Rather v. CBS Contracts Story Omitted from Redford’s “Truth”

Robert Redford’s latest film, Truth, dramatizes the last stand of newsman Dan Rather, longtime face of CBS News until fired for a controversial 2004 broadcast about President George W. Bush. The film, which debuted this week at the Hamptons Film Festival in Long Island, New York and opens October 16, is based on the book by Rather’s producer, Mary Mapes, and is therefore biased.  It is nevertheless a rich story, with Redford playing Rather and Cate Blanchett portraying Mapes (all pictured nearby).  The true story culminated, moreover, in a fight between Rather and CBS about contract interpretation, although neither the book nor the film delves into this important topic.

Amid a heated 2004 presidential election, on a CBS 60 Minutes broadcast of September 8, 2004, Rather questioned President Bush’s service in the Texas Air National Guard during the Vietnam era. Rather implied that Bush exerted political influence to avoid that era’s military draft by entering the Guard, and then receiving special treatment to skip military duties. A media melee followed Rather’s show. Bush supporters challenged its accuracy, the authenticity of documents used, and Rather’s journalistic integrity, which many believed was compromised by bias against President Bush.

After investigation, CBS disavowed the broadcast and, two weeks later, an emotional Rather apologized for it on national television. But CBS and Rather disagreed on the overall journalistic quality of the broadcast and what to do about it. Rather identified important accurate facts in the broadcast, obscured by the firestorm, and urged a defense of those whose reputations, including his and Mapes, the broadcast imperiled.

For its part, CBS emphasized the journalistic lapses and wanted to let it go at that. Believing CBS was most interested in the politics of good relations with the White House, as Bush was running for reelection in a heated contest against Senator John Kerry, Rather retracted his apology and claimed CBS fraudulently induced it. The day after President Bush won reelection, CBS told Rather it planned to remove him from his coveted spot as anchor of the CBS Evening News—a stinging rebuke. Rather’s last broadcast as anchor was March 9, 2005.

During the next 15 months, through May 2006, CBS kept Rather on its payroll, paying his salary of about $125,000 per week ($6 million annually). CBS gave him irregular appearances on CBS programs covering less significant stories, and his former television profile diminished. He rarely appeared on the network’s big-time shows such as 60 Minutes. Worse, CBS prevented him from pursuing jobs with competing networks or other media. Rather claimed that CBS marginalized him by giving him limited staff and editorial support; rejected most of his story proposals and aired those it accepted at off-peak times; denied him the chance to appear as a guest on other programs; and generally prevented him from refurbishing his reputation.

When CBS terminated Rather in May 2006, Rather claimed breach of the contract the two had since 1979 and had amended in 2002. In Rather’s interpretation, the 2002 additions to their contract addressed what CBS had to do if it removed him as News anchor: either appoint him as a regular correspondent on 60 Minutes or both (a) immediately pay the full balance due under their contract and (b) let him work elsewhere. Rather alleged that CBS breached because it did not appoint him correspondent, merely paid his regular weekly payroll through mid-2006, and barred him from seeking other employment.

In contrast, CBS interpreted its actions as complying with the contract. It acknowledged the 2002 terms Rather pointed to, but stressed another broader feature of the original 1979 contract called a “pay-or-play clause.” CBS could discharge all obligations under the contract simply by paying Rather the agreed weekly compensation. Nothing required CBS to use Rather’s services, whether as News anchor, 60 Minutes correspondent, or anything else. True, the 2002 additions said if Rather was removed as News anchor CBS would reassign him to 60 Minutes. But the pay-or-play clause meant that even if CBS removed him and did not reassign him, it was not required to release him from the contract or accelerate that compensation.

The two key contract clauses were thus inharmonious with one another. CBS explained the importance and rationale of the pay-or-play clause in business and editorial terms. It called “absurd” the notion that a network would cede to a reporter editorial authority over who would be on what program, as anchor or correspondent, or what stories would air. Rather emphasized the clauses specifically addressing what would happen if CBS removed him as News anchor and did not reassign him as 60 Minutes correspondent: the contract would end, he would receive an accelerated salary payout, and could work elsewhere. Meeting CBS’s business and editorial accounts of the bargain, this interpretation doesn’t cede network power to a reporter. Instead, it reflects the elevated status of the person, and terminates the bargain if that status is discontinued.

In the end, the court adopted a literal approach, viewed the pay-or-play provision as controlling, and sided with CBS. The pay-or-play provision, paraphrased as follows, was clear and unqualified: Nothing obligates CBS to use Rather’s services or broadcast any program, and CBS fully discharges its obligations by paying Rather’s compensation. In contrast, the removal and reassignment clause Rather emphasized was qualified, fronted by the provision: “except as otherwise provided in this contract.”  The court took that as telltale language of intent: that any conflict between the two provisions was to be resolved in favor of the pay-or-play provision.

But it was a close call. The pay-or-play clause dated back to 1979 and is a standard clause in many industries, including broadcast and general entertainment. While it is clearly important to protect networks like CBS from ceding managerial control to staff, employees who accumulate power through notoriety can gain negotiating leverage in their contracts. The 2002 changes were made when Rather personified the network and enjoyed commanding stature—perhaps not on par with his predecessor, Walter Cronkite, but close. It wouldn’t be surprising for the network to cede the little that Rather’s interpretation of the contract suggested: keep him in high-level posts or let him out and accelerate his pay.

Under the court’s and network’s interpretation, though, the contract’s language, “except as otherwise provided,” rendered the whole of that provision meaningless. It’s hard to imagine that the two parties took the trouble of writing those clauses with the intention of giving them no meaning. Still, such recurring phrases provide recognizable cues to judges trained to detect certain intent and meaning in them, and people handling contracts are expected to understand that. Don’t expect much from the book or film Truth about these points, however, as both show little understanding of contracts, and limited interest, preferring the drama of politics and broadcasting over the sober terms of deals.

Lawrence Cunningham is a professor at George Washington University whose forthcoming books include the second edition of Contracts in the Real World: Stories of Popular Contracts and Why They Matter, which includes this story and fifty more. 

Sources: Rather v. CBS Corp., 68 A.D.3d 49, 886 N.Y.S.2d 121 (N.Y. App. Div. 2009). This discussion is based on both the court’s opinion in the case and the briefs filed by the parties.

Photo Credit: by Andrew Walker (Variety)

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6 Responses

  1. Brett Bellmore says:

    Don’t even expect much truth from the film. By all reports, it is dedicated to pretending the forged documents were real.

  2. Joe says:

    Expecting your garden variety “based on truth” film not to have some key differential from what actually happened is a misguided enterprise. As someone who is concerned about history and portrayal of it, this concerns me. I don’t expect films to care much about the business side of things though the matter might be of some concern to specialists.

    The whole controversy is a sign of misguided concerns. The idea that a well off person was able to cut corners in their National Guard service during Vietnam was not particularly shocking — even granting he did it, it was simply not really THAT big of a deal when deciding who to vote for decades later. But, it was seen as a potential big “gotcha” and the rest is history as they say.

    I guess there is a story here but the lessons might not be the ones the Redford thinks are most notable.

  3. Brett Bellmore says:

    I’m not so concerned with your average “based on a true story” drama, but this is nominally a documentary, and should have some greater connection to the actual truth than using it sparingly as a kind of spice.

    The concern here is that ‘history’ is starting to bifurcate, groups are crafting their own closed universes that don’t acknowledge inconvenient facts, but just go on as though everything conformed to their ideology. This is an example of this process, where the “Bush was a draft dodger” meme is sustained in the teeth of the evidence for it having been a clumsy forgery.

    Rather didn’t seize on the forgery because it was just piling on a well proven case. He seized on it because he was trying to put forward a case embarrassingly lacking in evidence. 60 minutes has become notorious for using faked evidence, like showing cars flipping over and not disclosing they’d been specially weighted to accomplish it. It was something in the show’s culture, perhaps.

    But something else is going on when people find out the evidence of a thing was faked, and insist on going on believing it.

  4. Professor Cunningham nails the point and the flaw with this movie. It’s unfortunate that movie audiences prefer melodrama over facts, but ticket sales are the bottom line. Personally, I’d have been interested in watching a movie about the contract fight. A good filmmaker could have turned it into a compelling drama. Instead, we get regurgitated quasi-reality show nonsense.

    (full disclosure: Prof. Cunningham was my Contracts professor in law school and to this day, I am a detail oriented SOB when it comes to negotiating and drafting agreements, and I’ll glom onto the prefatory language to hammer home points like the one illustrated in this post)

  5. Joe says:

    A few people might be interested in a contract fight, but sorry, dramatically speaking, that is not a major draw. Dramatic license allows some changing of facts. So, seriously, the issue is what really matters. And, in this film, I doubt that is it.

    I do not think a movie with Cate Blanchett, Robert Redford etc. is a “documentary” — it is a based on truth drama that is akin to many films that supposedly provide a basic true portrayal of the facts with the usual understanding some dramatic license is involved. Some might find this more important than some t.v. movie based on the “Long Island Lolita” or something, but even there, we are dealing with portraying the truth and it is a concern. If the real life drama there involved some gun owner being badly portrayed, e.g., Bret given his concerns might not blithely not care. He would realize that dramatic portrayals of truth like that matter.

    Brett also is back to his “these days” stuff — yet again, when was golden age when we didn’t “bifurcate” — when did this “start”? I am not aware that 60 Minutes, around since before I was born, on the whole is bad here. Among its thousands of stories, a few were questionable. This is how freedom of the press works and it was more blatant in the past though modern mass media has its own ways of tempting people. But, that is an age old story, which can be good drama if done correctly.

  6. Lawrence Cunningham says:

    Brett and Joe: Glad you found a basis to mix it up, but my post doesn’t have anything to do with the topics you are discussing. It is about an interesting contract law question embedded, as they so often are, in the background of a lively public fight that has just been given extended life by a major motion picture nearly a decade after the event.

    Marc: Great to hear from you, thanks for your kind words, and so happy to hear about your engagement with contracts! All the best.