May 5, 2006
Two New Contract Suits Bite the Dog Whisperer
Cesar Millan has a prodigious ability to calm, train or re-condition even the most difficult of canines. On the National Geographic Channel's show -- The Dog Whisperer -- Mr. Millan needs only a half hour television slot to mesmerize the most aggressive dogs into submission. However, of the air, Mr. Millan has been bitten by two separate breach of contract actions, both filed this week. One was brought by his former publicist, claiming breach of contract, copyright infringement and breach of confidential relationship, based on the allegation that the publicist originally conceived of the name "Dog Whisperer" for Millan. The second action was brought by an owner who claims his dog, Gator, suffered serious injuries while in Mr. Millan's care. In that suit, Gator's owner seeks more than $25,000 in damages based on, among other theories, breach of contract, fraud, animal cruelty and intentional infliction of emotional distress.
[Meredith R. Miller]
Copyright and Contract Boilerplate
We recently mentioned a case in which an insurer was found liable for copyright violation for taking boilerplate language from another company's contract. Over at the Conglomerate Blog, Gordon Smith (Wisconsin) is leading an interesting discussion about the issue today. Although the discussion is focused on litigation documents, the same arguments generally apply to contracts.
Mentioned in the discussion is a good piece by Northern Kentucky's Davida Isaacs, The Highest Form of Flattery? Application of the Fair Use Defense against Copyright Claims for Unauthorized Appropriation of Litigation Documents, forthcoming in the Missouri Law Review. Many of the cases she discusses deal with claims of copyright in contract boilerplate.
Try to Control Your Excitement
With hotel labor problems still hitting San Francisco, our beloved Mother Ship, the Association of American Law Schools, has decided to move its Annual Meeting from the City By The Bay. After a great deal of work and effort, they've managed to come up with an alternative: Washington, D.C.!
This was no easy task. "The AALS staff," says the official release, "has . . . for worked diligently and successfully, to find another venue that would not only accommodate the Annual Meeting, but accommodate it in an excellent manner that will assure easy access for registrants to the many top quality programs that will be offered."
That diligence apparently included exploring the possibilities of going somewhere else, but it turns out that it is just too difficult to put on conventions in other possible venues, like Los Angeles, New York, San Diego, Houston, Dallas, Chicago, Seattle, Las Vegas, Atlantic City, Philadelphia, Boston, Detroit, Cleveland, St. Louis, Kansas City, Denver, Miami, Phoenix, Tampa, Nashville . . . . According to the release:
The AALS also considered other cities, but there are major difficulties in moving a meeting to a new city; it would take months of planning and investigation to assure that all events could fit in the meeting space, and to negotiate contracts with hotels unfamiliar with our needs. It is no exaggeration to say that those difficulties are almost insurmountable.
Want to bet it's going to be at the Marriott Wardman Park (top left)? We're extremely lucky that for some reason it's always available when everything else is sold out.
Music Clips: Rock and Roll Contracts
Wrapped up in a rock 'n' roll contract
Lots of paper I had to sign lots of times
Man told me not to worry 'bout the business
Just keep on poppin' those hits
Badfinger, Rock 'N' Roll Contract
Album: Say No More (1981)
Badfinger founder Peter Ham committed suicide in 1975, blaming contractual disputes with his manager.
Insurance and Incomplete Contracts
The literature on incomplete contracts seems to grow daily. The problem of parties who cannot foresee all the possible events that might occur during their relationship arises in all forms of contracting, but is especially significant in insurance contracts, where the whole point is to allocate risks of unexpected future events.
In a new paper, Insuring the Uninsurable: Brokers and Incomplete Insurance Contracts, Neil A. Doherty and Alexander Muermann of Penn's Insurance & Risk Management Department look at the way markets try to account for this risk -- in which the broker plays a prominent role. Here's the abstract:
How do markets spread risk when events are unknown or unknowable and where not anticipated in an insurance contract? While the policyholder can “hold up” the insurer for extra contractual payments, the continuing gains from trade on a single contract are often too small to yield useful coverage. By acting as a repository of the reputations of the parties, we show the brokers provide a coordinating mechanism to leverage the collective hold up power of policyholders. This extends both the degree of implicit and explicit coverage. The role is reflected in the terms of broker engagement, specifically in the ownership by the broker of the renewal rights. Finally, we argue that brokers can be motivated to play this role when they receive commissions that are contingent on insurer profits. This last feature questions a recent, well publicized, attack on broker compensation by New York attorney general, Elliot Spitzer.
Treating Bidders Fairly
The case of Southside Construction (London) Limited v. 734133 Ontario Limited, 45 C.L.R. (3d) 237 (Ont. Super. Ct. 2005), involved an owner who put a job out for bid but failed to specify a preference for local, unionized contractors. The Ontario Superior Court held that the owner violated its obligation to treat all bidders fairly when it chose a higher bidder on the ground that it was local and union, even though the owner had included a clause specifically reserving the right to make award to other than the lowest bidder. Kenneth Crofoot of Toronto’s Goodmans LLP has a brief rundown of the decision here.
Help With Contract Damages
It's springtime, which means that young people's fancies are turning to how to calculate breach of contract damages on their Contracts II final exams. It's not hard to see why they're baffled, since it's hard to find even two contracts profs who think about damages exactly the same way.
Help is on the way, though, at least for you visual learners. Chapman contracts prof Tom Bell has a great flowchart he's prepared for his students, and which you may find helpful. Keep in mind, though, that the chart may represent Bell's take on certain disputed issues (such as whether reliance and expectation damages are cumulative), so if your teacher thinks the rule is different, be careful. Still, it's the best damages flowchart I've run across.
Radio City Sues Over $4 Million TV
How big is a $4 million TV? Likely very big -- at least, Radio City Music Hall boasted that it was the "largest indoor, high-definition LED screen in the country." The giant TV didn't work out, however. Radio City has sued the Belgium manufacturer of the video screen for breach of contract, calling the LED video screen an "unmitigated disaster." Radio City alleges that the screen doesn't function properly. Radio City seeks the roughly $4 million it paid for the screen, as well as an additional $1.8 million it paid trying to install it.
[Meredith R. Miller]
May 4, 2006
Another Danger of Boilerplate
Lawyers are used to treating boilerplate as a kind of public good, swiping good language from agreements whenever they can. But they may not want to be quite so free. That’s the lesson of a recent decision discussed in Insurer’s Use of Narrative Policy Language From Another Insurer’s Policies Held to be Copyright Infringement, by Martin J. Bishop of Foley Lardner LLP in Chicago. The title is self-explanatory.
Wurgler Joins NYU
New York University has announced that Florencia Marotta-Wurgler will become an assistant professor of law at NYU in September. She is currently a fellow at the Center for Law and Business. Her scholarship and teaching interests include commercial law, contracts, corporate law, corporate finance and law and economics.
Her recent papers include Competition and the Quality of Standard Form Contracts: An Empirical Analysis of Software License Agreements, and Are 'Pay Now, Terms Later' Contracts Worse for Buyers? Evidence from Software License Agreements.
May 3, 2006
Lipshaw on Movsesian on Formalism
Yesterday we mentioned Mark Movsesian’s new paper, Formalism in American Contract Law: Classical and Contemporary. Tulane's Jeff Lipshaw (left) offers an analysis and response to Movsesian’s recent work in Contract Formalism, Scientism, and the M-Word: A Short Reaction to Professor Movsesian's Under-Theorization Thesis. Here’s the abstract:
In two recent essays, Professor Mark L. Movsesian has suggested that a significant difference between the classical formalism of Williston and the formalism of contemporary contracts scholars is the extent to which the earlier work was under-theorized. I want to suggest an area in which there is a consistency to the under-theorization between the classical and the modern contract formalists: the extent to which theorization in anything that approaches metaphysics is, and has been, consistently anathema. Modern theorizing is overwhelmingly of a particular form: dispassionate social science inquiry into how we tick, rarely questioned but implicit norms shaped solely around the utilitarian, if not material, consequence of choices, all seasoned by the occasional post-modern expression of futility and desperation around the indeterminacy of moral issues. It does not address the way we might think about solving the problem outside of the formal models (whether classically or economically based) of the law.
In a brief response to Professor Movsesian, I encourage debating over contract law not just in the context of pragmatics of instrumental reason, but as part of a broader inquiry into and struggle with the ends to which any endeavor is directed.
Drake Prof's Opera Performed
Folks in Des Moines will see a different side of Drake contracts prof Cathy Lesser Mansfield, when music from her opera The Sparks Fly Upward is performed by the Des Moines Choral Society and a string quartet on Saturday, May 13. Mansfield's opera (the title is from Job 5:7, "Man is born unto trouble as the sparks fly upward") centers on the experiences of a Jewish family fleeing the Holocaust.
Mansfield wrote the first version of the piece while still in high school, and it earned a scholarship to the Cincinnati Conservatory, before getting detoured to NYU and law school. The Des Moines performance is part of a concert honoring mothers.
We Don't Pay Any Attention to the Rankings, Either
We're shocked -- shocked! -- but it appears that law schools are taking the widely reviled U.S. News law-school rankings very seriously. At the University of Houston, former dean Nancy Rappaport is quoted in the National Law Journal as saying that the school's 20-point slide in the rankings since 2002 played a role in her departure. More deans, says the Journal, are feeling the heat.
Whole Foods Tries to Duck Contract Skirmish Based on its Foie Gras Policy
As you may have heard, Chicago has banned the sale of foie gras (French for fattened duck liver). Momentum is apparently gaining for similar legislation in Philadelphia. Proponents of the legislation want to save the ducks from the cruelty of force feeding. Opponents believe the government shouldn’t tell people what they can eat. Whole Foods, the large "natural foods" supermarket chain, sides with the ducks: as a matter of policy, it doesn’t sell foie gras. In fact, it won’t do business with any company that processes or distributes foie gras. The New York Times reports that this position has found Whole Foods in a bit of a legal skirmish.
Grimaud Farms sells ducks to Whole Foods. Grimaud also happens to process and distribute foie gras for Sonoma Foie Gras.
Whole Foods to Grimaud: we will not continue to do business you unless you terminate your relationship with Sonoma Foie Gras.
Grimaud to Sonoma Foie Gras: Whole Foods is putting the pressure on us, we have to terminate our contract with you at the end of this month.
The Result: Sonoma Foie Gras is suing Whole Foods for intentional interference with contract and seeks compensatory and punitive damages.
Apparently a motion to dismiss is pending, and will be heard on Friday.
[Meredith R. Miller]
May 2, 2006
It didn't get as much publicity as, say, Terrell Owens leaving the Philadelphia Eagles for the Dallas Cowboys, but the Law Professor Blog Network has switched sponsors. Here at ContractsProf Blog we have considerable affection for our old sponsor, Lexis/Nexis, but (as Cowboys owner Jerry Jones would doubtless say) bidness is bidness. We're delighted to have Thomson-West-Foundation on board as our exclusive new sponsor.
We want to make it clear, however, that we will never bow to pressure from a sponsor to slant our coverage of the issues or favor its interests, unless the sponsor really makes it worth our while.
Formalism, Classic and Contemporary
The term "formalism" covers a multitude of sins. The "legal science" of C. C. Langdell has little obvious relationship to the practical formalism of transactional lawyers and clients, or to the economic analysis used by many of those who are called "formalists" today. In an interesting new paper, Mark Movsesian (Hofstra) follows up on his earlier work on Samuel Williston to examine differences between the old and the new strands. The paper is Formalism in American Contract Law: Classical and Contemporary, forthcoming in Ius Gentium. Here's the abstract:
This essay compares classical and contemporary formalism in American contract law. Using the work of Samuel Williston as an example, it argues that there are some unappreciated similarities between the two types of formalism, but also one major difference: compared to contemporary formalism, classical formalism was dramatically undertheorized. Given what they saw as their project, the classicists’ lack of interest in theory is understandable. Unlike today’s legal academics, classicists did not see themselves primarily as members of the university world. They thought of themselves primarily as lawyers and directed their scholarship primarily towards the profession. More than anything else, the difference between classical and contemporary formalism can be explained by the changing self-image of the American legal academy.
Who Decides Contract Enforceability?
When an allegedly unenforceable contract contains an arbitration clause, who gets to decide the question of enforceability, the arbitrator or a court? The U.S. Supreme Court’s latest whack at that particular legal piñata is Buckeye Check Cashing, Inc. v. Cardegna, 126 S. Ct. 1204 (2006), decided in late February. In the aptly named Who Determines the Enforceability of an Agreement Containing an Arbitration Clause?, Barry M. Heller and John J. Dwyer of DLA Piper Rudnick Gray Carey in Baltimore discuss Buckeye and its implications.
Class Action Against U-Haul Moved Out of Court
Judge Diamond of the Eastern District of Pennsylvania has “put the brakes” on a consumer class action against U-Haul based on a breach of contract theory. The named plaintiff, Edward Ritti, was told on the morning of his scheduled move that U-Haul was unable to provide him with the truck he had reserved on the phone a few days earlier. When Ritti discovered that he was not alone in this experience, he filed a consumer class action against U-Haul. The proposed class was to consist of “all persons in the United States who reserved rental trucks or trailers from U-Haul for specific dates, received written confirmations of their agreements with U-Haul, did not receive trucks or trailers from U-Haul on the specific dates promised, and who were damaged thereby.”
The court recently denied class certification, however, holding that Ritti’s claim is not typical of the class because it is premised on the specific details of Ritti’s own interactions with U-Haul representatives. The court wrote:
There is no single rental agreement here. Rather, like Ritti himself, each class member will base his claim on a unique contract comprising terms offered and accepted when the Class member met with, spoke to, or electronically communicated with U-Haul. Moreover, the circumstances relating to each purported breach necessarily differ and so trigger different defenses. In these circumstances, I am compelled to conclude that plaintiff is not typical of the purported class and that common issues of law and fact do not predominate.
Plaintiffs’ attorneys argued that the company’s written confirmations are "standard, boilerplate, computer-generated forms" and that they "contain the essential terms of the parties’ agreements." Therefore, they insisted that there was “no need to inquire into any oral conversations that customers may have had with U-Haul.” However, the court agreed with U-Haul, holding that, because Ritti had testified about his telephone and email communications with U-Haul to make his reservation, Ritt’s contract was unique to him and he could not satisfy the typicality requirements of FRCP 23(a).
The focus nearly always seems to be on the hurdles to certification of the “mass tort” class action. Given that these were boilerplate contracts, it seems that certification of the “mass breach of contract action” likewise faces insuperable odds.
[Meredith R. Miller]
May 1, 2006
For the next few weeks, I will also be guest-blogging over at Concurring Opinions. I’ll be writing about employment topics, business topics, and other topics in addition to the usual contracts fare. Feel free to check it out and add comments!
Leonard v. Pepsico Redux
Granted, this story has nothing to do with either advertising or purported offers. But the subject matter of the contract, i.e. fighter planes, is certainly the same. This news report tells the story of a Chinese businessman who bid on, and won, a fighter plane as part of an eBay auction. His winning bid was approximately $25,000. Although the businessman is apparently claiming that the plane will be used merely to decorate his office, there is some question about whether the plane can be exported.
[Miriam Cherry / Hat-Tip: Kimberly Engel]