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57-627: Relativity Music Group was a record label owned by Relativity Media founded by Jason Markey to release motion picture soundtracks. It was founded in 2009 and has grown rapidly to be a strong force in soundtrack album releases around the globe. Relativity Music Group has released soundtrack albums for some of Hollywood's biggest films, including: Dear John, Love Happens, Couples Retreat, Zombieland, A Single Man, MacGruber, Repo Men, Brothers, The Spy Next Door and The Perfect Getaway. It became inactive in 2016 after its parent company Relativity went banktrupt. Relativity Media Relativity Media, LLC

114-587: A 5-year relationship with Relativity, Metz described Kavanaugh's algorithm as a poor predictive tool which Relativity used only inconsistently in determining which films to finance. In August 2018, the US Bankruptcy court approved the sale of the company to Ultra V Holdings. In 2020, Lex Miron, CEO of Relativity Media, announced that Come Away would be the first commercial release of the "new Relativity Media" under Ultra V Holdings. Miron gave an interview to The Hollywood Reporter about taking two years after

171-483: A Relativity Media reality show filed a lawsuit alleging the company never followed through on promises to support the women in escaping sex work and gaining improved housing, educational, medical and legal situations. The first litigant said she was paid $ 250 for her appearance and assured the "real" compensation would come in the form of assistance after the show. Two of the women also sued Relativity Media for not blurring their faces in footage as they had promised to do for

228-619: A ban on nearly all non-compete agreements. The rule was published on the Federal Register on May 7 and was to go into effect on September 4, 2024. The FTC found as shown the use of non-compete clauses by employers has negatively affected competition in labor markets, resulting in reduced wages for workers across the labor force—including workers not bound by non-compete clauses and that by suppressing labor mobility, non-compete clauses have negatively affected competition in product and service markets in several ways. The commission noted that

285-400: A customer list from one firm to a competing firm. However, such clauses can frequently be found in the contracts of low-wage workers and other workers who are unlikely to be in a position to share trade secrets. When courts consider the enforceability of non-compete agreements, they usually ask the employer to identify a protectable business interest that was harmed by the employee's move to

342-484: A different firm. Courts consider whether the non-compete covers a relevant industry (does the worker do work for a firm in the same industry?), reasonable geographic area, and reasonable time period. University of Chicago Law School Professor Eric A. Posner has argued that since non-competes have an adverse impact on competition, they should be covered under a strong anti-trust regime, and the "law should treat noncompetes as presumptively illegal, allowing employers to rebut

399-417: A film and performing arts school called Relativity School. Most of the studio's movies performed poorly at the box office. The movie slate financing Relativity Media brokered for Wall Street investors also fared poorly for equity holders. In July 2015, Relativity Media filed for Chapter 11 bankruptcy. With estimates of $ 500 million to $ 1 billion in liabilities and only $ 100–$ 500 million in claimed assets,

456-448: A form of employer collusion and are a form of a business cartel. Restrictions are normally limited in duration, geographical area (an "area covenant"), and content. In the Crown dependencies , many financial and other institutions require employees to sign 10-year or longer CNCs which could be seen to apply even if they leave the country or enter an unrelated field of work. In May 2023,

513-466: A former Carolco Pictures executive to invest $ 1 million into the venture. Relativity began operations as a middleman brokering deals between film studios and banks, private equity firms, and hedge funds to finance multi-film slates. In 2005, the funding needs of Hollywood studios became more critical when a German tax shelter that had supported them for 25 years was eliminated, and Relativity Media met that need with Wall Street's plentiful funds in

570-609: A general bar on any agreement that puts a restriction on trade. The Supreme Court of India has clarified that some non-compete clauses—specifically, those backed by a clear objective that is considered to be in advantage of trade and commerce—are not barred by Section 27 of the Contract Act, and therefore valid in India. Non-compete agreements are prevalent in Italy. In Italy , CNCs are regulated by articles 2125, 2596, and 1751 bis of

627-569: A memo alleging sexual harassment by a former co-president of the company. A forensic audit of Relativity Media found that the memo had been altered by a user named "kav kav". Kavanaugh stated that the finding was "patently false" and filed a counterclaim alleging a violation of the arbitration process. Also in June 2018, investor Carey Metz filed a lawsuit against Relativity's CEO Ryan Kavanaugh alleging Kavanaugh's deceptive representations of his proprietary algorithm had defrauded Metz of $ 12.5 million. After

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684-658: A non-compete agreement covers a worker's move to a relevant industry and reasonable geographic area, as well as whether the former is still bound by the agreement over a reasonable time period. An employer bringing a lawsuit may also be asked to identify a protectable business interest that was harmed by the employee's move to a different firm. Research shows that non-compete agreements make labor markets less competitive, reduce wages and reduce labor mobility. While non-compete agreements may incentivize company investment into their workers and research, they may also reduce innovation and productivity by employees who may be forced to leave

741-471: A restriction that was limited to a specific geographic location was found to be an enforceable exception to the previously absolute rule. Almost a hundred years later, the exception became the rule with the 1711 watershed case of Mitchel v Reynolds which established the modern framework for the analysis of the enforceability of non-compete agreements. Traditionally, non-competes were used to prevent high-skilled workers from transferring trade secrets or

798-472: A result Ryan dropped out of producing the film due to financial struggles with his company; Jane Got a Gun was sold to TWC , The Bronze was sold to both Sony Pictures Classics and Stage 6 Films , Love the Coopers was sold to CBS Films , The Space Between Us and The Foreigner were both sold to STX Entertainment , Solace was sold to Lionsgate Premiere , Collide was sold to Open Road Films , Kidnap

855-418: A result of the bankruptcy, the company sold off previously acquired films including Suffragette , Jane Got a Gun , The Bronze , Love the Coopers , The Space Between Us , The Foreigner , Solace , Collide , Kidnap , Before I Wake , Animal Crackers , Shot Caller , Hillsong: Let Hope Rise , Fallen and The Secret Scripture . Suffragette was sold to Focus Features and as

912-754: A revolving credit line. The increased funds allowed Relativity to expand involvement with film production companies. In 2009, Relativity reached an output deal with Lionsgate , and bought Rogue Pictures from Universal Pictures for $ 150 million. In 2010, a deal with Netflix allowed Relativity Media-owned films to be streamed on the platform, and Relativity purchased Overture Films ' distribution and marketing operations. Elliott Management's funding eventually allowed Relativity Media to begin operating its own studio, producing and distributing its own films. The studio distributed its first film on December 3, 2010. In 2011, Elliott Management pulled its financial backing from Relativity amid reports of tension between

969-504: A robust investigation. This concern was partially based on the negligence of Relativity to satisfy even the administrative fees owed from the 2016 bankruptcy. Greg Zipes, the attorney for the U.S. trustee's office in New York wrote "the Debtors [Relativity Media] have apparently been unable to pay even the administrative claims owed under the confirmed (bankruptcy) plan" of 2016... In summary, while

1026-419: A sector when they leave a firm. The labor movement tends to advocate for restrictions on non-compete agreements while support for non-compete agreements is common among some employers and business associations. As far back as Dyer's Case in 1414, English common law chose not to enforce non-compete agreements because of their nature as restraints on trade . That ban remained unchanged until 1621, when

1083-593: A shareholder. In May 2012, Relativity announced that Colbeck structured $ 350 million in debt financing for the company, with Elliott departing from its investment in the company. Later that month, it signed a co-production and co-financing deal on two movies with EuropaCorp that Relativity would distribute in the United States. Relativity also has co-production deals with Atlas Entertainment including Project . On June 12, 2012, Relativity Media and Rogue sold 30 of their films to Manchester Library Company, which

1140-399: Is an American independent media company founded in 2004 by Lynwood Spinks and Ryan Kavanaugh . The company brokered film finance deals and later branched into film production and other entertainment ventures. The company was commercially successful prior to bankruptcy. In 2015, Relativity Media filed for Chapter 11 bankruptcy after lawsuits and missing loan payments. The bankruptcy

1197-519: Is given. In the United Kingdom , CNCs are often called restraint of trade or restrictive covenant clauses, and may be used only if the employer can prove a legitimate business interest to protect in entering the clause into the contract. Mere competition will not amount to a legitimate business interest. The UK's regulator, the Competition and Markets Authority , advises that non-compete clauses are

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1254-445: Is now an independent film distributor focused on releasing films with budgets under $ 15 million. It will be co-headed by Mark Kassen and Dana Brunetti. On October 28, 2016, Kavanaugh announced that he was selling Relativity to Singapore-based social networking platform YuuZoo for $ 250 million. Other companies have attempted to bid, including Chinese technology company Lenovo . On March 2, 2017, YuuZoo announced they were canceling

1311-423: Is sold, and for chief officers (such as CEOs , CFOs , etc.). In France , CNCs must be limited in time to a maximum of two years and to a region where the employee's new work can reasonably be seen as competitive. The region can be a city or the whole country, depending on the circumstances. The employer must pay financial compensation, typically 30 percent of the previous salary. A CNC may not unreasonably limit

1368-615: Is still in place. On January 26, 2016, Relativity Television, Relativity Media's television division, became an independent company named Critical Content after the post-bankruptcy. On March 18, 2016, the company reemerged from the supervision of U.S. Bankruptcy Court Judge Michael Wiles. In the wake of the bankruptcy, Ryan Kavanaugh chose to pay himself $ 2.6 million between April and November 2016 while his company failed to pay bankruptcy fees or file tax returns. On September 8, 2016, it launched R2 Entertainment which will be based in Canada and

1425-458: Is void. However, courts of Pakistan have made decisions in the past in favour of such restrictive clauses given that the restrictions are "reasonable". The definition of "reasonable" depends on the time-period, geographical location and the designation of employee. In the case of Exide Pakistan Limited vs. Abdul Wadood, 2008 CLD 1258 (Karachi) , the High Court of Sindh stated that reasonableness of

1482-780: The District Court for the Northern District of Texas issued an injunction blocking the rule, ruling that the FTC "lacks statutory authority to promulgate the Non-Compete Rule, and that the Rule is arbitrary and capricious." While CNCs are one of the most common types of restrictive covenants, there are many others. Each serves a specific purpose and provides specific rights and remedies. The most common types of restrictive covenants are as follows: The enforceability of these agreements depends on

1539-477: The U.S. health care sector from 1996–2007 found that noncompete agreements in this sector led to higher prices for physicians, smaller medical practices and greater medical firm concentration . A 2021 study found that noncompete agreements for low-wage workers have been shown to lower wages; a study determined that the 2008 Oregon ban on noncompete agreements for workers paid by the hour "increased hourly wages by 2%–3% on average." The study also showed that

1596-448: The 2018 bankruptcy to "quietly and deliberately rebuild the studio and its industry relationships" and said Relativity Media's strategy going forward would be to focus on smaller to mid-budget films. Non-compete clause Non-compete agreements are rooted in the medieval system of apprenticeship whereby an older master craftsman took on a younger apprentice, trained the apprentice, and in some cases entered into an agreement whereby

1653-591: The Debtors appear to have raised some capital and paid down some debt, their finances are largely a mystery, apparently even to themselves." The filing from the trustee's office also uncovered the $ 2.6 million Kavanaugh paid himself between April and November 2016 while remaining delinquent on what Relativity owed from the bankruptcy agreement. The trustee's office also expressed concern that this 2018 bankruptcy filing might be an "arm's length transaction", as Kavanaugh continued to have inappropriate access to computer systems, email, bank accounts, and servers at Relativity after

1710-469: The FTC proposed a rule banning non-compete agreements. The U.S. Chamber of Commerce has lobbied against bans on non-compete agreements; in 2023, it threatened to sue the FTC if it bans non-compete agreements. The Chamber argued that "noncompete agreements are an important tool in fostering innovation and preserving competition". On April 23, 2024, the Federal Trade Commission (FTC) issued

1767-502: The FTC to ban non-compete agreements estimated that about 30 million workers (about 20% of all U.S. workers) were subject to a noncompete clause. While higher-wage workers are comparatively more likely to be covered by non-compete clauses, non-competes covered 14 percent of workers without college degrees in 2018. By some estimates, nearly half of all technical workers are covered by non-compete agreements. In March 2019, Democratic officials, labor unions, and workers' advocacy groups urged

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1824-647: The Lights , And So It Goes , and Hector and the Search for Happiness , but Relativity's led to their loss of control over the titles which third parties then distributed to Amazon and Starz. Netflix also alleged Relativity Media failed to provide their contracted number of films. Relativity Media promised to provide Netflix with 22 films between 2016 and 2018, including eight in 2017, but allegedly delivered only three. In June 2018, an arbitration case found that executives from Relativity Media, including Kavanaugh, had fabricated

1881-824: The Oregon ban on noncompete agreements for low-wage workers "improved average occupational status in Oregon, raised job-to-job mobility , and increased the proportion of salaried workers without affecting hours worked." Studies have found that non-compete agreements can prompt technical workers to involuntarily leave their technical field to avoid a potential lawsuit from their former employer. For this reason, non-compete agreements have been linked to less innovation and lower productivity as inventors switch fields in order to avoid violating non-competes. In Belgium , CNCs are restricted to new employments within Belgium and for no more than one year. The employer must pay financial compensation for

1938-530: The U.S. FTC to ban non-compete clauses. A petition to the FTC, seeking a ban on noncompete clauses, was submitted by the AFL-CIO , SEIU , and Public Citizen . In July 2021, President Joe Biden signed Executive Order 14036 , directing the FTC (whose chair, Lina Khan , he had recently appointed), as well as other federal agencies, to "curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility". On January 5, 2023,

1995-563: The UK Government announced plans to limit non-compete clauses to a maximum of three months. The majority of American states recognize and enforce various forms of non-compete agreements. A few states, such as California, North Dakota , and Oklahoma , totally ban noncompete agreements for employees, or prohibit all noncompete agreements except in limited circumstances. Data from 2018 indicates that non-compete clauses cover 18 percent of American labor force participants . A 2023 petition to

2052-509: The amount of the compensation. In Romania , CNCs are regulated by articles 21–24 of the labor code and restricted to two years. The employer must pay financial compensation for the duration of the CNC, amounting to at least 50 percent of the last 6 months salary. In Spain , CNCs are regulated by article 21 of the labor law. CNCs are allowed up to two years for technical professions and six months for other professions, given that adequate compensation

2109-734: The apprentice could not compete with the master after the apprenticeship. Modern uses of non-compete agreements are generally premised on preventing high-skilled workers from transferring trade secrets or a customer list from one firm to a competing firm, thus giving the competing firm a competitive advantage. However, many non-compete clauses apply to low-wage workers or individuals who do not possess transferable trade secrets. The extent to which non-compete clauses are legally allowed and enforced varies under different jurisdictions. Some localities and states ban non-compete clauses or highly restrict their applicability. In jurisdictions where non-compete agreements are legal, courts tend to evaluate whether

2166-474: The civil code. In the Netherlands , non-compete clauses ( non-concurrentiebeding or concurrentiebeding ) are allowed regarding issues such as moving to a new employer and approaching customers of the old company. Unreasonable clauses can be invalidated in court. According to Section 27 of the Contract Act, 1872, any agreement that restrains a person from exercising a lawful profession, trade or business

2223-410: The clause will vary from case to case and depends mainly on duration and extent of geographical territory In Portugal , CNCs are regulated by article 136 of the labor code and restricted to two years extendible to three years in cases of access to particularly sensitive information. The employer must pay financial compensation for the duration of the CNC, but the law does not specify anything regarding

2280-547: The companies. In May 2011, Relativity's president Michael Joe moved to Elliott Associates to manage their investment in Relativity after Elliott had invested hundreds of millions of dollars with very little in return . Kavanaugh had structured a slate deal between Elliott and Universal titled "Beverly 2" that comprised the majority of Elliott's investment in Relativity at the time, but the investment turned out poorly for Elliott and further enormous losses were forecasted. Relativity

2337-467: The company's unpaid debts were reportedly paralyzing the company. The bankruptcy filing came after a last-ditch effort from investors to salvage the company by preventing Ryan Kavanaugh and Relativity from carrying out any unsupervised transactions. The Hollywood Reporter later called it "one of the most notorious Hollywood bankruptcies ever." The company would remain in U.S. Bankruptcy Court reorganizing itself for nearly 8 months until March 2016. As

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2394-418: The duration of the CNC, amounting at least half of the gross salary for the corresponding period. Canadian courts will enforce non-competition and non-solicitation agreements ; however, the agreement must be limited in time frame, business scope, and geographic scope to what is reasonably required to protect the company's proprietary rights, such as confidential marketing information or client relations and

2451-495: The early 2000s. Relativity arranged financing for slates produced by Warner Bros. , Universal Pictures , and Sony Pictures . For each film, Relativity received equity and brokerage fees of $ 500,000 to $ 1 million, and Kavanaugh arranged an executive producer credit for himself. In 2007, Kavanaugh sued Spinks after the partners had a falling out. In 2008, Elliott Management bought 49.5% of Relativity Media for $ 67 million and provided access to about $ 1 billion in capital and

2508-580: The existing legal frameworks governing non-compete clauses—formed decades ago, without the benefit of this evidence—allow serious anticompetitive harm to labor, product, and service markets to go unchecked. The Commission noted "that instead of using noncompetes to lock in workers, employers that wish to retain employees can compete on the merits for the worker's labor services by improving wages and working conditions." In 2024, approximately one in five American workers, or about 30 million people, are subject to noncompetes. On August 20, 2024, Judge Ada Brown of

2565-449: The filing stated Kavanaugh had left the company. In June 2018, Netflix sued Relativity Media for breaching an exclusivity agreement after five films that were to be exclusively featured on Netflix were provided to Amazon and Starz . According to the suit, Netflix paid Relativity Media for licensing fees and exclusive rights to stream The Lazarus Effect , The Woman in Black 2 , Beyond

2622-429: The form of lower prices and to investors as higher returns. Non-competes are more common for technical, high-wage workers and more likely to be enforced for those workers. However, even when non-compete agreements are unlikely to be enforced (such as for individual low-wage workers or in states that do not enforce these agreements), the agreements may still have an intimidating impact on those workers. A 2021 study of

2679-412: The investment in the fledgling studio saying "conditions precedent to the investment had not been met". In May 2018, the company filed for bankruptcy once again and arranged to sell all of its assets. The U.S. Trustee's office expressed concern at the bankruptcy filing, saying that it appeared "designed to benefit Kavanaugh and lender UltraV Holdings at the expense of other creditors" and advocated for

2736-461: The possibilities of the employee to find new employment. In Germany , CNCs are allowed for a term up to two years. The employer must provide financial compensation for the duration of the CNC amounting to at least half the gross salary. Unreasonable clauses – for example, excluding similar jobs throughout the whole of Germany – can be invalidated. Section 27 of the Indian Contract Act has

2793-479: The presumption if they can prove that the noncompetes they use will benefit rather than harm their workers." In April, 2024, the Federal Trade Commission (FTC) banned all non compete agreements in the United States. Within a few days, business groups including the U.S. Chamber of Commerce sued to block the new rule. Studies show that non-compete agreements make labor markets less competitive, reduce wages and reduce labor mobility. Existing evidence suggests that

2850-450: The scope of the agreement must be unambiguously defined. The 2009 Supreme Court of Canada case Shafron v. KRG Insurance Brokers (Western) Inc. 2009 SCC 6 held a non-compete agreement to be invalid due to the term "Metropolitan City of Vancouver" not being legally defined. In 2021, employees in Ontario may no longer enter into non-compete agreements. There are exceptions for when a business

2907-422: The wage suppressing effects of non-competes are disproportionately concentrated on lower-income workers. Non-compete agreements can incentivize firms to increase investment into worker training and research, as those workers are less likely to leave the firm. Non-competes may reduce overall hiring costs and employee turnover for companies, which may result in savings that could in theory be passed on to customers in

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2964-473: The women. One of these women said she "has suffered incessant humiliation and embarrassment which continues to this day". On January 6, 2016, Relativity Media acquired Trigger Street Productions . Owners Kevin Spacey and Dana Brunetti were given the roles chairman and president of Relativity Studios, respectively. That March, Spacey announced that he would not accept Relativity's offer; Brunetti's position

3021-632: Was acquired by Vine Alternative Investments in April 2017. In July 2012, Relativity merged its Rogue Sports, a Maximum Sports Management basketball agency, a football agency, and SFX Baseball into Relativity Sports. Relativity Sports represented more than 400 clients including Amar'e Stoudemire . In 2013, hedge fund investor Carey Metz made a $ 10 million investment in Relativity Media based on what he later described as Ryan Kavanaugh's lies. In April 2013, Relativity partnered with Glenn Kalison to create

3078-498: Was already short on funds. Relativity took out a $ 200 million loan from Ron Burkle , who had other entertainment investments including with Bob and Harvey Weinstein through his associated firm Colbeck Capital. The loan was taken in part to cover the multi-million dollar marketing costs for Immortals . In January 2012, as Relativity continued to struggle financially, Kavanaugh sought a new major investor, and Burkle, and his invested between $ 600 million and $ 800 million and became

3135-545: Was also scheduling their own movies opposite Universal's, including competing Snow White adaptations, which Universal executives saw as Relativity using "Beverly 2" funds to gain a competitive advantage. Elliott put pressure on Kavanaugh to hand Beverly 2 over to Elliott in exchange for releasing Michael Joe from his non-compete . Two weeks before the opening of Relativity's first big-budget epic Immortals , Elliott reportedly threatened to further reduce its investment unless Kavanaugh made significant concessions when Relativity

3192-523: Was noted as one of the most notorious in entertainment industry. As a result, the company began selling off previously acquired films. Relativity Media reorganized and emerged from bankruptcy in March 2016, but in May 2018 it filed for bankruptcy again. The studio is now a wholly owned subsidiary of UltraV Holdings. Relativity Media was founded by Ryan Kavanaugh and Lynwood Spinks in 2004. Kavanaugh convinced Spinks,

3249-485: Was sold to Aviron Pictures , Before I Wake and Animal Crackers were both sold to Netflix , Shot Caller was sold to Saban Films , Hillsong: Let Hope Rise was sold to Pure Flix Entertainment and Fallen and The Secret Scripture were both sold to Vertical Entertainment and transferred its distribution rights of EuropaCorp to STX Entertainment in January 2017. In September 2015, three women who were involved in

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