#MeToo: New York State Court Allows Actor’s Claims Against Entertainment Companies to Proceed Based on Alleged Conduct in 1995 by Weinstein | JD Supra

A New York state judge has denied motions to dismiss actor Julia Ormond’s claims against a film company, its parent company, and a talent agency based on conduct by film producer Harvey Weinstein, who Ormond alleges assaulted her in December 1995 in her Manhattan apartment. In her lawsuit, Ormond alleges that these entities knew about Harvey Weinstein’s predatory behavior before he sexually assaulted her in 1995 and failed to protect her. The ruling allows the case to proceed, highlighting the potential scope of liability of these companies.

Ormond filed her lawsuit thought New York Adult Survivors Act (“ASA”), which waived the statute of limitations bar for one year so that individuals could pursue civil claims of sexual misconduct irrespective of when the alleged conduct occurred. The right to file claims under the ASA expired on November 24, 2023. The claims that were filed before the deadline are currently making their way through NY courts. This is a new type of sexual misconduct litigation, as the claims being litigated are old and there may not be any evidence related to the claims besides what witnesses recall of events.

Key Takeaways from the Ruling:

• Corporate Knowledge of Misconduct: The court found allegations that the defendants were aware of Weinstein’s sexual assaults prior to the 1995 incident to be credible enough to proceed. This includes claims that Weinstein’s behavior was known to each of these companies, yet they failed to warn or protect Ormond.

• Miramax’s Liabilities: The court rejected defendant Miramax’s argument that it couldn’t be held liable because it was formed in 2010, well after the alleged assault had occurred in 1995. The court ruled that Miramax Film NY LLC’s assumptions of liabilities when it was formed in 2010 were sufficient to hold the company accountable for Weinstein’s actions as a director of its predecessor, Miramax Film Corp. Since Weinstein was co-chair of Miramax Film Corp. during the time of the alleged assault, the court determined that Miramax could still be held accountable for his actions based on the continuity of liability.

• Disney and Miramax’s Control Over Weinstein’s Employment: The court supported Ormond’s claim that defendants Miramax and Disney, as Weinstein’s employer and parent company, exercised sufficient control over his actions to be potentially liable. The judge also noted that Ormond’s apartment, where the assault occurred, was paid for by Miramax, linking the location to Weinstein’s employment. By ruling so, the court reinforced the legal standard that in addition to Ormond’s burden to bring a traditional negligence claim, she sufficiently alleged that 1) the employer had actual or constructive knowledge of an employee’s propensity for the sort of behavior that caused the injured party’s harm; and 2) the employer knew or should have known that it had the ability to control the employee; 3) the employee engaged in tortious conduct on the employer’s premises or using property or resources available to the employee only through their status as an employee.

The court rejected Disney’s argument that it was not Weinstein’s employer and therefore could not be liable for his conduct. The court held that Ormond’s pleading that Weinstein had an employment contract with the parent company and that the parent company had control over the subsidiary was enough to “pierce the corporate veil.”

• Talent Agency’s Fiduciary Responsibility: Ormond alleged that her talent agency, also a defendant, had a fiduciary duty to protect her and failed in this responsibility by not warning her about Weinstein’s behavior, despite allegedly knowing about it from another client. The court found this claim sufficient to proceed based the fiduciary duty owed by talent agents to their clients.

The case will now move forward to the discovery phase, where the court will examine the full extent of the involvement of the defendants in Weinstein’s actions and their potential liability.

Takeaway for Entertainment, Media & Sports Employers: This case underscores the broader implications for companies in the entertainment industry and beyond. Employers, talent agencies, and parent companies may be held accountable for failing to act on known misconduct by their executives, particularly in cases involving sexual harassment or nonconsensual sexual touching. The ruling is a significant development in ongoing efforts to address these incidents in Hollywood and other industries following the #MeToo movement. It signals that courts may be more willing to allow claims to proceed against corporations that are alleged to have known about and failed to prevent sexual misconduct.

Employers in this space may want to consider the following considering this court’s decision:

1. Review the existence and need of employment contracts between executives and parent companies, as those contracts may be evidence in the future when assessing joint employer liability for claims against subsidiaries.
2. Assess the property owned by the employer and used as a perk – e.g., if a company permits use of a private residence by an actor, client, employee, does that increase the employer’s liability for anything that happens in that property? If so, assess alternative ways to structure this perk (such as reimbursement of costs of rental or hotel suites, rather than providing use of a private residential property owned or leased by the employer).
3. Conduct annual audits of #MeToo complaints to identify trends within the complaints and assess the corporate response to avoid claims of negligent supervision.
4. When acquiring a company ensure a #MeToo audit is part of the due diligence process.
5. View the landscape of fiduciary duty for the employer. Could an employer be found to have a fiduciary duty to third parties outside the employment relationship? If so, assess the structure of the relationship in order to limit that duty.
6. Facilitate interactive c-suite workshops on the current state of discrimination and harassment laws including the claims at issue here, so that managers can flag issues.
7. Review employment contracts for waivers or indemnification clauses.