Rashard Mendenhall, an NFL football player, had a longstanding endorsement agreement with Hanesbrands (HBI), in which he promised to promote Champion athletic apparel. In Section 17(a), the agreement provided:

If Mendenhall commits or is arrested for any crime or becomes involved in any situation or occurrence tending to bring Mendenhall into public disrepute, contempt, scandal, or ridicule, or tending to shock, insult or offend the majority of the consuming public or any protected class or group thereof, then we shall have the right to immediately terminate this Agreement.

Mendenhall was an avid Twitter user, often publicly expressing his controversial opinions on everything from Islam to parenting. HBI did not comment on Mendenhall’s tweets, nor did it tell him to stop them or tone them down.

On May 1, 2011, President Obama announced the death of terrorist Osama bin Laden. In response, Mendenhall tweeted the following:

What kind of person celebrates death? It’s amazing how people can HATE a man they never even heard speak. We’ve only heard one side…

For those of you who said we want to see Bin Laden burn in hell, I ask how would God feel about your heart?

We’ll never know what really happened. I just have a hard time believing a plane could take a skyscraper down demolition style.

Mendenhall’s tweet got much attention, so he sent another message explaining that he was not in support of bin Laden, or against America, but rather wanted to make people think about the morality of celebrating any human death. 

The next day HBI terminated Mendenhall’s contract, pursuant to section 17(a). At the same time, it issued a press statement suggesting that it only severed its relationship with the athlete because it disagreed with his legitimately held views.

Mendenhall sued for breach of the implied covenant of good faith and fair dealing. He argued that HBI acted unreasonably because the bin Laden tweets were not scandalous enough to warrant terminating the contract under 17(a). HBI filed a motion for judgment on the pleadings.

Questions:

1. Did HBI violate the implied covenant of good faith and fair dealing when it terminated Mendenhall’s contract?

2. What is the covenant of good faith and fair dealing?

3. Did HBI breach that covenant?

4. In terminating its business relationship with Mendenhall, HBI relied on its termination rights pursuant to section 17(a) of its contract with him. Why didn’t that work?

5. But isn’t that what happened? The public reaction to Mendenhall’s tweets was bad, wasn’t it?