Keith Olbermann, Current TV, and Drafting an Employment Contract

| Zuckerman Spaeder Team

On March 29, 2012, Current TV fired well-known TV personality and “baseball nerd”  Keith Olbermann a little more than one year into Olbermann’s five-year, $50 million contract in which Olbermann would move his political news and commentary program Countdown With Keith Olbermann from MSNBC to the fledgling Current TV network founded by former Vice President Al Gore and entrepreneur and politician Joel Hyatt.  Current’s termination letter alleges numerous material breaches of contract by Olbermann (described below) as a basis for its decision.

Unsuprisingly, Olbermann filed suit just one week later, suing Current for breach of contract and seeking the balance of his unpaid salary as well as consequential damages related to Olbermann’s ownership stake in Current TV.  Olbermnan’s lawyers estimate those damages at “between approximately $50 million and $70 million.”  Complaint, paragraph 10.  One day later, Current counterclaimed against Olbermann seeking a declaration that it was within its rights to terminate Olbermann and seeking unspecified damages arising from Olbermann’s alleged “repeated and continuing material breaches” of contract.  Counterclaim at 16.

For many of us watching from the sidelines, the Olbermann-Current lawsuit vividly illustrates the dangers of litigating in the press; as a result of the lawsuit, unflattering stories have leaked out about both sides.  So, now we’ve been told in high-profile newspaper and online sources that Keith Olbermann apparently fired eight different limousine companies and allegedly threw a temper tantrum (and a glass mug full of water) on the set of his TV show.  On the other side, the lawsuit has highlighted what appear to be serious deficies with Current TV’s ability to produce quality television shows, and Olbermann has publicly questioned Current’s judgment in hiring on-air talent, calling Current TV host Cenk Uygur someone who has “difficulty separating facts from things he wanted to be true.”  Olbermann even takes a tongue-in-cheek shot at Current TV’s president Al Gore’s famous misquotation at having invented the Internet, alleging that “Stunningly, Al Gore’s network was not interested in establishing a strong internet presence.”  Complaint, paragraph 29.  (Strangely, Keith Olbermann’s Countdown blog remains posted on Current TV’s website despite Olbermann’s termination.)

But beyond the salacious details leaked to the press is a cautionary tale to both employers and employees alike in crafting a personal services contract that protects your interests.  Current admits that it was looking for a star to be the “centerpiece” of its strategy to deliver progressive cable television news and commentary, Counterclaim paragraph 3, and recruited Olbermann for that role.  To do so, Current apparently gave Olbermann various rights – including absolute rights over the editorial content of Countdown and to use his name and likeness in advertising – that would wind up conflicting with Current’s expectation that Olbermann work with Current to build its brand and promote other Current TV programming.  As a result, Current finds itself embroiled in a messy and public $70 million lawsuit, the outcome of which is impossible to predict at this time.

The lawsuit is likely to turn in large measure on whether Current was justified in terminating Olbermann for uncured material breaches of his employment agreement.  Current has alleged six different breaches by Olbermann:  that he (1) improperly disclosed his compensation in the press; (2) refused to “meaningfully consult” with Current executives, (3) failed to promote Countdown, (4) made disparaging public statements regarding Current, (5) used an “unauthorized guest host” on Countdown, and (6) took unauthorized vacation days.

Here, Current seeks to take advantage of the well-known axiom in contract law that another party’s failure to perform on the contract relieves the first party of its obligations.  As the Restatement (Second) of Contracts, section 237 notes:  “[I]t is a condition of each party’s remaining duties to render performances to be exchanged under an exchange of promises that there by no uncured material failure by the other party to render any such performance due at an earlier time.”  Thus, the three inquiries we must make with respect to these arguments are:  (a) did a breach occur; (b) was the breach material; and (c) was the breach uncured?  If the answer to all three questions is “yes,” then that event would likely justify Current’s failure to perform on its obligations (i.e., by not paying Olbermann the nearly $40 million remaining on his contract).

As a threshold matter, Olbermann claims that his contract contains an “Uncured Default” provision that requires Current to give written notice of any potential default and then to give Olbermann five days to cure such default.  Olbermann then claims that for each of these six claims, Current never provided written notice of an event of default or requested that he cure.  If true, this would likely be fatal to Current’s position; such clauses are commonplace in service contracts and failure to provide written notice (and give Olbermann the opportunity to cure any default) would preclude Current from later terminating Olbermann’s contract on the basis of such defaults, even if they occurred exactly as Current described.  On the other hand, we do not know if the contract specified the form such notice was to take, and both Olbermann and Current describe numerous back-and-forth emails and letters regarding each side’s grievances.  It is plausible that a court might interpret such correspondence as the notice required by the contract.  The lesson here is straightforward:  if you are an employer who believes your employee to be in default on his contract, you should send a formal, written notice of the default to your employee and specify precisely how the default is to be cured.

Keith Olbermann’s contract and the evidence supporting or refuting these claims remains confidential.  Nevertheless, we can look at the allegations in the parties’ pleadings and evaluate the potential strengths and weaknesses of these arguments in light of the evidence that the parties themselves claim to be able to produce.  We’ll do that in detail over the course of the week, with ideas as to how both sides could have protected themselves better in advance.  Stay tuned!

One final note:  in the very first paragraph of its counterclaim, Current alleges that Keith Olbermann admitted to David Letterman that his termination “was my fault” and that “I screwed up.”  If true, this would be a significant statement against interest that would, at minimum, weaken Olbermann’s credibility in court.  Of course, quoting someone with a sarcastic wit such as Olbermann can be perilous; here's the unedited, 14-minute interview by David Letterman.  What do you think?  Did Olbermann concede that the termination was his fault, or -- by comparing himself to a “ten million dollar chandelier”  without a house to hang it -- was Olbermann poking fun at himself for taking the Current TV deal in the first place?  Once again, although the salacious details garner the most media attention, it is likely to be the nuts-and-bolts of the contract itself on which this case ultimately hinges.

Information provided on InsightZS should not be considered legal advice and expressed views are those of the authors alone. Readers should seek specific legal guidance before acting in any particular circumstance.

As the regulatory and business environments in which our clients operate grow increasingly complex, we identify and offer perspectives on significant legal developments affecting businesses, organizations, and individuals. Each post aims to address timely issues and trends by evaluating impactful decisions, sharing observations of key enforcement changes, or distilling best practices drawn from experience. InsightZS also features personal interest pieces about the impact of our legal work in our communities and about associate life at Zuckerman Spaeder.

Information provided on InsightZS should not be considered legal advice and expressed views are those of the authors alone. Readers should seek specific legal guidance before acting in any particular circumstance.