Actress Charlize Theron has settled a lawsuit brought against her by watchmaker Raymond Weil (RW) for breaching a contract to exclusively promote its watches. The terms of the settlement were undisclosed, but it came just more than a month after a federal judge in New York concluded that Theron had breached her agreement, and that Raymond Weil was entitled to prove to a jury that it sustained damages.
In 2005, Theron, who was named by Esquire Magazine as “The Sexiest Woman Alive,” signed an agreement to promote Raymond Weil’s “Shine” collection through advertising and by wearing the watches exclusively. However, during the contract term, she was photographed at a screening of a film produced by her production company wearing a Dior watch.
A photograph of Theron wearing the Dior watch made its way to Tourneau LLC, a major watch retailer and manufacturer, which published the photo in Tourneau Times, a publication the company distributes to high-spending customers. The caption under the photo read, “Charlize Theron wears Dior.”
Theron later expressed regret regarding the incident, and New York Federal District Court Judge Colleen McMahon agreed in a Sept. 30 opinion that the wardrobe choice was the wrong call.
“By wearing a … Dior watch at a film festival, Theron breached her covenant not to ‘wear publicly any other watches than RW,’” the judge stated, citing language from the agreement. “Theron recognizes as much, calling her decision to wear the watch ‘regrettable.’ It was more than ‘regrettable’; it was a clear breach of the Agreement.”
Judge McMahon also rejected Theron’s attempt to skirt personal liability.
Theron had argued that since her management company, Denver & Delilah Films, Inc., had struck the deal, she only signed as an agent of the company and therefore should not be held personally liable.
The judge disagreed. “Theron is the owner of DDF and therefore exercised considerable control over its corporate decisions. The agreement was only ten pages long, and Theron marked every page with her initials,” the judge stated. “Indeed, Theron even testified that she personally participated in the negotiations for the contract.”
Judge McMahon did throw out a number of Raymond Weil’s other claims, including claims that Theron breached their agreement by wearing other jewelry at public events and by accepting payment to do so.
The agreement forbade Theron from endorsing or advertising watches or jewelry for any other companies during its duration. The court noted, however, that the agreement also provided that Theron was “permitted to wear jewelry of her choice in public and to awards shows.” The fact that she was paid to do so did not nullify this exception, the court ruled.
Just how much Theron’s single breach cost her is a matter of speculation because the terms of the settlement reached after Judge McMahon’s decision were not disclosed. However, some form of payment seems likely to pass from Theron to Raymond Weil. The order dismissing the case notes that the case will be dismissed only if the settlement is “consummated” within 30 days.
Raymond Weil initially had sought $20 million in damages, but likely settled for less. The court threw out a number of its claims, including a claim for fraud, leaving the company with one proven incident where the agreement was breached. The company then sought, based upon that single incident of breach, to recover the $3 million originally paid to Theron under the agreement, as well as interest and money spent to promote her.
But the court noted that these damages would be equivalent to the amount that would be awarded if the entire contract were rescinded—a remedy to which Raymond Weil was not entitled.
“Theron loaned her image to RW, which realized substantial benefits of an indisputably successful advertising campaign featuring Theron,” the court stated. “Theron’s brief appearance wearing a Dior watch[…], which led to her image’s being published in the Tourneau magazine in the thirteenth month of the Agreement’s fifteen month term, was a material breach, but it was not so substantial and fundamental as to defeat the object of the parties making the contract.”
Why This Matters: The case, which was widely covered in the mainstream, entertainment and business media, sends a message to the market that celebrities, who often receive large sums of money to endorse products, should take their commitments seriously, and will be held responsible for their actions should they choose to disregard their agreements.