Equitable Remedies for Breach of Contract: Prohibitory Injunction and Specific

Performance

Case: American Broadcasting Companies v. Wolf (1981, NY) [pp. 987-996]

Facts:
○ Employment K between ABC and Wolf, which included a renewal option. The
renewal option said:
§ that 90 days prior to the expiration of the K, Wolf was to enter into
good faith negotiations with ABC for a K renewal (12/6/79 - 3/4/80)
§ that during the first 45 days, Wolf could not negotiate with anyone
else. (12/6/79 - 1/19/80)
§ that if an agreement could not be made, ABC had a right of first
refusal, where for the 3 months following the expiration, Wolf could not work in
certain capacities (sportscaster, etc.) within first giving ABC the opportunity to
offer him an agreement on substantially the same terms and the Wolf would have to
accept. (3/5/80 - 6/3/80)
○ ABC and Wolf couldn’t come to an agreement.
§ Wolf met with CBS in early Oct (this was before the 90-day period)
§ 2/1/80 Wolf and CBS made an oral agreement (after the first 45 day
period)
§ K with CBS had an effective date of 3/6/80, but Wolf paid $100 as
consideration for the option to hold the offer open until 6/4/80, when he would be
free from the terms of ABC's K.
○ Wolf resigned, and ABC tried to negotiate with him, but Wolf refused. ABC
then brought this suit on 5/6/80 claiming breach of the good faith negotiation and
the right of first refusal provisions of the K. ABC sought specific enforcement of
their right of first refusal, and an injunction against Wolf's K with CBS.

Issue: Whether the court should grant an equitable remedy for breach of an
employment K by a television personality (for a personal service contract). -No.

Holding: There is a breach of K, but equitable relief is inappropriate.

Reasoning:
○ Breach of K
§ K with CBS had an effective date of 3/6/08, and under this K, Wolf
could not render his services to anyone else, including ABC. ABC was given no
opportunity to exercise their right of first refusal.
§ The oral K (for him to work as a producer, which was not in the ABC
K)with CBS on 2/1/80 did not breach the right of first refusal provision b/c that
period did not begin until after expiration of the K and for 3 months after.
However, it did breach the provision to negotiate in good faith.
○ Should specific performance be granted?
§ First question to ask: Whether the employment has expired
□ During period of employment & is furnishing unique services -
if they have expressly or by clear implication agreed not to compete for the
duration of the K, and employer is exposed to irreparable injury, it may be
appropriate to restrain employee from competing until K expires.
® What courts may do is order a "negative enforcement," in
that, they can't offer those services to someone else during the duration of the
K, when the services are very unique.
□ After K has expired - equitable relief may only be available
from tortious behavior or to enforce a non-compete.
® Public policy favors healthy competition. So absent
something unfair (like a tort or non-compete) courts wont grant equitable relief
for personal services K.
§ Court denies the request for injunctive relief
 □ K is expired, so no negative enforcement warranted.
□ There is no express non-compete provision that employee is
violating, nor is the employee committing tortious acts (like exploitation of
trade secrets) that may cause special injury to ABC (other than competition).
§ Conclusion: Court won't grant equitable relief, but says that ABC
still has a right to pursue monetary damages.

Dissent: Agrees that Df breached K, but disagrees with court for not allowing
equitable relief. There should be a 90-day injunction

RULE:

Notes:
○ Why should equitable relief not be granted for personal services?
§ It is undesirable to compel the continuation of a personal
relationship after a dispute has undercut confidence and loyalty
§ Very difficult to for court to supervise the performance
□ The difficulties inherent in passing judgment on the quality of
what frequently is a subjective performance are too great
§ An award requiring performance may impose a form of involuntary
servitude that is prohibited by the 13th amendment
○ Availability of injunctive relief
§ There can be negative enforcement if specific performance is
unavailable
□ However, courts may not enforce this if by doing so, the Df
cannot reasonably earn a living (other than by working for Pl).
§ Equity jurisdiction:
□ Enforce the negative covenant where the direct promise was not
specifically enforceable, and
□ Grant the Pl an injunction where comparable relief was not
available to the Df
® An injunction, whose primary purpose is protect the Pl
from unfair competition from a K breacher whose unique services cannot easily be
replaced, is available whether or not an express negative covenant has been made
® An injunction against competition is proper of the
competition "will do additional irreparable injury to the Pl, and if the
injunction may induce proper performance of the entire K by economic pressure
without at the same time creating harmful personal relations.

Notes
○ We don’t grant specific enforcement for personal service contracts
§ We do have negative enforcement though, but only when there's a non-
compete, there's tortious behavior, or if employee still under the K, i.e. still
working there.
○ Court will only enforce a covenant for non-compete if its reasonable
(reasonableness depends on each situation):
§ time (20 years is unreasonable),
§ Space (can't be anywhere in the U.S., etc),
§ Scope - can't be too broad. Only enforce as to specific unique
talents the employee has
○ Pg 992 - Public policy argument:
§ We like competition - we want the most efficient allocation of
resources. Public policy of free competition
§ We don’t want to deprive anyone of their livelihood