ContractsProf Blog

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

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Wednesday, May 12, 2010

Elena Kagan: What's Her View on Contracts?

Kagan3 Over at The Conglomerate, Christine Hurt has helpfully assembled blog posts addressing various issues that have come up in connection with the nomination of Elena Kagan (pictured) to succeed Justice Stevens on the U.S. Supreme Court.  Notably absent in all of these posts is any discussion of or any predictions regarding how Justice Kagan will vote on vital contracts law issues.

For example, although Eugene Volokh, Brian Leiter, Paul Campos, and Mark Tushnet have all weighed in on Kagan's scholarship, none have mentioned her complete failure to address any important doctrinal issues in contracts law.  Has she written about unconscionability?  The battle of the forms?  The concept of fault in contract law?  The prevalence of promissory estoppel claims?  Whether contracts profs should devote one month or two to the doctrine of consideration?  One searches her publications in vain for even a hint of interest in any of these subjects.  A very disappointing record for someone who could be the deciding vote in future battles over enforceability or interpretation of contracts.  Who will set Justice Breyer straight on the consequences of Joe Bananas' actions?  Who will take Justice Scalia aside and explain that the unconscionability doctrine is not about protecting the rights of stupid people?  We can only hope that the Senate confirmation hearings will be as illuminating as they usually are on such issues.  

Professor Hurt points us to Ilya Somin's post at The Volokh Conspiracy on Dean Kagan's decision not to allow military recruiters to visit Harvard's law school because of the military's "don't ask, don't tell" policy.  However, Somin does not mention and Hurt does not note that military recruitment involves contracts.  What are we to infer from Kagan's actions about her attitudes towards promoting the negotiation of binding agreements? 

Hurt similarly alerts us to various concerns, expressed by Elizabeth Nowicki, Dan Markel and by four law professors who wrote a Salon column after writing letter to White House, relating to Dean Kagan's hiring decisions while at Harvard's helm.  Once again, the posts all shockingly fail to address the fact that hiring decisions implicate contracts.  Clearly, one's conclusions regarding Kagan's anti-contract tendencies in connection with military recruitment must be balanced against her willingness to enter into contracts in the hiring context.  Or do these episodes suggest that Kagan has not yet developed a coherent approach to contracts.  Is she a contractual flip-flopper or is her approach characterized by the sort of care and nuance associated with the man she has been selected to replace?

Ann Althouse does nothing to illuminate Kagan's views on contracts in her post about Kagan on the subject of gay marriage. 

Nate Oman comes closest to raising this important subject over at Concurring Opinions, where he points out that Kagan's resume is weak on private law issues.  Indeed, there has been a remarkable though unremarked prejudice in judicial appointments against those who have devoted their legal careers to such issues.  Why was there never a Judge, let alone Justice Karl Llewellyn?  Would not Judge Williston have adjudicated with formalist rigor.  Would not a Justice Corbin have reached the equitable result in every case argued before him?  It is, indeed, an outrage.

[Jeremy Telman]

May 12, 2010 in Commentary, In the News, Weblogs | Permalink | Comments (0) | TrackBack (0)

Weekly Top Tens from the Social Science Research Network

SSRN

Brent.white.lg_vert Brent White (pictured) has catapulted to the top, debuting at #1 with Beyond Guilt on both lists and already #7 on the hallowed SSRN All Time Top 10 List in Law & Society: Contracts!!  Congratulations!!  Meanwhile, Walking Away is also racking up the downloads.  Brent White is the Lady Gaga of contracts scholarship!!!

RECENT HITS (for all papers announced in the last 60 days)
TOP 10 Papers for Journal of Contracts & Commercial Law eJournal

March 13, 2010 to May 12, 2010

Rank Downloads Paper Title
1 588 Beyond Guilt in the Housing Crisis: The Morality of Strategic Default
Brent T. White
University of Arizona - James E. Rogers College of Law
2 294 The Shadow of State Secrets
Laura Donohue
Georgetown University Law Center
3 282 A Myth Deconstructed: The 'Emperor’s New Clothes' on the Low Profit Limited Liability Company
Daniel S. Kleinberger
William Mitchell College of Law
4 209 Virtue and Contract Law
Chapin Cimino
Drexel University - Earle Mack School of Law
5 201 Walking Away: The Emotional Drivers of Strategic Default
Brent T. White
University of Arizona - James E. Rogers College of Law
6 191 The Failure of Mandated Disclosure
Omri Ben-Shahar & Carl E. Schneider
University of Chicago Law School, University of Michigan Law School
7 156 The Right to Withdraw in Contract Law
Omri Ben-Shahar & Eric A. Posner
University of Chicago Law School, University of Chicago Law School
8 145 A Critical Theory of Private Equity
Lee Harris
University of Memphis - Cecil C. Humphreys School of Law
9 138 In Defense of Bailouts
Adam J. Levitin
Georgetown University Law Center
10 131 Consent to Retaliation: A Civil Recourse Theory of Contractual Liability
Nathan B. Oman
William & Mary Law School

RECENT HITS (for all papers announced in the last 60 days)
TOP 10 Papers for Journal of LSN: Contracts (Topic)

March 13, 2010 to May 12, 2010

Rank Downloads Paper Title
1 588 Beyond Guilt in the Housing Crisis: The Morality of Strategic Default
Brent T. White
University of Arizona - James E. Rogers College of Law
2 282 A Myth Deconstructed: The 'Emperor’s New Clothes' on the Low Profit Limited Liability Company
Daniel S. Kleinberger
William Mitchell College of Law
3 249 Private and Public Construction in Modern China
Gregory M. Stein
Associate Dean for Faculty Development & Woolf, McClane, Bright, Allen & Carpenter Distinguished Professor of Law, University of Tennessee College of Law
4 200 Walking Away: The Emotional Drivers of Strategic Default
Brent T. White
University of Arizona - James E. Rogers College of Law,
5 190 The Failure of Mandated Disclosure
Omri Ben-Shahar & Carl E. Schneider
University of Chicago Law School, University of Michigan Law School
6 188 Veil-Piercing
Peter B. Oh
University of Pittsburgh - School of Law
7 156 The Right to Withdraw in Contract Law
Omri Ben-Shahar & Eric A. Posner
University of Chicago Law School, University of Chicago Law School
8 84 Common Frame of Reference and UNIDROIT Principles of International Commercial Contracts: Coexistence, Competition, or Overkill of Soft Law?
Stefan Vogenauer
University of Oxford - Faculty of Law
9 64 Globalization of Law as Documented in the Law on International Sales of Goods
Harry M. Flechtner
University of Pittsburgh - School of Law
10 63 When the Law is Understood - L3C No
Daniel S. Kleinberger & J. William Callison
William Mitchell College of Law, Faegre & Benson LLP

[Jeremy Telman]

May 12, 2010 in Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

What a Long Strange Contract It's Been...

Gdk There is a Grateful Dead exhibit “currently playing” at the New York Historical Society, with lots of knick knacks on loan from the archives at UC Santa Cruz. (Jon Stewart once did a funny bit about a job listing for an archivist of the collection, though it apparently peeved serious archivists everywhere).  Here's more information on the exhibit, including the insights of a sociology professor who has written a book called Deadhead Social Science and sounds like she's study the culture like Jane Goodall studied chimps.

The exhibit was a bit sparse and dissatisfying, and it mostly felt like at $12 excuse to lure you into the gift shop to buy a large peace sign tapestry or small stuffed dancing bear for your kids.  (It still beat grading exams, of course).  There were a few cool pictures of the Fillmore East, which I suppose were obligatory because it was after all an exhibit at the New York Historical Society.

It should be no surprise that, for me, the most interesting thing at the exhibit was a contract – actually, the notice of an exercise of an option pursuant to a contract.  I learned that the Grateful Dead signed their first contract with Warner Bros. in 1966.  They were the first rock band signed to the Warner label.  The exercise of option (pictured, click to enlarge) was dated 1968 and it extended the terms of the 1966 contract through 1969.  There was not a copy (at least that I saw) of the 1966 contract.

In the document, “notice is herby given” to Jerome Garcia and his bandmates that “the undersigned, WARNER BROS. – SEVEN ARTS RECORDS, INC., has exercised and hereby exercises its option under the contract referred to above, for with respect to the Term specified, upon and subject to all of the terms and conditions set forth above and in said contract.”  The exercise came with a $30,000 advance and 8% of domestic royalties, and 5% of foreign royalties. The rest, as they say, is history.

More than anything, I came away with a sense that this band was a superb marketing machine and had a really good business sense, or at least someone advising them that did…. and still does.

[Meredith R. Miller]

May 12, 2010 in Miscellaneous, True Contracts | Permalink | Comments (0) | TrackBack (0)

Tuesday, May 11, 2010

Second Circuit Upholds Arbitration Agreement Against Unconscionability Challenge

2nd Cir.Last month was arbitration month here on the blog, but we just can't help ourselves.  On April 16th, the Second Circuit issued its opinion in Harrington v. Atlantic Sounding Inc., intervening in a pitched battle between the Federal Arbitration Act, the FAA, and protections afforded injured seamen currently codified in the Jones Act and the Federal Employer's Liability Act, or FELA.  

Plaintiff Harrington had been employed by Weeks Marine for two years before suffering a back injury in April 2005. Harrington left Weeks' employ, but Weeks paid for his medical expenses and made maintenance payments of $20/day.  Harrington's doctor prescribed painkillers, which Harrington supplemented, presumably without prescription, by drinking a half-gallon of vodka every two or three days.  Despite this therapy, Harrington required surgery to repair a herniated disk.  Harrington sought additional support from Weeks and received a "Claim Arbitration Agreement," CAA.  Under the CAA, Weeks agreed to advance Harrington 60% of his gross earnings until Harrington was again fit for duty.  In return, Weeks agreed to arbitrate any claim he might have against Weeks.  After undergoing surgery, Harrington signed the CAA and had it notarized.  He told the notary that he knew what he was signing, but he would later claim that he did so under the influence of painkillers and alcohol.  The notary's testimony on this subject was confused: the notary testified that Harrington was not impaired but was in pain and spoke incoherently on the rare occasions he chose to do so.

In December, Harrington was still unable to work, and he sought continued assistance from Weeks.  Weeks agreed to continue support through January 2006 but required that Harrington sign an Addendum to the CAA.  Harrington did so, and brought it to the same notary.  Harrington testified that he was at that time drinking two quarts of vodka and six beers a day.  Harrington was terminated at the end of January, and he brought suit in June 2006.  Weeks moved to dismiss the complaint or to compel arbitration.  The District Court denied the motion, finding the arbitration agreement both procedurally and substantively unconscionable.  It was procedurally unconscionable because Weeks asked Harrington to sign the CAA when he was in pain and under the influence.  It was substantively unconscionable because it forced Harrington to agree to Weeks' claims that it had no liability for his injury.

On appeal, Harrington argued that the CAA was invalid because it was inconsistent with provisions of FELA incorporated in the Jones Act and guaranteeing certain forum-selection rights of seamen.  The Second Circuit rejected that argument, noting that the FAA applies in the maritime context and reflects a federal policy in favor of arbitration.  The provision of FELA on which Harrington sought to rely is not about arbitration at all and was adopted in 1910, thus predating the FAA and the rise of employment arbitration.  The purpose of FELA was to provide that a seaman could bring a claim in a convenient forum and not to preclude arbitration. 

The Second Circuit also rejected the District Court's conclusion that the CAA was unconscionable.  First, the court noted that the District Court found the CAA substantively unconscionable based on one misleading provision, but the Second Circuit found that misleading language in an agreement goes to procedural, not substantive unconscionability, unless as a result of its operation the provision "shocks the conscience."  The Second Circuit was not shocked.  The provision said that Weeks was not "currently responsible or liable for any other damages under general maritime law, the Jones Act or any other applicable law."  That, the court said, is arguably simply a statement of fact, since liability had yet been adjudicated.  Applying New Jersey law, the court concluded that the CAA could not be unconscionable without a showing of substantive unconscionability.

The Second Circuit vacated the District Court's judgment and remanded the case for further proceedings relating to Harrington's incapacity defenses to the enforceability of the CAA and the question of Harrington's potential ratification of the agreement by having received its benefits.  

3calabresi  Judge Calabresi (pictured) dissented.  He argued that the majority's decision did not "take adequate account of the historic importance and purpose of both the Jones Act and FELA, and of their unique protections for specific categories of workers, such as seamen. . . ."  Judge Calebresi recounts the special circumstances that motivated Congress to provide special protections to seamen, including the right to choose unilaterally between a bench and a jury trial.  He reads FELA Section 5 as protecting a seaman's "right to bring his claim in any forum that was made eligible to him by statute."  Because the CAA deprived Harrington of that right, it was invalid under the Jones Act and FELA.  Judge Calebresi would not permit the policy in favor of arbitration to trump the worker-protection values underlying FELA and the Jones Act.

Judge Calabresi would not have reached the unconscionability issue, since he would have invalidated the CAA on statutory grounds.  However, had he reached it, he would have agreed with the District Court that the CAA was unconscionable based on his different understanding of New Jersey's "sliding scale" approach to unconscionability.

[Jeremy Telman]

May 11, 2010 in Recent Cases | Permalink | Comments (0) | TrackBack (0)

Monday, May 10, 2010

Blawgosphere Roundup on Contracts Issues

Monitor  The ADR Prof Blog is keeping the posts on Stolt-Nielsen coming.  Art Hinshaw shares Alvin Goldman's thoughts here.  That blog also features another take on Rent-A-Center, this time from Sarah Cole.

More on Stolt-Nielsen can be found at the Disputing Blog.  A post from University of Missouri Prawf, S. I. Strong can be found here.  Another post by Pepperdine Prawf Thomas J. Stipanowich can be found here.   

[Jeremy Telman]

May 10, 2010 in Commentary, In the News, Weblogs | Permalink | Comments (0) | TrackBack (0)