By now, we’ve all reluctantly become familiar with the sordid details of the child pornography and sexual assault allegations surrounding former Subway spokesman Jared Fogle. In a statement, Subway, as you might expect, distanced itself from Fogle and reiterated that “Jared Fogle’s actions are inexcusable and do not represent our brand’s values….We had already ended our relationship with Jared.” The sandwich mega-chain has instructed all stores to remove and discard all signage and materials depicting his image.
Of course, Fogle is not the first – nor will he be the last – celebrity endorser to be dethroned in the wake of a scandal. But abruptly cutting ties with a celebrity can bring about unforeseen legal challenges, especially if the terms of the endorsement contract do not clearly address the behavior underlying the severance.
Below, we remember several other wayward celebrities who lost endorsement deals over allegations of misconduct and moral turpitude, and explore the possible legal ramifications for a corporation desperate to eliminate a Jared Fogle from its payroll.
Infamous celebrity misconduct
When it comes to celebrities who faced unrelenting public scrutiny, seemingly endless humiliation, and rapid endorsement loss, few names come to mind as quickly as Tiger Woods. Woods, who sat atop the professional golf game for years, found himself in a moral and legal sand trap following the exposure of his extra-marital liaisons. According to reports, Woods lost $22 million in endorsements in 2009, including terminated contracts with Gatorade, AT&T and Accenture.
In 2005, supermodel Kate Moss was secretly photographed engaging in illegal drug use in a London recording studio – and promptly lost a major contract with Swedish retailer H&M. At first, the company seemed ready to stand by Moss – but it later reconsidered given its close ties to drug use prevention work with several non-profit organizations.
While many endorsement losses involve sex, drugs or criminal activity, companies may also choose to cut ties with individuals like Paula Deen or brands like Duck Dynasty due to celebrities’ extreme personal – and polarizing –viewpoints. With regard to the Paula Deen scandal, the Food Network star lost an estimated $12 million after recordings surfaced of her using derogatory racial slurs against a former employee. Similarly, several Duck Dynasty stars nearly lost their roles on the popular A&E series after unartfully speaking out against same-sex marriage and homosexuality in general.
The contractual angle
Endorsement deals between corporations and celebrities are generally governed by lengthy contracts covering the scope, time period, payment, and expectations the company has of the personality. Within these contracts is almost always a “morals clause,” which reads something like this:
The Celebrity shall not commit any act or do anything which might tend to bring him into public disrepute, contempt, scandal, or ridicule, or which might tend to reflect unfavorably on the Corporation.
Seems straightforward. Or, is it? Oftentimes, morals clauses are drafted ambiguously to create leverage for the corporation in the event of a scandal. By relying on the morals clause, a company can usually release itself from a relationship with a celebrity endorser without much risk of litigation, provided the celebrity’s misconduct meets a general, reasonable definition of “scandal” or “disrepute.” This way, the clause can be used to address everything from an extramarital affair to a child sexual assault conviction.
Do rejected celebrities have a case?
The ambiguity of the morals clause is a two-way street, however, and occasionally a corporation finds itself in hot water for terminating a contract based on a weak interpretation of “public contempt.” For instance, actor Charlie Sheen embarked on an epic litigious prizefight against Warner Bros. after it opted to cut ties with him over tabloid reports of drug use and philandering. In his defense, Sheen contended that his personal life had nothing to do with the success of then-hit Two and a Half Men, and that he was entitled to the remainder of his contract – which provided $1.8 million per episode. In the end, Sheen never returned to the show but walked away with $25 million in settlement.
In another morals clause case, Pittsburgh Steeler Rashard Mendenhall was removed from a lucrative endorsement deal after tweeting several controversial thoughts about the death of Osama bin Laden and 9/11 in general. In a less clear-cut case than the Sheen incident described above, Mendenhall initiated a lawsuit against Hanesbrands for wrongfully terminating the deal based on a weak interpretation of his morals clause (emphasis added):
If Mendenhall … becomes involved in any situation or occurrences … tending to bring Mendenhall into public disrepute, contempt, scandal, or ridicule, or tending to shock insult, or offend the majority of the consuming public or any protected class or group thereof, then [Hanesbrands] shall have the right to immediately terminate this Agreement.
In his defense, Mendenhall contended that there is a significant factual dispute over whether the “majority of the consuming public” was offended by his tweets. Ultimately, the athlete settled privately with the underwear brand, and did not return to his endorsement platform.
There are some contracts that corporations can’t wriggle out of without sustaining losses. But if the behavior of the spokesperson involved is reprehensible enough–and Fogle’s clearly is–those losses are a small price to pay for putting a healthy distance between the controversy and the company’s brand.