Poor Howard. For a guy who’s been so successful, he sure has problems with his bosses. Stern’s battles with NBC were immortalized in Private Parts while anybody who listened to his last days on terrestrial radio knew how much he hated Les Moonves. And then he met satellite radio, moved to Sirius Radio, and lived happily ever after…for a while.
Everything seemed great at first. He could cuss and swear and do all kinds of crazy things (or have Richard and Sal do crazy things). He loved his boss, Mel Karmazin, and got paid a bunch of money. And he made Sirius very successful; so much so that it was able to essentially force a merger with its once dominant competitor, XM Radio.
And that’s when trouble began brewing in paradise. Howard claimed that, because of the additional XM subscribers, he was entitled to a $300 million performance bonus that had been part of his Sirius contract – a bonus that was triggered if Sirius added a certain number of subscribers. SiriusXM disagreed, stating that he was only entitled to that bonus if Sirius subscribers surpassed a certain benchmark, and that the XM subscribers should not be viewed as “Sirius subscribers.”
Howard and his agent filed suit. SiriusXM moved for summary judgment on Howard’s claims, arguing that, as a matter of law, Howard’s claims should be dismissed. And the court agreed, citing to the “clear, unambiguous language” of Howard’s contract.
So Howard appealed. And now he’s lost again. He’s obviously disappointed (that’s a lot of money left on the table). And, according to Howard himself on his show today, he’s frustrated with the legal system and feels that he never got his day in court.
But the truth is that Howard did get his day in court, even if it’s not the way he pictured it. Many people don’t realize that not all issues go to trial, with their judges, juries, witnesses, and dramatic gestures. Instead, those moments are reserved for factual questions. If the only issues that are disputed are strictly legal (in other words, a jury would never get to weigh in on the dispute because they are questions that are reserved for judges), then any party can move for summary judgment if it wants to. A summary judgment motion “is appropriate if, viewing all facts in the light most favorable to the non-moving party, no genuine issue exists as to any material fact, and the moving party is entitled to judgment as a matter of law.” BGC Partners, Inc. v. Refco Securities., LLC, 2012 WL 1255253, 2 (N.Y.Sup. 2012).
Summary judgment motions are often used in such cases as Howard’s, where the issue is whether a contract has been breached. A breach of contract dispute requires the court to interpret the contract, and the general rule followed in New York and most states is that where the language of a contract is clear, unequivocal, and unambiguous, then the contract is to be interpreted by its own language. See R/S Associates v. New York Job Development Authority, 98 N.Y.2d 29, 32, 771 N.E.2d 240, 242, 744 N.Y.S.2d 358, 360 (N.Y. 2002). The underlying rationale for this principle is that when parties write down an agreement in a clear, complete document, then the words that they use in that contract should be enforced according to the contract’s own terms. See id. The only time extrinsic evidence (a.k.a. “evidence outside the four corners of the document”) will be considered by the court is if a term is ambiguous (e.g., subject to more than one meaning).
The reasoning behind this principle is sound. If the parties hammer out a written agreement (and, in the case of Howard’s agreement with Sirius, there were surely teams of lawyers on both sides), then one party shouldn’t be able to come back later and say, “Well, I don’t care what the words of the written contract say, I actually meant Y when I said X in the contract.” On the other hand, if the parties goof up and use a term that can be interpreted in multiple ways, then the courts will allow the parties to introduce evidence (e.g., testimony, emails, drafts of the contract) to show what each side meant when they used that term.