By: Matthew I. W. Baker
Although 2014 has thrust Justin Bieber into the legal spotlight for a variety of reasons, the most interesting Beiber-related legal question surrounds a party he threw at his California home in November, 2013. While the party was probably memorable for the guests who attended, the conditions placed on their attendance is what is most remarkable. Guests and workers at the party were required to sign a non-disclosure agreement (the “Bieber Contract”) in which they agreed not to text, tweet, record, or even talk about what they witnessed at the party. Any breach of those obligations would be punishable by a $3 million fine. The Bieber Contract was meant to protect the privacy of Bieber and his associates. But would such a contract be enforceable under New Jersey law?
Probably, but without the $3 million penalty, which New Jersey courts would likely find to be “unconscionable” – so one-sided or unjust that it “shocks the conscience.” In determining unconscionability, New Jersey courts tend to focus on two factors: unfairness in the formation
of the contract; and unfairness or one-sidedness in the terms
of the contract. New Jersey allows the defense of unconscionability to succeed based on a strong showing of one factor, even if the other factor is only marginally present.
Here, there is a strong argument for non-enforcement of the penalty in the Bieber Contract, due to its unconscionability. First, we should note that the Bieber Contract is a “contract of adhesion.” Adhesion contracts differ from other contracts in that they are typically presented on a take-it-or-leave-it basis, in a standardized form, and without the opportunity for the “adhering” party to negotiate its terms. It can be argued that at the time of execution, the Bieber Contract was thrust upon potential attendees, who likely did not have an opportunity to consult with legal counsel before signing, and likely received it in a setting that was not conducive to reasoned thought regarding the waiver of substantial legal rights or the undertaking of substantial legal obligations. Adhesion contracts necessarily involve indicia of unfairness in their formation.
Substantively, the Bieber Contract subjects even the most innocuous tweet to a $3 million fine. Although parties to a contract are generally free to set forth the amount to which either party will be entitled if the other party breaches, such a “liquidated damages” provision must be set at an amount that is reasonable in light of the anticipated or actual loss caused by the breach and the difficulty proving loss. A provision fixing unreasonably large liquidated damages is in reality a penalty and unenforceable. Because it would be difficult for Beiber to prove that $3 million dollars fairly represents his damages from one tweet, conversation or photo, this liquidated damages provision would be stricken.
However, New Jersey law permits courts to sever unconscionable provisions from otherwise enforceable contracts. Therefore, the fact that the $3 million liquidated damages provision may be unconscionable will not necessarily render the rest of the Bieber Contract unenforceable. Indeed, the subject matter of the Bieber Contract does not otherwise present obstacles to the contract’s enforceability. Parties are free to contract away their right to freedom of speech under the First Amendment, and their rights to “works made for hire.”
Without the $3 million fine, the Bieber Contract is little more than an agreement holding the signer generally liable for damages that he or she causes by the unauthorized publication of information about Bieber and his associates. Bieber hardly needed a contract to so bind his party guests and workers; any person, Bieber-Contract-signer or not, would be liable under the law for any damage they inflict on others for invasion of privacy, absent some affirmative defense.
While there certainly may be lots of juicy questions you may want to ask those who attended or worked at Bieber’s party, don’t ask whether they got more than they bargained for. We can assure you that they did.