September 04, 2007
The Shirley MacLaine Case
Posted by Gordon Smith

In my Contracts class, we just finished our discussion of the Shirley MacLaine case, the first case in the casebook. If you studied contracts in a law school, you probably encountered the case, which involves a contract between MacLaine and Twentieth Century Fox (TCF). Under that contract, MacLaine agreed to star in the movie version of the popular Broadway musical Bloomer Girl. The movie was never made, but TCF offered to place MacLaine in the lead role of another movie entitled "Big Country, Big Man." She refused, and that film was never made, either. (By the way, MacLaine turned down the opportunity to appear in Casino Royale because she was under contract for Bloomer Girl.)

MacLaine sued for payment under the contract. According to the California Supreme Court, "the sole issue is whether [MacLaine's] refusal of [TCF's] substitute offer of 'Big Country' may be used in mitigation." So conceived, the case turned on whether "Big Country" was "inferior employment" to "Bloomer Girl." The majority felt that "no expertise or judicial notice is required" to see that "Big Country" was inferior, but the dissent observed, "It is not intuitively obvious … that the leading female role in a dramatic motion picture is a radically different endeavor from the leading female role in a musical comedy film." And off we go, discussing the rationales for the "duty to mitigate."

Victor Goldberg's new book, Framing Contract Law, has a chapter devoted to the case, in which he discusses the following "pay-to-play" provision from MacLaine's contract:

We shall not be obligated to utilize your services in or in connection with the Photoplay hereunder, our sole obligation, subject to the terms and conditions of this Agreement, being to pay you the guaranteed compensation herein provided for.

Goldberg observes:

By posing the problem in terms of the "different or inferior" question, the California Supreme Court deflected attention from the essence of the contract. The contract had a "pay-or-play" provision, common in the motion picture industry. The studio had, in effect, purchased an option on her time; they would pay her to be ready to make a particular film, but they made no promise to actually use her in making the film. When Fox canceled the project, they did not breach; they merely chose not to exercise their option. There was no breach and, therefore, there was no need to mitigate.

Interestingly, this theory was presented in the lower courts in the MacLaine case. The Superior Court held that TCF waived the right to have damages mitigated. (Though any actual earnings by MacLaine during the contract period would have to be deducted from the contract price.) At the Court of Appeal, however, a unanimous court found an "implied condition that [MacLaine] mitigate [TCF's] obligation by accepting other suitable employment," but concluded, "It is obvious that the two plays differed widely."

This set the stage for the opinion that appears in my Contracts book, which focuses exclusively on mitigation. Of course, the existence of the pay-to-play provision doesn't do much to deflate the value of that opinion to our discussion of mitigation, but Goldberg's insight reinforces the notion that [appellate] opinions are fables. It also raises more troubling issues about the relationship between transactional work and litigation: "Why did the California Supreme Court ignore the purpose of the relevant contract language in determining whether Shirley MacLaine had to mitigate? Does the disjunction between contract law's analytic boxes and transactional lawyers' practical concerns lead to systematic error in contract litigation?"

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