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Morals Clause: Amazon Ends Woody Allen's Contract: Allen Sues For $68 Million

Amazon reportedly spent over $70 million to lure filmmaker Woody Allen to Amazon productions.  The deal was for a four-picture production and distribution of Mr. Allen's films.  However, Amazon canceled the contract and refused to distribute Mr. Allen's film, "A Rainy Day in New York."  Amazon had originally postponed the release of this first film after, as a result of the #MeToo movement, allegations that Mr. Allen had molested his adopted daughter, Dylan Farrow, in 1992 reemerged last year.  Amazon postponed the release and distribution from 2018 to 2019.  However, the company notified Mr. Allen early this year that it would not be distributing the film and that the full contract was canceled. 


Dylan Farrow has been actively appearing in the media and questioning why those in the film industry continue to work with Mr. Allen based on her allegations.  Mr.  Allen has denied those allegations, and the state of New York declined to prosecute Mr. Allen  when they were first made. 


Mr. Allen has now filed suit against Amazon, seeking $68 million in damages for breach of contract. Joe Flint, "Woody Allen Sues Amazon on Contract," Wall Street Journal, February 8, 2019, p. B1. Amazon explained in its termination notice reasons that included "renewed allegations,"  the inability to "recruit top talent," and "controversial comments."  There were no further details.

The Morals Clause

Many contracts, for sports and Hollywood figures, include what is called a "morals clause."  These clauses permit termination of the artist or athlete when they are charged or convicted of a crime, when there is public controversy about their conduct, statements, or comments, or when, as in this case is alleged, there are primary or secondary boycotts of products or work of the artist or athletes.  


The damages, should the court find that there has been a breach, would be grounded in the contract terms.  Under the contract, Amazon agreed to distribute and promote the films for 90 days and place them in a minimum of 500 theaters nationwide.  Mr. Allen was also guaranteed a minimum of $9 million under the contract.  The damages would include the $9 million plus at least the cost of what it would take for Mr. Allen to promote and distribute the film himself or find another distributor to do so.  Then there would be the damages from what the films could have made, which would be based on the revenues from Mr. Allen's other films.  However, those damages would be reduced by any consumer backlash or boycotts that could be established as a result of the allegations. 


Amazon would have to tie its actions to some terms in the contract and be prepared to show that Mr. Allen's sullied reputation as a result of  the allegations would make it impossible for a successful distribution and/or the future films would suffer because of unwillingness of creative and screen talent to work with Mr. Allen.  That evidence would need to come from the testimony of those in the industry in order to establish that the contract could not longer be completed successfully. 


Amazon has not made a comment on the suit, but Mr. Allen's lawyer notes that the termination does not offer a full explanation or legal grounds for the termination.  For now, the parties will proceed with the suit, perhaps seeking some form of settlement as it progresses. 



Make a list of the types of witnesses that might be needed in this case for proof purposes as well as for damages.

Discuss what a morals clause should cover.