Legal Lessons from the World of Reality TV: Waiving a Contractual Right to Arbitrate an Employment Dispute (Part 1 of 2)

Reality TV is a guilty pleasure for some - not us at Suits by Suits, mind you, as we prefer to focus our attention on the more pressing legal questions of our time.  Reality TV is also a highly competitive industry and fertile ground for lawsuits between companies and star employees with lessons for all of us about employment contracts.  In our last episode, MSNBC and the former host of My Big Obnoxious Fiance taught us about repudiating contracts.  In this episode, CBS and three former producers of Big Brother  teach us about waiving a contractual right to arbitrate an employment dispute.

The three former Big Brother producers - Corie Henson, Kenny Rosen and Michael O’Sullivan – eventually wound up working on the production of ABC’s The Glass House, which CBS has called a blatant rip-off of Big Brother, and which aired last summer.  Before it aired, in May 2012, CBS sued ABC and the three former producers in federal court in Los Angeles.  The former producers had signed non-disclosure agreements (NDAs) with CBS in connection with their work on Big Brother.   CBS sought to temporarily restrain ABC from airing the first episode of The Glass House, claiming that ABC and the former producers had violated CBS’s copyrights and misappropriated its trade secrets in the production of the show.  CBS also claimed that the former producers violated the NDAs by disclosing confidential information and trade secrets relating to technical, behind-the-scenes aspects of filming and producing Big Brother.

The court allowed CBS expedited discovery, including document productions by the defendants and a deposition of one of the former producers, but ultimately denied CBS’s request for a temporary restraining order, finding that CBS was unlikely to prevail on its copyright or trade secrets claims.  ABC aired the entire season of The Glass House through its finale in August.  CBS then dropped its suit and issued a statement that “The contract and trade secrets claims against former Big Brother producers for violating their confidentiality agreements will continue separately in arbitration.”

Earlier this month, the three former Big Brother producers filed a new suit in federal court in Los Angeles against CBS seeking, among other things, a court declaration that CBS waived its contractual right to arbitrate by filing the first lawsuit and pursuing discovery and the restraining order.  The NDAs apparently contain mandatory arbitration clauses, as do many contracts between employers and high-level employees. 

The danger for parties to employment contracts with arbitration clauses that Big Brother v. The Glass House highlights is that – even if you have a contractual right to arbitrate, you may be found to have waived that right if you act inconsistently with having the right.  The flip side of that is that, if you would prefer not to arbitrate your dispute and your adversary goes along with you in court for a while but then claims that the dispute must be arbitrated, you could argue waiver.  A contractual right to arbitrate can be waived just as other contractual rights can be waived.  However, courts are generally less inclined to find the waiver of a contractual right to arbitrate than waiver of other contractual rights.  For details, stay tuned for our next episode.

• Arbitration
• Arbitration and ADR
• Breach of Contract
• The Basics