Mendenhall v. Hanesbrands, Inc.
856 F. Supp. 2d 717 · District Court, M.D. North Carolina · 2012
Facts
NFL player Rashard Mendenhall had an endorsement contract with Hanesbrands, which included a morals clause allowing termination for actions causing public disrepute. After Mendenhall posted controversial tweets about Osama bin Laden and 9/11, Hanesbrands terminated the agreement, citing the morals clause. Mendenhall sued for breach of contract, arguing the termination was unreasonable and violated the implied covenant of good faith and fair dealing, as public reaction to his tweets was mixed.
Issue
Did Hanesbrands act reasonably and in good faith when terminating Mendenhall's contract under a morals clause, given the mixed public reaction to his controversial tweets, or does a material dispute of fact exist precluding judgment on the pleadings?
Holding
The court denied Hanesbrands' motion for judgment on the pleadings, finding that a material dispute of fact existed regarding the nature of the public's response to Mendenhall's tweets. This factual dispute was crucial to determining if Hanesbrands' termination was reasonable under the contract's morals clause and the implied covenant of good faith and fair dealing.
Rule
Under New York law, all contracts contain an implied covenant of good faith and fair dealing, requiring parties exercising contractual discretion, such as a termination right, to act reasonably and not arbitrarily or irrationally. Judgment on the pleadings is inappropriate when genuine issues of material fact remain.
Read the full opinion on CourtListener
Case brief last reviewed . Prepared by CaseReader from the published opinion.