoing by the late pop superstar. To hold HBO accountable for the documentary, the Estate uncovered a 1992 Agreement between Jackson and HBO, which prevented the studio from disclosing confidential personal information and making disparaging remarks about Jackson. In addition, the parties consented to “arbitrate” any disputes arising out of this agreement. On or about September 2019, the trial court ordered the parties to arbitrate this dispute. HBO appealed this decision to the 9th Circuit Court of Appeals.
Arbitration is an alternative form of dispute resolution, where parties submit their dispute to a neutral third party, known as the “arbitrator,” outside the parameters of the traditional courthouse. During the arbitration, both sides still present their arguments and defenses, like in a regular trial. However, instead of a judge or a jury issuing a verdict or judgment based on the facts, the “arbitrator” will make a binding and non-appealable decision on the case. While judges must follow precedent and substantive law during their rulings, “arbitrators” have wide discretion. Unlike regular trials, arbitrations are usually confidential, meaning the general public does not have access to the proceedings. When arbitration concludes, the award must be confirmed by a judge, who will usually defer to the judgment of the “arbitrator.”
The 1992 Agreement focused on HBO’s exhibition of Jackson’s concert film Live at Bucharest: The Dangerous Tour. Since HBO used excerpts from Live at Bucharest in the Leaving Neverland documentary to showcase Jackson’s misconduct, the Estate argued that this contract and the arbitration clause controlled. HBO conceded that the 1992 Agreement had a valid arbitration clause, but it claimed that the contract had expired, making the arbitration clause inapplicable. The panel of appellate judges agreed with the Estate that the 1992 Agreement controlled the dispute. Thus, the parties must attend the arbitration. The 9th Circuit left open the issue of whether the contract had expired or terminated, leaving this issue for the “arbitrator” to decide.
This case demonstrates the great power of arbitration clauses and how judges are unwilling to rule against their enforceability. Here, the 1992 Agreement was about a completely different film, and yet the court found the Agreement’s arbitration clause to be in connection with the dispute concerning the documentary.
U.S. Circuit Judges Richard A. Paez and Lawrence VanDyke and U.S. District Judge Karin J. Immergut sat on the panel that issued the 9th Circuit’s decision. The case is Optimum Productions Corp. et al. v. Home Box Office et al., case number 19-56222.
The Jackson estate is represented by Jonathan Steinsapir and Howard L. Weitzman of Kinsella Weitzman Iser Kump & Aldisert LLP and Bryan J. Freedman of Freedman & Taitelman LLP.
HBO is represented by Theodore J. Boutrous Jr. and Nathaniel Bach of Gibson Dunn & Crutcher LLP and Daniel Petrocelli and Drew Breuder of O’Melveny & Myers LLP.
* Lowe & Associates (“The Firm”) is an entertainment and business law firm located in Beverly Hills, California. The firm has extensive experience handling cases involving contract law, having provided top-quality legal services to its clients since 1991. The Firm is recognized for its many achievements, including successfully litigating many high-profile cases.
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