BATMAN VS... EXTRA? Why You Need to Take the NDA Seriously
October 29, 2014 by Katherine Imp
Last week, a background extra from the upcoming Batman v. Superman: Dawn of Justice leaked details of a female Robin character to a Michigan news station on the condition that he/she remain anonymous. Who cares, right? So what if the world talks about Robin’s gender a few months before they should?
Unfortunately for the “anonymous” extra, it’s not that simple. Online reports suggest he/she could be facing $5 million in damages for breach of his/her non-disclosure agreement (NDA) with the studio.
Now, if you’re an actor, crew member, or hopeful reality show contestant, your first thought was probably, “****, glad it’s not me.” But your second thought should be, “Is that $5 million damages claim even legal? And if so, how do I avoid the same fate?”
Actors, crew, and hopeful reality show contestants, here is your answer: Yes. Studios, networks, and production companies have filed, are filing, and will file a lawsuit against someone with even the minutest breach of his/her confidentiality agreement. These companies have millions, and sometimes billions, of dollars on the line and they will do whatever it takes to protect that income. Take NDAs seriously.
An NDA is a legal contract between two parties that outlines confidential material, knowledge, or information that the parties wish to share with one another for certain purposes (or that one party wishes to share with another party) and concludes with an agreement not to disclose said confidential information to third parties.
There are two situations you may encounter in your career: (1) the NDA from a company with a lot of power, and (2) the NDA from a company or individual with little or no power. You should be afraid of both.
In the situation of a “company with a lot of power,” you could very well be asked to sign an NDA or confidentiality agreement with language similar to the following:
I agree that disclosure of Confidential Information shall constitute and be treated as a material breach of this Agreement and, in addition, shall cause me to pay to Producer total liquidated damages in the amount of Five Million Dollars ($5,000,000) per violation, plus Producer’s reasonable attorneys’ fees incurred to enforce this paragraph. I understand that it would be extremely difficult and impracticable under presently known facts and anticipated facts to ascertain and fix the actual damages that Producer would incur if I breach the terms of this paragraph. Accordingly, I agree that the payment of damages as set forth above accurately reflects the damages that the Producer would otherwise incur. I hereby expressly waive and relinquish any right which I may have to seek to characterize the damages hereunder as a penalty, and further agree that such damages represent a fair and reasonable estimate of the Producer’s actual damages if I breach the provisions of this paragraph.
These so-called “liquidated damages” provisions will be deemed valid by a court of law if damages are difficult to forecast at the time the contract was made and the provision is a reasonable forecast (not a penalty).
In the situation of a “company or individual with little or no power,” the damages are not as lethal but nonetheless could bankrupt you just the same. Here’s why: plaintiffs (the person(s) and/or entit(ies) suing you) have a number of different remedies under contract law. The liquidated damages provision discussed above is only one of many different remedies afforded plaintiffs in a court of law. For example, “compensatory damages” allow plaintiffs to recover both actual and consequential damages from your breach. This means that plaintiffs don’t have to show actual lost profits; they can argue that you owe them for all related damages foreseeable at the time of formation of the contract for breach of the NDA. In other words, “lost reputation” for them, could mean bankruptcy and foreclosure for you.
Oh, and by the way, breach of contract is only one of many claims you could be facing. For example, breach of an NDA could also result in a claim for misappropriation of trade secrets, copyright infringement, breach of fiduciary duty, conversion, trespass, and patent infringement. But we’ll save that discussion for another day.
In sum, don’t repeat history. Let this anonymous extra blunder be a lesson for all. Read the NDA, and don’t tell even your mother what you’ve sworn in writing to keep secret.
Katherine (Kate) Imp is an entertainment attorney at Ramo Law PC and Chicago native. She specializes in film finance, production and distribution for clients in Illinois and across the country. Contact Kate at @KatherineImp or firstname.lastname@example.org.
Disclaimer: The information in this column is intended for general information purposes only and should not be construed as legal advice.