A bad sign?

By June 27, 2016 business
Wells Fargo tower

From the offices here at Rubric HQ, we can see one of the signs mounted high on the new Wells Fargo towers near the Vikings stadium. Because of an injunction issued by a federal court on June 23, 2016, however, we may not be able to see that sign much longer.

Judge Donovan Frank ruled that Wells Fargo breached its contract with Minnesota Viking Football Stadium LLC when it mounted raised and illuminated signs on the company’s new office towers, instead of flat, painted signs. The judge issued an injunction requiring Wells Fargo to remove the breaching signs within 30 days. Wells Fargo can put up a new sign the same size in the same location – it just has to be painted onto the building and can’t be lit up.

The difference may seem trivial, but it was important enough to the parties to spend hours and dollars litigating over what kind of sign is allowed on those towers. And it highlights how crucial contract language and interpretation can be. Ironically, the decision is also interesting because of how normal it is. Despite the public profile of the case, the ruling applies the same legal reasoning and rules we find in many lawsuits over contracts:

  • First, the judge had to decide if the contractual language about signs was ambiguous or not. In legal-speak, ambiguous contract language is language that can reasonably be interpreted in more than one way. If contract language is ambiguous, the court has to look at other evidence to figure out what the parties meant to say. If it isn’t ambiguous, the court applies the language as it is written, and can’t rely on other evidence about what the parties intended.
  • Judge Frank concluded the contract wasn’t ambiguous, and that it restricted Wells Fargo to painted-on roof-top signs with no lighting. So then he had to decide if signs that were mounted on the side of the building – instead of being painted – and that could be illuminated breached the contract. That one wasn’t too hard under the circumstances.
  • That left the question of what the court could do about it. The Stadium wanted an order requiring Wells Fargo to take down the signs. But that kind of order – requiring a party to do (or not do) something – is usually only made if a judge decides that money can’t compensate for the losses caused by the contract breach. The preferred remedy in most cases is an award of money damages. Here, though, Judge Frank decided that the long-term effect the Wells Fargo signs would have on the image of the stadium could not be compensated for with money. So he entered an injunction telling Wells Fargo to take down the signs.

The judge recognized that the signs cost Wells Fargo nearly a half-million dollars, and that it will cost Wells Fargo thousands more to remove and replace the signs. He reasoned that those harms were outweighed by the harm to the Stadium’s rights under the parties’ contract and by the public interest in “fair dealing and the solemnity of contracts.” He also reasoned that Wells Fargo’s harm was largely self-inflicted. The company knew the Stadium objected to the signs and went ahead and put them up anyway. Judge Frank’s decision is proof the old saying that “it’s easier to ask forgiveness than permission” isn’t always true.