September 1, 2006
Noncompetes Unlawful in California
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.
August 31, 2006
Taylor v. Caldwell Caribbean Style
A dispute between timeshare owners and a Bahamian resort may raise some interesting issues of impracticability.
Timeshare owners at the Crowne Plaza Golf Resort and Casino in Freeport are complaining that their timeshare points have been frozen and that they have been unable to vacation under the program since the Resort was closed in 2004. The Resort owners closed the Resort—shutting down both golf courses and the casino and throwing 1,300 people out of work—shortly after the place was hit by Hurricane Frances in September 2004. It has not reopened. The suit was filed in July 2006.
Oral Contracts Are Worth the Paper They're Printed On
This is the time of year when we find ourselves drumming into students' heads the idea that "contract" doesn't mean "signed piece of paper" -- that there are such things as oral contracts, even involving vast sums of money. A new dispute out of Las Vegas gives us a great example. As Nova Southeastern's Ronald Brown notes in the linked article, "It is really easier to create an enforceable contract than most people think."
The dispute involves the alleged promise made by the winner of the largest poker jackpot in history to split his $12 million take 50/50 with another man. Sometime Hollywood talent agent Jamie Gold, who beat out some 8,000 contestants, allegedly promised Crispin Leyser before the tournament that Leyser would be entitled to half his potential winnings in exchange for Leyser's services in lining up celebrities to wear clothes advertising one of Gold's clients. Gold denies the deal, claiming a "misunderstanding," but Leyser says he's got a taped message on his answering machine referring to the deal.
An interesting aspect is that such oral deals are apparently not unknown in poker circles -- top players often have deals with backers to split winnings, and they apparently are not always in writing.
[Frank Snyder -- hat tip, Gerry Caplan]
Call for Papers: Business Law in Copenhagen
A thousand years ago, when King Sweyn I Forkbeard (left) and his son Canute the Great founded a little fishing village on a fine harbor in Jutland, they might have thought that one day it would become one of Europe's great cities. But they probably had absolutely no idea that the place, later known as Copenhagen would one day host the International Conference on Business, Law, and Technology, which is scheduled this December 5-7, 2006.
Papers are still being accepted for the conference; the submission deadline is October 20. The organizers have a long list of topics they're interested in, which include Sales of Goods, Electronic Signatures, Contract Law, Consumer Protection, and E-business. Selected papers will be published in a book, Business Law: Present and Emerging Trends.
August 30, 2006
Weekly Top 10
We have a new Number One on this week’s Top 10 -- Andrea Matwyshyn’s new paper on the contract/technology divide, which is getting a lot of notice around the Internet. Following are the top ten most-downloaded new papers from the SSRN Journal of Contract and Commercial Law for the 60 days ending August 27, 2006.
1 (6) Technoconsen(t)sus, Andrea M. Matwyshyn (Florida).
2 (3) The Law and Economics of Contracts, Avery W. Katz (Columbia), Benjamin E. Hermalin (Cal Berkeley-Economics) & Richard Craswell (Stanford).
4 (2) Rise of the Financial Advisers: An Empirical Study of the Division of Professional Fees in Large Bankruptcies, Lynn M. LoPucki & Joseph W. Doherty (UCLA).
5 (4) A Coasean Analysis of Marketing, Eric Goldman (Santa Clara).
6 (7) Between Rights and Contract: Arbitration Agreements and Non-Compete Covenants as a Hybrid Form of Employment Law, Cynthia L. Estlund (NYU).
7 (-) The Strange Death of Academic Commercial Law, Larry T. Garvin (Ohio State).
8 (5) Bankruptcy, Creditor Protection and Debt Contracts, Stefano Rossi & Nicola Gennaioli (Stockholm-Economics).
9 (7) Finding Nemo: Rediscovering the Virtues of Negotiability in the Wake of Enron, Adam Levitin (3rd Circuit).
10 (9) Juries, Judges, and Punitive Damages: Empirical Analyses Using the Civil Justice Survey of State Courts 1992, 1996, and 2001 Data, Michael Heise (Cornell), et al.
Contracts Prof Weekly Spotlight: Nathan Oman
I grew up in Salt Lake City, Utah thinking that lawyers were boring. As an undergraduate I studied political science, philosophy, and economics mainly because I couldn't decide which field I was more interested in. Gradually it became clear to me that the most interesting place where the concerns of these disciplines intersected was in the law. I tested the waters by working as a research assistant for a duo of law professors and got hooked on jurisprudence. Some come to the law for money, power, and prestige. Some come to the law out of a burning sense of outrage at the injustices of the world and a desire to work for their redress. Some come to the law because they have humanities degrees and don't know what else to do with their lives. Oddly enough, I came to the law because I thought that reading law review articles was fun.
After college I worked on the DC staff of Senator Mitch McConnell (R-Ky) while my wife attended graduate school. When she finished her degree, we moved to
After graduating from law school (which included a stint on the Articles Committee of the Harvard Law Review, where even my appetite for reading law review articles flagged at times), we moved to Little Rock, Arkansas, where I clerked for Judge Morris "Buzz" Arnold on the Eighth Circuit Court of Appeals. (Best clerkship ever!) After clerking, I survived two years of litigation and appellate practice with the Washington, DC office of Sidley Austin LLP before running the gauntlet of the "meat market." I now teach contracts and commercial law at William & Mary
For the present, my primary research interest in contract law is the relationship between economic and moral theories of contract. My own conclusion is that neither approach adequately captures the law of contracts, which contains some rules and structures that are best explained by one approach and some rules and structures that are best explained by the other approach. My ambition is to show that despite this heterogeneity, contract law should be understood as more than the largely random result of historical and political accidents but actually has a relatively coherent normative structure. Hopefully, the products of this ambition will be coming soon to a law review near you. (You can download my work thus far here).
When not working on contracts, I have a scholarly interest in law and religion. My focus here is less on traditional questions of church and state than on understanding how people have used religion as a lens through which to understand and experience the law. I am currently researching an article comparing the early legal codes of commonwealth America's two indigenous theocracies -- the early Puritan of Massachusetts Bay and the mid-19th century Mormon "State of Deseret" in the American West -- in an attempt to understand the very different ways in which competing theologies are
manifested in the law.
In addition to the law, I enjoy spending time with my wife and 4-year-old son. I also like to garden, run and play chess (badly). I have long felt that I had an inner banjo player, but I feared to let him out because I was convinced that he basically sucked. I recently began learning the banjo and my fears have proven to be fully justified.
[Ed. note: Nathan also manages to contribute rather admirably to the blog over at Concurring Opinions].
For Sale: Stuyvesant Town and Peter Cooper Village
The N.Y. Times reports that MetLife has engaged a real estate broker to start the bidding process for a sale of Stuyvesant Town and Peter Cooper Village. The 110-Building site rests on 80 acres of property along First Avenue between 14th and 23rd Streets in Manhattan. You don’t usually hear about acres when you hear about Manhattan real estate sales – the normal measurement being the square foot. But, with a target price of nearly $5 billion, the sale would be “the biggest deal for a single American property in modern times.”
Apparently there is interest in making the purchase:
Behind the scenes, the sale has already drawn interest from dozens of prospective buyers, including New York’s top real estate families, pension funds, international investment banks and investors from Dubai, according to real estate executives, even though the marketing book will not be released to bidders until next week.
But, the sale raises concerns about the availability of affordable housing in Manhattan:
The sale would only add to the seismic cultural shifts already under way in New York City and especially in Manhattan, where soaring housing costs have made the borough increasingly inhospitable to working-class and middle-class residents. It would be another challenge to Mayor Michael Bloomberg’s effort to stabilize and expand the number of affordable apartments in the city.
MetLife has reserved the right not to sell if the offers come in too low, but MetLife is confident that “the current market conditions are very favorable.” Indeed, the article reports:
As one executive involved in the sale put it, “This is the ego dream of the world: 80 acres, 110 buildings, 11,000 apartments, covering 10 city blocks in Manhattan.”
[Meredith R. Miller]
August 27, 2006
Pre-Nuptial Negotiations: Re-writing Religious Tradition?
Civil marriage is often described as a contract, though the description seems more metaphoric than legal. However, some religious traditions do actually include the signing of a marriage contract that is intended to bind the parties. For example, it is Jewish tradition that the marrying couple signs a Ketubah, which is a contract that sets forth their responsibilities to one another. There are varying texts, ranging from very traditional to, for example, versions rewritten to express more egalitarian beliefs.
Today, the AP reports (via the Grand Forks Herald) on American Muslim women who negotiate the traditional Muslim marriage contract to “help them assert rights under religious law that long have been played down by men.” An excerpt from the article:
…. Advocates contend their approach is well within Islamic law, even though skeptics say the interpretation is too influenced by Western thinking.
The contract is especially useful in the
United States, where Muslims come from a variety of ethnic backgrounds and follow different customs and levels of observance. The document can accommodate views ranging from liberal to conservative.
Karamah, an organization of Muslim women lawyers based in
Washington, is developing a "model" marriage contract that can be adjusted to meet the requirements of family law in different parts of the country, said Azizah al-Hibri, a founder of the group, whose name means "dignity" in Arabic. In the United States, civil law governs divorce, but judges have taken Muslim marriage contracts into consideration, sometimes viewing them as prenuptial agreements.
Al-Hibri, a law professor at the University of Richmond, Va., said the contracts also help couples prepare for the challenges of married life.
"Couples need to define their relationship as they enter the marriage, so that they do not get disillusioned later," al-Hibri said. "They need a meeting of the minds on what their family life will look like. The contract helps them do that by discussing the issues up front."
[Meredith R. Miller]