Amy's Baking Co. Gets Legal Threat Over Relaunch Plans

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By Aditi Mukherji, JD on May 22, 2013 9:22 AM

As Amy and Samy Bouzaglo would say, Amy's Baking Company has legal "haters."

In anticipation of a grand reopening, the Bouzaglos were planning to host a press conference. But the conference was canceled when Gordon Ramsay's "Kitchen Nightmares" production company, Upper Ground Enterprises, sent the notorious reality stars a cease and desist letter.

In the letter, obtained by the Phoenix Business Journal, attorneys for Ramsay's company threatened a lawsuit for liquidated damages against the infamous couple.

Potential Breach of Contract

The letter warns the Bouzaglos that if they hold a public event and speak about "Kitchen Nightmares" without Upper Ground's and Fox's prior approval -- and if they disparage the show, its host, or its producers -- they'd be breaching a term in their contract and would be liable for $100,000 in liquidated damages.

What are liquidated damages? It's an amount set in a contract in the event of a breach. Courts have held that liquidated damages must be a reasonable estimate of actual damages that may result from a breach.

Liquidated damages are therefore not meant to be a penalty. A penalty is a sum that is disproportionate to the actual harm.

Liquidated damages are determined when a contract is drawn up, and serve as protection for both parties that have entered the contract. It's basically included to make sure both parties don't flake out on their obligations.

Press Conference Canceled

In the case of Amy's Baking Company, the "Kitchen Nightmare" attorneys point out that the press conference -- slated to discuss the couple's "unflattering portrayals" on the show -- would violate the contract's Personal Release and Participant Agreement.

The contract allegedly prohibits the social media pariahs from speaking publicly about "Kitchen Nightmares," other than to acknowledge they were on the show for personal publicity about themselves.

In layman's terms: They can't talk smack about the show without permission, or else they'd have to shell out $100,000.

That seemed to do the trick, as Amy and Samy's grand relaunch and press conference were called off soon thereafter. Generally, contracts that involve the exchange of money or the promise of performance have a liquidated damages stipulation. They're pretty common.

Perhaps the Bouzaglos should've checked out our advice to soon-to-be reality stars -- it could have helped them with their social media catastrophe damage control.

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