Legal Ramifications of COVID on the Theatre Industry | Romano Law

Legal Ramifications of COVID on the Theatre Industry

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Legal Ramifications of COVID on the Theatre Industry

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There are few circumstances that cause theatres to go dark.  While the usual response to most theatre industry roadblocks is simply “the show must go on,” this was not the case on March 12th.  That’s the date that The Broadway League announced all performances would be cancelled in compliance with government orders to reduce the spread of the COVID-19 pandemic.  Many theatres across the country and around the world followed suit.

The shutdown that was originally slated to last one month has most recently been extended through May 30, 2021, with the possibility of being prolonged further.  Though performances are suspended, the behind-the-scenes production and administration processes continue, and new legal issues caused by the shutdown abound.

Policies

According to Actors’ Equity Association, adherence to 4 core principles is required to ensure safe theatre productions: (1) The pandemic must be under control with contact tracing and testing, (2) Individuals who may be infectious can be readily identified and isolated, (3) Venues, productions, and processes may need to be modified to minimize exposure, and (4) Efforts to control COVID-19 exposure must be collaborative.

In addition to restrictions placed by theatre organizations, government orders regarding COVID-19 shutdowns, gathering restrictions, and social distancing requirements have massively affected the theatre industry.  Productions such as Disney’s “Frozen” and Edward Albee’s “Who’s Afraid of Virginia Wolf” have announced that they will not return to Broadway when doors reopen.  Several highly anticipated shows, such as the revival of “The Music Man” starring Hugh Jackman and Sutton Foster will experience lengthy delays. “Six,” which received early Tony Awards buzz, was slated to open the day the government shutdown went into effect and was determined ineligible for the 2020 Tony Award nominations.

Financial Assistance

With productions halted, many cast and crew members have been laid off until it is safe enough to return to work.  There are both state and federal laws in place to ensure employees receive the financial relief they need during the pandemic, including existing laws such as the WARN Act and new laws such as the Family First Coronavirus Response Act.

SBA loans may be available to smaller theatre companies to provide financial relief, and larger companies with greater financial resources may choose to restructure to remain afloat.  Filing for bankruptcy may provide some theatre companies with the protections they need to achieve long-term success once productions are back up and running.

Contract Breach and Force Majeure

Many productions executed underlying contracts before March that may have been fully performable prior to the shutdown.  Now, those productions have been forced to breach their contracts, which can lead to costly settlements, litigation fees, and high damages.

Contracts often contain force majeure clauses that excuse a party’s inability to perform its obligations under the contract due to an event that is unforeseen and beyond the control of both parties.  Depending on how the clause is worded in a particular contract, the COVID pandemic may trigger excuse of nonperformance or termination of many theatre production contracts.

Amending Contracts and Using Waivers

To avoid breach of contract, it may be possible to amend a contract or waive certain duties under the contract.  Many preexisting contracts may be amended through a mutual agreement by both parties, and in some cases may be amended unilaterally to avoid breach.  The revision process varies depending on the type of contract and specific language used in the provision regarding amendments.

Many business are utilizing COVID liability waivers to safely resume operations during the pandemic.  As theatre operations recommence in preparation for next year’s anticipated openings, the waivers can act as an additional layer of protection for productions striving to comply with ever-changing regulations and maintaining the health of everyone involved.

The enforceability of COVID waivers varies depending on state-specific waiver requirements, particular language used in the waiver, types of agreements and parties involved.  It is important to research the guidelines in your area and consult with counsel prior to utilizing or signing COVID waivers.

Theatre and Facility Rental Payment Defaults

Once-thriving productions delivering full houses eight times a week can no longer afford their theatre rent payments as the shutdown progresses.  On March 20th, Governor Cuomo issued the PAUSE Executive Order, prohibiting eviction or foreclosure of any residential or commercial property for a period of 90 days. The moratorium on commercial leases has recently been extended through January 1, 2021. Because productions will not yet be up and running by that date, this will likely not be of much help to the theatre industry unless extended further.

Many producers, both on Broadway and in independent theatres, are still receiving rent bills but are waiting to pay them until they collect payment from insurance claims.  There can be many factors that affect this process, and the best solution may look different depending on the size of the production and the underlying contracts involved.  A complete shutdown of the industry was unpredictable for both parties, and it may require negotiations and compromises facilitated by legal counsel in order for both parties to agree upon the best solution.

Refunds

Because production companies’ insurance policies may differ on whether losses from the pandemic are covered, the process for determining refunds is extremely individualized and time consuming.  Now that the shutdown has been extended, producers will need to refund additional ticket holders who purchased seats for shows reopening in early 2021.  Additionally, investors who contributed to productions which are now experiencing further delay may request their money back as well.

Publishing Content Online

While the pandemic has impeded the entertainment industry as a whole, the theatre has still found creative ways to grow amidst these difficult times.  One of those inventive avenues is expansion into online content.  As most notably done with the addition of Hamilton to Disney Plus, many theatre companies and productions have brought live theatre to the audience by uploading prerecorded shows to various digital platforms either as part of a subscription service, viewable with a one-time “ticket” fee, or available at no cost for a limited amount of time.

Allowing theatre to be experienced digitally in the comfort of audience members’ own homes makes theatre more accessible than ever, while also helping the industry stay afloat during the pandemic. However, a new slew of legal considerations must be taken into account throughout this process, such as drafting the proper agreements and obtaining the appropriate rights licenses.

Conclusion

Whatever your involvement in the industry may entail, we are here to help you navigate the theatre world in the face of the ongoing pandemic, assisting you through various new legal issues that have arisen and providing the tools you need to enable the show to go on.

Photo by Erik Mclean on Unsplash

Notice

This Blog is made available by Romano Law PLLC for general informational and educational purposes only, not to provide specific legal advice. By using this Blog you understand that there is no attorney client relationship between you and Romano Law PLLC or any individual contributor. You should consult a licensed professional attorney for individual advice regarding your own situation.

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