Wallace E.J. Collins III ()
In this era of media giants like Disney and Viacom/Nickelodeon creating shows for a younger and younger demographic, child TV stars and pre-teen musical artists are in ever-increasing demand and wielding ever greater power in the entertainment industry. It is almost inevitable that many practitioners in the entertainment field will eventually encounter the predicament of dealing with a personal services contract which involves a contracting party under the age of 18. The dilemma is that the minor may disaffirm the contract at any time during minority or upon reaching majority, thereby seriously jeopardizing the other party’s financial investment in developing such an artist.
Practitioners should know that the mere exercise of having the minor’s parent or guardian co-sign, approve or “guarantee” the contract does not resolve the problem. The minor may still disaffirm the contract on the ground of infancy, asserting that the parent or guardian lacked authority to make the contract.
Several states have laws regarding judicial approval of contracts with minors. New York’s Arts and Cultural Affairs Law §35.03 provides for judicial approval of certain contracts for services of minors or “infants” under the age of 18. The provisions of the statute specifically relate to performing artists (such as actors, dancers and musicians) and players of professional sports. The arduous procedure involved, however, can be expensive for the client and may prove to be a difficult gauntlet for the practitioner to run. Moreover, the probability of actually achieving court approval is discouragingly low.
Many judges, particularly outside the City of New York, are wary of approving what are often incomprehensible contracts replete with the convoluted formulas and the impenetrable nomenclature of the entertainment business. It is understandable that a judge’s trepidation with respect to certifying that a minor has adult responsibility for contractual obligations might be analogous to the reluctance a judge would experience when requested to declare someone judicially incompetent or insane.
As a practical matter, a proceeding for judicial approval of a minor’s contract under New York’s Arts and Cultural Affairs Law §35.03 is commenced by filing a verified petition. It can be filed by a parent, the guardian, a relative of the infant or any interested person or entity on the infant’s behalf (e.g., the record company or film studio with whom the infant is contracting).
Under the statute, the petition may be made to the Supreme Court or the Surrogate’s Court in the county where the infant resides. For proceedings commenced in New York County, there is a specific judge designated to handle such matters in the Supreme Court in Manhattan. If it so happens that a guardian has been appointed or qualified in New York, then the petition should be made to the court in which the guardian was appointed or qualified.
If the infant is not a resident of New York, then the petition may be filed in any county in which the infant is to be employed under the contract (which includes New York City if the record company or film studio contracts is in New York). In the event that the determination is made to file in the Supreme Court of a particular county, it is advisable to check with the clerk of the corresponding Surrogate’s Court. The Surrogate’s Court may require that special forms be completed and filed together with the petition to the Supreme Court, specifically with respect to appointment of a guardian.
A complete list of the information which must be included in the petition is set forth in Arts and Cultural Affairs Law §35.03(5) subsections (a) through (k).
Most importantly, the petition must stipulate the term and all other relevant, material terms of the agreement. Previously, the petition had to contain a statement that the term of the contract during which the infant was to perform could not extend for a period of more than three years from the date of approval of the contract. However, amended section 35.03(d) as it now stands provides that “if the court finds that such infant was represented by qualified counsel experienced with entertainment industry law and practices” then the contract could be for a period of not more than seven years. Moreover, certain covenants and conditions (e.g., re-recording restrictions) may also be approved for an extended term under the same conditions if the court finds them reasonable.
The petition must identify the nature of the infant’s employment and the compensation to be paid. In addition, the petition must contain a statement of who, if other than the infant, is entitled to the infant’s earnings and facts regarding the property and financial circumstances of the parent or parents so entitled. The petition also must include a schedule showing the infant’s projected “gross earnings,” estimated outlays and estimated “net earnings”, as such terms are defined in §35.03(3)(b).
If no guardian of the infant has been appointed or qualified in New York, the petition also must request the appointment of a limited guardian. The petition may nominate a person to be appointed as limited guardian solely for purposes of establishing a trust account for this proceeding and should set forth the reasons why the person nominated would be proper and suitable. A parent or other petitioner is not precluded from being appointed as limited guardian by reason of his or her interest in any part of the infant’s earnings or in the contract, provided such interest is disclosed. The court also has the option to appoint a special guardian to represent the interests of the minor at any time after the petition is filed.
A complete copy of the proposed contract must be annexed to the petition. Additional documents that should accompany the petition include written consent of the infant (if over the age of 14) and affidavits from the parents and/or guardian which consent to the petition, support the facts, and designate the clerk of the respective court as a person upon whom service of process may be made. In certain situations, it might be advisable for each of the attorneys who negotiated a particularly complicated contract to submit affidavits stipulating as to the substance of its particular provisions. Furthermore, if a guardian is or has been appointed for the particular proceeding, a document known as a “Report of Guardian Ad Litem” also must be filed with the petition.
At least eight days before the petition is noticed to be heard, the following persons (other than the petitioner and anyone who has joined in the petition) must be served with an order to show cause why the petition should not be granted: (1) the infant; (2) the parents of the infant; (3) the infant’s guardian(s); (4) each party to the contract; (5) any person having the care and custody of the infant; (6) the person with whom the infant resides; and (7) the infant’s spouse.
An order granting judicial approval of a contract for the services of a minor will rarely be granted on the papers alone. A hearing will be commenced in which the infant, the parent(s) and the various other interested parties may be questioned by the judge regarding the contract. Oftentimes the court will designate its own “experts” (usually lawyers not involved in the proceeding) to review and analyze the terms and provisions of the contract. The cost of such court-appointed lawyers is chargeable to the petitioner.
In the course of the proceeding, the court will decide what portion of the net earnings of the infant, if any, are to be set aside. In fixing the amount to be set aside, the court will consider the financial circumstances of the parents entitled to the infant’s earnings, the needs of the parents’ other children and the needs of the infant’s spouse, if married. Such amounts as are set aside are to be saved for the infant under guardianship until the minor turns 18 years old. Sometimes the court will designate that the minor’s attorney must establish an IOLA trust account to hold such funds.
As noted earlier, judges are often reluctant to approve contracts for the employment of a minor. Once the initial petition is filed to commence the proceeding, it could take anywhere from a few weeks to several months for a decision to be reached. Several appearances may be required before the judge is satisfied that the contract should be approved. As an additional practice note, I have found it helpful to prepare a detailed breakdown in outline form of the material terms of the agreement(s) (possibly attached to the petition as an exhibit) and for the agreements to state that if the minor’s employment will require absences from formal schooling that the employer will provide for the costs of a tutor. This will go a long way in assuaging the concerns of the court.
In a proceeding which I handled several years ago in Supreme Court in Dutchess County for approval of a personal management contract and a production agreement, the judge required three separate hearings. Despite affidavits from the attorneys who negotiated the contracts, the judge appointed independent counsel as a court “expert” to review the provisions of the contracts. The proceedings extended over several months before approval was granted.
Once the court grants approval, an order will be issued which will, in effect, declare the infant an adult for purposes of fulfilling his or her contractual obligations.
Keep in mind, however, that even after judicial approval of a contract, subsequent review may be made pursuant to an application made by the infant, a parent or the guardian. If the court determines after a hearing that the infant’s well-being is being impaired by the performance of the contract, it may at any time during the term of the contract order a modification or revoke its approval.
It is worthwhile for practitioners in the bicoastal entertainment field to be aware that the relevant California procedures concerning judicial approval of minors’ contract for artistic or creative services (Ca. Family Code §6750, et seq.), although similar, are somewhat more liberal substantively than New York law in many respects. For instance, under California law there is no limitation on the length of the term of a minor’s contract and there is no requirement that a limited guardian be appointed.
Although a hearing is usually required in California as in New York, the only parties required for the proceeding under California law are the employer or the employee, provided notice is provided by the party seeking judicial approval to the other party. Moreover, under California law, a maximum of 50 percent of net earnings will be set aside until the infant turns 18, whereas New York has no limit on what portion the court can direct to be set aside.
California courts would have jurisdiction over the action if the minor either resides or is employed in California, or if any party to the contract has its principal office in that state. Accordingly, if jurisdiction is available, a practitioner would be well advised to weigh the relevant pros and cons of having the proceeding commenced in California as opposed to New York.
Wallace E.J. Collins III practices primarily in entertainment and intellectual property law. He can be reached at www.wallacecollins.com.