[비즈한국] ADOR, a subsidiary of HYBE352820, has terminated the exclusive contract of NewJeans member Danielle. Furthermore, the company has filed a lawsuit for approximately 40 billion KRW in damages against Danielle and former CEO Min Hee-jin, citing their significant responsibility for triggering the series of disputes and causing the departure of NewJeans members and the delay in their return. This appears contradictory when compared to ADOR's previous refusal to accept the members' claims that it was HYBE that caused the disputes when the members initially asserted the termination of their contracts. This situation can be seen as a repercussion of the first-instance ruling on the lawsuit confirming the validity of the exclusive contract. Let us re-examine the issues raised by the NewJeans members and the court's judgment in the first instance.
The grounds for contract termination claimed by the NewJeans members can be summarized into several points: the ousting of former ADOR CEO Min Hee-jin as a violation of management obligations, the failure to protect leaked content such as the members' trainee-era videos, the damage to the uniqueness of the NewJeans brand due to derogatory remarks by HYBE employees and content imitation, and harassment by employees of other subsidiaries.
Looking at the specific claims, the members argued that HYBE's attempt to remove Min Hee-jin was unfair and violated the obligation to provide the best possible management. They stated that the unauthorized leak of their trainee videos from Source Music, which infringed upon their portrait and voice rights, constituted a breach of contract and a human rights violation. The derogatory remarks by a HYBE PR representative included comments about their performance in Japan and other regions (1.02 million albums) saying, "It's worse than expected. It didn't do well in Japan." They also pointed out the phrase "abandon New, build a new plan" appearing in internal HYBE reports. The claim regarding brand damage by content imitation alleged that ILLIT was implemented to be overall similar to NewJeans, and that there were even attempts to replace NewJeans with ILLIT. The alleged harassment by another subsidiary involved a manager of Belift Lab’s ILLIT telling others to "ignore and walk past" the NewJeans members.
The court in the first instance did not accept any of these claims. First, it stated that the exclusive contract contained no provision requiring that former CEO Min Hee-jin must be in charge of NewJeans' management. The court noted, "It is difficult to view Min's position as a crucial term of the contract simply because NewJeans has high trust in her," adding that "the submitted evidence alone is insufficient to recognize that NewJeans signed the contract based on their trust in Min."
However, the court failed to listen to or analyze *why* the members developed such high trust in Min Hee-jin. In particular, the unique characteristics of K-pop labels were not considered. Furthermore, Min Hee-jin is not an ordinary producer; her value differs from the norm. It is easily inferable that there is a significant difference between the head of a label supporting a group at a company-wide level and an ordinary employee-director producing a group.
The first-instance court stated, "Former CEO Min prepared for lawsuits and public opinion campaigns to decouple ADOR from HYBE, and she sought investors to acquire ADOR while staying behind the scenes and using the NewJeans parents to create negative public sentiment toward HYBE," adding, "It cannot be seen that HYBE audited and dismissed Min unfairly." This judgment simply accepted HYBE’s claims as they were. Furthermore, viewing the acceptance of management decisions as an obligation of the artists seems to suggest that the two sides are not in an equal contractual relationship.
The first-instance court expressed, "Even when looking at the report that said 'abandon New and build a new plan,' a different interpretation is possible given the context, and it is hard to accept that HYBE would try to abandon NewJeans, which it invested heavily in and made successful, to support another girl group." Typically, agencies increase marketability by absorbing and integrating trends among competitors rather than setting them as rivals. In that sense, the similar styles of ILLIT and NewJeans could be understood. The meaning of HYBE abandoning a heavily invested NewJeans does not mean eliminating them, but could be interpreted as relatively reducing their focus.
The court also ruled, "It is difficult to view the girl group concept as being included in trademark rights." However, NewJeans implemented a worldview and style entirely different from existing girl groups. While girl groups were unable to escape the standard 'girl crush' or bright-cute styles, NewJeans completely changed this flow. They established an identity that reflects the teenage girl style that peers actually like. Since it was Min Hee-jin who made such an implementation possible, the trust between NewJeans and Min was built.
Regarding the claim of being ignored, the court said, "Former CEO Min reconstructed the situation, and CCTV footage shows ILLIT members bowing and greeting Hanni when they supposedly ignored the members." Even if Min reconstructed the situation, the important point is not whether ILLIT greeted them or not, but whether there was a manager's order or instruction to ignore them. However, this part remains unclear.
Finally, the court stated, "If one party to an exclusive contract creates the appearance of the other party's non-performance of contractual obligations to deepen the dispute and then terminates the contract, it results in avoiding penalty clauses and exiting the contract without any burden." It judged that the members artificially created the appearance of a dispute to justify contract termination. In reality, the root cause of the escalating dispute was HYBE’s forced removal of Min Hee-jin. Had that process followed reasonable and legal procedures, the NewJeans contract dispute likely would not have occurred.
The first-instance court also seems to have interpreted the criteria for breach of trust too narrowly. To examine this more closely, one must look at the essence of an 'exclusive management contract.' The concept revolves around the exercise of exclusive rights, where the agency provides management services and the artist fulfills the obligation to work only through the agency and not independently or via third parties.
This contract has the nature of a mandate contract under civil law, where the artist entrusts administrative tasks related to entertainment activities. What distinguishes it from other mandate contracts is that it must be based on a high level of trust. The Supreme Court issued a ruling related to this on September 10, 2019. In the so-called Song So-hee exclusive contract ruling, the court stated, "In a case where an artist terminates a contract due to damaged trust, if the mutual trust between the parties is broken, the artist can terminate the contract."
Specifically, the Supreme Court stated, "Unlike a mandate contract under civil law, an exclusive contract is strongly linked to the interests of the parties regarding its continuity; therefore, even if an artist cannot terminate it at will, considering the fundamental nature of the contract as a mandate, it is not the case that a contract can only be terminated in the presence of 'grave reasons' that make expecting the continuation of the contract impossible." This differs from the common perception that contracts can only be broken if there is a 'grave reason.'
Furthermore, it stated, "Forcing an artist to perform under a contract against their free will simply because a 'grave reason' for termination is not met, despite the fact that trust between the parties has been broken, would result in an excessive infringement of the artist's personal rights. Thus, if mutual trust is broken, the artist can terminate the exclusive contract." It considered the fact that forcing exclusive activities against an artist's free will infringes on personal rights as extremely important.
Personal rights recognized by the Supreme Court through legal precedents include rights to honor (reputation), portrait/voice rights, rights to a name, privacy, and health (physical and mental). There are strong interests in entertainment contracts, but it means that if the artist decides they no longer need to depend on the agency, this cannot be forcibly blocked. It would be more appropriate to offer better conditions to the departing artist to maintain the contract.
The Supreme Court precedent that infringement of personal rights leads to a breakdown of trust differs from the perception that the maintenance of an exclusive contract is judged based on profit settlement issues. Therefore, rulings suggesting that there is no problem with maintaining a contract because the artists received about 5.2 billion KRW per person, along with dormitory and practice room support, seem to be too focused on a material foundation.
Above all, the fact that only Danielle had her contract terminated in this situation could further break trust. HYBE and ADOR stated in court that they were prepared to fully support the members upon their return. They never said they would selectively accept members or hold specific individuals responsible for the situation. This can be called a deceptive act. Deceptive acts are contrary to the principle of good faith that must be observed in trade relations, causing a misunderstanding (Supreme Court 2005Do1991 ruling). If Danielle had known this would happen, she would not have notified of her return, and the same may apply to other members. Moreover, in mandate contracts like entertainment exclusive contracts, if the party is a minor, the other contracting party must act in a role similar to a parent.
Most importantly, K-pop is fundamentally centered on fans. Fans are the reason idol groups gain popularity and maintain or sustain their activity base. Would fans really want the company to exclude one specific member and hold them harshly accountable? If the brand value is damaged, future activities will inevitably suffer a blow. V of HYBE’s BTS coined the term 'Borahae' (I Purple You). It carries the meaning of trusting and loving each other until the end, like the color purple, the last color of the rainbow. Wouldn't it be a true global K-pop management model if HYBE embraced all NewJeans members, just like the meaning of 'Borahae'?
The author Kim Heon-sik has wandered through the forest of pop culture phenomena since his 20s with the expectation that there is a way to make the world a better place through culture. He continues on this same path in the 21st century, where artificial intelligence and quantum computers are active, with the same belief.
※ The manuscript of an external contributor may differ from the editorial direction of this publication.