The Force Majeure Clause: Lizzo’s $5 million for the festival that never happened

For years the force majeure clause had been considered mere “boilerplate” – universal, ubiquitous and thus oft-overlooked wording – largely due to its implications only coming into effect in exceptional circumstances: volcano eruptions, earthquakes, tsunamis and the like. However, with the global pandemic providing just such a force majeure circumstance, the clause has been thrust into the spotlight in recent years, with the fate of many stakeholders in the live entertainment sector (in particular) being determined by its wording. And for one performer – the genre-bending US artist Lizzo – the clause has resulted in her retaining a $5 million fee for headlining a festival that never happened.

What is a ‘force majeure’ clause?

“Force majeure” is a French term that translates as “superior force”. In short, it describes events that are acts, events or circumstances that are unforeseen and therefore beyond the control of the contracting parties, and subsequently delays or excuses one party (or both parties) from the performance of certain obligations in a contract following the occurrence of such an event.

One such example of a contract’s force majeure clause may be:

“If a party is prevented or substantially delayed from performing any of its obligations under this agreement by reason of any circumstance beyond such party’s reasonable control (such as any act of God, war, fire, earthquake, strike, sickness, accident, civil commotion, epidemic, acts of government), the affected party shall not be in breach of this agreement or otherwise liable for any such failure or delay in the performance of such obligations.”

What is the effect of a force majeure clause?

The concept of force majeure originates from French civil law and is not fully recognised under English common law. Therefore, as creatures of contract, its inclusion and effect will be determined by the express wording of the agreement itself. Some clauses may state that the parties’ obligations are suspended for the duration of the force majeure event (often subject to a ‘long-stop’ to prevent an indefinite suspension), and others may allow for the termination of the contract altogether.

What is the customary effect of a force majeure clause in the context of a live performance?

Force majeure clauses differ from agreement to agreement. Nevertheless, the most commonly adopted position is that in the event of a force majeure event that prevents a show from going ahead, the promoter may cancel the contracts with the applicable performers and require the return of any fees previously paid to the performers for such cancelled show.

What happened in the case of Virgin Fest Los Angeles?

The inaugural Virgin Fest Los Angeles was scheduled to take place on 6–7 June 2020. In advance of the event, its promoter, VFLA Eventco, LLC (“VFLA”), entered into agreements with various artists, which involved the prepayment of millions of dollars in deposits to the artists’ respective booking agencies in connection with their performances.

However, in March 2020 COVID-19 was declared a national emergency in the United States, and the State of California and both the County and City of Los Angeles enacted emergency shut-down orders. In May 2020, Virgin Fest was prohibited from going ahead as scheduled.

After the enforced cancellation of the festival, VFLA invoked the force majeure provision of its various performance agreements and demanded the return in full of all prepaid deposits. The performance agreements had expressly provided that the COVID-19 pandemic constituted a force majeure event by virtue of it being:

“beyond the reasonable control of [the contracting parties] which ma[de] any performance by Artist impossible, infeasible, or unsafe…”.

VFLA stated that all booking agencies returned, or agreed to return, the artist deposits in full, with one exception – Lizzo’s booking agent, William Morris Endeavor Entertainment (“WME”).

VFLA subsequently brought a claim against Lizzo’s touring company (as well as those of WME’s other clients who were due to perform – Ellie Goulding and Kali Uchis) and WME in July 2020.

Why was the situation for Lizzo, Ellie Goulding and Kali Uchis any different?

Rather than accepting the proposed more promoter-friendly force majeure clause contained in VFLA’s performance agreements as drafted, WME’s lawyers had crucially added the following artist-friendly wording to the clause with respect to all three of its performers:

“However, if the Artist is otherwise ready, willing, and able to perform [VFLA] will pay [Artist’s touring company] the full Guarantee unless such cancellation is the result of Artist’s death, illness, or injury, or that of its immediate family…”

WME argued that by virtue of its additional wording, and their artists being “otherwise ready, willing, and able to perform” (stressing that “otherwise” in this context meant: “but for the force majeure event itself”) despite the event not going ahead, they were not required to return any of VFLA’s pre-paid deposits. For Lizzo this amounted to her entire performance fee of $5 million, which had been paid in full upfront (with Ellie Goulding and Kali Uchis having only received 50% of their (respective) $600k and $400k fees upfront).

As it transpired, although the festival was sponsored by Virgin Mobile, the main financiers were a Florida-based couple named Marc and Sharon Hagle. At the time, WME had been highly sceptical of the viability of launching a brand-new festival into a market largely dominated by Live Nation and AEG’s Goldenvoice – WME categorising it as a “higher risk show” – and therefore insisted that any WME artists booked to play the festival would expect to be paid upfront, and that the force majeure clause required amending.

What did the court determine?

Judge Mark Epstein of the Los Angeles Superior Court granted summary judgment in favour of all three performers and agreed that the contracts entitled each of the artists to keep the funds already paid to them by VFLA.

It is anticipated that VFLA will appeal the judgment, but whatever the final outcome, Lizzo’s case has presented a $5 million lesson on the potential impact of overlooking the force majeure clause.

For more information on force majeure clauses in live entertainment contracts, please contact Nick Weaser.