NOTE: All claims in this article are allegations. Nothing should be taken as fact. The matters have yet to be litigated and any claims not stipulated to by all parties should be considered allegations. The claims have been taken from publicly available court filings, reporting from major news outlets, and public statements made from the parties involved. All conclusions (legal and otherwise) are the author’s own opinion and should not be considered fact. The purpose of the article is to shine a light on the issues, defenses, and legal procedure of the Johansson and Disney legal disputes.
It is time to take a look a close look at this Scarlett Johansson vs Disney, by way of Marvel, lawsuit filed a month ago. There is so much online, twitter-verse chatter that focuses on the drama of it all, but what is truly being alleged, what are they key facts that need to be proven, what are the consequences for both parties, and what is going on with all of these procedural issues popping up?
I cover the Walt Disney Company’s business and theme park matters for The DisInsider and I felt it was time I took the JD (law school degree) I earned back in 2010 and put it to use to help the average user make sense of the legalese (a term used to describe the complicated legal language used by those in the legal profession). This article is simply my observations, my interpretation of the legal issues, and my attempt to cut through the noise and get at the heart of the issue.
Let’s first get this out of the way. There is no doubt that, on its face, this is a ‘sexy’ lawsuit.
It involves the largest entertainment company in the history of the world, the Walt Disney Company.
It involves the most successful film franchise in history, Marvel Cinematic Universe.
It involves a popular, beloved, and talented female actor, Scarlett Johansson.
The back and forth public statements between spokespersons of both parties has been wholly unhelpful in terms of settling a legal question, but, it has sure been entertaining for the casual reader. Johansson’s people calling out Disney executive’s compensation, Disney’s people calling out Johansson’s compensation, Johansson’s people claiming misogyny, Disney’s people claiming callous disregard for dangers of covid. Etc. Etc. None of it is helpful in terms of the practical matter at hand, but, it makes for good gossip and entertaining headlines.
The lawsuit has been framed by some as a David vs Goliath story, painting Johansson as some underdog battling the giant Disney. This seems a bit dramatic, seeing as though we have a multi-millionaire battling a billion dollar company. Sure, one party is significantly larger than the other, but we are not talking about some average middle class Joe from your hometown taking on an industry leader. This is more like a ‘David’s rich and successful aunt Scarlett vs Goliath.’ Regardless of the outcome, both parties will be just fine. But that doesn’t mean the case does not have big stakes.
The issue for Johansson seems focused on her payout for Black Widow, but the case has larger repercussions for Disney, and the entertainment industry as a whole. For years there has been a shift away from traditional movie releases, as streaming has turned the industry upside down. This began prior to the pandemic, but has only been exacerbated by covid-19. There are a number of issues that could be decided by the court that could have long-lasting impacts on upcoming films and how talent is reimbursed. This is the real issue that concerns Disney. The precedent set by this case.
So what is the general gist of the case? Let’s first start with the three players.
- Scarlett Johansson
- Walt Disney Company
While Marvel is owned by Disney, it is still its own business entity, this is important to remember to understand the lawsuit.
Here is an abridged overview of the general facts leading to the alleged misconduct.
A few years back Johansson began portraying the Black Widow character in the Marvel Cinematic Universe (MCU). She was always a supporting character, but popped up in a large number of movies. The MCU made billions and Johansson’s Black Widow was vital to the success of many of these movies. The character died in the fourth Avenger’s film, Avengers: End Game.
Early on there was talk between Johansson and Marvel about giving Black Widow her own standalone origin film. This was agreed to and a contract was drawn up and signed. Production was completed, the film was finished, and all that was left was to release it.
At the same time, Disney was getting their act together to release their flagship streaming service, Disney+. As Black Widow was being produced, more information started coming out about Disney+’s content. Namely, that it would include the MCU library and future content made directly for the service.
Before Disney+ launched in November 2019, Johansson’s people reached out to Marvel to make sure the film was getting a theatrical release. They were nervous after hearing the plans for Disney+. Her people were assured via email that Marvel would release Black Widow in theaters.
(Now, before those familiar with the lawsuit lose their mind, I know there are very important details being left out in my overview. Details that the lawsuit hinges on, but I am giving a general ‘lay of the land,’ before diving into specifics. I think getting a 10,000 foot bird’s eye view of things helps before digging into the minutia.)
The release date was set for May 2020.
Unfortunately, the covid-19 pandemic quickly spread and the world shutdown in early March 2020. The theatrical releases set for the rest of 2020 were put in limbo. Initially the question was not ‘will people to go the theaters,’ the question in the early days was ‘will the theaters be allowed to be open?’ The May 2020 release date was pushed back and the entertainment industry had to quickly adjust.
Black Widow’s release date changed a number of times, before settling on July 9th, 2021. In the end, Disney made the decision to release the film same day and date in theaters and on their streaming service, Disney+, with premier access. To stream the movie, one would need to have a Disney+ subscription and pay an additional $29.99 cost to lease the film. I say ‘lease,’ because you do not own it. For example, if you cancel your Disney+ subscription you lose access to the film, also you can’t sell your interest in the film (like you could if you purchase a DVD/BluRay), not to mention, eventually the film becomes free to stream with a Disney+ subscription.
The film opened number one at the box office, earning $80.4 million in the US. It was the highest grossing weekend for a film since the pandemic began sixteen months earlier. It was also revealed that the film made $55 million that first weekend in the US on Disney+ Premier Access. This gave the film a combined opening total of $135+ million.
The $80 million opening box office figure was roughly on par with pre-release industry forecasts. However, upon closer inspection many box office experts noted the large drop-off from the opening night preview numbers to the rest of the weekend. Suggesting, maybe, that diehard Marvel fans came out in droves the opening night, but the streaming availability might have kept the more casual fans home, as well as giving die-hard fans a place to watch the film a second or third time, that wasn’t the theater.
Black Widow’s second weekend domestic box office totals dropped 67%, for those not familiar with box office totals, that is a massive drop. In fact, that marks the largest first to second week drop off for any MCU film. At the same time, this was the first MCU film released in the middle of a pandemic. While that ‘pandemic asterisk’ may get old, it is important to note that the industry was (and currently is) in unprecedented times.
Despite this, as of writing this article, Black Widow currently holds the title of the highest grossing film released in 2021, with over $182 million in domestic box office totals. The film has earned over $370 million in worldwide box office receipts.
Streaming totals are not released like box office numbers, however, it was revealed in a court filing that as of August 15th, Black Widow had earned $125 million from streaming and downloads. This pushes the total receipts for the film near $500 million as of writing this article.
So, **deep breath in — and — exhale** … are all the basics understood? Big character from a huge franchise, big film, pandemic, dual release, still decent box office totals, end of story. Happily ever after right? Johansson got paid, Disney got paid, fans got to see the movie in the theater and/or at home, the Black Widow character had a great run, let’s move on. Right?
Not so fast.
As we all know, if you’re this deep into this piece, that Scarlett Johansson filed a lawsuit against the Walt Disney Company on July 29th 2021, twenty days after the film was released. And, I am sure you know that she is alleging breach of contract and seeking higher compensation.
Well, you would be half right. She did file a lawsuit, but, contrary to popular belief, it wasn’t for breach of contract. This is not some small issue, it actually has huge consequences.
Here is the deal, Johansson had a contract with Marvel, a subsidiary of the Walt Disney Company, so she can’t sue Disney for breach of contract, because she didn’t have a contract with them, it was with Marvel. So what is she suing Disney for? Two tort claims.
What’s a tort claim? Thousands of law students ask that question every year when they get their first set of classes assigned. Essentially, the definition is: a tort is a civil claim where a claimant has suffered damages due to the actions of the person who committed the act.
In other words, it is not a criminal charge (obviously) nor is it a contract claim. It falls in the same category as slip and fall cases, lawsuits against a toy manufacturer if a child gets hurt, wrongful death lawsuits, etc. These are cases where money is awarded because someone did something to harm someone or they didn’t do something that they should have done and someone was harmed.
In this case, Johansson is saying that Disney interfered with her contract with Marvel by forcing them to release the film in theaters and on streaming, and this caused her to suffer damages (lost income). In other words, count 1) intentional interference with contractual relations, and, count 2) inducing breach of contract.
This is a bit of a confusing situation because Disney owns Marvel, so the lines blur a bit, but it is best to imagine Disney, Marvel, and Johansson as three separate entities.
What Johansson has to prove is that Disney knowingly forced Marvel to breach their contract with Johansson, and did so in ‘bad faith.’ This is why it is important to realize this is a ‘tort’ claim not a simple ‘contract’ claim.
In a contract claim all you have to do is prove that there was a breach of contract and because of said breach, you suffered damages and are owed money. But, she’s suing Disney, not Marvel, so she has to prove that not only was there a breach of contract, but that Disney forced/induced Marvel to breach the contract, and Disney did so in bad faith. This makes things tricky for Johansson.
First she has to prove that there was an actual breach of contract. She claims the agreement required Marvel (not Disney) to give the film a theatrical release. She argues that the parties understood at the time of the agreement that a theatrical release meant an exclusive theatrical release. Pointing to Marvel’s counsel who confirmed with her people that the film would get a ‘typical wide release.’
So Johansson is arguing that the contract with Marvel was breached because the film was released day-and-date with Disney+ and that that did not constitute a wide theatrical release and does not conform to a ‘typical’ wide release.
Disney has countered this by stating that Marvel did not breach the contract because the film was given a wide release. In fact, it has earned $318 million in box office receipts to date and is still generating revenue. While the film is nowhere near the $1+ billion of Black Panther or Captain Marvel, it is on par with origin Marvel films like Ant-Man and is currently the highest earning theatrical release of the pandemic era. Marvel released the film in 4,160 theaters, roughly the same number as Captain Marvel (4,310), Thor: Ragnarok (4,080).
So the numbers do not indicate that Johansson would prevail solely on the issue of the release not being wide enough. It appears she is relying on an implied promise that it would be an exclusive theatrical release.
Like most legal issues, this entire situation would be crystal clear had this requirement been specifically noted in the contract, unfortunately we are left to interpret words like ‘typical’ release.
For arguments sake, let’s pretend Johansson can prove that there was a breach of contract claim with Marvel, which it is not clear that that will be the likely outcome. Her battle is not complete. In fact, it gets even harder from here. She has to prove that not only was there a breach, but that Disney induced the breach, and did so in bad faith.
What does bad faith mean? (Or, conversely, what does good faith mean?) Like everything in this case, that’s a bit complicated.
I can say for certainty that there is no clear case that Disney acted in bad faith, but I can also say it is not clear that their hands are totally clean and that they acted solely in good faith. Let’s look at what the parties are claiming.
Johansson is pointing to Disney executive’s pay to try and prove bad faith. She alleges that Disney Chairman Bob Iger and Disney CEO Bob Chapek both receive performance bonuses based on the performance of the company’s stock price. This is not contested, it is common practice and has been the case for Disney CEO’s since 1984 with Michael Eisner.
She further claims that the stock price is most responsive to Disney+ subscriber totals, more so than box office receipts, and this was what drove Disney’s decision to induce Marvel to (allegedly) breach their contract with Johansson and release the film in theaters and on Disney+. Basically, she’s saying that Iger and Chapek would get larger bonuses if they forced Marvel to (allegedly) breach their contract and screw Johansson out of her money.
A somewhat persuasive argument. There is definitely a connection between stock price and executive bonuses and it is clear that Disney+ subscriber totals do move the stock price faster than anything else these days. But she will have to prove that that was the driving factor behind their decision to force Marvel to release Black Widow in theaters and Disney+ Premier Access.
Remember, you do not win your case by merely showing that something could happen, you have to prove, to some certainty, that it more than likely happened.
But, Disney can point to a huge factor that is easier to understand for the decision – covid.
Through public statements Disney has made it clear that the pandemic will be at the heart of their defense. Obviously Disney would like the case to be struck down earlier, with the court finding that no breach of contract occurred. Because there is no need to get into a ‘good faith’ discussion if the court finds that there was no breach.
However, if the court does find that there was a breach, Disney seems poised to argue that the decision to force Marvel to release Black Widow day-and-date in theaters and Disney+ was not done to enrich Bob Iger and Bob Chapek, rather, it was done out of concern for public safety. Knowing that the movie would be a big draw, Disney will argue that it was not just in good faith, but it was morally responsible to release the film in a manner that would give audiences an opportunity to watch the film in the safety of their homes.
So the real dispute here is, did Disney change the release to enrich executives or due to public health concerns. As this case proceeds Johansson’s people will clearly seek emails and other documents to try and prove the former. That process is called ‘discovery,’ and it will allow her lawyers to comb through private correspondence to find evidence to support their proposition.
It is important to note that correlation does not equal causation. In other words, just because Disney Executive Chairman Bob Iger and Disney CEO Bob Chapek receive bonuses from stock price increases and the stock price is hyper sensitive to Disney+ subscriber totals, doesn’t mean that their decision to move Black Widow to Disney+ was based on these financial considerations. This will be a challenge for Johansson to prove and there likely will not be anything in writing that would indicate this.
Do not get me wrong, I am not saying that executive compensation was not a reason for the move, that is for the courts to figure out, all I am saying is that it is hard to prove, especially when movies were being released to both streaming and theaters for months leading up to July 9th because of covid-19.
Another argument that Johansson has made is that Disney did not act in good faith because her team reached out to Disney once the announcement was made for the new release strategy and Disney ignored them. According to Johansson’s complaint, her people reached out to negotiate new terms based on the dual release and Disney never responded. This, on its face, seems to be a pretty good case for bad faith. Courts will often allow for some changes of contract terms due to outside influences beyond the parties’ control, however, they expect the parties to communicate openly and negotiate new terms based on these changes.
The problem that Johansson might run into is that they are going to say that Disney’s unwillingness to negotiate new terms was done in bad faith, but, it has been reported that her people opened the negotiation by asking for a guarantee that would net her over $100 million. A total that would be expected if Black Widow had performed like the earth shatteringly successful Black Panther, which pulled in over $1.3 billion. Disney could easily argue that Johansson was not negotiating in good faith by opening things up with an offer that presumed a box office total that not even the most bullish Marvel fan would have expected. While refusing to even negotiate might be a clear sign of bad faith, Disney will argue that opening up the negotiation with such a ridiculous ask is an even clearer sign of bad faith. It’s like walking into a Tesla dealership and starting to negotiate for a $100k car by opening with a $20k offer, don’t be surprised if the salesperson just walks away and asks you to leave.
Also (there is always an ‘also’) Disney likely didn’t respond to renegotiate her salary because they are contending that their dual release strategy was not a breach of their agreement. If Disney had entered into negotiations with Johansson months before the release of the film, they would be implicitly acknowledging that their dual release strategy did not conform to the original contract. Parties don’t feel the need to negotiate a change of compensation if they do not believe that their actions have changed the original agreement. Disney was likely listening to their attorneys and were told not to engage in negotiations, because it would serve as evidence that they believe the original agreement was not being fulfilled.
As you can see, this is not a case that can be summed up by one headline. At the core this is not a contracts dispute, but a contracts dispute is a huge part of the case. There are three parties involved, two of which are two entities that exist as one. There is a once in a century pandemic and an industry shift from theaters to streaming. There are a lot of factors and Johansson has a lot of elements she needs to prove.
Let’s look at the remaining few issues that have popped up that seem to be the most ‘sexy’ for Disney and Marvel followers.
First, the Wall Street Journal has reported that Disney’s CEO Bob Chapek has not been involved in this matter at all. The entire situation has been handled by the Disney Studios Content Chairman Alan Bergman, and Media and Entertainment Distribution Chairman Kareem Daniel. While this dispute has caused a lot of palace intrigue, in the grand scheme of things it is not one that would typically garner the immediate involvement of the CEO of the largest entertainment company in the history of the world.
To put things into perspective, the Wall Street Journal also reported last week that Disney is in the middle of negotiating an agreement for the Disney owned ESPN to team up with sports gambling companies. While all eyes are on the Johansson lawsuit, an issue that could cost Disney $20+ million, this new sports betting deal could be worth more than $3 billion and have long lasting changes to the leading sports network.
Often times the most exciting issues to the public are the least important to the company.
Second, will the case be handled in arbitration or in an open trial.
The agreement that Johansson signed with Marvel has an arbitration clause in it. Go check nearly every contract you have signed, from iTunes agreements to apartment leases, there is always an arbitration clause that you unknowingly agreed to. These clauses say that any issues that arise out of the agreement are to be settled in arbitration. The reason for these clauses is that trials are long, expensive, and public, so, the parties agree that if there is an issue a private arbitration will be the avenue to resolve them.
Disney has asked the court to move this case to arbitration and Johansson’s people have challenged this move. This should be an easy issue, but the particulars of this case make it less clear.
Johansson did sign a contract with an arbitration clause in it, however, that contract was with Marvel, her lawsuit is with Disney, and the lawsuit is not a contract dispute (as I’ve mentioned about a hundred times now). This leaves things a bit unclear. Johansson allegedly agreed that any disputes arising out of the contract between her and Marvel would be settled in arbitration, so, if she is suing Disney, alleging that they induced Marvel to breach the contract, does that mean that that matter is bound by the arbitration clause, or is that solely in matters between Johansson and Marvel? The answer is not clear and it will be interesting to see what the court says.
The general rule for cases like this is that the courts want to get rid of them. They do everything they can to get them settled privately, have them sent to arbitration, use mediation, or some other alternative dispute resolution forum. There just is not enough resources in the legal system to handle the tsunami of cases that get filed every day. As a result, most civil cases are resolved and never see an open court room. So we will see how the court rules on this issue.
Third, the judge’s recusal.
Last week, the judge overseeing this case recused himself from the matter. The law firm that is representing Disney has been paying the judge a monthly pension from previous work he had done with the firm. The was disclosed properly and timely by the judge a month ago. Both parties were informed of the conflict of interest.
According to reporting from Fox News Business, the attorneys for both Disney and Johansson met to discuss this conflict and a potential waiver. If a conflict of interest arises, the parties could sign a waiver saying they are aware of the conflict and are fine moving forward. According to reports the two sides could not agree on a joint waiver, so the judge has recused himself and a new judge will be appointed to oversee the matter.
Finally, all the public nonsense.
This case is being fought out in the legal system, but it is also being fought in the public eye. This means that spokespersons get involved and lawyers make statements that are intended to sway public opinion and paint the opposing party in the least attractive light possible. None of this is related to the legal proceeding, but it is inevitable when it comes to matters involving such public figures.
It is like at the end of The Wizard of Oz when the Wizard says, “pay no attention to the man behind the curtain.” In this case, the public sparring acts only as a distraction to the real issue at hand. While the case deals with specific language in a contract, between a uniquely situated group, in a very rare public health crises, the result of this case may have repercussions that reverberate beyond just Disney. The entire entertainment industry is focused on this case.
There were a lot of opportunities for both parties to have acted differently that would have kept this thing from devolving. In my opinion, the biggest missed opportunity was back before the pandemic, when Disney began talking about Disney+, Johansson’s people contacted Marvel to ensure a theatrical release. Marvel responded by saying it would get a typical wide release, they did so in an email that was referred to in Johansson’s lawsuit. Her lawyers did not push for any clarification.
Had Johansson’s representatives made Disney clarify what it meant by that, things would have ended up differently. ScarJo’s lawyers should have forced Marvel to define that vague statement and to put into writing that a wide theatrical release specifically means theaters only. They did not ask for that and here we are. Then again, this was pre-pandemic, and clearly her lawyers were thinking theaters or Disney+, they didn’t foresee a dual release. This lack of foresight may have cost their client a lot of money and bad press.
This is one example of many and hindsight is always 20/20.
With Disney’s day-and-date release of Cruella and Jungle Cruise, opening on either side of Black Widow, it was expected by some that the stars of those films, Emma Stone, Dwayne Johnson, and Emily Blunt, would join with Scarlett Johansson in her lawsuit. But, in the private offices in southern California, those agreements were settled and sequels have even been reported. Showing that Disney can, and will, resolve these disputes quietly.
This case will either slip away into the confidential abyss that is arbitration, or it will be settled quietly out of court for an undisclosed amount, or this case will proceed to trial and it will become even more of a spectacle than it already has become.
While the financial situation of the two parties should not be considered when evaluating the legal merits of claims and defenses, it is human nature to do so. Watching a multi-millionaire Hollywood superstar fight with a multi-billion dollar global conglomerate does not bring a tear to anyone’s eye, but, like the Marvel movies themselves, it sure provides one hell of a show.
At the time of writing this article, Black Widow remains the highest earning box office earner released in 2021. Johansson will see a percentage of those receipts. Scarlett Johansson is currently filming a Wes Anderson movie in Europe, this movie will be released by Disney.