“Survivor” Contract May be Invalid
Contestants on the “Survivor” reality television show make many strict non-disclosure promises and bind themselves to pay CBS $5 million for the breach of any one of them. As risk of premature disclosure of the drama rises, the validity of these clauses may be tested in court. In my opinion, the damages clause is likely to be held invalid.
“Survivor” fan Jim Early, whom CBS reportedly sued last year, allegedly spoiled upcoming show episodes. Early has now fingered the leaking contestant as Russell Hantz, and CBS has withdrawn its suit against Early and now targets Hantz.
Reality shows such as “Survivor” can be spoiled by premature release of participant identities and those set for elimination. People seeking to be contestants on “Survivor” sign a 32-page single-spaced contract. Paragraph 24 (on pages 10-12 of the contract) expresses strict and broad contestant promises to protect program confidentiality.
They cannot talk about their appearance for 3 years after episodes air and can never write a book or magazine article about their appearance. Since players learn outcomes when taping long before episodes air, the contract puts a tight lid against players revealing anything about that (including information about contestants eliminated or victorious). Contestants may not communicate with other contestants for stated periods. The contract delineates a dozen more promises of varying significance.
The detailed non-disclosure paragraph concludes with an agreement reciting that the contestant understands that any breach of these provisions will cause CBS “significant” and “irreparable” harm. The contestant agrees that it would be “impracticable” to calculate these damages with “certainty or specificity.” Accordingly, the contract selects $5 million as the amount that any breaching contestant must pay CBS for any breach.
The clause declares itself to be “liquidated damages” and expressly denies being a “penalty.” It announces that it represents the considered judgment of the contestant and CBS about the “fair average compensation” for breach. It adds that the amount is “reasonable compensation for the harm which will be incurred.”
These linguistic maneuvers are all intended to promote the clause’s validity under ancient contract law doctrine. This enforces party attempts to set damages at compensatory levels when it is hard to determine them but denies effect to those designed to coerce, penalize or prod parties to contracts.
The trouble with the CBS clause, however, is that it is very long on such verbal protestations and short of any actual attempt at estimation. The clause purports to apply the $5 million to each and every one of a potentially infinite number and type of breaches the page-long set of promises delineates.
Discuss your appearance just shy of your third anniversary, pay $5 million; write a short blog post about it, $5 million; write a full-length book reflecting on your “Survivor” appearance or merely mention it in passing in your auto-biography, you owe CBS $5 million.
In the piquant phrase from a famous contracts case by Judge Richard Posner, CBS’s stipulated damages are “invariant to the gravity of the breach.” There is a very good chance that this clause would be invalid in respectable US courts properly applying basic contract law principles.
CBS would then have to prove its actual damages the usual way. That requires showing what they are with reasonable certainty, showing that they were foreseeable, and showing that it could not with reasonable effort have mitigated them. It would be interesting to see how far the company got in such a case and what the contestants would do afterwards. Maybe go berserk.