Kristen Cavallari and Jay Cutler filed for divorce in April 2020. But it wasn’t until recently that retired NFL quarterback Cutler decided to try to stake a claim on Cavallari’s brand as part of the property division in the divorce. Actress Cavallari owns the clothing, jewelry, and home products company, Uncommon James.
Launch and Development
Cavallari launched the business during their marriage and worked hard to promote it, often featuring it on her reality show, Very Cavallari. Cutler claims that because the business was created and built in 2017 during the marriage (which began in 2013), he’s entitled to half of its value. Some Twitter accounts have even pointed out that Cutler allegedly came up with the company’s name. Cavallari claims that the money to start the brand was hers and hers alone. The company reportedly was earning $20 million as of 2019.
The reality show may prove to be a double-edged sword for Cavallari. It helped her promote and grow the business, but footage may show Cutler had some involvement. In one episode, Cavallari asked him to speak to her employees, even though she said he wasn’t an owner and it might lead him to believe he was. From this footage, it’s clear the couple has had long-standing conflict and confusion over the company’s ownership. It’s important to note that the couple does not have a prenuptial agreement which could have avoided a conflict such as this.
The couple’s road to divorce has not been a smooth one. The couple reportedly had a difficult time agreeing on a parenting plan, but did eventually reach a settlement. It has also been alleged that Cutler was refusing to permit Cavallari to purchase a new home while the divorce was in progress, but that was also later resolved.
Personal Brand and Divorce
Cutler is seeking a 50% ownership stake in Cavallari’s company. The company is a clear, definable asset. While Cavallari’s name is certainly part of what has created the value of the business, the ownership he’s seeking is in the definable assets of the company itself.
It is not uncommon for a celebrity couple to include the value of a personal brand in their divorce. Celebrity brand is often compared to other intangible marital property such as a professional license (like a medical license or a law degree). It is an intangible asset that enhances a person’s earning ability, and as such, it can be considered a marital asset if it is created or developed during a marriage.
Celebrity brand has also been compared to a business’ goodwill, an intangible value attached to the business’ reputation and standing, which is valued in a divorce and divided. A spouse’s participation and support in assisting in the building of a celebrity brand is sometimes considered evidence that they are entitled to a portion of the increase in the value of the brand they contributed to throughout the marriage.
An interesting problem with regard to valuing a personal brand is that divorce distribution happens at one point in time and is not revisited or adjusted based on what happens in the future. Yet it is very clear in today’s world that celebrity status can be fleeting. One wrong tweet and a celebrity can be canceled and have virtually no earning opportunities in the future.
When courts value celebrity brands, they only look at the celebrity’s position at the time of the divorce. There is no mechanism to adjust an award in the future should that celebrity experience damage to their brand.
Brand vs. Company
Cutler is not seeking to be awarded part of the value of Cavallari’s celebrity status, even though he did appear on her reality show and made celebrity appearances with her. Instead, he is seeking half of the value of her company. Any company that is started during marriage will generally be considered marital property unless a prenuptial agreement specifies otherwise or if the company is created using only separate (non-marital) funds. However, even in that instance, the increase in the company’s value from inception to the date of asset valuation may be considered marital property.
To determine if Cutler is entitled to a portion of the value of Uncommon James, the court will evaluate the creation of the company and trace the funds that were used to form it. If those funds were entirely separate and not marital assets, Cutler’s claim would then be reduced, and he would only be able to seek a portion of the increase in value of the company that occurred during the marriage.
Celebrity brand and status, and the valuation of celebrity companies, is a complex and ever-changing area of law that requires experienced and cutting-edge legal representation.