Charlie Sheen And The Morality Clause

The Charlie Sheen situation is a classic train wreck.  Nobody can turn away and everyone is waiting for what Charlie Sheen is going to do next.  Well, we may as well pile on and rubberneck a little bit as well.

While everyone is wondering what Sheen is thinking… I wonder what Warner Brothers was thinking when they executed the Personal Services Contract with Sheen.  I think it is fine that Warner Brothers hired Sheen and paid him $2 million an episode because he is an entertaining actor.  However, knowing Sheen’s history with drugs, alcohol and hookers, Warner Brothers should have insisted on a more stringent “morality clause”.  Given that Warner Brothers fired Sheen they better hope that its “morality clause holds up or has another provision that allows them to terminate Sheen

I understand that the “morality clause” in Sheen’s contract reads as follows:

“If Producer in its reasonable but good faith opinion believes Performer has committed an act which constitutes a felony offense involving moral turpitude under federal, state or local laws, or is indicted or convicted of any such offense, Producer shall have the right to delete the billing provided for in this Agreement from any broadcast or other uses which are thereafter made of the episode(s) in which Performer appears. In addition, to the extent such event interferes with Performer’s ability to fully and completely render all material services required hereunder or Producer’s ability to fully exploit the Series, Producer shall have the right to treat such act as a default under the applicable provisions hereof.”

This is a pretty weak “morality clause” as Warner Brothers must prove that they had a (1) reasonable and good faith opinion that (2) Sheen committed an act which constitutes a felony (3) involving moral turpitude.  Sheen definitely conducted himself in a disrespectful, bizarre and unprofessional manner over the past few weeks.  Moreover, I am sure Sheen’s conduct embarrassed Warner Brothers to no end.  However none of that constitutes a felony of moral turpitude.

You may ask, what about the drug use, prostitutes and allegations of domestic violence?  That has to be felonious behavior of moral turpitude.  Sure, it may well be an act of moral turpitude.  But my question, and I am willing to bet Sheen’s lawyers’ question, why didn’t you fire Sheen when he allegedly engaged in those acts.  Sheen’s conduct has been in the tabloids for years now, especially since his bitter divorce from Denise Richards… much of it involving drugs, prostitutes and violence.  However, Warner Brothers turned the other way and pretended that it never happened.  It wasn’t until Sheen began bad mouthing his employers at Warner Brothers that Warner Brothers took action and terminated his employment.  Consequently, you can expect Sheen’s lawyers to argue that Warner Brothers waived its right to terminate Sheen’s contract based on those allegations.

Nevertheless, Warner Brother may still have other grounds to terminate Sheen.  However, I cannot discuss all of them, because I do not have a copy of the contract.  I only have this one little snippet that I pulled from the internet.

In any event, Warner Brothers could have positioned itself better if it created a more stringent moralities clause.  Hindsight being 20/20, I suggest that Warner Brothers would be in a better position if the “moralities clause” looked like this:

“If Producer, in his or her, sole and unfettered discretion, determines that Performer committed any act or did anything which might tend to bring Performer into public disrepute, contempt, scandal, or ridicule, or which might tend to reflect unfavorably on the Network, any sponsor of a program, any such sponsor’s advertising agency, any stations broadcasting or scheduled to broadcast a program, or any licensee of the Network, or to injure the success of any use of the Series or any program, Producer shall have the right to delete the billing provided for in this Agreement from any broadcast or other uses which are thereafter made of the episode(s) in which Performer appears.  In addition, to the extent such event interferes with Performer’s ability to fully and completely render all material services required hereunder or Producer’s ability to fully exploit the Series, Producer shall have the right to treat such act as a default under the applicable provisions hereof.”

As you can see, under this type of “morality clause”, Warner Brothers would have no problem terminating Sheen’s contract as Sheen definitely brought about scandal and ridicule upon himself and Warner Brothers.  Further, Warner Brothers would not need to prove the additional fact that they believed that Sheen  committed a felony.

It is the duty of a transactional attorney to put their client in the best position for litigation in the event that there is a dispute between two contracting parties.  It is not always possible to foresee every potential dispute.  However, when you are entering into a contract with Charlie Sheen, you know that you have a potential ticking time bomb.  As a result, you need to make sure your contract accounts for potential eccentric behavior.  It is clear that Warner Brothers did not put themselves in the best position for litigation when this contract was entered.

Need help drafting your “morality clause”?

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