Evening News Ass'n v. Peterson
5 Media L. Rep. (BNA) 2087, 477 F. Supp. 77, 1979 U.S. Dist. LEXIS 9946 (1979)
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Rule of Law:
The right to receive services under a personal services contract is assignable by an employer unless the contract is based on a personal relationship of confidence between the parties or the assignment would materially change the employee's duties and obligations.
Facts:
- Gordon Peterson, a newscaster-anchorman, was employed by Post-Newsweek Stations, Inc. (Post-Newsweek) under a three-year contract signed on July 1, 1977.
- The contract detailed Peterson's duties as a news anchorman but contained no provision regarding its assignability, though it did include an integration clause stating it was the entire agreement.
- In June 1978, Post-Newsweek sold its television station to Evening News Association (Evening News).
- As part of the sale, Post-Newsweek included Peterson's employment contract in the Bill of Sale and Assignment, transferring it to Evening News.
- Peterson continued to work for Evening News for over a year after the acquisition, performing the same duties and receiving the same compensation as stipulated in his contract with Post-Newsweek.
- In August 1979, Peterson tendered his resignation to Evening News, having negotiated a new employment contract with a competing television station.
Procedural Posture:
- Evening News Association sued Gordon Peterson in the U.S. District Court for the District of Columbia.
- The plaintiff sought a declaratory judgment affirming the validity and enforceability of the assigned contract.
- The plaintiff also requested a permanent injunction to prevent Peterson from working for a competing station.
- The court held an expedited bench trial on the merits of the case.
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Issue:
Is an employee's personal services contract assignable to a new employer without the employee's consent when the contract is silent on assignability and the employee's duties do not materially change after the assignment?
Opinions:
Majority - Barrington D. Parker, District Judge
Yes. An employee's personal services contract is assignable when it is silent on the matter and the assignment does not materially alter the employee's obligations. The court distinguished between the delegable duty to perform personal services and the assignable right to receive them. General contract law principles favor assignability unless an exception applies. The first exception, where an assignment materially varies the obligor's duty, was not met here, as Peterson's role, duties, and compensation remained unchanged under Evening News. The second exception, for contracts based on a personal relationship of confidence, also did not apply. Peterson contracted with the Post-Newsweek corporation, not with specific individuals, and his subjective feelings about his rapport with former managers were not reflected as conditions in the contract. Therefore, the right to receive his services was a corporate asset that Post-Newsweek could validly assign to Evening News.
Analysis:
This case solidifies the modern legal principle that rights under a personal services contract are presumptively assignable, separating the assignable right to receive services from the non-delegable duty to perform them. It clarifies that for a contract to be deemed non-assignable due to its 'personal' nature, the relationship of confidence must be an objective feature of the agreement, not merely the employee's subjective feeling. The ruling places the burden on employees who wish to control who they work for to explicitly negotiate a non-assignment clause in their contracts. This precedent is significant for corporate transactions like mergers and acquisitions, as it confirms that employee talent, as secured by contracts, can generally be transferred as part of the business assets.
