Last week, Chelsea Handler filed a lawsuit against ThirdLove, alleging that the lingerie company failed to honor its contractual commitments to her and refused to compensate her for an advertising campaign it had hired her to spearhead.
According to the complaint, the parties negotiated and finalized a term sheet by December 21, 2021 for a one-year deal under which Handler would exclusively promote the brand. The parties exchanged drafts of the full agreement, and were allegedly close by the time the term started on January 1, 2022. In anticipation of the deal going through, Handler started preparing for the campaign by starting an exercise program, participating in meetings, attending wardrobe fittings, and preparing for a shoot.
In addition to preparing for the campaign, Handler alleges that she turned down opportunities to work with competing companies based on the exclusivity provision in the draft agreement with ThirdLove. For example, she passed on inquiries from various athletic-wear brands, she turned down the opportunity to have another athletic-wear company purchase ads on her podcast, and she was forced to discontinue ads from an existing sponsor.
On January 26, 2022, the night before the scheduled campaign shoot, ThirdLove cancelled the agreement. Handler believes that the creative team in charge of her campaign never obtained approval from the company’s Board, and when the Board learned of the campaign right before the shoot, it didn’t want to move forward with it. Handler alleges that she tried to reach a reasonable settlement with the company, but that they ignored her requests.
Last week, Handler filed a lawsuit in California alleging breach of contract and promissory estoppel. She seeks full payment under the agreement (which is over $1 million), recovery of the expenses she incurred while preparing to perform her obligations under the agreement, and the loss of income from the brand deals she was forced to turn down pursuant to the exclusivity clause.
It’s likely that anyone who works on these types of deals will recognize some elements of this fact pattern. To the discomfort of the lawyers involved, it’s not uncommon for the parties to start work on a campaign before the agreement is signed. Although the parties usually manage to work things out in the end, this case demonstrates that not every story has a happy ending.