In December 2019, promoters of Virgin Fest Los Angeles (“Virgin Fest”) announced their intention to host a two-day music festival in Los Angeles, California. The inaugural event was scheduled for June 6 and 7, 2020. The festival promoters subsequently entered into standard performance contracts with various pop artists, including Ellie Goulding, Kali Uchis, and Lizzo, each represented by William Morris Endeavor (“WME”). A few short months later, the COVID-19 pandemic forced a global shutdown, leaving shuttered events like Virgin Fest in its wake. The ensuing months proved devastating for the live music and event industries. Among the pandemic’s more novel consequences was the discovery (or rediscovery) of the frequently overlooked “force majeure” contract clause. To most laypeople (and some lawyers), force majeure was a rarely cited boilerplate concept that occupied a few lines on the closing pages of often overly verbose contracts. Well, rarely cited prior to March 2020.
Virgin Fest Sues Lizzo and WME
Like most festivals, the Virgin Fest promoters negotiated festival-friendly riders that were attached to the deal memos and contracts issued by artist agents and business teams.1 Upon executing the performance agreement for Lizzo, Virgin Fest remitted a deposit payment of $5 million to WME’s escrow account, which represented Lizzo’s fully guaranteed performance fee. Within a matter of weeks, the State of California and County of Los Angeles mandated the cancellation of all public events and, as they say, the rest is history. Upon announcing the cancellation of Virgin Fest, the promoters requested a refund of all outstanding deposits based on the occurrence of a force majeure event. Objecting to that request, Lizzo and WME refused to return her deposit citing the negotiated language in the Virgin Fest rider. In turn, Virgin Fest sued Lizzo for breach of contract and WME for unlawful conversion.
Relying on the negotiated rider language, Lizzo and WME insisted that (1) Lizzo was “ready, willing, and able to perform”2; and (2) the cause of cancellation was not due to “Artist’s death, illness, or injury, or that of its immediate family.” In other words, the controlling question from WME’s perspective should be, had the force majeure event not occurred (e.g., “but for”), would artist have otherwise been ready, willing, and able to perform? Virgin Fest interpreted the contract language to mean Lizzo must forfeit the deposit unless she was ready, willing, and able to perform in spite of the occurrence of the force majeure event. The promoters argued that the governmental mandates requiring the shuttering of all events precluded Lizzo (or any artist) from clearing that contingency hurdle.
Upon granting judgment in favor of WME and Lizzo, the trial court found that WME negotiated a modification to the festival-friendly force majeure language, which changes were more favorable to the artist. Specifically, the court noted that while the original language sanctioned Lizzo’s retention of the deposit only if she “commenced performance,” WME’s modification substantially augmented Lizzo’s right to retain the deposit to include any instance where she was “otherwise ready, willing and able to perform.” After considering various evidence, the court determined that Lizzo was indeed ready, willing, and able to perform and, as such, she was entitled to keep her deposit (i.e., the full performance guaranty) notwithstanding the cancellation of the festival. On March 8, 2024, a California appellate court affirmed the trial court’s decision, further noting that Virgin Fest’s interpretation “makes the force majeure provision indefinite and incapable of being carried into effect and deprives the third sentence of any meaning thus rendering it surplusage.”3 In plain speak, the appellate court said Virgin Fest’s interpretation did not make any sense in light of the rider modifications that were negotiated and accepted by Virgin Fest.
Lessons Learned
This dispute and the resulting decision underscore the vital importance of the precise words and phrases included in a contract — with extra emphasis on modifications and revisions accepted during the negotiation phase. A seemingly innocuous word like “otherwise” when appended to the common phrase, “ready, willing, and able” has the power to materially change the meaning and effect of a contract. In this case, those additional five words yielded a $5 million windfall for Lizzo. Not a bad day for the WME business affairs team.
[1] Final Virgin Fest Rider Language: “A ‘Force Majeure Event’ means any act beyond the reasonable control of Producer, Artist, or Purchaser, which makes any performance by Artist impossible, infeasible, or unsafe (including, but not limited to, acts of God, terrorism, failure or delay of transportation, death, illness, or injury of Artist or Artist’s immediate family and civil disorder. In the event of cancellation due to Force Majeure then all parties will be fully excused and there shall be no claim for damages, and subject to the terms set forth herein, Producer shall return any deposit amount(s) (i.e., any amount paid to Producer pursuant to the Performance Agreement prior to payment of the Balance) previously received (unless otherwise agreed). However, if the Artist is otherwise ready, willing, and able to perform, Purchaser will pay Producer the full Guarantee unless such cancellation is the result of Artist’s death, illness, or injury, or that of its immediate family, in which case Producer shall return such applicable pro-rata portion of the Guarantee previously received unless otherwise agreed.”
[2] WME’s counsel added this phrase during the negotiation with Virgin Fest in lieu of the original language that allowed the artist to collect the full fee if she “commenced performance prior to cancellation.”
[3] See VFLA Eventco, LLC v. William Morris Endeavor Entertainment, LLC, (Cal. Ct. App., Mar. 6, 2024, No. B323977) 2024 WL 959751, at *13).