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Thursday, September 14, 2006

How Much Is that Rotary Phone?

Recently spotted this story, which could provide an interesting example, or "spin" for the unconscionabillity doctrine (pun intended).  According to the AP:

A widow rented a rotary dial telephone for 42 years, paying what her family calculates as more than $14,000 for a now outdated phone.

Ester Strogen, 82, of Canton, first leased two black rotary phones _ the kind whose round dial is moved manually with your finger _ in the 1960s. Back then, the technology was new and owning telephones was unaffordable for most people.

Until two months ago, Strogen was still paying AT&T to use the phones _ $29.10 a month. Strogen's granddaughters, Melissa Howell and Barb Gordon, ended the arrangement when they discovered the bills.

"I'm outraged," Gordon said. "It made me so mad. It's ridiculous. If my own grandmother was doing it, how many other people are?"

New Jersey-based Lucent Technologies, a spinoff of AT&T that manages the residential leasing service, said customers were given the choice option to opt out of renting in 1985. The number of customers leasing phones dropped from 40 million nationwide to about 750,000 today, he said.

"We will continue to lease sets as long as there is a demand for them," Skalko said.

Benefits of leasing include free replacements and the option of switching to newer models, he said.

Gordon said she believes the majority of people leasing are elderly and may not realize they are paying thousands of dollars for a telephone.

Skalko said bills are clearly marked, and customers can quit their lease any time by returning their phones.

Strogen says she's not a big fan of her new push-button phone.

"I'd like to have my rotary back," she said. "I like that better."

[Miriam A. Cherry]

September 14, 2006 in In the News | Permalink | TrackBack (0)

Promissory Liability, Reliance and the Day of Atonement

Don't miss Ethan Leib's interesting connections between contracts, Cardozo's opinion in Jacob & Youngs v. Kent (a/k/a "The Reading Pipe Case") and the Jewish Day of Atonement (Yom Kippur).  And, the equally interesting response from Keith Scharfman. 

One question I have: why bother to keep your (past or future) promises with god if your fate was already sealed either way 10 days earlier on Rosh Hashanah?  Perhaps we are judged by something other than our ability to keep our promises.

Clarification from Jeffrey Lipshaw: Actually, according to the legend, you are inscribed in the Book of Life on Rosh Hashanah, and sealed on Yom Kippur.

Thus, the Unataneh Tokef recites "on Rosh Hashanah it is written, on Yom Kippur it is sealed."

Also, a traditional greeting on Yom Kippur is "g'mar tov" which is short for "may you be sealed well."

[Meredith R. Miller]

September 14, 2006 in Miscellaneous | Permalink | TrackBack (0)

Wednesday, September 13, 2006

ContractsProf Spotlight: Chapin Cimino Cody

Spotlight_2_6_4_3 Chapin Cimino Cody (Drexel University)
BA, Denison University
JD, University of Chicago

Dsc_7695 Chapin Cimino Cody is part of the inaugural faculty at Drexel Law School, where she will teach Contracts.

The paths I’ve followed haven’t always been well-illuminated. The one I’m on now, in fact, has led me to a brand new, pre-accredited law school (albeit one at an established, well-regarded research institution). The “story” of how I ultimately found this job is that, while I did realize in my first or second year of law school that teaching law would be the best job imaginable, I didn’t begin then meticulously plotting an academic trajectory. Instead I went down a few side roads and soon enough I found my way to the right place. 

I didn’t start out looking for the side roads, however. In law school I followed the crowd to the doors of the big New York firms. I decided to spend my second summer at Cravath, Swaine & Moore. I genuinely liked the firm, so I accepted their offer to join the litigation practice after graduation. But a detour to Philadelphia to clerk changed that plan.  In the Eastern District of Pennsylvania, I saw many interesting things: impeccably written briefs, skilled oral advocates, sophisticated commercial disputes, and young women being given a lot of responsibility on pending cases.  Some of these revelations came as quite a surprise, as every New York lawyer I had known insisted there was no sophisticated commercial litigation outside of New York.  Still, these observations, coupled with what seemed to be an oddly high divorce rate among the New York lawyers, convinced me to stay in Philadelphia. So I told my firm I wouldn’t be coming that fall after all. The utility of this move was at best uncertain given one bit of conventional wisdom, which is that pedigrees from fancy New York firms certainly help aspiring teaching candidates down the road.

In Philly I practiced commercial litigation at a great firm, Pepper Hamilton, and got tremendous experience. I worked at a high level on lots of different commercial matters -- contract, antitrust, securities, copyright and trademark. I also got some practice experience in public law areas, namely first amendment and higher education work, which I loved. I got trial experience, mediation experience, mentoring experience -- all kinds of good stuff. I worked at a sane place with good people and did well.

Then my first daughter arrived. At the time my spouse was consulting (read: traveling 4-5 days/week) and I knew I couldn’t do what I needed to do and keep all fronts covered adequately, so I took a big risk and took an extended maternity leave. The last time I checked, “extended maternity leave” is not on anyone’s list of “how to get a teaching job” (Leiter?  Wendel?). I ended up staying out for two years – having a second child (another daughter) almost right away and also teaching for the first time.  To stay engaged while I was out, I taught “media law and ethics” as an adjunct to undergraduates at a local university.

Shortly after returning to practice I knew that it was time to start making the move to academia.  Two years ago I started teaching legal writing at Villanova University Law School, which was another serendipitous but very worthwhile experience. In that time I learned a lot about legal education, law schools as institutions, law students, and teaching. I was also able to publish an article and put myself on the market. Viewed ex ante, the article I wrote was not the most predictable path to success, either, because I took a pass on the received wisdom that an entry-level candidate should choose a topic and construct a thesis in order to maximize her placement possibilities. Instead I wrote about what was on my mind, which was standing in a certain class of discrimination suits.  Then, lo and behold, Drexel University decided to open a law school, right here in Philadelphia. I took myself off the market and the rest is (very recent) history.   

For anyone unfamiliar with this recent history, which is probably just about everyone reading this, or anyone curious about what it is like to start a new law at an established institution, I recommend a post on the subject written by my colleague, Dan Filler, at Concurring Opinions.  The crux: “this is entrepreneurship, on someone else’s dime.  Anything is possible.”

September 13, 2006 in Contracts Profs Weekly Spotlight | Permalink | TrackBack (0)

Speaking of Free Things

This tale from the Starbucks file might be fun for a discussion of mutual assent and consideration:

Starbucks Corp. was sued for $114 million Friday over its recall last week of a coupon that entitled the holder to a free large iced drink being promoted by the Seattle coffee retailer.

Peter Sullivan, the lawyer who sued on behalf of a 23-year-old Starbucks regular who felt "betrayed" when her coupon was not honored, accused the company of fraud and said he will request class-action status to include the "thousands who were misled" by the offer.

On Aug. 23, Starbucks e-mailed the coupon for the free grande drink to select employees with instructions for them to forward the coupon to friends and family. The offer was valid through Sept. 30.

But, Sullivan said, Starbucks got jittery and refused to honor the coupon after the company saw how widely it had been distributed. "I believe they were surprised by how successful the promotion was," the lawyer said.

"The excuse proffered by Starbucks, that they did not believe that an offer released over the Internet would be so widely distributed, is ridiculous," Sullivan said. "Clearly, Starbucks chose to initiate a viral marketing campaign to counteract their slumping sales."

A spokeswoman for Starbucks said company officials had seen Sullivan's press release but not his court papers and would have no immediate comment.

Sullivan said he saw lines of coupon-carrying caffeine customers outside Starbucks coffee shops in New York in response to the promotion, and when they could not redeem the coupons "they felt let down and angry."

One of those people, Sullivan said, was his client, Kelly Coakley of Queens, who works as a paralegal and administrative assistant.

The $114 million the lawsuit asks for approximates the average cost of one cup of Starbucks coffee a day for all of the people turned away for the 38 days the offer was valid, Sullivan said. "That's a very conservative figure," he said.

He did not explain how they determined how many people had tried to redeem the coupon.

[Meredith R. Miller / HT: Isaac Samuels, 1L]

September 13, 2006 in In the News | Permalink | TrackBack (0)

Tuesday, September 12, 2006

Free Furniture Offer

In the long tradition of interesting sales "offers" and prizes (a la Keith Rowley's "Toy Yoda" article), add this to the file.  From CNN.com:

Randy Gonigam, a Kendall County furniture store owner and "huge Bears fan," got tired of players bragging about their defense, so he decided to put his money on it.

Over Labor Day weekend, Gonigam's World Furniture Mall in Plano offered customers free furniture -- up to $10,000 -- if the Chicago Bears shut out the Green Bay Packers in their season opener. Plano is about 45 miles southwest of Chicago.

Four quarters, 206 customers and about $300,000 later, Gonigam is still a little shell-shocked.

The Bears blanked the Packers 26-0 Sunday, ending Green Bay's 233-game scoring streak and giving Brett Favre the first shutout of his 16-year NFL career.

The idea that it was a long shot didn't keep him from insuring the store for up to $300,000 worth of furniture with a company that specializes in insuring prize reimbursements.

[Miriam Cherry / Hat tip: Gerald Caplan (Pacific-McGeorge)]

September 12, 2006 in In the News | Permalink | TrackBack (0)

Monday, September 11, 2006

Liza Minnelli's Pre-Nup

Some contract-related tabloid fodder from the AP (via NYLawer.com):

David Gest, the estranged husband of Liza Minnelli, asked a judge to set aside his prenuptial agreement with the star, the latest development in their lengthy divorce battle.

Gest's lawyers told State Supreme Court Judge Harold B. Beeler on Friday that Minnelli hid the fact that she was infected with herpes, was an alcoholic and prone to violence. Had Gest known, the lawyers argued, he never would have entered into the prenuptial agreement.

Minnelli's lawyer, Israel Rubin, refused to comment on specific allegations. "This whole thing is ridiculous," he said.

Gest's lawyers asked Beeler to order a trial to determine the validity of the prenuptial agreement.

Minnelli and Gest married March 16, 2002, at a celebrity-studded ceremony with Michael Jackson as best man and Elizabeth Taylor as maid of honor. They separated in July 2003 and filed for divorce later that year.

The prenup request is the latest in a serious of ugly lawsuits (example) between the parties.

[Meredith R. Miller]

September 11, 2006 in In the News | Permalink | TrackBack (0)

Friday, September 8, 2006

A Million Little Refunds

The New York Times reports that a settlement has been reached in the consolidated cases by readers who sued Random House and James Frey when they found out his book A Million Little Pieces was not quite a memoir.  Want your refund?  According to the New York Times, here's what the settlement requires:

To claim a refund, readers who bought a copy of the book on or before Jan. 26 must submit proof of purchase. This will not be limited to a dated receipt however: hardcover buyers, who are entitled to a $23.95 refund, must submit page 163 (chosen at random, according to the source familiar with the negotiations); paperback buyers (entitled to $14.95) must send in the front cover of the book; those who bought the audio book ($34.95) will have to send in a piece of the packaging, and those who bought the e-book, at $9.95 apiece, must send in some proof of purchase.

People making a claim will also have to submit a sworn statement that they would not have bought the book if they knew that certain facts had been embroidered or changed.

Seems like you'd just be getting back the jacket price - no compensation for the time you spent reading the apparently wrenching (and believable?) description of undergoing dental work without Novocaine.

[Meredith R. Miller]

September 8, 2006 in In the News | Permalink | TrackBack (0)

Thursday, September 7, 2006

Contracts Research Canon

Over at Prawfsblawg, where I will be guest blogging for the next few weeks, Matt Bodie (Hofstra / St. Louis) has proposed the idea of Research Canons for different legal subject areas.  He describes the project this way:

Unlike other disciplines, most law academics do not have an advanced degree in "law."  For students pursuing a Ph.D in areas such as economics, history, or social psychology, they must pass comprehensive exams showing that they have a broad knowledge of the most important works in the field.  It is only after comps that students go on to complete their specialized dissertation research.

Legal academia assumes that entry-level candidates and new scholars have done the background research necessary for their area of expertise.  But it is left to the individual to get this knowledge.  Certainly, the J.D. provides a baseline, and mentors are helpful in providing further direction.  But there is nothing akin to comps that sets forth a comprehensive listing for new folks to follow.  Many of us have heard the question, in the AALS interview, in the job talk, or as a new scholar presenting a paper: "Well, of course, you have read the work of Prof. X in this area, right?"  Failure to respond appropriately to this question may raise eyebrows and cast doubt on the scholar's research.

Prawfs recently posted the Canon for Contracts and it would be great if we could add our input to their already growing list of scholarship.

[Miriam Cherry]

September 7, 2006 in Recent Scholarship | Permalink | TrackBack (0)

EULAs in English

Aaa_84 Virtually every human being who has ever used a computer has a contract with Microsoft Corp.  The contract is the End User License Agreement that comes with Windows software.  The EULA is a formidable piece of legal drafting, but (rather like the software it covers) it's not the most user-friendly thing around.

The folks at LINUX Advocate -- whose goal in life seems to be turning MS Windows into a 21st century Betamax -- have come up with an English translation of the EULA.  Interestingly, the language in the license agreement for LINUX is somewhat more understandable than Microsoft's, but you wind up getting much the same remedies:

. . . THERE IS NO WARRANTY FOR THE PROGRAM, TO THE EXTENT PERMITTED BY APPLICABLE LAW. EXCEPT WHEN OTHERWISE STATED IN WRITING THE COPYRIGHT HOLDERS AND/OR OTHER PARTIES PROVIDE THE PROGRAM "AS IS" WITHOUT WARRANTY OF ANY KIND, EITHER EXPRESSED OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. THE ENTIRE RISK AS TO THE QUALITY AND PERFORMANCE OF THE PROGRAM IS WITH YOU. SHOULD THE PROGRAM PROVE DEFECTIVE, YOU ASSUME THE COST OF ALL NECESSARY SERVICING, REPAIR OR CORRECTION.

IN NO EVENT UNLESS REQUIRED BY APPLICABLE LAW OR AGREED TO IN WRITING WILL ANY COPYRIGHT HOLDER, OR ANY OTHER PARTY WHO MAY MODIFY AND/OR REDISTRIBUTE THE PROGRAM AS PERMITTED ABOVE, BE LIABLE TO YOU FOR DAMAGES, INCLUDING ANY GENERAL, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THE USE OR INABILITY TO USE THE PROGRAM (INCLUDING BUT NOT LIMITED TO LOSS OF DATA OR DATA BEING RENDERED INACCURATE OR LOSSES SUSTAINED BY YOU OR THIRD PARTIES OR A FAILURE OF THE PROGRAM TO OPERATE WITH ANY OTHER PROGRAMS), EVEN IF SUCH HOLDER OR OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

[Frank Snyder -- hat tip to InfoWorld]

September 7, 2006 in E-commerce | Permalink | TrackBack (0)

Football Star Sues Insurer

Aaa_82 A new lawsuit by former Denver Broncos star Terrell Davis may raise some interesting issues about insurance companies’ obligations to pay for their clients’ legal representation. Seems that during a party following the Emmy Awards last fall, Davis had an altercation with bouncers at the Hollywood Roosevelt Hotel bar. He says the staff made racially offensive remarks and that he was physically assaulted by two bouncers. He sued the hotel and the bouncers.

To this point, his insurer, Liberty Mutual had nothing to do with this.  But then one of the bouncers cross-claimed against Davis for assault and battery.  An insurer ordinarily has no duty to defend against an intentional tort, but it seems the bouncer for some reason added a negligence count -- although from the description of events it sounds like the bouncers either deliberately attacked Davis or vice-versa.  Liberty Mutual refused to provide coverage, and Davis is suing.

[Frank Snyder]

September 7, 2006 in In the News | Permalink | TrackBack (0)

Where Dickinson's Agent Met Dodds

Bbb_1 Speaking of old contract law chestnuts, how about Dickinson v. Dodds?  In the case, one Dodds made a written offer to one Dickinson, to sell certain dwelling-houses and property at Croft (a village near Darlington in Yorkshire) for £ 800, "[t]his offer to be left open until Friday, 9 o'clock a.m., 12th June 1874."  Before that time expired, Dickinson learned that Dodds was apparently also offering to sell it to one Allan.  Dickinson tried to accept the offer, and his agent Berry finally managed to run Dodds down in the Darlington railway station and hand him the written acceptance two hours before the deadline, at 7:00 a.m. Friday morning.  Dodds refused to sell him the property, saying that he had already sold it to Allan.

The questions for the court were (1) are offers unsupported by consideration revocable at will, even when the offeror has stated that it will be held open for a specific period? and (2) was Dodds's offer somehow revoked before Dickinson delivered the acceptance?  Held:  Yes and yes.  The former ruling became black letter law, but the latter is still a little controversial.

The present Darlington Railway Station, with a fine Victorian clock tower, dates only from 1887, a half-dozen years after the case.  The actual building where Dickinson's agent confronted Dodds is the old station, now known as the "North Road" station, shown in the accompanying picture.  It's now the site of the Darlington Railway Centre and Museum.  The story is that the Stockton & Darlington Railway built the new station because Queen Victoria visited the old one and found it shabby.

[Frank Snyder]

September 7, 2006 in Famous Cases | Permalink | TrackBack (0)

Wednesday, September 6, 2006

Images of New Headley Tobacco Warehouse

Aaa_80 Bbb For those who use the Epstein-Markell-Ponoroff casebook, or another book that teaches New Headley Tobacco Warehouse Co. v. Gentry's Executor, here are two views of the Tobacco Warehouse district in Lexington, Kentucky, taken in 1931, the year before the contract at issue in the case was negotiated.

The case is a "dying offeror" staple.  Gentry executed a lease of property in Lexington to New Headley for a 22-year term at $1,200 a year.  Ten years into the lease, Gentry sent a letter to New Headley, saying that if New Headley built a specified improvement worth at least $25,000 on the property before 1947, he would extend the lease for 22 years from the date the improvement was built.  New Headley made no effort to start work on the improvement before Gentry died in 1945.  New Headley subsequently tried to accept the offer but the executor refused.  The question for the court was whether Gentry's death terminated the offer.  Held:  Yes.  Even though the offer formally gave New Headley until 1947 to accept, it was revocable at any time, and hence was revoked by Gentry's death.

The images are from the Kentuckiana Digital Library, whose site authorizes their use for classroom purposes with the provision that no commercial use is permitted.

[Frank Snyder]

September 6, 2006 in Famous Cases | Permalink | TrackBack (0)

Contracts Prof Weekly Spotlight: Michael Satz

Spotlight_2_6_4_2 Michael Satz (University of Idaho College of Law)
B.A., B.S., Southern Methodist University
J.D., University of Michigan

Michael_satz_2 Michael Satz recently joined the law faculty at the University of Idaho College of Law as an associate professor.  At Idaho, he teaches Contracts, Secured Transactions and Creditor's Rights. 

Professor Satz received a B.A. and B.S. from Southern Methodist University in 1990.  After that, he was a Surface Warfare Officer in the United States Navy, completing two overseas tours of duty in Japan onboard the Amphibious Assault Ships USS San Bernardino (LST-1189) and USS Dubuque (LPD-8). Professor Satz then attended The University of Michigan School of Law, earning his J.D. Cum Laude in 2000. While at Michigan, Professor Satz was an Executive Editor on the Michigan Law Review.

Professor Satz has practiced in both the commercial litigation area and as in-house counsel at a major Japanese auto company. One of the perks of his in-house counsel job was free company cars for all counsel. Professor Satz has made it his mission in life to petition the AALS to encourage member schools to provide free vehicles for all faculty members. “It’s a great perk” says Professor Satz, “and it will go a long way in bridging the generational gap between the professors and the students. For example, can you imagine how much more respect the stodgy Contracts professor will garner from the 1L class when he comes spinning into the parking lot in a shiny new sports car, does a donut skidding directly into a parking spot in reverse, hops out and immediately starts lecturing about the Objective Theory of Contract?” Thus far, the response to Professor Satz’ suggestion from the Torts contingent on the faculty at his law school has been lukewarm, but Professor Satz says “they seem to be coming around, especially when you tell them about all the innovations in safety equipment in new cars today, such as ABS brakes and smart airbags. If I can persuade the auto manufactures to put 1L sensing technology into new cars, we may just get there.”

September 6, 2006 in Contracts Profs Weekly Spotlight | Permalink | TrackBack (0)

Tuesday, September 5, 2006

Visual Aides: Smith v. Boyd and Leonard v. Pepsico

If you teach with Smith v. Boyd, 553 A.2d 131 (1989), you might find this Google Earth image of the property useful (click on the image for a larger view):

Smithvboyd

It really doesn't add anything analytically, but it is a fun visual aide.

Also, if you are teaching with Leonard v. Pepsico, 88 F.Supp. 2d 116 (1999), here are links to the commercials.

[Meredith R. Miller]

September 5, 2006 in Teaching | Permalink | TrackBack (0)

Monday, September 4, 2006

Contract: Saved from Death by Consumer Fraud Statute?

The Seventh Circuit (Easterbrook, Rovner, Evans) recently held that a hotel guest's allegation that the hotel's website misrepresented the room rate was not actionable as consumer fraud but, rather, sounded in breach of contract.

Using the hyatt.com website, Britt Shaw made a reservation for a 3-night hotel stay at the Ararat Park Hyatt in Moscow, Russia. The website established a nightly room rate of $502.  However, the website cautioned that the conversion represented an approximate price based on the recent exchange rates, and that "the price paid at the time of hotel checkout will be of the currency initially quoted and displayed."

Shaw stayed at the hotel for three nights and, upon checkout, his bill was provided in Russian rubles. Shaw paid the bill using his American Express card, which charged him a roughly 3182 rubles for the room, taxes, and other amenities. Shaw’s hotel bill reflected a hotel exchange rate of 32 Russian rubles per United States dollar, whereas the official exchange rate set by the Central Bank of Russia on the date of check-out was 28.01 Russian rubles per dollar. The result: Shaw paid approximately 14% more for his room in U.S. dollars than the rate promised by the website.

Shaw pursued a class action against Hyatt, alleging unjust enrichment and violation of the Illinois Consumer Fraud Act.*  Shaw did not allege breach of contract, maintaining throughout the proceedings that there was no contract between him and Hyatt.  The trial court granted Hyatt's motion to dismiss both claims, and the Seventh Circuit affirmed.

The Seventh Circuit held that there was an express contract between Shaw and Hyatt, and that ultimately resolved both of his claims.  The court held that a breach of a contractual promise, without more, is not actionable under the Consumer Fraud Act.The court wrote:

What plaintiff calls "consumer fraud" or "deception" is simply defendants' failure to fulfill their contractual obligations. Were our courts to accept plaintiff's assertion that promises that go unfulfilled are actionable under the Consumer Fraud Act, consumer plaintiffs could convert any suit for breach of contract into a consumer fraud action. However, it is settled that the Consumer Fraud Act was not intended to apply to every contract dispute or to supplement every breach of contract claim with a redundant remedy. [citation omitted] We believe that a "deceptive act or practice" involves more than the mere fact that a defendant promised something and then failed to do it. That type of "misrepresentation" occurs every time a defendant breaches a contract.

Here's a link to the oral argument, with an enlightening set of questioning concerning why Plaintiff did not allege that Hyatt.com breached an express contract to provide the room at the rate promised on the website.

[*Apparently, the website specified that any disputes would be governed by Illinois law.  Shaw booked the Moscow hotel room while on the internet in London; the parties disputed whether Shaw had established the requisite nexus of contact with Illinois to form a basis for the application of the Consumer Fraud Act to the transaction.]

Shaw v. Hyatt Int'l Corp, __ F.3d __, 2006 WL 2473417 (7th Cir. Aug. 30, 2006). 

[Meredith R. Miller]

September 4, 2006 in E-commerce, Recent Cases | Permalink | TrackBack (0)

Weekly Top Ten

Ssrn_logo_65 The top three slots remain the same in the Weekly Top 10, but a new paper from Barak Richman and Jeffrey Macher debuts with a bullet in the fourth slot.  Following are the top ten most-downloaded new papers from the SSRN Journal of Contract and Commercial Law for the 60 days ending Sunday, September 3, 2006.  (Last week's ranking in parentheses.)

1 (1) Technoconsen(t)sus, Andrea M. Matwyshyn (Florida).

2 (2) The Law and Economics of Contracts, Avery W. Katz (Columbia), Benjamin E. Hermalin (Cal Berkeley-Economics) & Richard Craswell (Stanford).

3 (3) Terms of Use, Mark A. Lemley (Stanford).

4 (-) Transaction Cost Economics: An Assessment of Empirical Research in the Social Sciences, Barak D. Richman (Duke) & Jeffrey Macher (Georgetown-Business).

5 (4) Rise of the Financial Advisers: An Empirical Study of the Division of Professional Fees in Large Bankruptcies, Lynn M. LoPucki & Joseph W. Doherty (UCLA).

6 (7) The Strange Death of Academic Commercial Law, Larry T. Garvin (Ohio State).

7 (8) Bankruptcy, Creditor Protection and Debt Contracts, Stefano Rossi & Nicola Gennaioli (Stockholm-Economics).

8 (5) A Coasean Analysis of Marketing, Eric Goldman (Santa Clara).

9 (6) Between Rights and Contract: Arbitration Agreements and Non-Compete Covenants as a Hybrid Form of Employment Law, Cynthia L. Estlund (NYU).

10 (-) The Use of MTAs to Control Commercialization of Stem Cell Diagnostics and Therapeutics. Sean M. O'Connor (U Washington).

[Frank Snyder]

September 4, 2006 in Recent Scholarship | Permalink | TrackBack (0)

Friday, September 1, 2006

Noncompetes Unlawful in California

California_flag_23 Employee noncompete clauses are unlawful in California, according to a new ruling by the California Court of Appeals.  In Edwards v. Arthur Andersen LLP, the Second District rejected decades of prior decisions -- chiefly in federal courts -- to hold that noncompetes are generally invalid and employees cannot be compelled to sign them as a condition of employment.  The case is noteworthy because the type of restrictions stuck down were the type normally upheld as reasonable:

If you leave the Firm, for eighteen months after release or resignation, you agree not to perform professional services of the type you provided for any client on which you worked during the eighteen months prior to release or resignation. This does not prohibit you from accepting employment with a client.

For twelve months after you leave the Firm, you agree not to solicit (to perform professional services of the type you provided) any client of the office(s) to which you were assigned during the eighteen months preceding release or resignation.

You agree not to solicit away from the Firm any of its professional personnel for eighteen months after release or resignation.

Although the restrictions were narrow enough, the court held:

We conclude a noncompetition agreement between an employee and employer, prohibiting the employee from performing services for certain former clients, is invalid under Business and Professions Code section 16000 unless it falls within the statutory or "trade secret" exceptions to the statute. Such a noncompetition agreement is invalid even if the restraints imposed are narrow and leave a substantial portion of the market open to the employee.

[Frank Snyder]

September 1, 2006 in Recent Cases | Permalink | TrackBack (0)