Classic COVID Force Majeure Case: Commvault v. Marriott

Commvault Systems, Inc (Commvault) is in the business of hosting large-scale conference events.  It entered into three contracts with Marriott Hotel Services, Inc. (Marriott) to hold various events at Marriott venues starting in 2018 and continuing through 2026.  Each contract contained an impossibility/force majeure clause, as well as a clauses providing that the parties would cooperate to comply with all applicable laws.  

In October 2020, Commvault purported to cancel all three contracts, citing the COVID pandemic and the “impossibility, illegality and/or impracticality of using” Marriott’s facilities.  It sought a declaratory judgment of its right to do so, and Marriott responded with counterclaims, seeking liquidated damages, among other things.  Marriott noted that some of the cancellations related to events that were still years away and nothing that occurred had rendered performance illegal, impractical, or impossible.  Commvault responded by claiming that it acted within its rights and that Marriott had not yet suffered any damages and that it had a duty under the contract to mitigate any losses it might suffer due to cancellation.

In April, the The U.S. District Court for the District of New Jersey issued a ruling on Commvault’s motion to dismiss Marriott’s counterclaims both on ripeness grounds and for failure to state a claim.  The court rejected Commvault’s argument that Marriott’s claims as to contracts relating to events that had not yet take place were not ripe.  Rather, the court noted, a party may immediately bring suit upon its counterparty’s anticipatory repudiation.  Any recovery can be offset by later mitigation.

As to Commvault’s argument that Marriott’s counterclaims ought to be dismissed because Commvault acted within its rights pursuant to the contracts’ force majeure provisions, the court withheld judgment.  It noted that courts across the country had counseled against deciding the applicability of force majeure clauses in the COVID context based on the pleadings alone.  A “more fulsome record” is needed. 

Pedantry sidebar: Yuck.  Just use “complete” or “capacious” or “ample” or “extensive” or any of the myriad words that are available for this humdrum purpose.  Can we not save “fulsome” for its primary (and unique!) meaning (“excessive”), so as to avoid the confusion that arises when a word means both one thing and the very opposite.  Feel free to peruse other posts for a plethora of complaints about other instances of semantic confusion.

The court did not make Commvault go away empty handed, dismissing two of Marriott’s counterclaims as duplicative of other claims.