May 2, 2008
The CISG: The Rodney Dangerfield of Treaties
In their new case comment, All Quiet on the CISG Front: Guiliani v. Invar Manufacturing, the Battle of the Forms, and the Elusive Concept of Terminus Fixus, James M. Klotz, Peter Mazzacano and friend of the Blog, Antonin I. Pribetic argue that the CISG gets no respect, no respect at all. Not even in Canada! Here's the abstract from SSRN:
Since Canada adopted the U.N. Convention on the International Sale of Goods (the "CISG") in 1992, international sales practitioners have been patiently waiting for a corpus of Canadian case law to develop. The slow pace of development of case law has been due, in large part, to the failure of litigants and judges to recognize that the CISG is the applicable law in numerous international contract disputes involving the sale of goods. The latest example, the recently reported case of Guiliani v. Invar Manufacturing is a further manifestation of this failure. Not only is this case the latest disappointment in Canadian CISG jurisprudence, the case also begs additional questions: When is contract formation complete? At what point does the "battle of the forms" end, and contract consummation begin? Finally, is there a specific point at which the contract is formed, or is the idea of terminus fixus in contracts an elusive goal? This Case Comment considers these questions within the broader context of the failure in Canadian jurisprudence to give the CISG its day in court.
HT: Antonin Pribetic!
The General Services Administration: A Victim of "Terrorism"
According to the Wall Street Journal (see story "The Ousting of Lurita Doan"), Lurita Doan (pictured), as chief of the General Services Administration, oversaw "tens of billions of dollars in government contracts" with the help of inspectors general. In her two-year tenure as GSA chief, Doan generated a lot of controversy.
In 2006, frustrated with oversight by those inspectors general, Doan proposed to cut the budget of the inspector general's office by $5 million. Doan claimed that she was going after wasteful government spending, despite the fact that the office reported that its oversight had saved the government $1 billion over the previous two years through its watchdog efforts with respect to government contracts. The Washington Post obtained a copy of notes from a GSA staff meeting in which she chided the inspectors general as terrorists: "There are two kinds of terrorism in the US: the external kind; and, internally, the IGs have terrorized the Regional Administrators,"
In January 2007, Doan admitted she made a "mistake" in awarding a no-bid contract to a friend.
In March, 2007, the House Committee on Oversight and Government Reform initiated investigations into Ms. Doan's conduct that may have violated the Hatch Act, which prohibits partisan campaign activities on federal property, when she allegedly directed GSA administrators to "help our [Republican] candidates" in a teleconference with one of Karl Rove's deputies on the line.
A full catalog of Washington Post stories covering Doan's career in public service is available here.
This week, Doan finally resigned from the GSA at the request of the White House. Heckuva job, Doanie.
May 1, 2008
New Topical Category: Limericks
Thanks to Joe Hodnicki of the Law Professors Blog Network and to Frank Snyder, whose limitless indulgence permits me to post here, we now have a new topical category for the Limericks fans out there. It has not yet been fully populated, but I hope to do so over the next few weeks. Then, those of you who want to gather the full collection of Limericks for Lawyers can do so by clicking on "Limericks" in our Topical Archive. You can have a look at what's there now here.
April 30, 2008
WSJ: Meet the New Boss
When The News Corporation bought Dow Jones & Company, publisher of the Wall Street Journal, the Bancroft family, which held a controlling interest in Dow Jones, put up a fight in an attempt to protect the Journal's independence. The News Corporation is controlled by Rupert Murdoch (pictured), who is reputed to have "a history of bending news coverage to suit his views," according to today's New York Times. In order to protect the paper, the Bancrofts insisted upon the creation of a special oversight committee with the power to block the firing or hiring of the Journal's managing editor.
Last week, the Times reported that Marcus Brauchli, the Journal's managing editor, was resigning, just four months after Murdoch took control of the paper. The special oversight committee has no jurisdiction over resignations, but it found that Brauchli had been effectively forced to resign and thus that Brauchli was removed from his position in violation of both "the letter and the spirit of the agreement."
The committee recognizes that Mr Brauchli cannot be "unresigned," and is therefore simply stressing its intention to play a role in selecting his replacement. According to the Times, the committee's chairman, Thomas J. Bray, said that Brauchli did not believe that the News Corporation had compromised the integrity or independence of the Journal. Still, the Times reported that Brauchli was frustrated by the perception (at least) that he was not truly in control of the paper he ostensibly led.
April 29, 2008
Limerick of the Week: Gorton v. Doty
After a long hiatus from Limerick posting, I have decided to share with the blog's readership a selection from Volume II of my collection of Limericks for Lawyers. Volume II summarizes cases covered in my Business Associations course, but many of the cases for that course raise contractual issues, so I figure that's a sufficient hook to permit me to post them here.
I teach the course using Klein, Ramseyer and Bainbridge's casebook, so those of you familiar with that book will know the cases. Volume I of the Limericks for Lawyers series was based on my first-year contracts course, in which I used Knapp, Crystal and Prince's casebook. For the coming year, I am switching to the Conracts: Law in Action book, which means new cases, and yes, new contracts Limericks coming in the Fall. This is not a knock on the Knapp book, of course, which I have enjoyed using. I just need to use some new materials so as to awaken from my dogmatic slumbers.
So, without further ado. The first case I teach in Business Associations is Gorton v. Doty, in which a high school teacher (Doty) is repaid for her patriot efforts on behalf of her school (Soda Springs) football team with a tort claim. She loaned her car to Coach Garst so that he could drive the team to a game. The Gorton boy was injured when Coach Garst got into an accident, but Ms. Doty was held liable as the principal since the court found that she had effectively made Coach Garst her agent by conditioning the loan of her car on his agreement to be the sole driver.
Gorton v. Doty
The court made Ms. Doty the heavy
When Coach Garst demolished her Chevy.
When Soda Springs lost the game,
Coach accepted the blame,
But the principal pays the tort levy.
Girls Gone Litigious?!?
What do you get when you cross Ashley Alexandra Dupre, the woman with whom former New York Governor Elliot Spitzer allegedly had some very expensive private encounters, with the Girls Gone Wild franchise?
a. A law suit.
b. A perfect storm for the blogarazzi.
c. A much-visited post on this blog.
d. All of the above.
If you guessed d, you may be right. Time will tell if c is a winner.
In any case, Comcast.net news reports that Ms. Dupre is seeking $10 million in damages from Girls Gone Wild and the mastermind behind it, Joe Francis, pictured above. The ever-enterprising Mr. Francis reportedly offered Ms. Dupre $1 million to appear in one of his videos but then rescinded the offer when he learned that he already had footage of the pre-Spitzer Ms. Dupre. Francis claims that Dupre spent a week on a Girls Gone Wild bus and made seven Girls Gone Wild videos. The eleemosynary urge is strong in Mr. Francis: after their collaboration was at an end, he even bought her a bus ticket so that she could return to North Carolina.
Ms. Dupre's attorney contends that she was only 17 (and also drunk FWIW) when she signed releases permitting Mr. Francis to film her. Her lawsuit thus challenges the validity of the releases and claims that defendants exploited her image without meaningful consent in order to promote their soft-porn products.
April 28, 2008
Alamo and National Sue Orbitz
According to the St. Louis Business Journal, Alamo Rent-A-Car and National Car Rental are suing Orbitz Worldwide, Inc. for breach of contract, alleging that Orbitz has violated its online listing agreement with the two companies and has and improperly removed both Alamo and National from its main rental car matrix.
Both Alamo and National were acquired in 2007 by the Taylor family of St. Louis, which also owns Enterprise Rent-A-Car, when Enterprise acquired the parent company of Alamo and National, the Vanguard Car Rental Group. The companies allege that Orbitz demanded an additional payment of $1.5 million in excess of what was required under the companies' agreement which runs through December 31, 2008. Alamo and National allege that Orbitz removed them from its matrix when the Taylor family refused to pay.
Alamo and National are seeking a temporary restraining order, preliminary and permanent injunctive relief, and specific performance, punitive damages, and attorneys' fees. Alamo contends that it stands to lose more than $27 million due to the alleged breach. That being the case, I would pay the $1.5 million and sue later, but nobody asked my advice.
Orbitz maintains that the suit is without merit and that the two rental companies are making demands of it that are not required under the agreement.
No Punitive Damages in Genentech Case
Last week, the California Supreme Court upheld a $300 million verdict on a breach of contract claim against the biotechnology company Genentech (HQ pictured) but struck the $200 million award of punitive damages, according to the San Francisco Chronicle. The dispute relates to the discovery of a process for producing insulin made in the 1970s by two scientists working at the City of Hope National Medical Center, a cancer research center, City of Hope contracted with Genentech to patent and market products derived from the process in return for a 2 percent royalty. Genentech paid City of Hope more than $300 million in royalties relating to the product the two scientists had synthesized but did not pay royalties relating to other products that were created using the engineering process that the two scientists had created.
The jury had awarded punitive damages based on a finding that Genentech had breached a fiducity duty to City of Hope. The Supreme Court refused to permit plaintiffs to get around the limitation on contractual damages by characterizing a breach of contract claim as one alleging a fiduciary breach. Summarizing the opinion, the Chronicle reports:
The court said a company that markets another firm's scientific discoveries in exchange for royalties has no special obligation to protect the other's interests, apart from its duty to adhere to the contract. Without any such obligation, the justices said, punitive damages cannot be awarded for a breach of contract.
And there was much rejoicing among the amici.
April 27, 2008
"Greed Is Good" Guy Sued
As TMZ.com puts it, "A guy that once starred in a movie with Michael Douglas, then became his business partner, is suing the Oscar winner, claiming he got screwed out of millions." Now that's good reporting. Want to know the details? Well, TMZ says it's complicated but provides a link to the complaint, which alleges six causes of action including breach of contract and inducement to breach of contract, against Douglas and other individuals and business entities.
Plaintiff, Howard Zuker, aka Zack Norman, sues on his own behalf and derivatively on behalf of an LLC in which he has a 20% stake. Plaintiff alleges that he managed the LLC while also active as a producer of Hollywood films. The LLC's main asset seems to be a library of "owned or managed intellectual property rights." Plainitff alleges that Michael Douglas prevented the LLC from advertising its existence, making it harder for the LLC to attract potential users of its assets. Still, as of January 31, 2008, the complaint alleges that the LLC was involved in 31 active projects.
The complaint also relates the close personal relationship between plaintiff and Douglas. According to TMZ, Douglas is plaintiff's former "BFF," but the complaint does not go that far. It merely alleges that Douglas was kind to plaintiff and loaned him a lot of money. The LLC was created to purchase a company that held the assets that are now the primary asset of the LLC. According to the complaint, Douglas originally promised to put up half the capital necessary for that purchase but in the end put up much less, and the LLC was thus perpetually short of working capital.
Plaintiff alleges that he and Douglas created a joint venture agreement around January 2000 whereby the LLC would repay Douglas the loan he made at its founding plus 8% interest. After that loan was repaid, the partners would share profits from the venture on a 50/50 basis. But the complaint also alleges that Douglas made further loans to the LLC from 2001 to 2003 and that other parties who promised to provide capital did not perform.
Between 2002 and January 2006, plaintiff worked to created a new funding vehicle for the LLC, the AEHC Film Fund. Plaintiff was supposed to receive a $1 million bonus for putting together the Film Fund, and he borrowed money from a banker (Baker) involved in the deal in order to tide him over until the work was completed. In March 2006, according to the complaint, Douglas sent Plaintiff a new plan for the Film Fund, which was now renamed. Under the new plan, the LLC's stake in the Film Fund would drop from 50% to 4%, with the remaining stakes going to film production companies controlled by Douglas and his wife. and the LLC would transfer its assets to a new entity, Granite-Glass, L.P. controlled by Douglas and Baker. Recently, the LLC has stopped paying plaintiff his salary as manager and has refused to reimburse his business expenses.
Unfortunately, the complaint fails to allege that in pitching the new Film Fund to potential investors, Michael Douglas gave a rousing speech about the benefits of greed.
Plaintiff's main claim is for breach of fiduciary duty. He seeks lost wages and the $1 million bonus he would have made for putting together the Film Fund. He also seeks unspecified damages for harm done to the LLC. Plaintiff's breach of contract claim is against the LLC, alleging that he is owed a part of his annual $192,000 salary as manager of the LLC. Plaintiff names Baker as responsible for inducing the breach.