March 25, 2011
Suffolk Breaks The Mold!
Greetings from Boston! Following brief greetings from Dean Camille Nelson, Suffolk Law Review EiC Tyler Sparrow, and conference organizer Jeff Lipshaw, Charles Fried, whose Contract as Promise inspired today's conference, offered some initial warmly-received comments about what inspired him to write Contract as Promise three decades ago (irritation at arguments Grant Gilmore made in his Death of Contract and Patrick Atiyah made in his classic The Rise and Fall of Freedom of Contract about the nature of contractual obligations and "sound" and "unsound" jurisprudential approaches to understanding and analyzing contractual obligations), and promised to say more at the end of the day -- taking advantage of an opportunity unavailable to the subjects of most such "memorials."
Then came the realization that the first panel wasn't quite ready to go because the conference was running ten minutes ahead of schedule. How promising! We'll see whether the gap between the schedule and real time contracts as the day progresses.
[Keith A. Rowley]
March 24, 2011
The NFL Lock-Out, Part I
The NFL’s owners entered into a collective bargaining agreement with the players after the 2008 season. The agreement expired on March 4th of this year. As ESPN.com reports, after several delays and a 16-day federal mediation, the owners locked the players out. A lock-out means that the players can have no contact with teams or their personnel, do not get paid, and also cannot negotiate new contracts with their respective teams or any other teams. This is the NFL's first work stoppage since 1987.
The players union has now dissolved itself, enabling individual players to bring a class-action antitrust suit in federal court. The matter is scheduled to be heard by a federal judge on April 6. The Washington Post reports that the owners have asked the judge to allow the lockout to continue until the National Labor Relations Board has ruled on its claim that the union's decertification was an unfair labor practice.
As the New York Times reports, the main issue dividing the parties is revenue sharing. Under the old deal, the players received nearly 60% of the league revenue from 2006 to 2009 after the owners took $1 billion off the top. The owners are currently proposing a 50/50 split after the owners take $2 billion off the top. The owners need the added money to cover the cost of building new stadiums, and the players should still make at least as much in absolute terms because the new deal would prolong the season to 18 games, thus leading to more revenue -- largely from television deals.
Sporting News provides this run-down of the two sides' positions on the other issues, including the proposed rookie pay scale, benefits for retired players, and the level of the salary cap. The two sides' positions started off $1 billion apart. They negotiated down to around $185 million apart, but then talks broke down when the owners refused the players' request for financial information about the various NFL franchises.
The final major dispute between the two sides is level of the salary cap. The players have said the owners’ current offer is based on unrealistically low revenue proposals. According to ESPN.com the owners’ have offered an increase in the salary cap from $131 million to $141 million for next season in their most recent proposal. The players reportedly seek a cap of $151 million.
The New Yorker's James Surowiecki is most eloquent on the reasons why "in a contest between millionaire athletes and billionaire socialists it’s the guys on the field who deserve to win."
[Jared Vasiliauskas & JT]
March 23, 2011
Contracts Clause Case in the Fourth Circuit
Note-writers take note! This is a fascinating case and involves a Circuit split!!!
In Crosby v. City of Gastonia, a Fourth Circuit panel that included retired Supreme Court Justice Sandra Day O'Connor affirmed the District Court's order, dismissing a Contracts Clause claim brought by retired members of the Gastonia police department. The case arose over a retirement Fund for police officers established by the North Carolina Assembly in 1955. In the early 1990s, the Fund began to experience financial difficulties. There were various attempts to supplement the Fund's resources, all of which were inadequate. In 2005, the Fund's assets were exhausted. Along the way, the North Carolina legislature allowed active officers to cease their contributions to the Fund and to recover their prior contributions in their entirety prior to retirement.
Plaintiffs brought suit alleging various state law claims but also claiming federal jurisdiction by making a § 1983 claim based on the City's alleged violation of the Contracts Clause. The District Court found no impairment of obligation within the meaning of the Contracts Clause but retained jurisdiction over the remaining claims and granted the defendant City summary judgment on all claims.
In affirming the District Court's judgment on the Contracts Clause issue, the Fourth Circuit discusses Carter v. Greenhow, an 1885 case in which a Richmond property owner engaged in a tax dispute tried to rely on the Contracts Clause to assert a civil rights violation -- i.e. a "deprivation of any rights, privileges or immunities secured by the Constitution" under color of law. In that case, the Supreme Court ruled that, while plaintiff had indeed identified a potential civil rights violation, the clause in question did not provide him with a cause of action. Rather, it seems, he could only rely on the Contracts Clause if the state had somehow impaired his ability to seek injunctive or declaratory relief in connection with his alleged deprivation of property.
In 1991, in Dennis v. Higgins, the Supreme Court seemed to favor a narrow reading of Carter, suggesting that plaintiff's claim was unsuccessful in that case because he chose to plead a contracts claim rather than a "right secured to him by" the Contracts Clause. The Ninth Circuit relied on this dictum in 2003 in ruling that § 1983 can give rise to claim sounding in the Contracts Clause. The Fourth Circuit found the Supreme Court's dictum in Dennis unpersuasive because the Clause at issue in Dennis was the Commerce Clause and not the Contracts Clause.
The Fourth Circuit acknowledges that Carter was decided largely on procedural grounds and did not "substantively explore the contours of a properly pleaded claim" and that Justice Matthews' opinion in Carter is thus "of limited utility in determining whether § 1983 might afford a remedy for infringement of federal rights not previously considered in that context." Nonetheless, it concludes that this case is in the same procedural posture as Carter and therefore that they cannot rely on § 1983 to pursue a Contracts Clause claim. That is, the plaintiffs cannot claim a violation of their civil rights because they do not allege that the City "impermissibly thwarted [them] in any prior attempt on their behalf to vindicate the application of the Contracts Clause to the parties' dispute by resort to the courts."
Frankly, the distinction is subtle, and neither the Fourth Circuit nor the Supreme Court have provided litigants with much guidance about what litigation strategy one ought to pursue in order to bring such an action.
Another interesting element of the opinion is that the Fourth Circuit's construction of plaintiffs' Contracts Clause claim is different from that of the District Court. The District Court treated the claim, somewhat creatively, as a direct Contracts Clause claim and ignored the link to § 1983. The District Court dismissed under Rule 12(b)(1) for lack of subject-matter jurisdiction. The Fourth Circuit found this improper. So why not just remand, especially since the Fourth Circuit notes that retention of jurisdiction over state law claims after dismissal on 12(b)(1) grounds is "problematic?"
New in Print: (Mostly) International Edition
Horst Eidenmüller, Why Withdrawal Rights? 7 Eur. Rev. of Contract L. 1 (2011)
Stefan Grundmann & Sebastian Uhlig, German Contract Law – Nearly a Decade After the Fundamental Reform in the Schuldrechtsmodernisierung, Eur. Rev. of Contract L. 78 (2011)
Theodore J. St. Antoine, Mandatory Employment Arbitration: Keeping It Fair, Keeping It Lawful, 60 Case West. Res. L. Rev. 629 (2010)
Salvatore Orlando, The Use of Unfair Contractual Terms as an Unfair Commercial Practice, 7 Eur. Rev. of Contract L. 76 (2011)
March 22, 2011
Non-Competes in the NYLJ
In today's NYLJ, Stephen Kramarsky writes about "IBM's Hard Lesson in Non-Competes" (subscription required). He discusses International Business Machines Corp. v. Visentin, a recent SDNY decision that denied IBM a preliminary injunction to enforce a non-compete very similar to one it had successfully enforced just a few years ago, demonstrating the difficulty of predicting the enforceability of a non-compete in NY.
The article begins:
One of the hardest things to explain to a client (particularly a sophisticated business client) is that some contracts, no matter how carefully drafted and heavily negotiated, may simply be ignored when push comes to shove before a court. For technology lawyers, that conversation often takes place as the client tries to figure out how to retain its key employees or protect its trade secrets and intellectual property through a non-compete clause.
Definitely worth a read.
[Meredith R. Miller]
Weekly Top Tens from the Social Science Research Network
A Tangled Web: Julie Taymor and the Spiderman Musical
As Broadway watchers likely already know, the Bono/The Edge-inspired Broadsay musical, Spiderman: Turn Off the Dark has already cost $65 million dollars to produce, which is more than twice the amount of any Broadway production. The show also costs $1 million a week to run, but that's okay, since it brings in $1.3 million a week -- and that's in.
Still, critics who have attended previews of the show have been less than enthusiastic. Here, for example, is what Ben Brantley had to say in the New York Times. It seems like the show is not coming together under its current artistic team, and the producers recently announced that the show's opening, most recently scheduled for March 15th, will be delayed again. My spidey-sense and the New York Times suggest that the new opening date will be June 14th.
News broke earlier this month that Tony Award winning director, and recipient of the MacArthur Foundation Genius Award, Julie Taymor, is stepping down from her position as director of the musical: . According to this report on popeater.com, the move is now official and the two sides are determining how to work out the contractual issues.
It seems that both parties are trying to avoid anything approaching litigation. Time reports that, although it seems like Taymor was ousted, the producers of the show issued a press release indicating that she has simply agreed to step aside from her day-to-day duties" so that the show can be overhauled [again] under the direction of the new team led by Philip William McKinley. From the Press Release:
Julie Taymor is not leaving the creative team. Her vision has been at the heart of this production since its inception and will continue to be so. Julie's previous commitments mean that past March 15th, she cannot work the 24/7 necessary to make the changes in the production in order to be ready for our opening. We cannot exaggerate how technically difficult it is to make such changes to a show of this complexity, so it's with great pride that we announce that Phil McKinley is joining the creative team. Phil is hugely experienced with productions of this scale and is exactly what SPIDER-MAN Turn off the Dark needs right now.
The New York Times notes that Taymor will retain her title of "director" of the show and will also be credited as a script writer, but that sources close to Taymor claim that she was forced out because she would not agree to make substantial changes to the show. These include scaling back the "Arachne" character and dropped a big production number called "Deeply Furious" that involved numerous shoed lady-spiders. Pity. The Times characterized Ms. Taymor's contract as giving her "broad creative control over the musical."
[Jared Vasiliauskus and JT]
March 21, 2011
Neither Snow nor Rain nor Heat nor Threat of Suit in Federal Court . . .
In Anselma Crossing v. United States Postal Service, the Third Circuit Court of Appeals affirmed the District Court's ruling that a federal court is not the proper venue for a breach of contract action against the United States Postal Service (USPS).
The dispute arose out of an alleged spring 2007 oral agreement according to which the USPS would lease from Anselma Crossing a new post office facility in Chester Springs, Pennsylvania. Anselma was to build and lease a building to the Post Office beginning in or around 2010. In reliance on this agreement Anselma asserted that it expended "substantial sums" on engineering and environmental services for the property. However, in 2008, the Post Office made the decision to rescind all new projects, which effectively cancelled the Anselma project along with about 400 others. Anselma sued USPS in District Court, alleging promissory estoppels and breach of contract, claiming it had incurred $150,000 in costs. The court first had to determine whether such a suit could commence a District Court.
Two conflicting Acts govern suits against the Post office. The first is the Postal Reorganization Act (PRA), which allows the USPS to “sue and be sued.” This act also gives District Courts original (but not exclusive) jurisdiction over all actions brought by or against the Postal Service. Easy enough for Anselma, right? The wrench in the works is the contradictory provision in the Contract Disputes Act of 1979, whichpushes any disputes by government contractors against the USPS- and other executive agencies into either the appropriate board of appeals- in this case the Postal Service Board of Contract Appeals, or the United States Court of Federal Claims. The Third Circuit determined that the provisions of the PRA were general, while the CDA is more “recent and precisely drawn.” Therefore the CDA’s specific provisions prevail over the RPA’s general ones. Anselma’s claims should have been brought to the Postal Service Board of Contract Appeals instead of the District Court.
[Katherine Freeman & JT]
Netflix Lands "House of Cards"
An update on last week's post on Netflix's purchase of two entire seasons of the Kevin Spacey/David Fincher joint, "House of Cards."
1. The deal that we reported as imminent has apparently been closed now, as reported in The New York Times here.
2. As we suspected, the new "House of Cards" is an American adaptation of the brilliant BBC series "House of Cards," which we highly recommend and which is available on Netflix!
This deal could change many things about the way serialized television programs make their way into our living rooms. Indeed, it may increase the percentage of television programs that are never watched in anything like a living room because they are watched on an iPad, some other tablet or the next generation of hand-held 4-D holographic projection systems complete with smell-o-vision.
One aspect of the change is that Netflix plans to release episodes in bunches for those who need a good 4-hour fix of their latest addiction.