Monday, August 3, 2015
In the continuing fallout from Donald Trump's Presidential candidacy (photo right by Michael Vadon via Wikimedia Commons), Trump is now suing celebrity chef Jose Andres. According to the Washington Times, Andres was to open a restaurant in Washington, DC's old post office building, which will soon be the Trump International Hotel. He now claims that Trump's anti-immigrant comments make it impossible for him to do so. It seems that Trump's attorneys' response is to claim that his views on immigration were well known and consistent and should not have come as a surprise to Mr. Andres. The lawsuit seeks $10 million in damages.
In other Presidential candidate news, three unions representing New Jersey public employees are suing the state for breach of contract. The suit arises out of Governor Chris Christie's efforts to address a budget shortfall by cutting contributions to the state pension fund. Excellent coverage of this suit and its background can be found in the Winnipeg Free Press here.
The Fay Observer reports that Intersal, a company that discovered the wreck of Blackbeard's ship of the coast of North Carolina, is suing North Carolina. The suit alleges that the state has breached a contract pertaining to the use photos and video relating to the wreck and seeks $8.2 million in damages.
Sunday, August 2, 2015
Remember Aereo, the company trying to provide select TV programs and movies using alternatives to traditional cable TV programming? That company went bankrupt after a U.S. Supreme Court ruling last year.
A federal court in Los Angeles just ruled that online TV provider FilmOn X should be allowed to transmit the programs of the nation’s large broadcasters such as ABC, CBS and Fox online, albeit not on TV screens. See Fox Television Stations, Inc. v. FilmOn X, LLC, in the U.S. District Court for the Central District of California, No. 12-cv-6921. Of course, the traditional broadcasters have been aggressively opposing such services and the litigation so far. Recognizing the huge commercial consequences of his ruling, Judge Wu certified the case for an immediate appeal to the Ninth Circuit Court of Appeals.
Said FilmOn’s lawyer in an interview: “The broadcasters have been trying to keep their foot on the throat of innovation. The court’s decision … is a win for technology and the American public.”
The ultimate outcome will, of course, to a very large extent or perhaps exclusively depend on an interpretation of the Copyright Act and not so much contracts law as such, but the case is still a promising step in the direction of allowing consumers to enter into contracts for only what they actually need or want and not, at bottom, what giant companies want to charge consumers to protect income streams obtained through yesteryear’s business methods. Currently, many companies still “bundle” TV packages instead of allowing customers to select individual stations. In an increasingly busy world, this does not seem to make sense anymore. Time will tell what happens in this area after the appeal to the Ninth Circuit and other developments. Personally, I have no doubt that traditional broadcasting companies will have to give in to new purchasing trends or lose their positions on the market.
Thursday, July 30, 2015
I earlier blogged on an American TV personality's contract to hunt and kill one of the most highly endangered species on earth: a black rhino. That hunt has now been completed at a price tag of $350,000. The asserted reasoning for wanting to undertake the hunt: the money would allegedly help the species conservation overall and the local population. Studies, however, show that only 3-5% of that money goes to the local population. Some experts believe that the money could be much better spent for both the local population and the species via, for example, tourism to see the animals alive. This brings in three to fifteen times of what is created through so-called "trophy hunting."
This past week, the world community was again outraged over yet another American's hunt - this time through a contract with a local rancher and professional assistant hunter - of Cecil the Lion. The price? A mere $50,000 or so. This case has criminal aspects as well since the landowner involved did not have a permit to kill a lion. The hunter previously served a year of probation over false statements made in connection with his hunting methods: bow and arrow.
This is also how the locally famous and collared Cecil - a study subject of Oxford University - was initially hunted down, lured by bait on a car to leave a local national park, shot, but not killed, by Minnesota dentist Walter Palmer, and eventually shot with a gun no less than 40 hours after being wounded by Palmer.
Comments by famous and regular people alike have been posted widely since then. For example, said Sharon Osbourne: ""I hope that #WalterPalmer loses his home, his practice & his money. He has already lost his soul."
I recognize that some people - including some experts - argue for the continued allowance of this kind of hunting. Others believe it is a very bad idea for many biological, criminal, ethical, and other reasons to allow this practice. If you are interested in signing a petition to Zimbabwe Robert Mugabe to stop issuing hunting permits to kill endangered animals, click here. It will take you less than 60 seconds.
Wednesday, July 29, 2015
Tuesday, July 28, 2015
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University of Oxford - Saint Cross College; Middle Temple; Freshfields Bruckhaus Deringer LLP; Minerva Chambers
July 12, 2015
However there was a second question considered in detail by the Supreme Court, namely what was the alternative fair remuneration that should be substituted for the salvors? This led to a complex and sophisticated analysis of the business risks and fair returns for both parties. Although the context was admiralty law and commercial salvage rather than international tax, the Supreme Court's analysis is remarkably close modern transfer pricing analysis and Post v Jones can perhaps also be viewed as a prototype early transfer pricing type case.
Number of Pages in PDF File: 12
Monday, July 27, 2015
As Fortune Magazine reported here, Lifelock has sued a bitcoin digital wallet company called Xapo. Xapo's founder and CEO, Wences Casares, formerly owned a company that was purchased by Lifelock, and he became a Lifelock employee at that point. Lifelock alleges that he used a product from his old company to create Xapo. Casares responds that Lifelock had no interest in the product. Casares moved to dismiss the suit in California Superior Court, and that motion was denied. Fortune provides more complete background on the case here. For some reason, Fortune describes the suit as sounding in fraud, but it sounds more like a breach of contract/IP issue to me. Other websites (e.g., Bitcoin News Service here and Bitcoin Magazine here) describe the suit as sounding in breach of contract.
This is not exactly news, but the Daily Telegraph is reporting on sex contracts at U.S. colleges and universities as though it were news. While the report features some discouraging information about the frequency of sexual assault at UK and U.S. universities, it adopts a snide tone regarding sex contracts and concludes that they are "overly simplistic and potentially harmful." Although the report acknowledges that the contracts are "conversation starters" and are not intended to be binding contracts, it proceeds to treat them as contracts and to point out the obvious -- like that people are entitled to change their minds about sex. Ugh. It's not as if this is not something that has occurred to the designers of sex contracts. The models of such contracts that we have discussed here include language requiring consent on an on-going basis to each new sex act. This approach is easy to mock, but, as we've seen before, those who denigrate serious approaches to the problem of sexual assault on college campuses fail to provide alternatives. The Telegraph cites to an organization called the "Good Lad Workshop" that encourages college students to be good guys. It is clear that the spokesman for the organization knows nothing about how actual sex contracts work.
Thursday, July 23, 2015
You cannot say that we are boring you this week. Our blogs have included considerations on advertising on porn sites and having one’s illicit affairs forgotten contractually. Add to that the news that this week, Roman Catholic nuns, the archdiocese of Los Angeles, the formerly Jesuit student turned California Governor Brown and Pope Francis all had something to say about contracting about major and, admittedly, some minor issues.
To start with the important: Pope Francis famously issued his Encyclical Letter Laudato Si’ “On Care for our Common Home.” In it, he critiques “cap and trade agreements,” which by some are considered to be a mere euphemism for contractual permits to pollute and not the required ultimate solution to CO2 emissions. In the Pope’s opinion, “The strategy of buying and selling carbon credits can lead to a new form of speculation which would not help reduce the emission of polluting gases worldwide. This system seems to provide a quick and easy solution under the guise of a certain commitment to the environment, but in no way does it allow for the radical change which present circumstances require. Rather, it may simply become a ploy which permits maintaining the excessive consumption of some countries and sectors.” Well said.
Governor Brown, however, disagrees: Brown shrugged off Francis' comments. "There's a lot of different ways," he told reporters, "that cap and trade can be part of a very imaginative and aggressive program." Brown, however, does agree with the Pope that we are “dealing with the biggest threat of our time. If you discount nuclear annihilation, this is the next one. If we don’t annihilate ourselves with nuclear bombs then it's climate change. It’s a big deal and he’s on it.”
In less significant contractual news, Roar, Firework, and I Kissed a Girl and I Liked It singer Katy Perry is interested in buying a convent owned by two Sisters of the Most Holy and Immaculate Heart of the Blessed Virgin. Why? Take a look at these pictures. The only problem is who actually has the right to sell the convent to begin with: the Sisters or the archdiocese. When two of the sisters found out the identity of the potential buyer (Perry), they became uninterested in selling to her because of her “public image.” They now prefer selling to a local restaurateur whereas the archdiocese prefers to complete the sale to Perry, although she bid less ($14.5 million) on the property than the restaurateur ($15.5 million). Perry may be about to learn that image is indeed everything in California, even when it comes to the Divine. Perry is no stranger to religion herself as she was, ironically, raised in a Christian home by two pastor parents.
Wednesday, July 22, 2015
Juliet P. Kostritsky, Context Matters -- What Lawyers Say about Choice of Law Decisions in Merger Agreements, 13 DePaul Bus. & Com. L.J. 211 (2015)
Murat Madykov, Step-in Right As a Lender Protection Mechanism in Project Financed Transactions, 13 DePaul Bus. & Com. L.J. 273 (2015)
Genevieve Saumier, The Hague Principles and the Choice of Non-State "Rules of Law" to Govern an International Commercial Contract, 40 Brook. J. Int'l L. 1 (2014)
Tuesday, July 21, 2015
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Monday, July 20, 2015
In 2014, the Court of Justice of the European Union famously held that “[i]ndividuals have the right - under certain conditions - to ask search engines to remove links with personal information about them. This applies where “the information is inaccurate, inadequate, irrelevant or excessive” for the purpose of otherwise legitimate data collection. “A case-by-case assessment is needed considering the type of information in question, its sensitivity for the individual’s private life and the interest of the public in having access to that information.”
A few days ago, infamous adultery-enabling website Ashley Madison and “sister” site (no pun intended) EstablishedMen.com, which “connects ambitious and attractive young women with successful and generous benefactors to fulfill their lifestyle needs,” was hacked into by “The Impact Team,” a group of apparently offended hackers who threatened to release “all customer records, including profiles with all the customers’ secret sexual fantasies and matching credit card transactions, real names and addresses, and employee documents and emails” unless the owner of the sites, Avid Life Media, removes the controversial websites from the Internet permanently.
Notwithstanding legal issues regarding, perhaps, prostitution, do customers have a right to be forgotten? Not in general in the USA so far. Even if a provision similar to the EU law applied here, it would only govern search engines. Ashley Madison had, however, contractually promised its paying users a “full delete” in return for a fee of $19. The problem? Apparently that the site(s) still kept purchase details with names. Further, of course, that the company promised and still promises “100% discreet service.” Both seemingly clear contractual promises.
Although the above example may, for perhaps good reason, simply cause you to think that the so-called “clients” above have only gotten what they asked for, the underlying bigger issues remain: why in the world, after first Target, then HomeDepot and others, can companies not find out how to securely protect their customers’ data “100%”? And why should we, in the United States, not have a general right to be deleted not only from companies’ records, but from search engines, if we want to? I admittedly live a very boring life. I don’t have anything to hide. But if I once in a blue moon sign up for something as simple as Meetup.com to go hiking with others, my name and/or image is almost certain to appear within a few days online. I find that annoying. I don’t want my students, for example, to know where I occasionally may meet friends for happy hour. But unless I invest relatively large amount of time in figuring out how to use and not use new technology (which I see that I have to, given the popularity of LinkedIn and the like), I may end up online anyway. That’s not what I signed up for.
As for Ashley Madison, the company has apparently been adding users so rapidly that it has been considering an initial public offering. You can truly get everything on the Internet these days, perhaps apart from data security.
I was never a business person. I grew up hoping to some day live in a commune. That dream collapsed when I experienced the idiocy of rural life, so I did the next least practical thing and got a Ph.D. in German history. But now I teach contracts and business associations. My brother is still living the dream (sort of), residing on a kibbutz in the Arava. But the kibbutz has a factory that makes sealable plastic bags, and my brother actually works for an engineering company located on a neighboring kibbutz. In short, there is no escape from commercial enterprise.
In some ways, Alex Blumberg's project is the perfect fit for someone like me, who teaches and studies commercial transactions from the convenient distance of the academy. Blumberg comes from public radio, where he co-hosted Planet Money and was a producer for This American Life. He decided to go over to the dark side and created his own media company, which eventually became Gimlet Media, a producer and distributor of high-quality podcasts. I am not yet hooked on its other projects, but I am extremely taken with StartUp, and I recommend it to people who teach business courses, including business and media law.
In StartUp, Blumberg and his team wrestle publicly with every private thing associated with setting up a new company. The show provides a unique, well-edited but still very intimate, behind-the-scenes view of new companies. The first season focused on Blumberg's own company, Gimlet Media, including hilarious episodes devoted to naming the company. Blumberg had settled on the name "Orelo," but when he told his wife that he had selected that name because it means "ear" in Esperanto, she burst out laughing, and when she finally caught her breath, she gasped out "That's so . . . dumb. . . . So dumb!" He was also considering American Podcasting Corporation. He explained to one of his unimpressed investors that the name would be a throwback to older media companies like ABC. The disenchanted investor said something like, "No, no, I get it." My real question that I wish the podcast had addressed is why did you form a corporation rather than an LLC? That would have been a great episode for my business associations course!!
StartUp's second season covered a very different type of company, Dating Ring, an online dating service that was supposed to have, as its special gimmick, a team of matchmakers who actually set you up with people you will likely connect with. I don't know if this was Blumberg's design, but I really loved the contrast between Season 1, which covered a company that I wanted to succeed and that did succeed, and Season 2, which covered I company that I wanted to fail, and pretty much did fail. I hated Dating Ring from the moment its founders announced that they wanted to be the Uber of dating. As followers of this blog know, Uber has its own problems, but the analogy highlighted the tension at the heart of Dating Ring's model -- they want to help you find true love, but they want to do it in a seamless, mechanized way. They also considered advertising on porn sites, because nothing says "I want to bring you home to my mother" like "I met her through a website that was linked to on my favorite porn site." Season 2 provides great insights into some of the many reasons why a company can fail, despite having smart, dedicated people with talent and energy and an idea that some investors think promising.
But the second season was also invaluable for its reporting on fundraising, on the mindset of people who want to become entrepreneurs and the crazy rollercoaster ride that most new companies experience. At one point, Dating Ring's founders go to a consultant who is really like a couple's therapist for start-up founders. From a distance it seemed a bit ridiculous, but one could also easily imagine how in such an intimate relationship the idea "I don't have a large enough equity stake" could translate into "I don't think you really love me and value me the way you ought to do."
I am looking forward to Season 3 almost as much as I am looking forward to Season 2 of Serial.
On July 14th, American Honda Finance Corporation (Honda) and the Consumer Financial Protection Bureau (CFPB) entered into a consent order (the Order). The CFPB and the Civil Rights Division of the Department of Justice (DOJ) alleged that Honda had violated the Equal Credit Opportunity Act (ECOA) and its implementing legislation by permitting dealers to charge higher interest rates on auto loans on the basis of race and national origin.
According to the Order, after a joint investigation, the DOJ and the CFPB made found that, during the time period covered, on average, African-American borrowers were issued loans that resulted in an extra $250 in interest payments over the course of the loan compared to loans issued to non-Hispanic whites. Hispanics paid an extra $200 and Asians and Pacific Islanders paid an extra $150. This result was the product of Honda's specific policy and practice.
The Order gives Honda three options that it can pursue in order to prevent future violations of the ECOA in the future. Honda will also pay $24 million into an escrow account. The funds will be used to compensate borrowers for the excessive interest payments they were required to make.
As the CFPB notes on its website:
Today’s action is part of a larger joint effort between the CFPB and DOJ to address discrimination in the indirect auto lending market. In December 2013, the CFPB and DOJ took an action against Ally Financial Inc. and Ally Bank that ordered Ally to pay $80 million in consumer restitution and an $18 million civil penalty.
Friday, July 17, 2015
The Rutgers Center for Risk and Responsibility is holding its fourth annual insurance workshop on Friday, October 2, 2015. This is a day-long event on the Camden campus with an opportunity to present and receive comments on drafts or less fully formed works-in-progress on topics related to insurance law or other aspect of managing or regulating risk.
For more information, contact Professor Rick Swedloff, email@example.com
Thursday, July 16, 2015
Contracts Prof Kermit Mawakana (pictured) has sued the University of District Columbia (UDC) for breach of contract and employment discrimination in connection with his termination from UDC's David A. Clarke School of Law. Last week, the District Court for the District of Columbia issued an opinion in the case. On UDC's motion to dismiss the contract claim, the court found that UDC had breached no express contract but may have breached an implied contract, and it denied the motion.
According to the court, Professor Mawakana was hired in 2006 as an Assistant Professor and promoted to Associate Professor three years later. However when he came up for tenure, his application was denied because he had not met UDC's criteria for scholarship. Professor Mawakana alleged defects in his review process that amounted to a breach of contract. The court found that the review policies did not amount to a contract and thus found no breach of an express contract, but it did find that the complaint alleged sufficient facts "if just barely" for the claim for breach of an implied contract to proceed. The court similarly found that plaintiff had alleged sufficient facts to allow his claim for breach of the implied covenant of good faith and fair dealing to proceed.
The court did not rule on Professor Mawakana's non-contractual claims.
Christopher K. Odinet, Commerce, Commonality, and Contract Law: Legal Reform in a Mixed Jurisdiction, 75 La. L. Rev. 741 (2015)
Nadezda Rozehnalova & Jiri Valdhans, Rome I and Rome II Regulations: Choice of Law Compared, 7 J. Eurasian L. 1 (2014)
J.H. Verkerke, Legal Ignorance and Information-Forcing Rules, 56 Wm. & Mary L. Rev. 899 (2015)
Tuesday, July 14, 2015
Hawaii's Governor David Ige recently signed a bill into law making "a non-compete or a non-solicit clause in any employment contract relating to an employee of a technology business... void and of no force and effect."
Under the law, effective July 1, a "technology business" is defined as a "trade or business that derive the majority of its gross income from the sale or license of products or services resulting from its software development or information technology development, or both." It excludes businesses that are part of the broadcast industry or any telecommunications carrier. There are exceptions, such as when the restrictive covenant is in connection with the sale of a business or partnership. Furthermore, agreements to protect trade secrets are still valid.
With this bill, Hawaii joins California and a few other states in invalidating non-compete clauses in employment agreements. In doing so, it has made clear that it has a "strong public policy" in promoting the growth of new businesses and recognized the "special hardship on employees of technology businesses" who are unduly restricted given the unique and limited geographic area of the state.
Important to note is how this will affect not just those contracts where the choice of law clause selects Hawaii, but those where the governing law is one other than Hawaii's (or California's). In those cases, it's likely that a Hawaiian court will not enforce the governing law clause if it would defeat this important state policy in favor of tech worker mobility -- i.e. an employer probably won't be able to get around Hawaii's law by selecting another state's law in the governing law clause. (I'm currently working on a book about contract clauses and hope to write a short post on governing law clauses in the near future).
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Monday, July 13, 2015
Today's New York Times has an article about how Uber and Lyft are merely the latest incarnation of a decades-long trend towards replacing (or attempting to replace) employees with independent contractors. According to the Times, Uber is a rather extreme version, officially employing only 4000 people, while 160,000 people make their living through Uber. The Times attributes stagnating wages to this "gig economy," acknowledging that other forces, including the decline of unions and globalization, are also contributing factors. As of 2014, 18% of all jobs held in the United States are occupied by independent contractors.
But the process has its roots in older trends, such as the move towards franchises that got going in the 1960s and has continued its steady expansion. In the hospitality industry, hotel chains enter into franchise agreements with hotel operators, who in turn now increasingly turn to independent contractors to provide services within their hotels. The results has been a decline in wages in the industry in the 21st century.
As usual in Times articles these days, if you read on below the fold, you will learn the upside to the "gig economy." Some people choose to be self-employed consultants to that they can work flexible hours and work from home. But it's hard to find a silver lining here for ordinary workers. Some can succeed as independent contractors, but their wages tend to be low, they have no job security, and the work may come in uncontrollable bursts followed by long, anxiety-producing lulls.
We have some news from the world of hockey, that is, the sport of the 2015 Stanley Cup Champion Chicago Blackhawks (logo pictured). While elite teams (like the Blackhawks) struggle to keep their rosters under the salary camp (Goodbye Patrick Sharp; Goodbye Brandon Saad -- thanks for the memories and the Cups!), as reported on ESPN.com, the L.A. Kings used an alleged "material" breach of contract to terminate center Mike Richards rather than buying him out to evade the cap. The alleged material breach was at first mysterious, but it has now bee reported, e.g., here on Forbes.com, that Richards was detained at the Canadian border in illegal possession of OxyContin. But the Forbes report also indicates that Richards' mere arrest is not grounds for termination, and even if he is convicted, the NHL's drug policy does not call for termination. It calls for substance abuse treatment. Go Blackhawks!
The Bangor Daily News reports that author Tess Gerritsen has dropped her $10 million law suit against Warner Bros. for breach of contract in connection with the film "Gravity." As we reported previously, a District Court in California dismissed her complaint but allowed her twenty days to amend and refile. The complaint is based on a $1 million contract Gerritsen signed in 1999 to sell the book’s feature film rights to a company that was eventually purchased by Warner Bros. Gerritsen has admitted that the film "is not based on" her book, but she asserts that the book clearly inspired the film.