ContractsProf Blog

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

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Wednesday, February 25, 2009

How Many Credits For Contracts?

Lecture_hallMost contracts profs would probably prefer to teach the course over two semesters as a six-credit course. When I was a law student, my contracts course was 3/2, but the law school I attended has since eliminated one credit and made it a four-credit course. My own contracts professor applauded this change, explaining that it was hard to get students' attention during the two-credit spring course, as most of their energies were focused on their five-credit property course. I teach a four-credit contracts course and, given that I have always taught it as a four-credit course, I don't experience any hardship in being so limited. Still, I understand that most law schools still retain the six-hour approach to contracts.

We have heard the professors' perspective on this issue, but I wonder if any law students or practitioners would like to weigh in on the merits of four versus six-credit first-year contracts courses.

[Jeremy Telman]

February 25, 2009 in Teaching | Permalink | Comments (1) | TrackBack (0)

Business Associations Limerick of the Week: Ringling Bros.

Bros6

The Ringling Brothers are pictured at right. Together, they created a successful business enterprise. But when they passed the circus on their heirs, things got a bit messy. So messy, in fact, that I no longer teach this case, as the facts are too complicated and the situation too idiosyncratic to justify the time one has to spend on the case in order the earn the meager reward it offers in terms of useful law. Still, it is at least about the breach of a contract, in this case a shareholders agreement, and that makes it a legit case to discuss on this blog. And the facts of the case certainly render it Limerickworthy. 

Much of the background behind the case is nicely explored in J. Mark Ramseyer's article, which can be found on SSRN here. The short version is as follows. John Ringling, one of the original five brothers (he's the one with the mustache!), controlled the circus until his death in 1936. At that point, control passed to three Ringling factions: John's wife Edith, and her son Robert; Aubrey and James Haley; and Ida Ringling North (a sister to the original five) and her sons John Ringling North and Henry North. John Ringling North was the most industrious of the new generation and he actually knew how to run a business. He was the impressario who engaged Igor Stravinsky and George Balanchine to create a ballet for elephants. John North ran the circus ably until 1943 when the Haleys entered into a vote pooling agreement with Edith and Robert Ringling and thus were able to seize control of the board. They did so, Ramseyer tells us, in order to assure that the circus would continue during World War II. 

This was an unwise decision. John North had decided to shut down the circus for the remainder of the war because of the scarcity of fireproof materials for the tents under which the circus performed. But Robert Ringling and the Haleys were willing to take the risk. The result was the tragic Hartford Fire on July 6, 1944, in which 168 people were killed. Ramseyer reports that the fire was either caused by: a mentally handicapped arsonist employed by the circus; a "dirty son-of-a-b----" in the bleachers who threw a cigarette butt; or a monkey jumping around the upper poritions of the tent with a lit cigar. So much for the value of eyewitness testimony. In any case, the circus ended up paying nearly $4 million to settle civil suits, and James Haley was sentenced to a year in jail for involuntary manslaughter. 

Perhaps out of fellow feeling or perhaps out of business savvy, John North made friendly overtures towards his convicted business partner. Robert Ringling, on the other hand, who was himself lucky to have escaped a prison sentence, stayed away. As a result, when Haley got out of jail, he and Aubrey refused to cast their shareholder votes as previously agreed per their shareholder agreement with Edith and Robert Ringling. Aubrey and John North hatched a plan to return control of the circus to John North, while also allowing James Haley the opportunity to benefit from a position as an officer in the corporation.  

The issue before the court then was whether the Haleys had violated their shareholder agreement by refusing to abide by the ruling of the arbitrator appointed under the agreement, one Mr. Loos, and by refusing to cast their votes as Mr. Loos determined they should. The Delaware Supreme Court found that the Haleys were in breach of the agreement but that Mr. Loos had no power to enforce it. It therefore determined that the Haleys' improper votes simply would not count. The result was that the Haleys were simply left without representation on the newly-elected board, but that board was now evenly split between representatives of the North faction and representatives of the Ringling faction, a recipe for deadlock. 

This Limerick addresses the question of what role the Haleys were to have in the new administration of the circus. 

Ringling Bros. v. Ringling

After the Great Hartford Fire,
Aubrey and John did conspire.
The corporation is close;
Aubrey's misconduct, gross
Now the Haleys perform on high wire.

[Jeremy Telman]

February 25, 2009 in Famous Cases, Limericks, Teaching | Permalink | Comments (0) | TrackBack (0)

Tuesday, February 24, 2009

Tenure and Contract

Moriarty
The American Association of University Professors, which is like a lioness defending her cubs when it comes to tenure is roaring about its recent success (as an amicus) in the First Circuit case, Otero-Burgos v. Inter-American University.

That case did not involve the tenure struggles of Professor Moriarty (pictured), but of Professor Edwin Otero-Burgos, who was dismissed from Inter American University in 2003 after having worked there for nearly 30 years. He was awarded tenure in 1994. In 1999, one of Professor Otero-Burgos's students complained that his grade of "D" was undeserved. The student demanded an opportunity to improve the grade, but the professor refused. The student appealed to the administration, which determined that the student was entitled to a supplemental evaluation. Professor Otero-Burgos refused to participate in this process and so the university designated an alternate. The student did additional work, was evaluated and received a "C" for the course.

Otero-Burgos was dissatisfied with this resolution, so he filed a grievance, alleging that the university's actions interfered with his academic freedom. A Faculty Appeals Committee supported Professor Otero-Burgos's claim, but the University Chancellor nonetheless considered it meritless. There followed a flurry of letters and accusations sent to the University President. The upshot was an investigation into Professor Otero-Burgos's conduct by an Ad Hoc Committee comprised of three professors chosen by the Professor's Dean. That Committee concluded that Professor Otero-Burgos was insubordinate and had violated all sorts of rules, policies, and norms, as well as his colleagues' rights. As a result, in 2002, the Dean notified Professor Otero-Burgos that he was terminated.

Otero-Burgos appealed that decision, and a new Faculty Appeals Committee entertained that appeal. It concluded that there was no cause for terminating Professor Otero-Burgos, but that view was overruled by the Chancellor. The President backed the Chancellor, and Otero-Burgos was dismissed.

On appeal, the issue was whether Puerto Rico's Law 80 limited Otero-Burgos's remedy to severance pay. It appears that Law 80 was intended to protect "at-will" employees and it provides severance benefits to workers who are hired for no fixed term, so long as they are not fired for cause. The case turned on whether Law 80 would apply to tenure and whether a tenured professor falls under the law because he has "contracted without a fixed term."

The court looked at the intention behind Law 80 and found that it was "a measure that would provide employees with a baseline level of economic protection from the consequences of arbitrary dismissals." It concluded that tenure contracts are "not remotely the at-will employment arrangement to which Law 80 is addressed." But the court proceeds with a very scrupulous inquiry into the purposes of tenure and the compatibility of those purposes with the notion that Law 80 should limit remedies available to dismissed professors. It then concludes that Law 80 could not possibly apply to this situation. It reinstated Professor Otero-Burgos's breach of contract claim, noting that if he can establish that he was fired without adequate cause, "he will be eligible for the panoply of generally available contract remedies."

The full opinion in the case can be found here (go to opinions and type in case no. 07-2501).

[Jeremy Telman]

February 24, 2009 in In the News, Recent Cases | Permalink | Comments (0) | TrackBack (0)