Repudiation 101 Courtesy of Claudia DiFolco and MSNBC

| Marcus, Ellen

In part two of our series on suits brought by Hollywood actresses against TV networks, we feature a case brought by Claudia DiFolco, actress and host of the one-time reality series My Big Fat Obnoxious Fiance, against her former employer MSNBC.  Whether Hollywood actresses will continue to bring cases that perfectly illustrate black-letter legal concepts like repudiation remains to be seen. 

DiFolco v. MSNBC – and the decisions that it generated in the U.S. District Court for the Southern District of New York and U.S. Court of Appeals for the Second Circuit in particular – serves as a reminder to companies and executives alike that even seemingly airtight employment contracts can be for naught if the parties “repudiate” them by future conduct, making their provisions unenforceable.

In part two of our series on suits brought by Hollywood actresses against TV networks, we feature a case brought by Claudia DiFolco, actress and host of the one-time reality series My Big Fat Obnoxious Fiance, against her former employer MSNBC.  Whether Hollywood actresses will continue to bring cases that perfectly illustrate black-letter legal concepts like repudiation remains to be seen. 

DiFolco v. MSNBC – and the decisions that it generated in the U.S. District Court for the Southern District of New York and U.S. Court of Appeals for the Second Circuit in particular – serves as a reminder to companies and executives alike that even seemingly airtight employment contracts can be for naught if the parties “repudiate” them by future conduct, making their provisions unenforceable.   

Generally speaking, the repudiation of a contract is a statement or act by one party to a contract indicating that she refuses to perform under the contract, which then relieves the other party from its obligations under the contract.  The repudiation must be very clear to the other side.  For example, in New York and other states, courts will not find that repudiation occurred unless a party’s announcement of an intention not to perform under the contract is “unequivocal.”  Where the repudiation is in writing and unambiguous, a court can resolve the issues of repudiation as a matter of law.  DiFolco’s case against MSNBC shows how repudiation might become an issue in the employment context. 

DiFolco had entered into a two-year employment contract with MSNBC to be a Los Angeles-based correspondent for two shows – “MSNBC at the Movies,” and “MSNBC Entertainment Hot List.”   The contract was to run from January 2005 to January 2007.  By August 2005, DiFalco had become unhappy with her job and sent a couple of e-mails to her superiors at MSNBC, including one to her producer saying, among other things, that she wanted to meet “to discuss my exit from the shows,” and another one the next day saying, “to be clear, i [sic] did not resign yesterday and was merely giving you significant notice of my intention so you could be thinking about alternatives for next year.”   DiFolco’s superiors – apparently not happy with DiFolco’s performance on the show – somewhat gleefully e-mailed each other about “drop[ing] her off the show immediately . . . after all she resigned!” and e-mailed her that “[m]y complete impression is that you have resigned.”   Shortly thereafter, MSNBC removed DiFolco from the payroll and put her on “suspended assignment” status.  DiFolco sued for, among other things, breach of the employment contract. 

Initially, the district court dismissed the case.  The court determined that DiFolco’s e-mails (which were incorporated by reference in the complaint and could therefore be considered on a motion to dismiss), unequivocally indicated that she had repudiated her contract by resignation.   On appeal, the Second Circuit disagreed and reversed, finding that the e-mails did not unambiguously state an intention to leave and that there were factual issues as to whether “DiFolco had made a final and definite communication of an intent to forego performance or had indicated her refusal to perform in a clear and unqualified way such as to justify a conclusion that she had repudiated her contract.”  DiFolco v. MSNBC Cable L.L.C., 622 F.3d 104, 112(2d Cir. 2010).  

The case was remanded back to the district court.  After discovery, MSNBC moved for summary judgment, again contending that DiFolco had repudiated the contract by resigning, and pointing to the same e-mails as its primary evidence in support.  This time, the district court disagreed, finding that “given the conflicting statements contained in the August 23 e-mail . . . that Plaintiff both wanted to discuss her exit and at the same time was planning on working the following week – the Court cannot at this point conclude that based on the August 23 email Plaintiff’s intention to resign was ‘positive and unequivocal.’”   DiFolco v. MSNBC Cable L.L.C., --- F Supp. 2d ----, 2011 WL 5519824, at *6 (S.D.N.Y. Nov. 9, 2011).

Employers and employees alike can learn from the dispute between DiFolco and MSNBC that, where a contract governs the employment relationship, and the relationship goes sour, the parties should not jeopardize their rights under the contract by acting in a manner that could be construed as repudiating the contract.  Written communications, especially, should be done with care.  That can be tricky when emotions may be running high.  In DiFolco’s case, her e-mails were found to be sufficiently ambiguous that her case lived to see another day.