Lago Agrio: Someone’s Going To Have Egg On His Face

The fracas between MCSquared and Sharon Stone has taken a decidedly odd turn.

If you’ll recall, when MCSquared sued, it made a point of alleging that the parties “negotiated a formal written contract, but it was never fully executed as APB and Stone never executed the written contract.” Nevertheless, MCSquared alleged that there was an oral agreement and that Stone and American Program Bureau, Inc., a “talent agency,” breached it.

Now Stone’s lawyers, in a prelude to a motion to dismiss or to stay, have said that not only is there a written contract, signed by APB, Stone, and MCSquared’s principal, Maria Garay, but that it contains an agreement to arbitrate. MCSquared has said in reply that it “is not aware of any fully executed written agreement between MCS, Stone, and American Program Bureau, Inc. (‘APB’) containing an arbitration agreement …”

Until we have more facts, I won’t even try to figure this out. On the basis of Stone’s lawyers’ representations I assume for the moment that they’ve got a copy of the agreement with at least Garay’s signature. MCSquared could be saying that while Garay signed the agreement, neither APB or Stone did, or at least that no one ever provided MCSquared with the fully executed contract. Maybe the point is that the substantive terms of the written contract are enforceable because they reflect the parties’ meeting of the mind but the agreement to arbitrate is not enforceable because it is not in a writing signed by all the parties? That may be a pretty small needle to thread, and anyway, while I think there’s an issue about whether the signature of the party that doesn’t want to go to arbitration is required, see, e.g., In re Thomas, 447 B.R. 402 (Bankr. D. Mass. 2011), I’m not sure the issue extends to cases where it’s the party demanding arbitration whose signature is missing. In any case, we will need to await further developments.

Stone’s lawyers also have given an outline of their substantive defense. They say that Stone never agreed to support Ecuador’s “Dirty Hand of Chevron” PR campaign, “advance any other political agenda of the Ecuadorian government, or advocate against Chevron.” But MCSquared, they say, “MCS, acting as the public relations arm for the Republic of Ecuador, issued a press release asserting that the purpose of Ms. Stone’s expected trip was to support the Ecuadorian government’s ‘Dirty Hand of Chevron’ campaign.” (MCSquared’s lawyers deny that the firm issued such a press release. Again, we’ll have to wait and see). Stone also seems to assert that MCSquared’s failure to register under the FARA as an agent of the Ecuadoran government also excuses her from performance. Last, she asserts that MCSquared, in the written agreement, has indemnified her.

I’ll keep an eye on this. I have to say it’s surprising to me that lawyers would spar over such basic facts. Either the parties all signed the contract or they didn’t. Either MCSquared issued the press release or it didn’t. That’s why I chose the title to this post. Someone is either ignorant of the facts, hiding the ball, or trying to walk a very fine semantic tightrope.

About Ted Folkman

Ted Folkman is a shareholder with Murphy & King, a Boston law firm, where he has a complex business litigation practice. He is the author of International Judicial Assistance (MCLE 2d ed. 2016), a nuts-and-bolts guide to international judicial assistance issues, and of the chapter on service of process in the ABA's forthcoming treatise on International Aspects of US Litigation, and he is the publisher of Letters Blogatory, the Web's first blog devoted to international judicial assistance, which the ABA recognized as one of the best 100 legal blogs in 2012, 2014, and 2015.

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