ContractsProf Blog

Editor: D. A. Jeremy Telman
Valparaiso Univ. Law School

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Saturday, March 10, 2007

Houston, We Have a Mistake

Here's an interesting "mistake" case about some overpayments in the Houston school district (full story from the AP here):

The school district that runs the nation's largest merit pay program gave oversized bonuses to nearly 100 teachers and is asking them to give it back. The president of Houston's largest teachers' union is telling members not to return the overpayments, which range from $62.50 to $2,790.

A total of almost $75,000 was overpaid because a computer program mistakenly calculated the bonuses of part-time personnel as if they were full-time employees, according to the Houston Independent School District. Less than 1 percent of teachers were affected, the district said.

Gayle Fallon, president of the Houston Federation of Teachers, said the district can't force the 99 teachers to sign forms authorizing it to deduct the money from their paychecks, and promised legal action if it attempts to do so.

"If it's the district's error, then the district should bear the loss," she said.

District spokesman Terry Abbott, however, said the money must be repaid.

[Miriam A. Cherry]

March 10, 2007 in In the News | Permalink | TrackBack (0)

Friday, March 9, 2007

Limerick of the Week

I know I'm a bit ahead of schedule, but I will be traveling on Monday and unable to post.

The best scenarios out there for explaining the doctrine of restitution are provided, IMHO, by Seinfeld and The Incredibles.  In a late Seinfeld episode, the Elaine character, suffering from back pain, offers to give anything to anyone who could relieve her of the pain.  Kramer grabs Elain's head, and as she objects, proceeds to twist it until her neck cracks.  Elaine feels immediate relief and thanks Kramer, at which point he demands payment for his services.  In my book, he was an officious intermeddler who deserved no payment for his services.  In any case, Elaine's pain soon returned with a vengeance.  But Elaine didn't ask my advice.  I believe the dispute was settled by Newman.

The Incredibles provides two illustrations of the doctrine.  In the first, Mr. Incredible saves the life of a suicide, but in so doing causes some bodily harm to the man.  The would-be suicide then files suit for damages, and the improbable success of this suit is then the vehicle for the film's premise -- a world in which plaintiffs' attorneys destroy the entire culture of the superheroes.  But if Mr. Incredible were simply in the habit of demanding payment for his good deeds, he would have a slam dunk defense, just as a doctor who causes some injuries in reviving an unconscious patient could not be sued for assault. Inded, rather than being sued, Mr. Incredible would likely succeed on a restitution claim.

In the second, Edna Mode, having prepared a new supersuit for Mr. Incredible, prepares matching clothing for the rest of the family.   Mr. Incredible's wife, Helen (aka Elastigirl), at first expresses shock and outrage that Edna would make such a presumption, but then, for reasons that need not concern us here, ends up using Edna's supersuits.  This may well illustrate ratification, but it can also be a basis for a good discussion of restitution. 

Alas, I have yet to find a casebook that includes discussions of these scenarios, perhaps because Newman does not publish his opinions and it is not clear whether Helen paid Edna for the supersuits or if Edna needed to bring suit to collect.  So, I am left teaching the Pelo case, which is not nearly as entertaining. 

Credit Bureau Enterprises, Inc. v. Pelo

Does the doctrine of restitution
Provide a fair resolution?
It keeps doctors secure
When consent is obscure
And thus prevents self-execution.

[Jeremy Telman]

March 9, 2007 in Famous Cases, Limericks, Teaching | Permalink | Comments (0) | TrackBack (0)

Thursday, March 8, 2007

Gordley from Boalt to Tulane

Law school rankings and faculty movement blog master Brian Leiter reports: "James Gordley, one of the country's leading authorities in comparative law and contracts at Boalt Hall School of Law at the University of California at Berkeley, has accepted a Chair at Tulane Law School, to start next fall.  That's a huge coup for Tulane!"

Indeed, it is.  Gordley's The Philosophical Origins of Modern Contract Doctrine (Oxford 1991) should be on every Contracts professor's "must read" list.  Alas, it is unavailable for purchase except from used book dealers.  Those unable to locate a copy may have to satisfy themselves with his new book: The Foundations of Private Law: Property, Tort, Contract, Unjust Enrichment (Oxford 2006).  While not as contracts-centric as its predecessor, Gordley's new book is available from the publisher and from online commercial bookstores, including Amazon and Barnes & Noble.

[Keith A. Rowley]

March 8, 2007 in Contract Profs | Permalink | TrackBack (0)

Wednesday, March 7, 2007

Just Doing Business or Tortious Interference?

800pxnyscourtofappeals1jpgYou can only keep Contracts and Torts separate for so long… This month, New York’s highest court will hear oral argument on a question certified by the Second Circuit in White Plains Coat & Apron Co. v. Cintas Corp. The case raises an interesting question about what X Corporation may permissibly do to solicit the clients of Z Corporation when the corporations sell the same service but X Corporation has no existing relationships with the solicited clients.

Here are the facts: White Plains Coat & Apron Co. (WPL) rents napkins, tablecloths and other “laundered articles” to bars and restaurants. Generally, using a form contract, WPL enters into 5-year exclusive deals to provide customers with the laundered linens. Cintas Corp. (Cintas) rents, among other items, similar linen products as WPL. WPL claims that Cintas tortiously interfered with WPL’s existing linen rental contracts when Cintas sales representatives intentionally solicited and induced dozens of WPL customers to breach agreements with WPL and enter into agreements with Cintas.

Cintas moved for summary judgment on the age old theory: “that’s business.” In legalspeak, Cintas asserted the economic interest defense – which, if proved, requires WPL to demonstrate malice or illegality in order to establish the tortious interference claim. WPL’s response: the economic interest defense does not apply because Cintas did not have any existing relationships with any of WPL’s customers and the best Cintas can claim is a general economic interest.

The district court granted Cintas summary judgment in an oral decision, reasoning that Cintas had “a legitimate economic interest as a competitor to go sell or rent the linens.” On appeal, the Second Circuit certified the following question to the New York State Court of Appeals:

Does a generalized economic interest in soliciting business for profit constitute a defense to a claim of tortious interference with an existing contract for an alleged tortfeasor with no previous economic relationship with the breaching party?

In other words, does Cintas’ general economic interest in soliciting WPL’s clients allow Cintas to assert the economic interest defense to tortious intereference? If so, WPL would be required to show that Cintas acted with malice.

New York precedent does not provide coherent guidance. The economic interest defense allows a third party to procure a breach of contract if that third party is exercising an “equal or superior right” to the party alleging the interference. What constitutes an “equal or superior right” to trigger this defense? Is it enough that the businesses sell the same products? Or, must Cintas allege a specific economic interest in these clients? What would form the basis of that specific interest?

White Plains Coat & Apron Co. v. Cintas Corp.

[Meredith R. Miller]

March 7, 2007 in Recent Cases | Permalink | TrackBack (0)

Montana Looking for Visitor

Per Scott Burnham (Montana):  If you are interested in teaching contracts at The University of Montana for the 2007-2008 school year, contact Associate Dean Fritz Snyder

[Miriam Cherry]

March 7, 2007 in Help Wanted | Permalink | TrackBack (0)

Implied Warranty of Merchantability

We just studied this warranty in my sales class, and this morning I got to contemplate whether and how the concept applied to Trader Joe's brand toilet paper.

[Miriam Cherry]

March 7, 2007 in True Contracts | Permalink | TrackBack (0)

I Am Shocked, Shocked to Learn of Payola

Adelstein But it seems to be true.  According to Wikipedia, "payola" is a practice whereby record companies pay radio stations to play specified songs.  The practice is illegal if the payments are undislosed.(see 47 U.S.C.§ 317).  Apparently, this practice is quite widespread and was going on even before I got grounded for playing my Kiss records too loudly (and spitting fake blook on our new shag carpeting).  Accordingly, the reason you cannot get that Milli Vanilli song out of your head may not be its inherent tunefulness and their extraordinary vocal talent.  It may be that some record label paid the radio station to play the same song over and over until you danced yourself into a coma and awoke to think that you actually enjoyed it.

Although nobody is admitting any wrongdoing of course, four radio broadcast companies, Clear Channel Communications Inc., CBS Radio, Entercom Communications Corp. and Citadel Broadcasting Corp., have tentatively agreed to a settlement with the FCC.  According to media reports (like this one), the radio companies will pay $12.5 million and reserve 8.400 half-hour segments of air time for independent artists in order to counteract the effects of "payola."

Who really benefits from this deal?  FCC Commissioner Jonathan Adelstein (pictured above), that's who!  Fox News reports that Adelstein is himself an amateur musician and "has been in the forefront of the payola fight."  According to the AP, Adelstein complains that "payola gets in the way of authenticity because money drives the music, not its quality."  Uh-huh.  Very nice, Mr. Boo-Hoo, the radio stations won't play my indie band's music.  He'll change his tune when we are all forced to listen to the latest single from Johny A and the Commissioners.

[Jeremy Telman]

March 7, 2007 in In the News | Permalink | Comments (0) | TrackBack (0)

Monday, March 5, 2007

Limerick of the Week

As Frank Snyder put it in the early days of this Blog:

[On] December 2, 1980, the Missouri Court of Appeals decided Katz v. Danny Dare, Inc.,  610 S.W.2d 121 (Mo. Ct. App.1980), a popular casebook follow-up to Feinberg v. Pfeiffer Co. in the promissory estoppel part of the course.  In the case, the president of the company wanted to get his brother-in-law to resign instead of having to fire him (thus ticking off his sister) so he promised him a pension.  After the man retired, the company reneged on the promise, claiming that there was no consideration for the promise because the employee would have been fired anyway.  The court's holding -- that there was no consideration but that there was reliance -- is just off base enough to make for great class discussion.

And also off-base enough to inspire a Limerick:

Katz v. Danny Dare

Shopmaker could have fired Katz.
Instead, they held family chats.
Now a pension is due,
Though Katz' work days aren't through.
Estoppel here seems a bit bats.

[Jeremy Telman]

March 5, 2007 in Famous Cases, Limericks, Teaching | Permalink | Comments (0) | TrackBack (0)