PUBLISHED JULY/AUGUST 2020
by Jonathan Kirsch, the Law Offices of Jonathan Kirsch —
Below are the most demanding legal issues that have arisen during the pandemic.
Each day of the global pandemic has presented the publishing industry with challenges. Many of them can be seen as opportunities to improve the way publishers do business as we try to understand and adapt to the brave new world in which we find ourselves now. As always, however, the law comes into play. Here are some of the most demanding legal issues that have arisen in the time of COVID-19.
Any contract that obliges the author or the publisher to perform an obligation by a particular time should be reviewed for a “force majeure” clause. Force majeure is generally defined as an event beyond the control of the parties to the contract—war, strikes, severe weather, and so on—and a force majeure clause excuses the performance of the contractual obligations for as long as the circumstance remains in effect. Not every contract contains such a clause, and if it doesn’t, then an event beyond the control of the publisher—even a global pandemic—may not excuse the contracting parties from performing their obligations.
If the contract does contain a force majeure clause, the clause needs to be parsed carefully to determine whether it applies to an event like a public health emergency. Sometimes the clause will list all of the specific events that amount to force majeure, and pandemics are generally not among them. Sometimes the clause will not apply unless the circumstances of force majeure make it “illegal or impossible” to perform the contractual obligation. Sometimes the clause applies only to one or another of the contracting parties and not to both parties.
If a force majeure clause has been included in the contract, and if the clause applies to the pandemic, then the contracting parties will be excused from its obligations. For example, publishing agreements commonly include both a date by which the author must deliver the manuscript of the book to the publisher and a “time of publication” clause that obliges the publisher to publish the book within a specified period of time after delivery. Both of these deadlines may be extended until the events that amount to force majeure have abated.
Several of my clients resorted to the force majeure clauses in their contracts with hotels and conference centers after the COVID-19 stay-at-home orders forced them to cancel public events, only to find that the venues took the position that a global pandemic was not covered under the force majeure clause. So far, none of them have been put to their proof in court, but a lawsuit may be necessary if a contracting party refuses to concede that a force majeure clause is applicable.
Mitigation and Good-Faith Attempts to Perform Obligations
Whether or not a contract contains a force majeure clause, it is a good idea to reach out to the contracting party and try to work out a businesslike approach to the burdens and delays that have resulted from the pandemic.
If one party to the contract knows that the other party will not be able to perform its obligations, the law generally allows (and may require) the injured party to take reasonable steps to mitigate its damages. The party that cannot perform all of its obligations may offer to perform as many of its obligations as possible to avoid or reduce the damage that the other party may suffer. Sometimes the obligation can be discharged by agreement of the parties even if it is not exactly what the contract calls for.
Some of my clients offered to present web-based events to substitute for the live events that they were obliged to provide to their customers. A publisher who promised to go to press with an initial print run of 1,500 copies offered to fulfill preorders using print-on-demand copies. Such gestures show good faith and may help both parties avoid a legal dispute.
Relief from legal obligations may be available as matter of public policy during the pandemic. Some cities have enacted temporary rules that prevent a landlord from evicting a tenant for non-payment of rent, for example, and some civil courts are closed entirely. (One of my clients was threatened with a lawsuit for copyright infringement but only “when the courts reopen,” which postpones the day of reckoning into the indefinite future.) Some lenders and other businesses have extended offers to reduce or extend the payments that are owed to them.
Whether or not these kinds of emergency relief are available depends on where you are doing business and the status of relief measures that were put into effect at the outbreak of the pandemic. Careful and ongoing research is necessary to find out what relief is available and how long it may last.
One important legal caveat should be kept in mind. It can be treacherous to frankly announce that you cannot perform your obligations under a contract since it may amount to an actionable breach of contract in itself. Consulting with a lawyer and finding out the right words and phrases to use when offering or asking for an accommodation may make the difference between avoiding a lawsuit or losing one.
Some publishers have turned hopefully to their insurance policies for assistance in dealing with the costs of the pandemic, but their high hopes are only rarely rewarded.
As a general rule, an insurance policy is likely to exclude loss of business income resulting from an event like a public health emergency unless the insured has asked for (and paid for) a rider that specifically covers such losses. Even if the policy includes a rider that extends to “bacteria and virus,” the insurance company may take the position that only damage to the insured property is covered and not a decline in sales revenues or an obligation to pay wages at a time when employees are not allowed to enter the property because of a public health issue.
Insurance policies are complex documents, and expert advice is necessary to determine if a loss is covered or excluded. The first step is to call the broker or agent who handled the policy, but you need not stop there. The next step is to submit a formal claim, which will require the insurance company to either grant or deny coverage for the claim. If coverage is denied, the insurance company will cite chapter and verse from the policy to justify its position. Then you can decide whether to take the denial-of-coverage letter to an attorney who specializes in coverage disputes and contest the decision of the insurance company.
Employment and Workplace Issues
COVID-19 raises some serious workplace issues as employers struggle to keep their businesses in operation. Many employers have furloughed or laid off employees. Some have reduced the hours that are available to their employees. Some have required their employees to work from home, and others have required their employees to sign waivers as a condition for returning to work as businesses begin to reopen.
Each of these exigencies may put the employer at legal risk at multiple levels. Employment law and workplace rules are generally based in state law that varies from state to state. Regulations, orders, and “guidance” regarding the pandemic have been issued by federal, state, and local governments and agencies across the country, and they are constantly changing. Even when stay-at-home orders have been lifted, an employer may face new legal risks when employees come back to work.
A separate but equally important area of concern is how the publisher reopens the workplace. State and local governments have issued rules, regulations, and guidance that impose legal restrictions on how many individuals are permitted to be present at the same time and how many business visitors are allowed to enter. In some places around the country, business owners are obliged to record the names and addresses of visitors in case it is necessary to find them for contact-tracing purposes. The wearing of face masks and the availability of other personal protection equipment may be mandated by law. To make matters even more challenging, the rules and regulations are likely to change as the infection rate rises and falls.
Here, too, it is prudent for employers to consult with an attorney to determine what can and cannot be lawfully done—and what must be done—when the doors of a publishing house are reopened and the staff is welcomed back to work.
Jonathan Kirsch is an author, book reviewer, and attorney specializing in copyright, trademark, privacy, and publishing law. He has long served as general counsel to IBPA and is a recipient of the IBPA Benjamin Franklin Award.