Pl - Jordan
Df - In re WorldCom
Jordan and the Debtors entered into an endorsement agreement.
was considered to be one of the most popular athletes in the world.
The Agreement granted MCI a ten-year license to use Jordan's name,
The Agreement did not prevent Jordan from endorsing most other products
Could not endorse the same products or services that MCI produced.
$5 million signing bonus,
Annual base compensation of $2 million for Jordan.
The Agreement provided that Jordan would be treated as an independent
Four days, not to exceed four hours per day, for commercials.
WorldCom Chapter 11
MCI Rejected agreement with Jordan with 2 years left.
filed a claim for $4 million.
had an obligation to mitigate his damages and failed to do so.
Because of this, MCI is under not obligation to pay Jordan.
The objection should be overruled and dismissed for three independent
was a "lost volume seller" and thus mitigation does not apply,
There is no evidence that Jordan could have entered into a
"substantially similar" endorsement agreement, and
acted reasonably when he decided not to pursue other endorsements after
MCI's rejection of the Agreement.
Duty to Mitigate Damages
The doctrine of avoidable consequences,
which has also been referred to as the duty
to mitigate damages, bars recovery for losses suffered
by a non-breaching party that could
have been avoided by
reasonable effort and
without risk of substantial loss or injury.
The burden of proving that the damages could have been avoided or
mitigated rests with the party that committed the breach. The efforts to
avoid or mitigate the damages do not have to be successful, as long as
they are reasonable.
Jordan Argues Lost Volume Seller
a lost volume seller and any additional endorsement contracts would not
have been substitutes and would not have mitigated the damages for which
MCI is liable.
A lost volume seller does not minimize its damages by entering into
another contract because it would have had the benefit of both contracts
even if the first were not breached.
Lost Volume Seller Two
profit from the breached contract
profit from one or more other contracts that it could have performed at
the same time as the breached contract.
Courts Conclusion (Lost Volume Seller)
Court concludes that Jordan was not a lost volume seller.
If Jordan had been seeking additional endorsement agreements
independent of the Agreement's rejection, the Court
could conclude that Jordan was a lost
volume seller and irretrievably lost the money from the MCI
Jordan Argues MCI must show .
MCI must show that Jordan could have entered a "substantially similar"
endorsement contract in order to mitigate damages.
Courts (Substantially Similar Analysis)
This is not the law of mitigation of damages.
This stems from federal employment cases concerning back pay which this
This standard was
to ensure an employees future advancement.
This does not apply
because Jordan is not an employee.
acceptance of inferior employment can mean "that one who has been
discriminated against would be obliged, in order to mitigate
damages, to submit to the very discrimination of which he
complains. Has no application here.
Duty of employee to
find substantially equivalent employment.
MCI must show the
absence of reasonable effort by Jordan to avoid consequence or
minimize his damages.
Movie Star Case
The substitute movie that the movie star refused could not be applied
because the second offer was different and inferior.
was changing his strategy to not be a pitchman and buy an NBA
says he was talking with Nextel.
MCI says that
talking with accompany does not mean you are in contract with them.
Court: MCI has
established that Jordan did not take affirmative step to mitigate
Jordans Argument Dilute impact as an endorser.
Court says this was not convincing.
MCI says replacing a lost endorsement is the status quo, no a dilution
of Jordans impact.
Previously, Jordan has 16 endorsements, which further weakens the
Also Jordan not wanting endorsement to damage his changes of become an
NBA owner was irrelevant to his duties to mitigate damages.
Jordans Argument -
Risk to reputation Theory
An injured party is not
allowed to recover from a wrongdoer those damages that the injured party
"could have avoided without undue risk, burden or humiliation."
Courts Response Harm to Reputation
Flawed because the envisioned harm to Jordan's reputation does not rise
to the level of harm found in the cited case law.
No factual assertions of how Jordans passing up endorsements is akin
to the below cases.
Kodak Case Cite
Kodak was not required to mitigate damage by selling damaged
merchandize that could harm its reputation.
Sony Case Cite
Sony was not required to sell damaged products that harm their
Ripping out concrete slab could damage reputation.
A celebrity endorser has nothing to do with the company failing.
Citizen Bank Case
Where a choice has been required between two reasonable courses, the
person whose wrong forced the choice can not complain that one rather
than the other was chosen."
Ct: MCI is not complaining about the choice between "two reasonable
courses" of mitigation. MCI is arguing that choosing to take no steps
to mitigate is not a reasonable course.
Jordan Argues Goal of
owning NBA Franchise
Novelty Textile Mills
If the course of conduct chosen by the plaintiff was reasonable, the
plaintiff can recover despite the existence of another reasonable course
of action that would have further lessened the plaintiff's damages".
The Pl attempt to salvage the goods the damaged fabric instead of clean
it was reasonable.
Ct: Focus on owning an NBA franchise was not done to lessen the
Courts Response - Goal of owning NBA Franchise
It may have been reasonable for Jordan to focus on becoming an NBA team
owner in the scope of Jordan's overall future desires
but that does not mean it
can support a determination that he was
relieved of his obligation to mitigate damages in response to
MCI's rejection of the Agreement.
failed to mitigate.
To the extent Jordan moved to overrule MCI's objection to the Claim
that the "Agreement" is an employment agreement under section 502(b)(7),
Jordan's motion is granted.
To the extent Jordan moved to overrule MCI's objection based on MCI's
argument that Jordan failed to mitigate damages,
Jordan's motion is denied.
MCI's motion for summary judgment is granted in part and denied in
To the extent MCI sought to disallow the Claim in full, MCI's motion is
To the extent MCI moved for a ruling that section 502(b)(7) limits the
Claim, MCI's motion is denied.
To the extent MCI claimed that Jordan failed to mitigate damages, MCI's
motion is granted in part.
The Court finds that Jordan failed to mitigate damages but a further
evidentiary hearing is necessary to determine what Jordan could have
received had he made reasonable efforts to mitigate, a determination
that consequently will affect the Claim.