ContractsProf Blog

A New Contracts Defense: Killer Bees

In my contracts class, we’ve just begun our study of standard contracts defenses.  Interestingly, via the Consumerist, here's a very non-standard attempt to get out of a contract, based on an alleged infestation of an RV by Killer Bees. 

Having bid on an auction for an RV that was posted on eBay, the buyer sent in a deposit quickly (in part because it was such a good deal).  In response, this was the email that the buyer allegedly received from the auto dealership:

We are devastated with our discovery this morning of a swarm of Africanized killer bees in the 2007 Sandpiper 325RG 5th wheel that you have a deposit on. We have used multiple poisons in an attempt eradicate them. We have vacuumed up the bees that covered the floors, cabinets, and furniture. We tried to clean the traces of honey on the countertops and cabinet tops as completely as possible. This is one of the terrible acts of Mother Nature we have in Arizona. As best we can determine, the bees entered from the door that had been left opened yesterday morning. The interior of this trailer does have a strong chemical odor from the poison and is TOXIC. Our insurance regulations prohibit us from selling this 5th wheel at this time.  Due to these circumstances beyond our control, we are unable to proceed with the sale of this 2007 Sandpiper 325RG 5th wheel. This vehicle is unsafe for occupancy or use. We are therefore refunding your deposit at this time. We have attached several photos. Watch EBay for other close-outs we will be posting soon.

After consulting with an attorney, the buyer sent an email saying that he would still take possession of the vehicle despite the problems.  According to the buyer, the dealership then changed tactics, then claiming that they had no idea about the bees, that there was no contract, and that the

Assuming Buyer’s version is believed, the conflicting versions begin to look like fraud, rather than the establishment of a frustration of purpose (by bee) defense.

[Miriam Cherry/Hat Tip: Megan Thacker]

“And the Golden Globe goes to…the Parol Evidence Rule!”

The telecast of the 68^th Annual Golden Globe Awards Ceremony is this Sunday, January 16^th.  Although True Grit was rumored to be the favorite for “Best Use of Contract Law in a Western or Documentary” here, it appears to have been omitted from the actual list of nominees.  Also not mentioned on the Golden Globe site is the Parol Evidence Rule issue at the heart of the ongoing contract dispute between the Hollywood Foreign Press Association (“HFPA”), which votes on and presents the Golden Globe awards, and Dick Clark Productions (“DCP”), which produces the award telecast. 

 The contract between HFPA and DCP, as amended: (i) gave DCP the right to license the telecast rights for the awards ceremony to a broadcast network (DCP chose NBC); and (ii) specified that HFPA and DCP would split the license payment 50/50.  However, when DCP recently awarded an extension of the telecast license to NBC without first consulting with HFPA, HFPA sued.  HFPA claims that DCP cannot grant an extension of a license without HFPA’s consent.  The primary problem with HFPA’s argument, however, is that the written contract says nothing about HFPA’s consent.  Instead, it states that DCP may grant “any extensions, renewals, substitutions or modifications of the NBC Agreement, and to exploit such productions in all media through the world in perpetuity."  The words “subject to HFPA’s consent” or “only with HFPA’s consent, not to be unreasonably withheld” simply are not there.  And that is where the Parol Evidence Rule enters Stage Left.  HFPA’s preferred term would appear to contradict the writing (if the agreement is partially integrated) or at least fall within its scope (if the agreement is fully integrated).  Thus, evidence of such a consent requirement likely would be barred by the Parol Evidence Rule   However, as reported in this recent Variety article, HFPA has a decent argument under California law, which allegedly is rather welcoming to extrinsic evidence.  Hopefully, some of you more familiar with California law will comment on the accuracy of that assessment.

Biased Author Note:  I am cheering for HFPA in this one.  DCP now is owned by the same conglomerate that owns the Washington Redskins.  And if you’re a Dallas Cowboys fan like I am, you don’t like to see the Redskins’ owner, Dan Snyder, win anything.  

[HRA]

Federal Contractors and Arbitration of Sexual Assault and Harassment Claims

As reported in the Bureau of National Affairs (BNA) Federal Contracts Report (subscription necessary, alas) -- and nowhere else that I can find on the web -- on December 8, 2010, the Department of Defense (DoD) issued its final rule implementing Section 8116 of the 2010 Defense Appropriations Act, known as the Franken Amendment.  The Amendment applies to DoD contracts of more than $1 million and provides that contractors awarded such contracts must not require employees to arbitrate their Title VII claims or "any tort relating to or arising out of sexual assault or harassment."

According to the BNA Report, the Franken Amendment was a response to the case of Jamie Leigh Jones, a former employee of government contractor and former Halliburton-subsidiary, KBR.  Ms. Jones alleged that her fellow KBR employees drugged and gang-raped raped her while she was working for the company in Baghdad.  She further alleged that KBR confiscated, hid and tampered with the rape kit compiled by an army doctor who treated Ms. Jones.  KBR then allegedly confined Jones to a shipping container under armed guard and denied her food, water and medical treatment. 

Jones's case inspired Senator Franken (pictured) because KBR argued that her claims were subject to arbitration and sought dismissal of her suit from the federal courts.  The Fifth Circuit denied KBR's motion to compel arbitration and remanded the case to the District Court.  KBR's petition for cert. was denied in March.  

[JT]

Welcome to the Blog, Heidi Anderson!

Before stepping down as our Dear Leader, Frank Snyder recruited some new additions to our line-up of contributing editors, and I will have the pleasure of introducing them as they begin posting on the blog.  The first such sucker new contributor is the Florida Coastal School of Law's Heidi Anderson.

Prior to joining the Florida Coastal faculty in 2008, Professor Anderson practiced media and telecommunications law with Akin Gump Strauss Hauer & Feld, LLP in Washington, D.C.  During and prior to law school, she interned with law firms in Charlotte and Greensboro, NC and for the United States Court of Appeals for the Federal Circuit.  

On behalf of the veteran bloggers at the ContractsProf Blog, welcome to the blog!  We look forward to adding your virtual voice to our cacophony.

[JT]

Deadline Approaching for Spring Contracts Conference Hotel

At 11:00 AM last Friday, the chant went up loud and clear in San Francisco:

"What do we want?"

"Contracts!"

"When do we want 'em?"

"Now!"

Were I in Valparaiso, where I have trained my first-year students to initiate this chant at the beginning of every Civil Procedure and Criminal Law class, I would not be surprised.   But in San Francisco?

At first, I thought it was the union workers outside of the San Francisco Hilton, but upon closer inspection, I noticed that most of the people carrying signs and chanting were wearing their AALS badges.  And given that a session of the AALS conference had just let out, I can only conclude that what they meant was something like, "We are not satisfied with the three hours of contracts law discussion hosted by the AALS Section on Contracts yesterday.  Enough of these other sessions that don't interest us.  We want more contracts sessions!"

Fortunately, there is a solution.  As we mentioned before, Stetson University College of Law and Texas Wesleyan School of Law are co-sponsoring the 6th Annual International Conference on Contracts, February 18 and 19, 2011, at Stetson’s beautiful campus in Gulfport, Fla. Similar to previous contracts conferences held at UNLV, McGeorge, South Texas, Texas Wesleyan, and Gloucester, England, this conference is designed to offer scholars and teachers at all experience levels an opportunity to present and discuss recently-published papers, forthcoming papers, works-in-progress, and pedagogical innovations, and to network with colleagues from the U.S and around the globe.

The conference hotel will be the Tradewinds Resort in nearby St. Pete Beach. Need we say more?  Well, in case we do need to say more, we'll say this: Stewart Macauley will give the keynote address.  

You can register for the conference here.

But here's the deal: those planning on attending need to reserve a hotel room by January 18th.  Otherwise, the Tradewinds will release the rooms and you won't be guaranteed a place to stay.  Of course, there are other options nearby.

[JT]

Labor Dispute at the New York City Ballet

Balletomanes throughout the Great Flyover let out a collective "Hot Diggety!" when we learned that the New York City Ballet was to create a touring company so that the unwashed masses can soon be awash in the creations of George Balanchine and Jerome Robbins.  Alas, there is trouble in paradise.  Who'da thunk there could be tension or conflict within a dance company?  Not Natalie Portman, that's for sure!

As Crain's New York reports here, the union that represents the dancers contends that the plan to create a touring company that does not include the entire company violates the dancers' contracts.  The plan requires the union's consent, the dancers claim, and the NYCB did not get it.  In fact, the union claims that it was not even consulted before the NYCB announced its plans to create a touring company.

If I could, I would now include a video of the NYCB performing, but they are very careful not to let any of their performances make it onto YouTube, so we'll have to make due with with this video of the San Francisco Ballet performing Balanchine's "Serenade"

I have to add that, although the San Francisco ballet is absolutely fabulous, this video does not come close to capturing the emotional punch that "Serenade" packs.  You have to see it live and hopefully, once this little squabble is put behind us, audiences throughout the country will be able to do so.

[JT]

The Gates of Hell[ish Mandatory Arbitration]?

Thanks to Michigan State University's Daniel Barnhizer and his student Christpher Anderson, we have the picture at right, which Mr. Anderson found taped to a local burger franchise while he was home in Texas for the holidays.

If you can't read the text, here it is in full: 

"Arbitration Notice"

"By entering these premises, you hereby agree to resolve any and all disputes or claims of any kind whatsoever, which arise from the products, services or premises, by way of binding arbitration, not litigation. No suit or action may be filed in any state or federal court. Any arbitration shall be governed by the FEDERAL ARBITRATION ACT, and administered by the American Mediation Association.

"Arbitration Notice"

Further research by contracts profs provides further information regarding the aforementioned American Mediation Association on this website.  Even as we speak, contracts profs are debating the effectiveness of this notice and of the counter-notice suggested by Ian Ayres here.  

[JT]

Weekly Top Ten from the Social Science Research Network

RECENT HITS (for all papers announced in the last 60 days) 
TOP 10 Papers for Journal of Contracts & Commercial Law eJournal 
October 31, 2010 to December 30, 2010

Our own Meredith Miller continues to lead the pack -- three weeks running now! -- on the Law & Society List.  

Rank	Downloads	Paper Title
1	201	Party Autonomy in Rome I and IΙ from a Comparative Perspective  Symeon C. Symeonides,  Willamette University - College of Law,  Date posted to database: October 25, 2010  Last Revised: October 26, 2010
2	194	Suing the Government as a 'Joint Employer' - Evolving Pathologies of the Blended Workforce  Steven L. Schooner, Collin D. Swan,  George Washington University - Law School, George Washington University - Law School,  Date posted to database: October 21, 2010  Last Revised: November 16, 2010
3	193	The Gold Clause Cases and Constitutional Necessity  Gerard N. Magliocca,  Indiana University School of Law - Indianapolis,  Date posted to database: November 17, 2010  Last Revised: November 21, 2010
4	157	Divided Loyalties: The Attorney’s Role in Bankruptcy Reaffirmations  Gregory M. Duhl,  William Mitchell College of Law,  Date posted to database: November 17, 2010  Last Revised: November 17, 2010
5	148	The Regulation of Surrogate Motherhood in Greece  Aristides N. Hatzis,  University of Athens - Department of Philosophy & History of Science,  Date posted to database: October 10, 2010  Last Revised: October 10, 2010
6	148	Access or Expectation: The Test for Fiduciary Accountability  Robert Flannigan,  University of Saskatchewan,  Date posted to database: October 29, 2010  Last Revised: December 17, 2010
7	137	When Do Fiduciary Duties Arise?  James J. Edelman,  University of Oxford - Faculty of Law,  Date posted to database: October 26, 2010  Last Revised: November 13, 2010
8	126	Contract, Uncertainty and Innovation  Ronald J. Gilson, Charles F. Sabel, Robert E. Scott,  Stanford Law School, Columbia University - Law School, Columbia University - Law School,  Date posted to database: November 20, 2010  Last Revised: December 3, 2010
9	98	Does Disclosure Matter?  Florencia Marotta-Wurgler,  New York University (NYU) - School of Law,  Date posted to database: November 24, 2010  Last Revised: December 7, 2010
10	96	Structure and Reform of Corporate Governance in the United Kingdom in Relation to the Shareholder Versus the Stakeholder Theory  Rohit Arora,  Unaffiliated Authors - affiliation not provided to SSRN,  Date posted to database: September 29, 2010  Last Revised: September 29, 2010

RECENT HITS (for all papers announced in the last 60 days) 
TOP 10 Papers for Journal of LSN: Contracts (Topic) 
October 31, 2010 to December 30, 2010

Rank	Downloads	Paper Title
1	91	Strategic Default: The Popularization of a Debate Among Contract Scholars  Meredith R. Miller,  Touro College - Jacob D. Fuchsberg Law Center,  Date posted to database: October 3, 2010  Last Revised: November 17, 2010
2	87	The English vs. The American Rule on Attorneys Fees: An Empirical Study of Attorney Fee Clauses in Publicly-Held Companies’ Contracts  Theodore Eisenberg, Geoffrey P. Miller,  Cornell University - School of Law, New York University (NYU) - School of Law,  Date posted to database: November 11, 2010  Last Revised: November 15, 2010
3	55	An Optional Instrument on EU Contract Law: Could it Increase Legal Certainty and Foster Cross-Border Trade?  Martijn W. Hesselink,  University of Amsterdam - Centre for the Study of European Contract Law (CSECL),  Date posted to database: October 23, 2010  Last Revised: December 15, 2010
4	49	An Optional Contract Law for Europe? (Rote Karte oder grünes Licht für den Blue Button) (German)  Walter Doralt,  Max Planck Institute for Comparative and International Private Law,  Date posted to database: November 11, 2010  Last Revised: November 11, 2010
5	38	Rudolf Von Jhering’s Influence on Karl Llewellyn  Robert Whitman, Julie E. Wynns,  University of Connecticut School of Law, Unaffiliated Authors - affiliation not provided to SSRN,  Date posted to database: October 1, 2010  Last Revised: October 1, 2010
6	36	How Organisational and Structural Weaknesses Impacted the Harmonisation Process and What it Implies for European Private Law (Strukturelle Schwächen in der Europäisierung des Privatrechts – Eine Prozessanalyse der jüngeren Entwicklungen) (German)  Walter Doralt,  Max Planck Institute for Comparative and International Private Law,  Date posted to database: November 11, 2010  Last Revised: November 11, 2010
7	35	The Double Soul of Promissory Estoppel - A Comparative View  Paolo Pardolesi,  Università degli Studi di Bari - Faculty of Law,  Date posted to database: November 5, 2010  Last Revised: December 8, 2010
8	26	Arbitration's Suspect Status  Hiro N. Aragaki,  Fordham University - Fordham University Schools of Business,  Date posted to database: November 29, 2010  Last Revised: December 28, 2010
9	20	Autonomy and Paternalism from a Common Law Perspective: Setting Aside Disadvantageous Transactions  Stephen Michael Waddams,  University of Toronto - Faculty of Law,  Date posted to database: October 25, 2010  Last Revised: October 25, 2010
10	18	Fannie Mae/Freddie Mac Home Mortgage Documents Interpreted as Nonrecourse Debt (with Poetic Comments Lifted from Carl Sandburg)  John Mixon,  University of Houston - Law Center,  Date posted to database: November 19, 2010  Last Revised: November 19, 2010

[JT]

An Introduction to Our Roundtable on General Dynamics and Boeing

On January 18th, the U.S. Supreme Court will hear argument on a pair of consolidated contracts cases.  The issue before the court is the state secrets privilege, a subject on which the court has not weighed in since it created the modern state secrets privilege in United States v. Reynolds, decided in 1953.  Next week, in anticipation of oral argument, we have invited some scholars and practitioners with expertise in the area to weigh in with their thoughts on the case.  We provide some background below, drawing on an article by two of the people who have agreed to participate in our roundtable, Neil H. O'Donnell and Dennis J. Callahan, both of Rogers Joseph O'Donnell.  Their full article appeared in 52 The Government Contractor, No. 45 (Dec. 8, 2010).  Links to prior opinions, briefs and other materials can be found on the invaluable SCOTUSblog.

In 1988, the Navy awarded General Dynamics and McDonnell Douglas a fixed price contract to develop the A-12, a carrier-based, stealth aircraft  (an artist's conception of which appears at right).   Alleging default, the Navy terminated the contract in 1991 and the contractors filed suit in the Court of Claims challenging the Navy's claim that they were in default.  Boeing is the successor in interest to McDonnell Douglas.

In 2009, the Federal Circuit recognized the case as an American Jarndyce and Jarndyce, but the Supreme Court, in accepting cert., has agreed to decide only the issue of the applicability of the state secrets privilege (the SSP) to this case.  The litigation is currently in its third round.  In the second round, the Federal Circuit upheld the Court of Claims' finding that the SSP precluded the contractors from asserting their claim that the government had superior knowledge regarding stealth technology that it had failed to disclose.  The issue on which the Supreme Court has agreed to hear argument is "Whether the government can maintain its claim against a party when it invokes the state-secrets privilege to completely deny that party a defense to the claim." 

That is the case in a very small nutshell.  I will leave it to our guest bloggers to explore the issue in further detail in the coming weeks.

[JT]