"Harm Brought Upon Themselves"

The appellate court rejected NewJeans' request for an injunction, stating that the harm was "self-inflicted" and that their "subjective claims alone cannot justify a contract termination."

On June 17, the Seoul High Court's Civil Division 25-2 held a hearing for the appeal regarding the injunction to prohibit their agency from exercising authority and signing advertisement deals.

The court upheld the initial ruling, maintaining that NewJeans' exclusive contract remains valid and that the members are not allowed to pursue independent activities.

This decision highlights the court's stance: NewJeans' claims were not legally sufficient to break the contract.

NewJeans' Claims — And Why the Court Rejected Them

1. Breach of trust due to mistreatment
NewJeans argued they were unfairly mistreated. They claimed that Min Hee-jin, central to their exclusive contract, was unjustly audited and dismissed as CEO of ADOR. As a result, the trust between artist and agency was irreparably damaged, justifying contract termination.

2. Irreparable harm to the group
The group claimed that if their injunction was denied, they would face irreversible harm, including a prolonged hiatus. In contrast, they argued, HYBE would only suffer financial loss. They also cited infringement of their freedom of artistic expression and professional activity.

However, the appellate court rejected these arguments one by one.
It ruled that the contract remains valid and stated that the alleged breach of trust and predicted damages were not legally sufficient to justify termination.

① "No Breakdown of Trust" → Rejected

The court clearly stated that NewJeans members originated as trainees under Source Music (N Team). For example, Minji was selected in 2018, even before Min Hee-jin joined HYBE in 2019.

"There is no evidence that Min Hee-jin was involved in selecting the other members. NewJeans were simply trainees of Source Music, and it has not been proven that Min Hee-jin was involved," the court said.

The court also pointed out that there is no clause related to Min Hee-jin in the exclusive contract. It noted that nowhere does it state Min Hee-jin must be solely responsible for producing.

"Min Hee-jin is not the core premise of the contract. Rather, HYBE discovered NewJeans and established a separate company for them, investing a total of 21 billion KRW. The core of the contract lies with HYBE, not Min Hee-jin."

Since around December 2023, Min Hee-jin began requesting revisions to the shareholder agreement at HYBE. At the same time, she planned to take NewJeans with her, seeking investors and attempting meetings.

"She tried to leave HYBE with NewJeans and pressured for the sale of HYBE shares. Min Hee-jin is currently destroying the fundamental structure of the exclusive contract," the court said.

The court explained that "the dismissal of the CEO was caused by Min Hee-jin herself," adding that "demanding a specific producer back or being disappointed with ADOR does not justify a 'breakdown of trust.'"

② Enforcement of Exclusive Contract → Affirmed

According to Articles 15, Paragraphs 1 and 2 of the exclusive contract, termination is only possible when a party seriously breaches important obligations.

NewJeans and ADOR agreed that if a member arbitrarily terminates the contract, they must pay not only damages but also a penalty fee (calculated as the average monthly sales over the past two years multiplied by the remaining contract months).

Given the nature of idols, debut requires significant investment, support, education, and training from the agency. If the contract is arbitrarily terminated, the agency suffers substantial losses.

The court stated, "ADOR and NewJeans entered into the contract through mutual negotiation," and added, "It is NewJeans' natural obligation to comply with the exclusive contract."

"Behind NewJeans' success were the efforts and dedication of ADOR's executives and stakeholders. Recognizing this, the exclusive contract was established. Compliance is naturally required."

The court specified in its ruling that NewJeans cannot unilaterally terminate the contract or arbitrarily withdraw from the contractual relationship based solely on their subjective circumstances.

③ Principle of Change of Circumstances → Rejected

NewJeans claimed that Min Hee-jin's absence from producing caused a significant change in circumstances related to the exclusive contract, justifying contract termination.

The court reiterated that Min Hee-jin is not a core premise of the exclusive contract. "Even if Min Hee-jin's role was an objective circumstance underlying the contract, it is not a key factor," the court stated.

Min Hee-jin was identified as the party undermining the contract structure. The court pointed out that it is even harder to understand NewJeans siding with Min Hee-jin's position in the current situation.

"Rather, NewJeans' claim appears to violate the principle of good faith (bona fide) on which the change of circumstances is based."

The court did not consider Min Hee-jin's absence a serious enough issue to break the contract itself. Most of NewJeans' other claims were judged as subjective opinions.

④ Other Claims → Rejected

The claim that Ailee did not greet was not accepted. "CCTV confirmed the greeting. There was no evidence that Ailee deliberately ignored anyone or that the manager instructed to 'ignore'," the court said.

Adore was seen to have taken the best possible measures to protect NewJeans, citing manager interviews, minimizing contact with other artists, and posting official statements.

Regarding the claim that a HYBE PR staff member disparaged NewJeans' achievements, the court noted, "HYBE promised to prevent recurrence by educating staff and excluding the person responsible from NewJeans PR."

The plagiarism allegation against Ailee was also rejected. It was difficult to conclude that NewJeans' concept was wholly copied, and the claim was unrelated to trust issues in the exclusive contract.

The court also found that videos of the trainees released by Dispatch could not be seen as causing a breakdown of trust. Adore had repeatedly requested the removal of such videos.

"Adore even signed a service contract to delete videos distributed online. Other reasons cited by NewJeans also cannot be seen as circumstances causing a breakdown of trust."

⑤ Necessity of Preservation → Acknowledged

If NewJeans engages in independent activities, Adore will lose the returns on its investment, while NewJeans would effectively enjoy all the benefits exclusively. The court called this an "unreasonable result."

The court cited NewJeans' Hong Kong concert last March as an example. Allowing independent activities unchecked could mislead the public into thinking the exclusive contract was terminated, damaging the NewJeans brand image.

"NewJeans claims 'damages,' but these arise because NewJeans refuses to lawfully fulfill the exclusive contract. It is a self-inflicted loss. Rather, Adore suffers damages."

The court pointed out that "NewJeans succeeded in overseas performances without Adore's management, so there is no reason they cannot perform while under Adore's management."

Regarding NewJeans' claims about freedom of occupation and artistic creation, the court said, "If NewJeans complies with the exclusive contract, they can continue entertainment activities, which ultimately benefits NewJeans."

The High Court dismissed all of NewJeans' appeals. It recognized Adore's exclusive contract status until the trial for the validity confirmation of the exclusive contract is concluded. The ban on NewJeans' independent activities was also upheld.

Meanwhile, the court also accepted Adore's indirect enforcement request last month. If any member engages in independent activities without Adore's approval, they must pay 1 billion won per occurrence, per member.

[Photo Credit: ADOR, Dispatch DB]