Loew's, Inc. v. Cole
1950 U.S. App. LEXIS 4320, 185 F.2d 641 (1950)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
An employee's refusal to answer questions before a congressional committee regarding political affiliations can present a question of fact for a jury as to whether it breaches a contractual "morals clause" prohibiting conduct that brings the employee into public hatred or contempt. An employer does not waive its right to act on such a breach by waiting a reasonable time to assess the public and business impact of the employee's conduct.
Facts:
- Lester Cole was employed as a screenwriter by Loew’s, Incorporated under a contract containing a "morals clause."
- The clause required Cole to conduct himself with due regard for public conventions and morals and not commit any act that would bring him into public hatred, contempt, scorn, or ridicule, or prejudice the producer or the motion picture industry.
- In October 1947, Cole was subpoenaed to testify before the House Committee on Un-American Activities (HUAC) during its investigation into the motion picture industry.
- When asked "Are you now or have you ever been a member of the Communist Party?", Cole's responses were interpreted by the committee as a refusal to answer.
- Cole's conduct before the committee received extremely wide notice in the press and on the radio, leading to public criticism.
- On December 2, 1947, approximately one month after his testimony, Loew's suspended Cole, citing his conduct before the committee as a violation of the morals clause.
Procedural Posture:
- Lester Cole filed an action for declaratory relief against Loew's, Incorporated in state court after being suspended.
- The case was removed to the United States District Court.
- A jury trial was held, and the jury returned a special verdict answering four questions in favor of Cole.
- The trial court adopted the jury's findings, made additional findings of its own, and entered a judgment for Cole, ordering his reinstatement and awarding $75,600 in back pay.
- Loew's, Incorporated (appellant) appealed the judgment to the United States Court of Appeals for the Ninth Circuit.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does an employee's refusal to answer questions before the House Committee on Un-American Activities about Communist Party membership, which results in public scorn, fail as a matter of law to constitute a breach of a contractual "morals clause," thereby preventing the employer from suspending the employee?
Opinions:
Majority - Pope, J.
No, an employee's refusal to answer questions before HUAC does not mean the employee wins a breach of contract claim as a matter of law; it is a question of fact for a jury. The court held that a jury could reasonably find that Cole's conduct breached the morals clause by bringing him and the motion picture industry into public contempt. The trial court erred in concluding that Cole's conduct did not breach the contract as a matter of law. Furthermore, the employer did not necessarily waive its right to suspend Cole by continuing his employment for 33 days after his testimony; whether this was a reasonable time for the employer to assess the public relations damage and decide on a course of action is also a question of fact for the jury. The court reversed and remanded for a new trial due to numerous prejudicial errors in the jury instructions, which misled the jury on issues like the rights of witnesses before Congress and the law of libel.
Analysis:
This decision is a key case from the Hollywood Blacklist era, legally validating the use of "morals clauses" by studios to fire or suspend employees for their political activities, specifically their refusal to cooperate with HUAC. It framed the dispute as a matter of private contract law rather than public constitutional law, allowing employers to penalize employees for conduct that, while potentially protected against government action, caused significant public relations damage. This ruling empowered studios to distance themselves from the "Hollywood Ten" and others perceived as liabilities, establishing that controversial political conduct could have direct employment consequences under broadly written contractual clauses.
Unlock the full brief for Loew's, Inc. v. Cole