April 8, 2011
Fan Sues NFL and Cleveland Browns
Cleveland Browns fan Ken Lanci has brought suit against the Cleveland Browns for allegedly violating his contractual right to buy tickets under his personal seat license due to the current NFL lockout, about which we have previously posted. You can find a copy of Mr. Lanci's complaint here. According to Wikipedia, a personal seat license:
gives the holder the right to buy season tickets for a certain seat in a stadium. This holder can sell the seat license to someone else if they no longer wish to purchase season tickets. However, if the seat license holder chooses not to sell the seat licenses and does not renew the season tickets, the holder forfeits the license back to the team. Most seat licenses are valid for as long as the team plays in the current venue.
According to this story in the Miami Herald the suit is seeking $25,000 in damages from the Browns on theories of breach of contract and bad faith. Lanci has named the NFL and its other teams in the suit as well, alleging tortious nterference with his personal seat license. He is seeking over $25,000 in damages plus additional unspecified damages. Lanci claims that the violation stemmed from the conspiracy of the NFL to lock out the players which violated his personal seat license. In response to this claim, NFL spokesman Greg Aiello told the Herald that he understands that the fans are frustrated and that the league has refund policies in place for fans in the event that games are lost.
Mr Lanci characterizes the lockout as a product of a dispute between millionaires and billionaires and notes that people have no sympathy for multi-millionaires. Given that Mr. Lanci is himself a multi-millionaire, this would seem to be a case that only a lawyer could love. The website, Cleveland Frowns, provides a critical commentary on the suit here, noting among other things, that Mr. Lanci's personal suit license agreement specifically contemplates the possibility of a lockout. Here's the relevant language:
STRIKES, DAMAGES, DESTRUCTION, ETC. In the event of: (a) any strike or other labor disturbance which results in the cancellation of any Browns Games at the Stadium, … the License/Ticket Fee payable under the Agreement shall … be abated during the period of time that the Club Seats are unusable. Any such abatement of the License/Ticket Fee shall be computed for each NFL Season by dividing the number of Browns Games for which the Club Seats were unusable by the total number of Browns Games that would have been played in the Stadium during the applicable NFL Season were it not for such strike, labor disturbance, damage or destruction.”
If games are lost it is possible that the NFL could find itself in breach of their other contractual obligations with entities such as sponsors, and television stations that broadcast league games. Stay tuned.
[Jared Vasiliauskas & JT]
April 7, 2011
Howard Stern, Are Your Sirius?!?
Howard Stern is mad as hell, and he's not going to take it anymore. According to Wikipedia, Sirius Satellite Radio has already paid Mr. Stern and his agent in excess of $300 million in stock on top of establishing a $100 million annual budget for Mr. Stern's radio program. In December 2010, the parties announced that they were renewing their relationship for another five years Then in March 2010, Mr. Stern filed a lawsuit against Sirius, alleging that his money was lonely and would lapse into depression if Sirius did not fork over some stock bonuses he alleges that he is owed on his first contract.
According to the New York Times, the terms of Mr. Stern's new contract were not disclosed, but it was believed to be for five years at around $80 million per year. According to the Times, the new contract is all cash. Sirius maintains that it has not violated itsagreement and has made all required stock payments to Mr. Stern. Sirius also registers its surprise and disappointment upon learning that Mr. Stern and his production company have filed suit against Sirius.
More information about the law suit is available from Sirius Buzz here.
But for those of you addicted to Mr. Stern's intelligent but profane material, never fear. Rolling Stone assures us that the show will go on. Mr. Stern wants money he believe he is owed, but he also knows who he works for and that he wants to continue to do so. So he is mad as hell but he is going to take it (i.e., his multi-million dollar salary) for another five years at least.
[Jared Vasiliauskas & JT]
April 6, 2011
Breach of Contract Can Be Fatal to Retired Racehorses
The Thoroughbred Retirement Foundation-one of the nation’s largest organizations dedicated to retired racehorses-has apparently been slow or delinquent in paying its bills to contractors charged with caring for their horses. TRF is responsible for the care of more than 1,000 retired horses each year reports the New York Times.
The Times reports that the organization has been operating at a deficit the last 2 years according to their financial disclosure statements, which has led to unreliable payments to the more than 25 farms with which the organization has entered into contracts for the care of retired horses. Inspectiors of these farms are finding emaciated horses, neglect, and missing thoroughbreds that have presumably starved to death. Oddly enough, the mission of this organization includes saving these horses from “possible neglect, abuse, and slaughter.”
While the leadership of the organization is blaming the down economy, RTF still maintains some high profile benefactors. The estate of Paul Mellon, established a $7 million endowment for the organization. According to the Times, after hearing complaints from the horses' caretakers, the estate decided to conduct an investigation of the contract farms and discovered that at least 25% of the horses need urgent and immediate care, and that farm owners were seriously disenchanted with the organization.
Many farm owners are owed in the tens of thousands of dollars but are still caring for the retired horses. Other owners say that when they complained about lack of payment, the horses were immediately taken away from them. These horses were most likely just directed to different farms with the same issues. The Times reports that, despite registering a $1.2 million deficit in 2009, the RTF continued to meet its adminsitrative payroll obligations.
The RTF has a Facebook page where visitors are invited to comment "However, comments deemed off-topic, insensitive, or downright rude will be deleted."
[Katherine Freeman and JT]
New in Print
Ian Bartum, Thoughts on the Divergence of Contract and Promise, 24 Canadian J. L & Jurisprudence 225 (2011)
April 5, 2011
Weekly Top Tens from the Social Science Research Network
Will the Real Linda Green Please Stand Up?
Here is the link to the clip on the CBS site.
[Meredith R. Miller]
EU and US Both Claim Victory in WTO Dispute
We have been providing on-going coverage, most recently here, of the epic battle between Boeing and Airbus over a long-term contract to provide the U.S. military with refueling tankers, shown at left. Our last post reported on Boeing's victory in the battle to win the government contract. Airbus decided not to fight that decision through domestic channels, but the battle continues in the World Trade Organization.
Last week, a WTO panel published its "final ruling" on Airbus's complaint alleging that the U.S. had provided subsidies to Boeing that are prohibited under international trade agreements. The European Union brought the case on Airbus's behalf, and the panel found that the U.S. had provided at least $5.3 billion in illegal subsidies to Boeing. As Agence France Presse reports, the WTO found that the EU had provided similar illegal subsidies in a decision handed down last June. Both sides are appealing that decision. While the EU characterizes the most recent decision in the case as a victory, AFP notes that it "launched" its appeal of the decision last Friday.
Although the U.S. was found to have engaged in some illegal practices, the result is still being described as a "victory," since U.S. violations were found to be less serious than those found against the EU, according to the Seattle Times. The appeals process will likely take several more years, and given the WTO's weak enforcement powers, the Seattle Times predicts a settlement in the future that will involve some tweaks to domestic laws that will still allow governments to provide their business partners with the sort of "launch loans" that are in dispute in this litigation.
April 4, 2011
Supreme Court Decides Case Involving Third-Party Beneficiaries Issue
Last week, the U.S. Supreme Court issued its opinion in Astra USA v. Santa Clara County in which it unanimously overturned a decision of the Ninth Circuit Court of Appeals. The case was brought by Santa Clara County, which operates several 340B entities, that is, public hospitals or community health organizations involved in delivering medical services to the poor. The county claimed a right to sue for overcharges on prescription medications provided through a PPA, or Pharmaceutical Pricing Agreement entered into between drug manufacturers and a division of the Department of Health and Human Services. Although no statute created a private right of action to sue on such PPAs, the county claimed that it could sue as a third-party beneficiary of the PPAs to which the drug manufacturers had agreed.
Justice Ginsburg, writing for the Court, determined that permitting such third-party beneficiary suits would be incompatible with the statutory design. The 340B program and its attendant PPAs are to be administered by the Secretary of HHS and her agents. HHS oversight would be impossible if third-parties were permitted to set themselves up as independent enforcement agencies. This is so because the drug companies are required under the statute to provide price information to the government so that it can set price ceilings. In return, the government agrees not to disclose the price information. If 340B entities could sue to challenge prices, the regulation would become a mechanism through which the drug companies' trade secrets would routinely be made public.
Citing to the Restatement of Contracts, the Court observed that a nonparty is legally entitled to benefit from a promise contained in a contract only if the parties to the contract so intended. The county reasoned that the entire purpose of the statute that created 340B entities and PPAs was to benefit entities such as itself. The Court disagreed, noting that the PPAs merely incorporated statutory language, rendering a suit to enforce the PPAs identical to a suit to enforce the underlying statute. The U.S. government, as amicus curiae, argued -- and the Court agreed -- that Congress did not intend to share the burden of enforcement of the the statute with 340B entities. The county objected that Congress has acknowledged that HHS lacks the resources to effectively monitor and police the PPAs. The Court was unmoved. Congress addressed the issue in the 2010 Patient Protection and Affordable Care Act with a new dispute resolution procedure, plus new penalties for drug manufacturers who overcharge 340B entities.