Part I: The Birth of Morals Clauses in Entertainment Services Contracts

The issues highlighted by the #MeToo and Time’s Up movements have refocused the spotlight on morals clauses in talent agreements.  Morals clauses (or morality clauses) are contractual provisions which give entertainment and media employers – e.g. motion picture studios, television networks, producers, news media providers, advertisers, sports leagues etc. – the right to terminate contracts if the talent behaves in a way that negatively impacts his or her public image and devalues the services to be provided under the contract.  Originally introduced by Universal Pictures in 1921, the prevalence of morality clauses in talent agreements appeared to have declined in recent years.  Today, in 2018, following a slew of cancelled film releases, film projects, television series, and comedy specials, some companies have revisited the use of morals clauses to protect their investments.

Movie studios first introduced morality clauses after the public outcry following the arrest and widely publicized trials of silent film actor Roscoe ‘Fatty’ Arbuckle in 1921. Arbuckle was among the most popular, and most highly compensated, silent film stars of the 1910s.  In the summer of 1921, Arbuckle signed a three-year contract with Paramount Pictures for $1 million a year (estimated to be worth over $42 million today).  Arbuckle had just completed his starring role in a comedy called Leap Year, which was set to be released.  Over Labor Day weekend, Arbuckle traveled to San Francisco, checking into a suite at the St. Francis Hotel.  During the gin party that ensued (this was during Prohibition), an actress named Virginia Rappé was found severely injured in Arbuckle’s suite.  After Rappé died from a ruptured bladder, Arbuckle was arrested on rape and murder charges.  His arrest caused a media frenzy.  Even though Arbuckle was acquitted after three trials and was even issued an unprecedented statement of apology from the jury, the scandal marked the end of Arbuckle’s career.  Public opinion had turned against the once beloved actor.  The newly formed Motion Picture Producers and Distributors of America–the organization that later became the Motion Picture Association of America–banned Arbuckle from appearing in films.  Though the Association lifted the ban eight months later, Arbuckle’s career was over. Leap Year was never released, and Paramount presumably lost a substantial investment.

In response to the public disenchantment with Arbuckle and a growing concern about Hollywood scandals, the Universal Film Company announced that it would include clauses in all its talent agreements “permitting the company to discontinue their salaries if they forfeit the respect of the public.”  (Morality Clause For Films, N.Y. Times, Sept. 22, 1921, at 8) (PDF).  The announcement noted that though “[i]t may have a restraining influence on some thoughtless or willful actors; it will reassure the public, who for the moment may be inclined to fear that all their screen idols have feet of clay, and it will protect the company in an investment, often of hundreds of thousands of dollars.” Id.  Other studios followed suit, and morality clauses became a standard term in talent agreements.

During the 1940’s and 1950’s, several studios used morality clauses to terminate talent contracts based on politics.  Morality clauses were used to dismiss the so-called Hollywood Ten, a group of ten actors and screenwriters who were jailed and blacklisted by movie studios for publicly denouncing the activities of the House Committee on Un-American Activities (HUAC) during its investigation of Communist influence in Hollywood.  In a series of high profile cases, the Ninth Circuit Court of Appeals upheld the dismissals under the morality clauses.  In one case, the Court held that “because, even in 1947, a large segment of the public did look upon Communism and Communists as things of evil,” by failing to assist the HUAC, the screenwriter breached his agreement “not do or commit any act or thing that will tend to degrade him in society or bring him into public hatred, contempt, scorn or ridicule, or that will tend to shock, insult or offend the community or ridicule public morals or decency, or prejudice the producer or the motion picture, theatrical or radio industry in general.” Loew’s, Inc. v. Cole, 185 F.2d 641, 644-645 (9th Cir. 1950).  The court reached similar conclusions in Twentieth Century-Fox Film Corp. v. Lardner, 216 F.2d 844 (9th Cir. 1954) and Scott v. RKO Radio Pictures, Inc., 240 F.2d 87, 88 (9th Cir. 1957).

In the decades that followed, the prevalence of morality clauses in film and television contracts started to decline. While such clauses remained prominent in celebrity endorsement agreements, morals clauses were criticized by some for their vagueness and fell out of favor.

Both the Director’s Guild of America (DGA) and the Writer’s Guild of America (WGA) have banned morals clauses in guild member agreements for decades.  The DGA Basic Agreement states that,  “Employer agrees that it shall not include or enforce any so-called ‘morals clause,’ as the term is commonly understood in the motion picture and television industries, in any contract of employment or deal memo for the services of an employee.”  Similarly, the WGA Basic Agreement states that, “Company agrees that it will not include the so-called ‘morals clause’ in any writer’s employment agreement covered by this Basic Agreement.”  The Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA) does not impose a similar prohibition.