June 1, 2011
Met Stars Pull Out of Japan Tour
Back in 1991, my parents attended a performance of the Israel Philharmonic in Jerusalem, featuring Isaac Stern (pictured) as the soloist. This was during the Persian Gulf War, and Israelis had been conditioned to bring their gas masks with them everywhere they went, in case Saddam Hussein launched a gas attack via missile. As recounted in this archived report from People Magazine, during the concert, the air raid siren went off. The orchestra left the stage, while the audience stayed seated and each audience member put on a gas mask. Stern came back on stage and played solo music, his gas mask at his feet, until the all clear sounded.
I remembered this event today as I read in today's New York Times that a number of opera stars have pulled out of the Metropolitan Opera's scheduled tour of Japan. According to the Times report, 350 members of the Opera company will be traveling to Nagoya and Tokyo for a scheduled two-week run. Two tenors and a soprano have withdrawn from the trip, apparently due to concerns over the dangers of radiation emanating from the the Fukushima Daiichi nuclear plant that was crippled in the aftermath of the earthquake and tsunami that hit Japan on March 11.
It appears that most of the company's members are obligated under their union contracts to proceed with the tour. However as the Met's general manager explained, "[s]tars are stars. They’re different than company members." One of those stars lived through the trauma of the Chernobyl disaster and did not want to re-visit the experience of radiation exposure. That's something Isaac Stern would no doubt have understood. After all, he was born in Ukraine.
Announcing the Michigan Journal of Private Equity & Venture Capital Law
The University of Michigan Law School is proud to announce its newest publication, the Michigan Journal of Private Equity and Venture Capital Law.
The Journal is published semi-annually by the students of the University of Michigan Law School in conjunction with the ABA Committee on Private Equity and Venture Capital.
The Journal addresses the regulatory, securities, corporate, tax intellectual property, and other legal issues involved with private equity and venture capital, including with respect to both investments by funds and the formation of funds.
The Journal is currently accepting scholarly papers and paper proposals for publication in our first issue. We anticipate publishing the issue in late fall 2011. Articles for this issue are generally between 25 and 40 pages long.
Please send drafts, proposals, or inquiries to Jeffrey Koh, Executive Article Editor, at email@example.com, or via ExpressO.
May 31, 2011
Contracts Law Fallout from the Madoff Affair
The New York Times published a story today about Steven Simkin, a New York attoney who is trying to re-negotiate his divorce settlement because, although he and his wife Laura Blank split their assets evenly after a 2006 divorce, much of his portion of the divorce settlement was invested with Bernie Madoff (pictured). Simkin wants Blank to pay back some of the millions he lost as a result of Madoff's fraud. His claim sounds in the doctrine of mutual mistake.
When the parties divorced they split up $13.2 million in assets, $5.4 million of which was in a Madoff account. Mr. Simkin now claims that there was no account, only a Ponzi scheme. Ms. Blank counters that there was an account with an uncertain future value and thus the parties were not mistaken as to the crucial fact at issue in the case.
Six judges have already weighed in on the case, and the Times suggests that a result that favors Mr. Simkin could require the revisiting of other divorce settlements as well as other types of contracts affected by a mutual mistake. According to the Times, there already has been one copycat case in the divorce settlement context.
The most recent opinion in the case, from New York's Appellate Division, 1st Department, can be found here. Last month, that same court granted leave to appeal to New York's highest court, the Court of Appeal, after it ruled 3-2 in favor of Mr. Simkin on Ms. Blank's motion to dismiss on the pleadings.
Here is the heart of the reasoning underlying that conclusion:
Finally, defendant and the dissent ignore the allegations of mutual mistake as to the actual existence of the account itself. Both defendant and the dissent attempt to foreclose plaintiff's claims by transmogrifying the claim of mutual mistake into a claim of mistake in valuation.
The dissent states: "[a]t the time of the agreement, Steven had an account in his name with [Madoff]." Untrue. Steven never had an account in his name with Madoff; on Madoff's own admission there were no accounts within which trades were made on behalf of investors.
The dissent then states, "Steven liquidated part of the account to fund his payments to Laura." Untrue. In Madoff's Ponzi scheme what appeared to Steven and Laura to be a partial liquidation of an account was simply a payment to Steven that came from funds deposited by a more recent "investor" in what the "investor" believed was his own account.
The dissent further observes, "[Steven] did not liquidate the rest of the Madoff account . . . and he continued to invest in it." Untrue. There was no account which could be liquidated, as became apparent when Madoff received $7 billion worth of "liquidation" calls from investors in 2008. Nor was Steven "investing" in an account; his further contributions went directly to pay other "investors" in the scheme.
Weekly Top Tens from the Social Science Research Network
May 30, 2011
Curb Records Sues Tim McGraw
Country singer Tim McGraw (right) has been sued by his record label, Curb Records, over an alleged breach of contract. Here is the complaint. According to the complaint, McGraw has been recording with Curb since 1997. The dispute relates to when McGraw recorded the master tracks for his new album. According to this report on Taste of Country, the contract states that the new music must be delivered to the label, “no earlier than 12 months and no later than 18 months" after his prior album. However, that timetable gets pushed back upon the release of a collection of McGraw's Greatest Hits. The purpose of these term was to make certain that the music on the new album is "topical and new." Curb Records claims that McGraw began recording the current album, Emotional Traffic, in 2008 but did not turn in the final cut of the album to the label until 2010. That early start date renders the music as old as dirt and as stale as the corn bread from last year's Fourth of July parade.
In addition, since Curb recently released a McGraw Greatest Hits album, not only are the masters too old, they are also delivered too early, rendering them both as old as dirt and as premature as a Spring pig born in February. Curb records alleges that McGraw is trying to fulfill his contractual obligations early and thus be free of them.
Curb seeks a judgment declaring McGraw to be in breach of his agreement with Curb, allowing it to enforce remedies provided in the agreement, and also in agreement of a 2001 settlement that reduced the number of albums McGraw was obligated to record with Curb from six to five. As a result, if Curb is successful in its suit, McGraw would be obligated to provide yet another album on the terms specified -- or he'd have to somehow buy his way out of that agreement. They are also seeking consequential damages and injunctive relief that would prevent McGraw from offering his services to anyone other than Curb records until he has completed the terms of his contract.
As Reuters reports, all of this makes McGraw madder than a wet hen. He has filed an Answer and Counterclaims against Curb. He is seeking a declaration that he has delivered all the recordings that he was contractually obligated to deliver to Curb and is now free of further contractual obligations. He also seeks advances, plus compensatory, consequential and special damages. The heart of the dispute seems to surround the timing and frequency of Greatest Hits albums that Curb has released. From McGraw's perspective, the releases prolong both the contract and the periods during which McGraw cannot release new material. To date Curb has only released on track off the new album, the single “Felt Good on My Lips,” which spent several weeks at the top of the country charts. If the album's release is delayed, fans will have to see McGraw perform them live, which he plans to do, claiming that the new material is "his best ever." The whole thing is more complicated than one of Thomas Jefferson's plans for crop rotation.
[JT and Jared Vasiliauskas]