ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Tuesday, September 27, 2005

Subaru Distributor Attempts to Enjoin "Re-Badging Plan"

What is the difference between a Saab 9-2 and a Subaru Impreza WRX Wagon?  Soon, the answer might be that the only real difference is the badge (and, perhaps, the price).  Not surprisingly, this peeved a Subaru distributor with exlcusive rights to distribute Subaru cars in New York and New Jersey.

Here’s what seems to be the shortest possible version of the story: Fuji manufactures Subaru cars. Fuji granted Subaru of America the exclusive right to distribute certain Subaru products in the United States. In 1975, Subaru of America entered into a distribution agreement with Subaru Distributors, granting Subaru Distributors the exclusive right to distribute Subaru vehicles, parts and accessories in New York and northern New Jersey. Since 1975, various car company acquisitions have changed things:

the relationship between these three parties has grown complicated and vexed as Fuji acquired part, then all, of the stock of Subaru of America; a rival manufacturer, General Motors, acquired approximately 20% of Fuji’s stock; and GM acquired 100% of the stock of Saab, the Swedish vehicle manufacturer.

After GM acquired its stake in Fuji, GM and Fuji announced that they had entered a “technical alliance.” In 2003, GM and Saab announced what the complaint called a “Re-Badging Plan,” under which Fuji would manufacture vehicles to be sold as the Saab 9-2.

Subaru Distributors is not happy with the “Re-Badging Plan”: under the plan the new Saab 9-2 is to be based on the same design as the Subaru Impreza WRX Wagon and Sport Wagon, which Fuji manufactures in the same plant as the Saab 9-2. According to the complaint, under the "Rebadging Plan," the Saab 9-2s are going to be sold through the existing Saab distribution network in Subaru Distributors’ geographic territory.

On various contract theories, Subaru Distributors sought to enjoin the re-bading plan and sought compensatory and punitive damages. The District Court dismissed the complaint for failure to state a claim, and the Second Circuit affirmed. Subaru Distributors’ breach of contract claim against Subaru of America alleged that Subaru of America acquiesced to Fuji’s "Re-Badging Plan." The Second Circuit held that nothing in the Distribution Agreement between the parties imposed upon Subaru of America a duty to prevent Fuji from acting. Additionally, the Second Circuit held that Subaru Distributors was not a third-party beneficiary of the contract between Fuji and Subaru of America.

Subaru Distributors, Corp. v. Subaru of America, et al., No. 04-3598-cv (2d Cir. Sept. 21, 2005).

[Meredith R. Miller]

September 27, 2005 in Recent Cases | Permalink | TrackBack (0)

Today in History: September 27

1696: St. Alphonsus Liguori, who will earn his Doctorate of Laws at 16 and by age 27 will be one of the leaders of the Neapolitan bar, is born at Marianella, near Naples.  He’ll renounce his legal career when he finds that he has inadvertently been led to make a false argument to a court.

1825: The 26-mile Stockton & Darlington Railway, the first to use steam engines to haul passengers, opens for business, carrying 600 passengers in a single train.

1941: The first of steelmaker Henry Kaiser’s remarkable 7,000-ton Liberty Ship freighters, the S.S. Patrick Henry, is christened.  Before war's end the prefab ships will be completed at the rate of three a day.

1954: Steve Allen hosts the first installment of what will become The Tonight Show on NBC Television.

1983:  Richard Stallman announces the start of the GNU free software project.  He’ll later become the principal author of the GNU General Public License, which will become the most popular license agreement for free software.

1995: The U.S. Government releases the first of its new $100 bill design, featuring the off-center Benjamin Franklin.

2004: The Virgin Group and Mojave Aerospace Ventures announce a joint project ("Virgin Galactic") to develop commercial space flight with what they will call the “VSS Enterprise.”

September 27, 2005 in Today in History | Permalink | TrackBack (0)

Monday, September 26, 2005

Gasoline Scarcities

Today’s print Wall Street Journal contained a lead story on the scarcity of gasoline in Houston.  The shortages and rising prices could lead to litigation about impossibility and impracticability, just the embargo did.  For an interesting discussion / debate of anti-price gouging measures, check out this discussion on Conglomerate.

[Miriam Cherry]

September 26, 2005 in In the News | Permalink | TrackBack (0)

Weekly Top Ten

Ssrn_logo_25 Not much change in this week's Top Ten.  Following are the ten most-downloaded papers from the SSRN Journal of Contract and Commercial Law for the 60 days ending September 25, 2005.

1 (1) On Collaboration, Organizations, and Conciliation in the General Theory of Contract, Ethan J. Leib (Cal-Hastings).

2 (2) The Posthumous Life of the Postal Rule Requiem and Revival of Adams v. Lindsell, Peter Goodrich (Cardozo).

3 (3) The Limits of Lawyering: Legal Opinions in Structured Finance, Steven L. Schwarcz (Duke).

4 (5) Bargaining Power in Contract Theory, Daniel D. Barnhizer (Michigan State).

5 (4) Friends in High Places: Amity and Agreement in Alsatia, Peter Goodrich (Cardozo).

6 (7) On-line Boilerplate: Would Mandatory Website Disclosure of E-standard Terms Backfire?, Robert A. Hillman (Cornell).

7 (5) Is Forum-Shopping Corrupting America's Bankruptcy Courts?, Todd J. Zywicki (Geo. Mason).

8 (-) Are 'Pay Now, Terms Later' Contracts Worse for Buyers?  Evidence from Software License Agreements, Florencia Marotta-Wurgler (NYU).

9 (8) New Basics: 12 Principles for Fair Commerce in Mass-Market Software and Other Digital Products, Jean Braucher (Arizona).

10 (9) Employment as a Relational Contract, Robert C. Bird (UConn-Marketing).

[Frank Snyder]

September 26, 2005 in Recent Scholarship | Permalink | TrackBack (0)

Coudert sued over leases

The breakup of the venerable Coudert Brothers firm is likely to leave a number of creditors holding an empty bag, and landlords are getting worried.  Some have already sued the firm, demanding that the firm honor its leases.

September 26, 2005 in In the News | Permalink | TrackBack (0)

Florida Coastal on the move

Fcsl1_2 Fcsl2_1 For those who like to root for the Davids of this world against the Goliaths, congrats  to Florida Coastal School of Law for scoring the highest bar passage rate of any Sunshine State school on the most recent bar exam.

In other news, the Jacksonville school says it’s moving its campus in 2006 to a five-story, 220,000 square foot lakefront facility with a 1,400-car parking garage.  (Left, the building entrance; right, the campus from the lake.  Click on photos for a larger picture.)

[Frank Snyder]

September 26, 2005 in Law Schools | Permalink | TrackBack (0)

Mass Transit Licensing Departments: Take Down Your Maps provides free downloadable maps of the mass transit systems of over 20 cities around the world. The maps are formatted so that they can be viewed on an Ipod. However, reports that transit authorities in New York and San Francisco have “launched a copyright crackdown” on the website. The little maps may not be available for long. 

The site has received cease and desist letters from both the NYC Metropolitan Transit Authority ("MTA") and the San Francisco Bay Area Rapid Transit ("BART").  These organizations are demanding that remove the maps from the site because it did not obtain licenses to post the maps and to authorize others to download them.

[Meredith R. Miller]

September 26, 2005 in E-commerce | Permalink | TrackBack (0)

Today in History: September 26

1789: John Jay is appointed the first Chief Justice of the United States.  He’ll later resign the post to take the more important post of Governor of New York.

1810: French Marshal Jean-Baptiste Bernadotte, the son of a provincial French lawyer adopted as a son by King Charles XII of Sweden, becomes heir to the Swedish throne when the Riksdag passes a new Law of Succession.

1889: Philosopher Martin Heidegger is born at Messkirch in Germany.  He’s been cited in more than 600 law review articles, even though hardly anyone really understands what he’s talking about.

1914: The U.S. Federal Trade Commission is established.

1914: Francois Henri “Jack” LaLanne is born at San Francisco, California.  In 1936, at age 21, he’ll open his first gym and will go on to create the modern fitness industry.

1957: At the Winter Garden Theater in New York, Leonard Bernstein’s West Side Story introduces audiences to gang members who stab people but never swear.

1991: Eight volunteers enter the $150 million Biosphere II in Oracle, Arizona, to see if it can sustain them in a hermetically sealed environment.  It can’t.

September 26, 2005 in Today in History | Permalink | TrackBack (0)

Sunday, September 25, 2005

Art v. Commerce

     Edwards:  I would like to voice my strong concern about this show's spiraling decline in ratings.  David, ever since you took [the show] to the Caribbean, it's been Jamaica homeless people sucking soup, and a big wave outside that cost a hundred thousand dollars. That's depressing and it's expensive, two words I hate.  You know the words I like?  I like the word "peppy" and the word "cheap."  Peppy and cheap.

                          Soapdish (1992)

September 25, 2005 in Film Clips | Permalink | TrackBack (0)

Today in History: September 25

1066: King Harold II defeats the Vikings at Stamford Bridge, ending Danish authority in England.

1513: Vasco Núñez de Balboa becomes the first European to sight the Pacific Ocean.  He claims the whole thing for the King of Spain.

1789: The U.S. Congress proposes 12 amendments to the recently adopted Constitution.  Ten of them will be ratified.

1862: William Morris “Billy” Hughes, Australia’s seventh Prime Minister, is born at London, England.  He’ll study law and qualify as a barrister at age 41 while working as a labor organizer for Sydney dockworkers.

1912: With money obtained from the will of Joseph Pulitzer, who has grown considerably more respectable after he's six feet under, Columbia University founds its School of Journalism.

1981: Arizona Court of Appeals Judge Sandra Day O’Connor is sworn in as the first female Justice of the U.S. Supreme Court.

1988: William Alton “Billy” Carter, the only U.S. Presidential sibling to have a beer named for him, dies at Plains, Georgia.  His claim for “Billy Beer”: “It’s the best beer I’ve ever tasted, and I’ve tasted a lot.”

2004: Billionaire corporate raider Marvin Davis dies at Beverly Hills, California.

September 25, 2005 in Today in History | Permalink | TrackBack (0)

Saturday, September 24, 2005

Monty Python on Substantial Performance

From the "Last Supper" sketch.  Michelangelo is played by Eric Idle; the Pope is played by John Cleese.

Michelangelo: Good evening, your Holiness.

Pope: Evening, Michelangelo. I want to have a word with you about this painting of yours, "The Last Supper."

Michelangelo: Oh, yeah?

Pope: I'm not happy about it.

Michelangelo: Oh, dear. It took me hours.

Pope: Not happy at all.

Michelangelo: Is it the jello you don't like?

Pope: No.

Michelangelo: Ah, no, I know, they do have a bit of colour, don't they? Oh, I know, you don't like the kangaroo?

Pope: What kangaroo?

Michelangelo: No problem, I'll paint him out.

Pope: I never saw a kangaroo!

Michelangelo: Uuh...he's right in the back. I'll paint him out! No sweat, I'll make him into a disciple.

Pope: Aah.

Michelangelo: All right?

Pope: That's the problem.

Michelangelo: What is?

Pope: The disciples.

Michelangelo: Are they too Jewish? I made Judas the most Jewish.

Pope: No, it's just that there are twenty-eight of them.

Michelangelo: Oh, well, another one will never matter, I'll make the kangaroo into another one.

Pope: No, that's not the point.

Michelangelo: All right. Well, I'll lose the kangaroo. Be honest, I wasn't perfectly happy with it.

Pope: That's not the point. There are twenty-eight disciples!

Michelangelo: Too many?

Pope: Well, of course it's too many!

Michelangelo: Yeah, I know that, but I wanted to give the impression of a real last supper. You know, not just any old last supper. Not like a last meal or a final snack. But you know, I wanted to give the impression of a real mother of a blow-out, you know?

Pope: There were only twelve disciples at the last supper.

Continue reading

September 24, 2005 in Quotes | Permalink | TrackBack (0)

An Offer You Can’t Refuse…?

Playing off Frank’s earlier post about murder-for-hire in India, I recently came across this article that discusses how few employee benefits there are when your employment contract is with the mob.  As the story put it, mafia members often leave with “bronze caskets” rather than with “golden parachutes.”  Interesting, as was the discussion in Freakonomics about the pay structure for drug dealers.  Low-level “employees” are willing to put up with pay close to minimum wage and extremely violent working conditions because they, usually in vain, hope to become the leader of the gang someday and make millions.

[Miriam Cherry]

September 24, 2005 in Labor Contracts | Permalink | TrackBack (0)

Today in History: September 24

624: Muhammad and his followers arrive in Medina at the conclusion of their hejira from Mecca.

1664: Dutch West India Company director-general Peter Stuyvesant surrenders the Company's New Amsterdam community to the English after a surprise attack.

1755: Future U.S. Chief Justice John Marshall is born at what is now Midland, Virginia.

1789: On Marshall's 34th birthday, The Judiciary Act creates the U.S. Supreme Court and the position of Attorney General.

1852: French engineer Henri Giffard makes the first powered flight, going some 27 kilometers in a steam-powered dirigible.

1869: The "Black Friday" panic hits the U.S. financial markets after Jay Gould and James Fisk try to corner the gold market.  President Grant will break the corner by releasing $4 million in U.S. gold into the market.

1948: Soichiro Honda, who had just made a nice profit selling auto-parts business to Toyota, starts his own company to make motorized bicycles.

September 24, 2005 in Today in History | Permalink | TrackBack (0)

Friday, September 23, 2005

AALS fete moves to D.C.

Since Hurricane Katrina caused New Orleans and the Gulf Coast to suffer, the AALS leadership has decided to have its membership share the pain.  The AALS Annual Meeting in January will thus be held, not in someplace like California or Las Vegas but at the God-Awful Marriott Wardman Park in D.C.

Somehow you really expected this, didn't you?

[Frank Snyder]

September 23, 2005 in Conferences | Permalink | TrackBack (0)

Mitchell to host Lavender Law

William Mitchell Law School will host the 14th Regional Lavender Law Conference, “Challenging Times: Reclaiming Purpose, Passion and Balance.”  It will be at the St. Paul school on Saturday, October 15, from 9 a.m. to 4 p.m.

September 23, 2005 in Conferences | Permalink | TrackBack (0)

Negotiation of Public Loo Contract

The New York Times reports today that New York City is in negotiation with a Spanish company, Cemusa, to build 20 public toilets, 3,300 bus shelters and 330 newsstands at no cost to the city. Actually, the company would pay the city at least $1 billion over 20 years in exchange for permission to sell advertising on the toilets, shelters and newsstands.

Apparently, “the details of how Cemusa was chosen, as well as its designs for the toilets, bus shelters and newsstands, remain a mystery.” The project is one of the largest of its kind in the city’s history, and Cemusa outbid four other companies for the project.

The Times reports:

City and Cemusa officials, citing the continuing contract talks, have refused to provide more information. Some lobbyists and city officials who have followed the bid say privately that one of the losing companies may still sue to block the project.

The mayor was pleased:

"It will mean for the city a billion dollars in revenues over 20 years, which we certainly can use, and it will make the streetscape look better and cleaner, and provide better access for people walking back and forth," he said. "And toilets are one of those things that people need, and lots of other cities have them."

The article is here (free subscription required).

[Meredith R. Miller]

September 23, 2005 in In the News | Permalink | TrackBack (0)

Contract hits in India

There’s a an unusual contract dispute brewing in the Indian film industry -- one that involves not merely “contract” in its legal sense but “contract” in its underworld sense.

Bollywood actress Preeti Jain has apparently admitted that she agreed to pay contract killer Naresh Pardeshi an advance of 40,000 rupees to murder film-maker Madhur Bhandarkar.  Pardeshi then turned and allegedly hired subcontractor Gulfam Mohammed Ibrahim Shaikh, a/k/a Shamir, to help with the killing.  But Pardeshi says he was then contacted by gangster-turned-state-legislator Arun Gawli, who told him that Bhandarkar would pay him 50,000 rupees more than Jain to get the contract “cancelled.”  Five people have been arrested; no word on whether Pardeshi will get the cash for calling off the hit.

[Frank Snyder]

September 23, 2005 in In the News | Permalink | TrackBack (0)

Today in History: September 23

490 BC: A Greek soldier, Pheidippides, runs the first Marathon and dies.

1241: Poet-historian-politician Snorri Sturleson is killed at Reykholt in western Iceland after taking part in an unsuccessful revolt against King  Haakon IV of Norway.

1529: After massacring 4,000 the civilians who fled the city -- young women suitable for slavery excepted -- Suleiman the Magnificent begins the siege of Vienna with an army of 100,000 men and 300 cannons.

1728: Christian Thomasius, the first German law professor to lecture in the vernacular instead of German (at the University of Halle), dies at 73.

1806: Meriwether Lewis and William Clark return from their long trip.

1912: Mack Sennett’s new Keystone Film Co. releases its first “Keystone Kops” feature, Hoffmeyer’s Legacy.

1943: Elinor Glyn, sister of Lucy, Lady Duff Gordon, and inventor of the modern bodice-ripping novel, dies at age 78.

September 23, 2005 in Today in History | Permalink | TrackBack (0)

Thursday, September 22, 2005

News in Brief

Cosmetics firm Rimmel is the fourth to announce it is "reviewing its contract" with model Kate Moss, saying it’s “shocked” -- shocked! -- that she snorts cocaine.  (The Telegraph)

The town of Brookline (Mass.) is suing cable giant Comcast for breach of contract, saying the company broke its pledge to improve reception there.  (Brookline TAB)

A Texas judge has dismissed fraud and breach of contract claims brought against bicycle racer Lance Armstrong by a former assistant.  (KGBT-TV)

Indiana officials have terminated the contract of the firm hired to link together the computer systems of the state courts because the system just doesn’t work.  (Ft. Wayne Journal-Gazette)

New York City will ink a 20-year contract with Spain’s Cemusa, Inc., to build and maintain bus stops and public toilets; Cemusa will get all advertising rights and will pay about $1 billion over the life of the contract.  (Newsday)

An Oklahoma roofing company has seen its stock more than double after it wins Army contracts to provide roofing services in storm-damaged Mississippi.  (KFOR-TV)

Boston Scientific has agreed to pay $750 million to a small Israeli company to settle a contract dispute over sales of heart stents.  (Boston Globe)

September 22, 2005 in In the News | Permalink | TrackBack (0)

Cases: Policy incontestible despite fraud

Florida_flag_3 The statutory two-year incontestability provision of Florida life insurance law means an insurer must pay out the benefits even if the policyholder hired an impostor to impersonate him during the required medical exam, according to a ruling from the U.S. Court of Appeals for the 11th Circuit.

Under the law, a life insurance policy becomes incontestable if it’s in force for two years before the policyholder’s death.  Allstate Insurance claimed that policyholder John Miller had someone else pretend to be him during the medical exam, but the district court granted summary judgment on that contention to the beneficiaries.

The two-year period, said the court, is the equivalent of a statute of limitations:

Just as Florida courts would dismiss an otherwise valid action once the statute of limitations on that claim had run, Florida's appellate courts have uniformly held that once the incontestability clause becomes effective, insurers are barred from attempting to rescind or cancel the insurance policy based on allegations that the insured engaged in fraud or misrepresentation.

[Frank Snyder]

September 22, 2005 in Recent Cases | Permalink | TrackBack (0)