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At a hearing in downtown Los Angeles on Thursday, a judge listened to arguments from Spacey’s lawyer and then ruled that the embattled actor failed to show that the award was too “utterly irrational” to stand. Without meeting that bar, the judge said he wouldn’t step in to review and possibly reverse the independent arbitrator’s findings of fact in the case.
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“Respondents fail to demonstrate that this is even a close case. Respondents do not demonstrate that the damages award was so utterly irrational that it amounts to an arbitrary remaking of the parties’ contracts,” Los Angeles County Judge Mel Red Recana wrote in his ruling obtained by Rolling Stone. “Respondents do not show that the arbitrator acted beyond his authority under the scope of the parties’ arbitration agreements.”
Spacey, 63, was filming the sixth and final season of House of Cards on Oct. 29, 2017, when Buzzfeed published an online article alleging he forced himself on actor Anthony Rapp during a gathering at his house in 1986 when Rapp was only 14 years old. Days later, on Nov. 2, 2017, CNN published a story with allegations from eight anonymous House of Cards crew members claiming Spacey engaged in “predatory” behavior such as going for a handshake and pulling a person’s hand down to touch his crotch.
The explosive allegations led Netflix boss Ted Sarandos to tell top company executives on Nov. 2, 2017, that there was “no scenario” in which Spacey would appear in the show’s final season, according to court filings. Spacey was summarily fired, and a months-long internal investigation and an eight-day evidentiary hearing in February 2020 ended with a neutral arbitrator ruling that Spacey failed to comply with the show’s anti-harassment policy. In terms of damages, the arbitrator found Spacey’s actions caused House of Cards producer MRC to incur massive losses because his termination required major script revisions and the shortening of the show’s final season from 13 to eight episodes to meet streaming deadlines.
Spacey’s lawyer Jonathan E. Phillips argued Thursday that the arbitrator exceeded his authority’s scope when he concluded that he breached his contract through his interactions with “five specific” crew members who only came forward in MRC’s internal investigation after his firing. Phillips argued that because the five alleged breaches weren’t known to Netflix in early November 2017, they couldn’t be “rationally” connected to MRC’s damages award. He further argued Rapp’s allegations were a non-issue because Spacey’s contract did not include a “morals provision.” “It’s not about Mr. Spacey’s actions as a general matter. It’s about Mr. Spacey’s breaches of the contract,” Phillips said.
“Netflix’s action was caused by the conduct of the respondent, and because of the conduct, which was a breach of the contract, (MRC) incurred expenses and costs. So it’s got to be rationally based,” Judge Recana shot back.
Meanwhile, MRC’s lawyer argued Thursday that the arbitration award absolutely linked back to accusations made before Spacey’s termination. “This allegation that the CNN article did not disclose what was later proved in the arbitration is just completely false,” MRC lawyer Gregory Korn argued. “The last page of the CNN article specifically refers to a crew member who says that she saw Mr. Spacey approach multiple people to say hello, greet them, shake their hands and pull their hand down to his crotch, and touch their crotch. That was the allegation in the CNN article. The details of the award are sealed, but you have access to them. That is the exact conduct – to a T – that was proved in the arbitration.”
Spacey filed his state court petition to vacate the award in January after a three-member arbitration appellate panel heard his prior appeal and upheld the $31 million award.
In filings ahead of Thursday’s hearing, MRC argued that Spacey’s renewed attempt to overturn the award was “devoted to the same, factually false, twice-rejected argument that his breaches did not cause the shortening of Season 6.” The studio revealed that the neutral arbitrator who decided the sealed case “found that on over 10 different occasions, actor and producer Kevin Spacey egregiously breached his contractual obligations by sexually touching young crew members.”
The $31 million award includes $29.5 million in compensatory damages, $1.2 million in attorneys’ fees, and $235,707 in costs to MRC.
“We are pleased with the court’s ruling,” MRC lawyer Michael Kump said as he left the courthouse Thursday. MRC is a co-owner of Rolling Stone through a joint venture with Penske Media titled PMRC.
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