Radius Clause is Coming to Town: Coachella Deals with Radius Clauses

coachellaTop headlines from Coachella this year are Walmart Yodel Boy, Destiny’s Child reuniting, and…Radius Clauses? That’s right, one of the biggest headlines surrounding the California-based music festival has to do with a lawsuit involving a Radius Clause.

The Coachella music festival, which runs from April 13 to April 22, has come under fire from a fellow West Coast Music Festival. The Plaintiff, Soul’d Out Productions, LLC, is the organizer of the Soul’d Out Music Festival based in Portland, Oregon. The Soul’d Out Music Festival, which runs from April 18 to April 22, presents jazz, hip hop, and reggae concerts at different venues around the Portland area.

Soul’d Out is suing because one of their performers, Tank and the Bangas, had to withdraw from their festival due to their contract with Coachella. What is more, two other artists that they contacted, Daniel Caesar and SZA, declined to play at Soul’d Out, citing their contract with Coachella. Part of the contract, dubbed a “Radius Clause” states:

“Artist shall not advertise, publicize or leak: Any Festival or Themed Event in the states of California, Nevada, Oregon, Washington or Arizona from December 15, 2017 until May 7, 2018.”

This Radius Clause operates somewhat like a non-compete agreement, in that it restricts when and where an individual can engage in their line of work. The purpose of these agreements is to protect the investment that the employer (in this case Coachella) has put into the employee (in this case the musicians). If Coachella pays Beyoncé to do a new set for their festival, they want to make sure that no other venues book her for that same concert at a close enough time and place that it would financially impact their booking.

But Soul’d Out sees the clause differently. They note in their Complaint that the geographic territory of Coachella’s Radius Clause has been growing. In years past, they claim, the Radius Clause has not included Oregon or Washington, which are nearly 1300 miles away from Coachella’s SoCal venue.

Though the Complaint was filed with the District Court of Oregon, part of it alleges that Coachella’s Radius Clause is an unlawful restrain on trade under California Law.

California is seen as the most inhospitable environment for non-competes in the United States. California Business and Professions Code § 16600 states, “Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” Soul’d Out feels that by restricting where and when artists can play, Coachella is in direct violation of California Law.

It should be noted, however, that Coachella and its parent company Anschutz Entertainment Group, Inc. are both Limited Liability Companies organized and under the laws of Delaware (but headquartered in Los Angeles, CA).

The Complaint also notes that the Radius Clause is not ironclad. It states, “Defendants selectively waive the Radius Clause where artists perform at other venues where Defendants receive financial remuneration or other benefits for such performances, but decline to allow such waivers where there is no benefit to Defendants.” This, they feel, marks a violation of federal antitrust laws.

While this case remains tied up in Oregon Courts, it seems that if you are on the West Coast and have a desire to see Tank and the Bangas you will have to see them at Coachella.