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ICSOM Provides Legal Guidance Regarding the Application of Force Majeure Due to Coronavirus Threat

By Kevin Case, ICSOM Counsel and Member of Local 10-208 (Chicago, IL)

Editor’s note: This article was a memo sent to International Conference of Symphony and Opera Musicians (ICSOM) delegates and committee chairs, and a version of this is appearing in the ICSOM newsletter Senza Sordino. It is being reprinted with permission.

Dear Delegates:

As you know, the Covid-19 situation is developing rapidly and has begun to impact our orchestras. Several have cancelled or are planning to cancel concerts and upcoming tours, sometimes voluntarily and sometimes in response to orders from a municipal government or other controlling authority. Musicians have concerns about the legal implications of this on their employment—particularly the application of force majeure or “Act of God” clauses—and about how to work with management in this uncertain time.

This message is intended to provide (1) legal guidance regarding the application of force majeure and (2) practical guidance as to steps you may want to take in dealing with management. As always, however, it is crucial that your orchestra committee work closely with your local, and, where possible, solicit advice from your local’s attorney regarding the interpretation of your particular Collective Bargaining Agreement (CBA).

Force Majeure

Whether an outbreak of a disease like Covid-19 triggers a force majeure clause in a CBA requires an individualized analysis of the language. The answer may vary significantly from employer to employer.

A CBA is a binding obligation. An employer is bound by the promises it has made in the CBA and cannot be relieved of those obligations absent agreement by the union, or bankruptcy. However, the CBA itself may contain provisions that permit the employer to suspend all or part of its obligations upon the occurrence of certain contingencies (which is the written manifestation of “agreement by the union”). That is where force majeure clauses come in. A force majeure provision in a contract (otherwise called an “Act of God” clause) may relieve a party from performing its contractual obligations when circumstances beyond the party’s control arise which make the party’s performance of those obligations impossible.

Force majeure is a creature of the contract. It is not an overriding principle of contract law. That means there is typically no such thing as an “implied” force majeure provision; rather, the parties must have explicitly agreed that a force majeure event may excuse non-performance. Moreover, force majeure clauses are strictly construed by courts and arbitrators, which means that the party seeking to invoke a force majeure event will be held to the precise language the parties used in their contract.

There are a wide variety of approaches to force majeure in our orchestra CBAs. Some don’t have a force majeure clause at all. Others simply refer to an “Act of God” or permit the employer to suspend its obligation “by reason of force majeure” without further elaboration. Many list examples of natural force majeure events, such as “floods, fires, earthquakes, hurricanes,” etc. Some also include man-made events like “war” or “civil strife.” A few (unfortunately) refer to economic hardship, which on its own is not a force majeure event, but which will be enforced if the parties have agreed to put it in their agreement. Many contain a “catch-all” provision such as “other events beyond the control of the employer.”

For present purposes, I’ve identified three scenarios for discussion: (1) a CBA without a force majeure clause at all; (2) a force majeure clause that contains only the terms “force majeure” or “Act of God,” without further definition; and (3) a force majeure clause that lists specific events.

1. No force majeure clause at all

Because a CBA is a contract that is enforced primarily through arbitration, the body of law that governs the interpretation of a CBA has been developed through arbitration decisions; those decisions, in turn, often incorporate common-law contract principles. Although contract law varies from state to state, courts will not imply a force majeure provision if it does not exist in the contract.

The same cannot always be said for arbitrators, who sometimes inject subjective considerations into their decisions. Consequently, one can find a few arbitration awards that excuse an employer’s performance in cases of, for example, extremely severe weather, even in the absence of a force majeure clause. Those cases are outliers, however, as they are inconsistent with contract law (and the well-settled principle that arbitrators are forbidden to add to or modify the terms of a CBA).

Therefore, if your CBA lacks a force majeure clause, then your management should not be able to suspend its obligations and cut off your pay and benefits in the event that Covid-19 forces some kind of shutdown. That doesn’t mean your management may not try to do so, in which case you may end up in arbitration. (Note that my analysis here applies primarily to full-time, salaried musicians; for per-service musicians, subs, and extras, management may have more flexibility to cancel services without payment, depending on the language in those orchestras’ CBAs.)

There is also a chance your management may cite “impossibility” as permitting suspension of its obligations in a shutdown. There is indeed an “impossibility doctrine” in contract law, but it is rarely applied to CBAs and should have no place here. When it comes to paying musicians their salary and maintaining benefits, nothing about Covid-19 has rendered that “impossible.” If the city shuts down your venue, it may be impossible for the orchestra to actually perform; but that doesn’t mean it is impossible to pay the musicians. Payroll can still operate.

Impossibility also applies only when the event was plainly unforeseeable, such that the parties would have been unable to provide for the risk of that event in their contract. Although pandemics may not have been specifically contemplated by the parties when your CBA was negotiated, the risk of an event that would preclude a concert from occurring was always known—indeed, that’s the whole reason for force majeure language, “fire, flood, earthquake,” etc. Management presumably had every opportunity to bargain for such force majeure language so as to mitigate its risk; and if management failed to do so, it can’t assert “impossibility” now.

2. Force majeure clause simply says “force majeure” or “Act of God”

There is no standard definition of the terms “force majeure” or “Act of God.” Rather, such terms have whatever meaning the parties chose to give them in the contract. That’s not helpful, though, if the parties declined to specify that meaning and simply used the terms in isolation. There are two schools of thought. One says a force majeure event must result solely from natural causes and not from any human action; so, even if the initial cause was wholly natural, it doesn’t count if the event involves human actions taken in response. Under that approach, concert cancellations as the result of a governmental order would not be deemed an “Act of God” because even though Covid-19 arose from natural forces, the decision to close venues was made by human beings. In other words, there would be a distinction between the pandemic itself and a government measure taken in response.

Different arbitrators come to different conclusions, though, and the second school of thought holds that even if the decision was made by management or others, it is nonetheless considered an “Act of God” if the “real reason” was the natural event. So, under that approach, a concert cancellation by municipal order might still be seen as an “Act of God,” even though a significant amount of human decision-making would be involved. On the other hand, if your management voluntarily cancelled concerts without being directed to do so by the city or other controlling authority, it is less likely that would be deemed a force majeure event. A subjective judgment call by your executive director shouldn’t be considered an “Act of God.”

3. Force majeure clause lists specific events

Where a force majeure provision lists examples of qualifying events, courts construe the language narrowly to apply force majeure to only the events specifically identified. Cleary, then, a force majeure clause that refers to “epidemic,” “plague,” “quarantine,” or even “public health emergency” would encompass a Covid-19 shutdown. Similarly, if the clause specifies governmental action, then a venue shutdown by municipal order would likely qualify. But if the list of events is confined to specified natural disasters, war, or civil disturbance, then a Covid-19 shutdown should properly be considered outside the scope of that force majeure clause. Similarly, if your force majeure clause lists “work stoppages,” that will be deemed to mean a strike or lockout—not just any stoppage of work for any reason.

Note that if the list ends with the clause “other similar act, event, or occurrence,” that doesn’t necessarily expand the scope of the provision. The principle of contract interpretation for such clauses is that “other” means events of the same kind or nature as the specific events mentioned. However, the same may not be true if the force majeure provision ends with a catch-all clause like “other causes beyond the control of the employer.” The “beyond the control of the employer” clause is often deemed to encompass any event that is, well, beyond the control of the employer. If your CBA has that language, then it is more likely that a Covid-19-related shutdown would be considered a force majeure event.

Practical Steps

There should be no doubt whatsoever as to ICSOM’s position: In the event of any cancellations or shutdowns in our orchestras, whether voluntary or involuntary, orchestra managements should maintain salary and benefits for their musicians, including subs and extras (or other per-service musicians) that have been engaged for cancelled services. In other words, regardless of whether your management can legally invoke a force majeure clause, it should not do so.

It is in everyone’s best interests to come to an understanding on this issue. Clearly, your managements need flexibility to deal with this crisis: schedules will need to be revamped; locations may need to change; and some orchestras may find it viable to stream concerts rather than perform before a full audience. Just as clearly, you need assurances that you will continue to be paid and your health insurance and other benefits will continue.

Working collaboratively with your management to provide such flexibility in exchange for the assurances you need would thus be a positive outcome. At the local/OC level, that means a willingness to provide waivers where management makes a compelling case that a waiver is necessary. With respect to media, Debbie Newmark and Rochelle Skolnick at the AFM’s Symphonic Services Division can handle discussions with your managements regarding streaming and similar media options. (You can expect to hear from Rochelle and Debbie on this topic shortly.)

Again, however, any such flexibility should be provided only if you get the assurances you need from management (including with respect to subs and extras). Further, you should hold management to a burden of demonstrating that any requested changes are truly necessary. That means management must come up with an actual plan for dealing with Covid-19 going well into the future—not simply an ad hoc, short-term reaction. You should also insist on total transparency from management, including with respect to the financial impact of any cancellations and efforts to replace lost revenue.

To that end, you should consider making an information request to management regarding any business interruption insurance policy maintained by the orchestra. Granted, many such policies specifically exclude from coverage interruptions caused by epidemics, or limit coverage to physical damage. But if there is a chance that the organization may be insured in whole or in part for financial losses caused by a shutdown, then you need to know about it.

There are sound reasons why your managements should decline to invoke force majeure during this crisis. For one thing, any management that cites Covid-19 to cut off pay and benefits would essentially be declaring war on its musicians. However difficult CBA negotiations may have been in the past, or however tense the relationship has been, that would be nothing compared to the fallout resulting from any such decision. The damage would be far-reaching and permanent.

It is also a simple matter of fairness. It comes down to a question of who is best able to withstand the pain of a Covid-19 shutdown. The answer is obvious. Yes, the employer will lose money and its financial condition may ultimately become precarious. But if the musicians lose their pay and benefits, then they won’t be able to buy food, go to the doctor, or pay their mortgage. Even if the orchestra is forced to dip into emergency reserves or its endowment, and even if that means future CBA negotiations will be more challenging because of it, that would be a far better outcome than one in which the very lives of musicians and their families are put at risk.

ICSOM will provide further guidance as circumstances require.

Albany Symphony Reaches Agreement on New Contract

After five months of negotiations, musicians and management of the Albany Symphony reached an agreement on a new contract near the end of July.

The four-year contract increases the number of guaranteed services per season, and increases pay rates for services, mileage, and per diems. In addition, pay rates could be further increased pending the organization’s achievement of sales, fundraising, and endowment goals.

The new contract also includes changes in rehearsal and concert conditions that will support artistic quality, and for the first time, includes language addressing education and community-engagement activities. A side letter affirms Albany Symphony’s commitment to the importance of diversity, equity, and inclusion.

“The negotiating committee and the Albany Symphony engaged in days of meaningful discussions about the future of the orchestra and how to solve problems both sides were facing,” says Joey Demko of Local 14 (Albany, NY), a French hornist in the orchestra and co-chair of the musicians negotiating committee. “Together, we were able to build a collaborative agreement that ensures that the Capital District continues to have a world-class orchestra.”

Kansas City Symphony Negotiates Contract Extension

With both its executive director and board chair planning departures, the Kansas City Symphony negotiated a contract extension ahead of schedule. The two-year extension will cover musicians through 2023.

Musicians have enjoyed pay increases under their current contract, and raises will continue with the contract extension. Base salaries will increase 4% in the 2021-2022 season and 3% in the 2022-2023 season.

“Together, we look forward to reaching even greater artistic success and financial stability,” says Brian Rood of Local 34-627 (Kansas City, MO), a trumpet player in the orchestra and chair of the Negotiating Committee. “As we welcome incoming Executive Director Daniel Beckley and Board Chair Patrick McCown, we salute [outgoing Executive Director] Frank Byrne and [outgoing Board Chair] William Lyons for their extraordinary leadership and service. Through their vision and dedication, the symphony has become one of Kansas City’s favorite performing arts organizations.”

Phoenix Symphony Contract Includes Raises

On May 10, musicians of the Phoenix Symphony, represented by Local 586 (Phoenix, AZ), agreed to a one-year contract that will begin September 1 and run through October 31, 2020. Under the contract, salary will increase from $44,163.98 in the past season to $45,486 in the coming season, and orchestra size will remain at 76 musicians with 10 vacancies. Updates to work rules include limitations on scheduling Saturday rehearsals.

Symphoria Ratifies First Agreement

In June, the musicians of Symphoria in Syracuse, New York, ratified their first one-year agreement. The agreement—basic, but comprehensive—is intended to serve as a template for future agreements. Much of the language was taken from previous Syracuse Symphony Orchestra contracts, as well as procedures and agreements used during the founding of Symphoria. The orchestra’s musicians are represented by Local 78 (Syracuse, NY).

The contact establishes an annual salary of $12,600, and an orchestra complement of 48 core musicians with five additional contract musicians. Season length is 35 weeks for the regular season and an additional two weeks in the summer. Existing health care and dental care policies will remain intact, and the contract establishes two sick leave services per season.

esmd 101

EMSD 101: How to Select the Correct Agreement For Your Project

The following questions will help determine which rates and agreement should be applied to your recording. Always contact the AFM to confirm which contract you should be using. Note, if an electronic media project involves a symphony, opera, ballet, or chamber orchestra with a collective bargaining agreement, you need to contact the Symphonic Services Division to determine the appropriate agreement. 

1) If it is a live performance being recorded or taped, is there a live performance contract on file?

2) What is the nature of the project (music recorded for a CD release/download, commercial announcement, television show, motion picture)?

3) If it is for a CD release/download, what is the approximate number of pressings/downloads? What is the approximate budget?

4) If it is for a commercial announcement, is it for a national, regional, or local campaign? Which medium (television, radio, Internet, etc.) will it be used on? Will the musicians be on camera?

5) If it is for a television show, which type of show is it for (variety special, talk, sports event or theme, documentary, sitcom, awards)? Where will the television show air (network, basic cable, pay cable, PBS, local television)?

6)   If it is for a variety type show (talk show, awards show), what is the length of the show and its rehearsals?

7) If it is for a television movie, scripted episodic show, television documentary, or sitcom, will musicians be on camera?

8) If it is a live performance pick-up of a staged concert for the Internet, will it be a one-time live stream or an on-demand stream? Will the stream access be ad supported or subscription based?

9) If it is a project made for new media, what type of show is it, and over which new media platforms will it be available (Netflix, Amazon, Hulu, Apple)? Will the viewing be ad supported or subscription based?

10) What is the name of the production entity and party responsible for control of the product?

Atlanta Symphony Orchestra Completes Amicable Contract Negotiations

Musicians and management of the Atlanta Symphony Orchestra (ASO) announced in early March that they had reached agreement on a three-year contract extension through the 2020-2021 season. Reflecting a renewed sense of collaboration and trust between the two sides, the negotiation process was conducted quietly and the agreement was reached six months ahead of schedule. ASO musicians, members of Local 148-462, endured lockouts in 2012 and 2014, as well as a drastic pay cut in 2012.

The contract extension will include increases to compensation totaling approximately 3% annually over the three-year period. In addition, the agreement includes changes to the orchestra’s work rules. The agreement was made possible due to the strong financial performance of the institution over the past four years, along with the generosity of an anonymous donor who stepped forward with support for compensation increases.

During the term of the extension, the orchestra’s complement remains unchanged. In the most recent contract, management agreed to raise $25 million for a musicians’ endowment fund to restore and fund 11 positions in the orchestra. ASO exceeded the $25 million goal and completed the campaign two years ahead of schedule. Auditions are in process to fill the final positions and raise the complement to 88 full-time musicians.

“The Musicians of the Atlanta Symphony Orchestra are pleased that respectful and productive negotiations resulted in this new contract,” says Atlanta Symphony Players’ Association Chair and ASO Cellist Daniel Laufer of Local 148-462. “This agreement is another important step forward in solidifying the financial foundation necessary to support the artistry of the Atlanta Symphony Orchestra. We would like to thank Jennifer Barlament [ASO executive director] and her senior leadership team, as well as Howard Palefsky, ASO board Chair, for making a positive difference during these negotiations. We are also very appreciative of the anonymous donor who so strongly believes in ASO musicians and understands the importance of continuing to restore the compensation package.”

Alabama Symphony Orchestra Ratifies New Agreement

In August, the Alabama Symphony Orchestra ratified a new three-year contract agreement that began September 1, 2017 and is effective through August 31, 2020. The orchestra’s musicians are members of Local 256-733 (Birmingham, AL).

Wages remain the same this season, with modest increases next season and in 2019-2020, bringing annual salary to slightly more than $43,000 in the third and final year of the contract. Season length remains 40 weeks and the orchestra size of 53 musicians will continue.

The contract establishes 12 weeks of maternity leave, increases per-service pay for substitute musicians, and clarifies the makeup and role of the Artistic Advisory Committee—seven musicians representing all instrument sections, which will be a part of all discussions regarding concert series programming.

Improved Contract for Glimmerglass Festival Orchestra

In December, Glimmerglass Festival Orchestra ratified a four-year CBA under which its musicians, represented by Local 443 (Oneonta, NY), will see wage increases and other significant improvements. Base musician wages will increase 3% in each year of the contract, in addition to increases in guaranteed weekly minimum salary, overscale for principal players, and pension contributions. Improvements to sick time, bereavement leave, personal leave, and guaranteed season leaves of absence will also take effect. A new position has been added to the core roster; language regarding dismissal policy has been improved; and opportunities for additional work will be added as the festival grows.

“This contract achieves significant gains for our membership in many areas,” says Committee Chair Greg Spiridopoulos of Local 443. “We are especially pleased to have been able to make these enormous strides for our entire membership in a compact negotiation, which was achieved by establishing a mutually respectful relationship with management early in the process and identifying the shared goal of the company’s artistic growth.” Negotiator and Local 9-535 (Boston, MA) Vice President Robert Couture was brought in by Local 443 to assist throughout the negotiating process.

Disney Workers Want $15 an Hour

The 38,000 unionized Disney workers remain without a new contract. Disney representatives have agreed the employees deserve a raise, but they have been unable to agree with the union as to the amount.

Currently, new Disney employees earn $10 per hour, but the union wants to raise average worker pay to above $15 per hour. Disney’s offer of a 5% raise over two years has been rejected by the union.