ContractsProf Blog

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Valparaiso Univ. Law School

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Friday, January 21, 2011

What Darth Vader wants in the contract, he gets in the contract

For anyone looking for a clip to accompany the teaching of modification, the pre-existing legal duty rule, duress, negotiations or The Law of Star Wars, I offer this 1-minute excerpt from Robot Chicken, a show in the Adult Swim block on Comedy Central, which often parodies pop culture. This particular parody focuses on a deal between Darth Vader and Lando Calrissian that Darth Vader repeatedly "modifies."  

Two important warnings before you watch: (i) the clip includes a few bleeped-out expletives, and (ii) you may find yourself unable to stop repeating Vader's catch phrase for at least two hours after viewing.  

Hat tip to my TA for passing this along to me (I am way too old busy to be watching shows like this one.)

[HRA]

 

January 21, 2011 in Film Clips, Teaching | Permalink | Comments (0) | TrackBack (0)

Travel Advisory: Prostitution Is Illegal in Las Vegas

Breaking news from the New York Daily News, which now seems to be little more than a front organization for the Onion News Network.  According to the Daily News, New York college student Hubert Blackman is suing an escort service for $1.8 million.  He was unhappy because the stripper who performed a lap dance and a sex act for him left after half an hour and he had paid for an hour.  Here we have a dramatic reconstruction of their interactions [please note, the actors have substituted the word "argument" for an unspecified sex act in order to retain our PG-13 rating]:

Mr. Blackman was traumatized by the incident, especially since, when he called the police to complain about this breach of contract, they threatened to have him arrested and insisted on calling him "John" even though his name is Hubert. 

[JT]

January 21, 2011 in In the News, Recent Cases, Travel | Permalink | Comments (0) | TrackBack (0)

Thursday, January 20, 2011

SCOTUS on the Right to Informational Privacy for Government Contractors

Supreme_large_seal The U.S. Supreme Court issued a unanimous verdict yesterday in NASA v. Nelson, a case in which some employees of government contractors challenged background checks that they were required to undergo in order to retain their positions.  The plaintiffs, scientists and engineers at Jet Propulsion Laboratories, alleged that the new, expanded background checks violated their rights to informational privacy.  Many of them had worked at the lab for decades and had never previously been subjected to such background checks.  The forms asked employees to state whether or not they had used illegal drugs in the past year, provide details regarding that drug use and state whether they had sought counseling for such drug use.  The form also required the employee to list all prior schools, employers and residences so that each of those entities could be sent a form on which they could note any positive or negative reflections on the employee's character.  The Ninth Circuit found these aspects of the background check constitutionally problematic. 

Justice Alito, writing for six Justices, assumed without deciding that a right to informational privacy exists but found that the background checks did not violate any such right.  Justice Kagan, who had had a hand in designing the new background checks, did not participate in the case.

Justice Scalia wrote separately to scold his fellow Justices for being so obtuse as to even entertain the possibility that a right to informational privacy might exist.  Justice Thomas joined Justice Scalia and also added his own two cents in which he pointed to prior opinions in which he had stated that no general right to privacy exists and that the Due Process Clause cannot be a wellspring of unenumerated rights.  Justice Alito had assumed arguendo that a right to informational privacy exists only because the Supreme Court had referenced such a right in two prior cases. Moreover, Justice Alito pointed out in a footnote, as neither party to the case questioned the existence of a right to informational privacy, the issue had not been briefed and it would thus have been inappropriate for the Court to address it.

[JT]

January 20, 2011 in Government Contracting, Recent Cases | Permalink | Comments (0) | TrackBack (0)

Civil Recourse Theory in the Sunshine State

A The Florida State University College of Law will host a "Symposium on Civil Recourse Theory" on February 11-12 in Tallahassee.  Civil Recourse Theory (CRT) is hot new theory in the private law area, and FSU has lined up an impressive panel of speakers.  Here's the sitch:

Civil recourse theory is an account of private law (property, contract and especially tort) according to which the primary purpose of private law is to empower victims to confront publicly those who have wronged them and enlist the state’s help in addressing those wrongs. This event brings together some of the world’s top scholars in private law to discuss this emerging area of legal philosophy.

The proceedings will be published in the FSU Law Review.  Attendance at the conference in free.  And even better (if you've blown your travel budget) is that the school will provide live streaming video of the whole bean feed.  Full details here.

If you're not familiar with CRT, a good introduction from a contract law perspective is Nate Oman's (Wm. & Mary) Consent to Retaliation: A Civil Recourse Theory of Contractual Liability.

FGS (via Curtis Bridgeman)

January 20, 2011 in Conferences | Permalink | Comments (0) | TrackBack (0)

Wednesday, January 19, 2011

More Links on General Dynamics and Boeing

Yesterday, Laura Donohue posted for us on the two consolidated state secrets cases on which the Supreme Court heard argument.  Those looking for further commentary can find several links on the SCOTUSblog here.  

Scalia Both Dahlia LIthick on Slate and Adam Liptak in the New York Times, focus on Justice Scalia's suggestion that the Court's approach in state secrets cases has been to tell the parties to "go away."  "You say potato, I say state secrets, let's call the whole thing off," seems to be the basic idea.  As is often the case, Scalia's reasoning is as catchy and wry as it is without foundation.  Unless he is conflating the Totten doctrine with the state secrets privilege, as the courts are now wont to do and as the government is irresponsibly encouraging them to do, Scalia is completely wrong about what the state secrets privilege requires.  

Unfortunately, Justice Kagan's "heads I win; tails you lose" remark is more on point.  For all the debates in oral argument over which entity is the "moving party" in this case, that has never mattered in the state secrets privilege context, because the government never loses when it asserts the privilege.  Either it wins and gets the case dismissed or it wins and the case proceeds without the evidence subject to the privilege -- which is to say without evidence vital to some part of plaintiffs' claims.  Other options remain largely unexplored in recent case law.

But courts have not treated the state secrets privilege like the public policy rule relating to illegal contracts by leaving the parties as they find them.  While these two cases have been likened to Dickens' Jarndyce and Jarndyce, it would be not Dickensian but Kafkaesque if the Court would say to the parties after 20 years of litigation that their claims are non-justiciable.

[JT]

January 19, 2011 in Commentary, Government Contracting, Recent Cases | Permalink | Comments (0) | TrackBack (0)

A Few Footnotes on Laura Donohue's Post

Professor Donohue makes reference to two cases and a statute with which our readers might not be familiar but which are important to an understanding of the General Dynamics and Boeing cases on which the Court heard argument yesterday.  

First, she mentions Totten, about which we have blogged in the past, and mentioned in another post here.  

Lincoln In Totten, the administrator for the estate of William A. Lloyd broght a claim against the government seeking to recover for the breach of an espionage contract.  Lloyd allegedly entered into an agreement with President Abraham Lincoln in which Lloyd infiltrated enemy territory during the Civil War in order to provide the U.S. Government with information relating to the military forces and fortifications of the Confederacy.   For these services, Lloyd was to be paid $200/month plus expenses, but he received only his expenses.

Justice Field, writing in 1875, found that the subject matter of the contract was a secret and that both parties must have known at the time of their agreement that their lips would be “for ever sealed respecting the relation of either to the matter.”  In order to protect the public interest in having an effective arm of the government that could engage in secret services, the Court ruled that there could be no claim for breach of a secret contract because the existence of the contract was itself a secret that could not be disclosed.

As Professor Donohue points out, Acting Solicitor General Neal Katyal invoked Totten in arguing that plaintiffs' suits in General Dynamics and Boeing should be dismissed.  If the Court were to bite on that one, it would be an extraordinary -- and dare we say outrageous -- development.  Totten is a justiciability doctrine, and it as these cases have been in the courts for the better part of two decades, it's a bit absurd for the government to now assert that both parties understood when they entered the agreement that its very essence was a state secret which neither party could disclose.

Boeing_B-29_Superfortress Professor Donohue also mentions Reynolds, the locus classicus of the modern state secrets privilege.  That case was brought by the widows of three civilians who were killed when an Air Force B-29 crashed while testing out new equipment.  The plaintiffs sought the Air Force's official Accident Investigation Report so that they could pursue their theory that the crash had been the result of negligence either in maintenance or in piloting the aircraft.  The Air Force refused to produce the report and eventually claimed that it would not do so because doing so would result in the disclosure of national security secrets.  The Supreme Court ruled that the Air Force did not have to produce the report because it had properly asserted the state secrets privilege by producing a declaration from the head of the agency involved setting forth the dangers that would follow from disclosure.  The standard established by the Reynolds court is that the state secrets privilege is absolute and prevents discovery of information subject to the privilege whenever the privilege is properly asserted by the government and the court is persuaded that “there is a reasonable danger that compulsion of the evidence will expose military matters which, in the interest of national security, should not be divulged.”  Pace Katyal, the cases on which the Court heard argument yesterday are about the state secrets privilege and not about Totten.  More particularly, it is about whether the U.S. can make an administrative finding that a contractor is in default and then invoke the privilege to prevent any challenge to that determination.

Professor Donohue invokes the Classified Information Procedures Act (CIPA) as a possible solution, and we agree that this is a promising avenue to pursue.  CIPA was enacted to address the danger that a criminal defendant might threaten to reveal state secrets if prosecuted and thus use "graymail" to escape such prosecution.  CIPA provides procedures that enable a court to determine what disclosures are relevant to the criminal proceedings and also to proceed in camera or to have documents sealed so that the criminal prosecution can occur without the public dissemination of state secrets.  

But here's the key to CIPA: if the court is convinced that the criminal defendant must rely on classified information and that there is no way to proceed without risking disclosure, the government must forego prosecution.  The state secrets privilege has no analogue.  It is never the case that if the government cannot assert an affirmative defense without reliance on secret information, it must suffer the consequences.  Rather, as Justice Kagan noted, the state secrets privilege has developed into a pro-government game of heads, I win; tails, you lose.

The result, as many, many scholars have pointed out, is the government's abuse of the privilege.  This should not be surprising since the privilege was clearly abused in Reynolds itself, since the Accident Report at issue in that case contained lots of evidence of negligence and very little (if any) classified information that posed a reasonable danger to national security.  What is surprising is that courts continue to allow the government to assert the state secrets privilege and to grant government motions to dismiss claims based on the state secrets privilege before discovery has even begun.  That's one heckuv an evidentiary privilege!

[JT]

January 19, 2011 in Commentary, Government Contracting, Recent Cases | Permalink | Comments (0) | TrackBack (0)

Laura Donohue on General Dynamics

Supreme_Court_US_2010

Heads or tails, the government wins, Justice Kagan noted during oral argument this morning in the consolidated case of General Dynamics v. U.S. and Boeing v. US (Nos. 09-1298 & 09-1302).  

The issue before the Court is whether the government can invoke state secrets privilege to prevent a superior knowledge defense in a civil suit.

Plaintiffs argue that their 1988 contract to develop stealth technology for the A-12 Avenger (artist's conception, below right) relied on the government subsequently providing classified, technical information. The government’s failure to do so resulted in the companies’ inability to meet their development schedule.

The government’s contracting officer found default termination of the contract and demanded the return of unliquidated damages—defined broadly by the Acting Solicitor General during oral argument as claims not approved by the government, in this case, some $1.35 billion.

The key problem with the plaintiffs’ position is that there is no language in the contract indicating that the contractors were to receive specialized information from the government.  To the contrary, the government set up a competitive situation, awarding pre-contracts to two teams, to see who could develop the most impressive stealth technology.  As Acting Solicitor General Neal Katyal noted, the contract was to acquire technology, not to provide it.  

Donohue Katyal asserted that the courts should not be in the business of interfering in contract law, where sophisticated parties had the obligation to include any unwritten assumptions into the contract itself.

He further stated that plaintiffs’ failure to perform, explicitly contemplated in the language of the agreement, established the contracting officer’s right to determine default.  In light of Totten, plaintiffs had been on notice that state secrets may be asserted in subsequent suits.

Herein lies the rub:  Mr. Carter Philips, who argued for General Dynamics and Boeing, suggested that the government could not claim default termination and then hide behind state secrets when the contractors attempted to bring a superior knowledge defense.  As the moving party, the government was in a position akin to that of a prosecutor in a criminal case—indeed, the money at stake was substantial:  between $1.35 billion and $5 billion, depending upon the immediate calculus employed.  Reynolds did contemplate such a situationand recognized that the government could not have it both ways.

The Acting Solicitor General disagreed:  it was the plaintiffs, not the government, who brought suit.  The plaintiffs, not the government, were thus the moving party.

Justice Scalia offered some well-founded skepticism:  just because the legal action (here, default termination) did not occur in court did not mean that the government was not the moving party.   

Justice Ginsberg went further:  didn’t the plaintiffs’ claim that the government had a duty to provide information make plaintiffs the moving party?

Indeed, as Justice Roberts asked, could the government ever be the moving party?

Apparently not.  A rather convenient rule, indeed.

A-12_Avenger_Concept According to the Acting Solicitor General, under the language of this contract, the government has an absolute right to unliquidated damages at the time the contracting officer determines default termination.  Any plaintiff who brings suit will be the moving party.  And if the suit moves forward, the plaintiff is on notice that state secrets may result in dismissal.  If the contractors don’t like it, they can simply contract around the state secrets privilege.

But would the government accept language in a contract, Justice Roberts asked, that sets aside a state secrets claim?  

Perhaps not, conceded Katyal – but there may be other options, such as alternative dispute resolution within the military, or a classified panel, or setting aside a certain sum of money.  None of these, though, in the immediate suit, was of issue.

The case points to a much larger issue in state secrets, which is the utter inadequacy of the doctrine to take account of how deeply private industry has become involved in national defense.  

In December,Penn Law Review carried an article I wrote detailing the use of the doctrine over the past decade.

The big surprise?  State secrets has become a form of private indemnity – it is the contractors, in civil suits that range from breach of contract and patent infringement to personal injury and wrongful death, who often assert state secrets as an affirmative defense.  They may then lobby the government to become involved.

The Boeing case is thus somewhat unusual, in that contractors are generally arguing for use of the privilege.  They can’t have it both ways.  But then again, neither can the government.

What is needed is a far-reaching solution that takes account of the degree to which U.S. national security has become dependent on private industry.  Failure to come up with a civil solution—akin to the Classified Information Procedures Act (PL 96-456, 18 USC App. III, Secs 1-16) in criminal matters—will mean the continued miscarriage of justice and breach of fundamental fairness that inevitably occurs when parties are categorically denied their day in court.

[Posted on Professor Donohue's behalf, by JT]

January 19, 2011 in Commentary, Government Contracting, Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Court of Federal Claims to Armour of America: The "u" is for U Lose

In an opinion unsealed on January 10, 2011, the Court of Federal Claims rejected Armour of America's breach of contract claims and granted judgement to the United States on its counterclaims in Armour of America v. United States.  The opinion is lengthy, so those in need of greater detail will have to consult the full opinion, linked to above.  

CH-46E The case has some similarities with the General Dynamics and Boeing cases, relating to the cancelled contracts to build the A-12 stealth aircraft, on which argument in the Supreme Court is scheduled for this week.  As in those cases, this is a case about the Navy terminating a contract because the contractor had filed to make progress towards the completion of the contract in accordance with its terms.  

On June 10, 2004, the Navy had awarded Armour of America (AOA) a contract to replace existing metallic armor on the CH-46E helicopter (pictured being trained to heal).  The value of the contract was in excess of $6 million.   One month later, the Navy realized that AOA's armor was insufficient for its purposes.  The Navy sent AOA a letter advising AOA that it had about a month to develop a product that would serve the Navy's purposes or the contract would be terminated.  One day before the deadline established in the letter, the parties met and AOA asked for three or four more weeks. One day after the deadline established in the letter, having received no satisfactory response from AOA, the Navy terminated the contract.  The Navy then awarded the contract to ArmorWorks and sought in its counterclaim to recover $1.5 million in re-procurement costs plus over $45,000 in administrative costs

AOA challenged the termination arguing first that the Navy awarded the contract knowing of a ambiguity in AOA's bid and second that the termination was not for default but for the convenience of the government.

The court found no ambiguity in the minimum contract requirements and, allowing the contracting officer to terminate the contract if he reasonably believed AOA was not reasonably likely to complete the contract on time, found that AOA, given opportunity to cure any deficiencies, failed to alleviate the Navy's concerns in a timely manner.  Even four weeks after the termination, although AOA continued ballistics testing, it still could not meet the Navy's specifications for its armor in terms of its ability to withstand impacts.  The court thus concluded that there was no reasonable likelihood that AOA could complete the contract on time.  

As a result, the court found that the Navy had acted reasonably in terminating the contract for default.

On the government's counterclaims, the court determined that the armor provided by ArmorWorks was substantially similar to that specified in the terminated contract with AOA.  The court also found that the government had acted reasonably to minimize its re-procurement costs.  As a result the court awarded the government the full damages sought on its counterclaim, including its administrative costs.

[JT]

 

January 19, 2011 in Government Contracting, Recent Cases | Permalink | Comments (0) | TrackBack (0)

Tuesday, January 18, 2011

Introducing Laura Donohue and the General Dynamics Roundtable

Donohue
We have previously posted about Laura Donohue's scholarship, now available, by the way, via the University of Pennsylvania Law Review.  Today, we are happy to welcome her as a guest poster on the blog.  Professor Donohue will be holding forth on a case being argued today in the U.S. Supreme Court, General Dynamics v. United States, consolidated with Boeing v. United States.

We look forward to a lively discussion of the case here on the blog, and we thank Professor Donohue for starting us off.

[JT]

January 18, 2011 in About this Blog, Government Contracting, Recent Cases | Permalink | Comments (0) | TrackBack (0)

Weekly Top Ten from the Social Science Research Network

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

November 19, 2010 to January 18, 2011

RankDownloadsPaper Title
1 636 Mortgage Servicing 
Adam J. LevitinTara Twomey
Georgetown University - Law Center, National Consumer Law Center, 
Date posted to database: December 18, 2010 
Last Revised: January 17, 2011
2 345 Choice of Law in the American Courts in 2010: Twenty-Fourth Annual Survey 
Symeon C. Symeonides
Willamette University - College of Law, 
Date posted to database: January 11, 2011 
Last Revised: January 11, 2011
3 213 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
4 197 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
5 171 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
6 166 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
7 139 Contract, Uncertainty and Innovation 
Ronald J. GilsonCharles F. SabelRobert 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
8 133 A Collaborative Model of Offshore Legal Outsourcing 
Cassandra Burke Robertson
Case Western Reserve University - School of Law, 
Date posted to database: November 9, 2010 
Last Revised: November 9, 2010
9 114 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
10 109 The Uncorporation and the Unraveling of 'Nexus of Contracts' Theory 
Grant M. HaydenMatthew T. Bodie
Hofstra University - School of Law, Saint Louis University School of Law, 
Date posted to database: December 10, 2010 
Last Revised: December 15, 2010

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

November 19, 2010 to January 18, 2011

RankDownloadsPaper Title
1 344 Choice of Law in the American Courts in 2010: Twenty-Fourth Annual Survey 
Symeon C. Symeonides
Willamette University - College of Law, 
Date posted to database: January 11, 2011 
Last Revised: January 11, 2011
2 93 Pregnant Man?: A Conversation 
Darren RosenblumNoa Ben-AsherMary Anne CaseElizabeth F. EmensBerta E. Hernández-TruyolVivian M. GutierrezLisa Chiyemi IkemotoAngela Onwuachi-WilligJacob Willig-OnwuachiKimberly MutchersonPeter SiegelmanBeth Jones
Pace Law School, Pace University - School of Law, University of Chicago Law School, Columbia Law School, University of Florida Levin College of Law, Unaffiliated Authors - affiliation not provided to SSRN, University of California, Davis - School of Law, University of Iowa College of Law, Unaffiliated Authors - affiliation not provided to SSRN, Rutgers School of Law-Camden, University of Connecticut - School of Law, Unaffiliated Authors - affiliation not provided to SSRN
Date posted to database: December 17, 2010 
Last Revised: January 5, 2011
3 92 The English vs. The American Rule on Attorneys Fees: An Empirical Study of Attorney Fee Clauses in Publicly-Held Companies’ Contracts 
Theodore EisenbergGeoffrey 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
4 62 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
5 60 The Role of Dynamic Renegotiation and Asymmetric Information in Financial Contracting 
Michael R. Roberts
University of Pennsylvania - The Wharton School - Finance Department, 
Date posted to database: December 31, 2010 
Last Revised: December 31, 2010
6 59 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
7 40 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
8 39 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
9 32 A Toolbox for European Judges 
Martijn W. Hesselink
University of Amsterdam - Centre for the Study of European Contract Law (CSECL), 
Date posted to database: December 17, 2010 
Last Revised: December 17, 2010
10 30 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

[JT]

January 18, 2011 in Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

$75 Million Suit Against the Kardashians

KK This blog has thus far been completely Kardashian free.  Is that because we are too highfalutin to cover contracts involving reality television?  Probably not, as this post should attest.  As best as we can piece thing together form reports on the suit, such as this one from CNN, the Kardashian sisters, Kim (pictured), Khloe and Kourtney, endorsed a pre-paid credit card, the Kardashian Kard.  Given their family's attachment to the eleventh letter of the alphabet, they could have called it the KKK Kard, but nobody ever listens to our marketing ideas for some reason.  In any case, the sisters withdrew their endorsement of the "Kard" when it was criticized for predatory fees.  CNN reports that debit cards usually come with monthly maintenance fees that average $13, while a 12-month "Kard" would cost about $100.  There were additional costs -- $1 for adding money to the card; $1.50 to speak with a live operator, even though that operator would not be a Kardashian; $2/transaction to pay bills with the card.  We at the blog do not know what the Kardashians want to be known for, but it is apparently not predation.

The Revenue Resource Group (RRG) is suing the sisters, their mother and their LLC, seeing to recover the $75 million it expects to lose as a result of the sisters' alleged breach of contract.  As RRG's attorney put it, "With the Kardashians' star power, the amount of cards they would have sold would have been off the chart."  RRG also seeks to recover $500,000 in out-of pocket expenses, which includes the $65,000 the company apparently spent on a "launch party."  The sisters reportedly were not the lives of the party, as they tried to leave early, only returning when their mother was called in to bring them back, and spending much of the evening huddled in a corner sending text messages via iPhones.

That last part of the story is not very credible, since iPhones don't really work for such purposes, as Jon Stewart illustrates in this clip.  While we're on the topic of iPhones, check out how to walk away from your AT&T contract here.

[JT]

January 18, 2011 in Celebrity Contracts, In the News, Recent Cases | Permalink | Comments (2) | TrackBack (0)

Monday, January 17, 2011

Breaking: U.S. Renews Contract with Spotted Ground Squirrels Through 2015

Blacksquirrelrev Trusted reporting from the Onion; read it here.  An excerpt:

"We're happy to have finally reached an agreement with this vital American species, and we thank all the ground squirrels who have been carrying on in good faith for the past 18 months while we worked this out," a jubilant but visibly exhausted Interior Secretary Ken Salazar told reporters at a press conference Tuesday. "Their continued participation in our forests, meadows, and prairies is an integral part of our natural world, and I think our generous offer reflects that fact."

[Meredith R. Miller]

January 17, 2011 in In the News, Miscellaneous | Permalink | Comments (0) | TrackBack (0)

How to Walk Away From Your Contract with AT&T To Get a Verizon Iphone

Verizon-iphone Yes, it is finally true, Apple's exclusive deal with AT&T is over, and the Iphone will now be available from Verizon.  Verizon is widely believed to be a much more reliable carrier (though, some question whether the Iphone will test Verizon's system).  

What if you already have an AT&T iphone and you want to walk away from the contract so you can get a Verizon Iphone?  (The hardware in the phones are slightly different, so you cannot use your AT&T phone on the Verizon network).

The folks at LifeHacker have posted a how-to guide-- that is, how-to efficiently breach your AT&T contract.  They discuss (1)  how to figure out the early termination fee owed to AT&T (here's an ETF calculator) and then (2) how to eliminate or avoid that cost by, among other suggestions, reselling your old phone.  The advice is quite entertaining -- with suggestions such as attempting to negotiate out of the early termination fee (described for some reason as "unethical"), challenging formation based on unilateral amendments, or assignment/novation. 

[Meredith R. Miller]

January 17, 2011 in In the News, Miscellaneous, Web/Tech | Permalink | Comments (0) | TrackBack (0)

Court of Federal Claims Finds No Breach of Implied Contract of Fair Dealing


On January 11, 2011, the Court of Federal Claims issued its opinion and order in Resource Conservation Group, LLC v. United States.  The case involved the plaintiff's bid to lease property that had once been the U.S. Naval Academy's dairy farm.  Resource Conservation Group (RSC) bid on the property and stated its intention to mine the property for sand and gravel.  The Navy responded that it was barred from considering RSC's bid because its proposed use would constitute a disposal of the the property prohibited by section 6976(a)(2)(A) of Title 10 of the United States Code.  In 2008, the Navy entered into a 30-year lease with Anne Arundel County for the county's use and preservation of the N.S. Naval Academy's Dairy Farm.

Naval Academy Insignia RCG responded with a suit alleging that the Navy had breached an implied contract of fair and honest consideration and had violated the Administrative Procedure Act.  It's argument on the breach of implied contract claim was basically that the Navy led it on by encouraging it to bid knowing that RCG's intentions with respect to the dairy farm.  RCG contended that the Navy misconstrued the relevant provisions and should have entertained its bid.  In the alternative, RCG claimed that it was entitled to reimbursement of its bid costs.  

The Court of Claims ruled that the Navy correctly interpreted the relevant statutes and that it was therefore indeed precluded from considering RCG's bid.  In addition, in order for the Navy to have breached the implied contract of fair and honest consideration, it must have acted arbitrarily and capriciously.  The court had no difficulty in determining that the Navy had notdone so.

RCG's claim that it was at least entitled to reimbursement of bidding costs seems more plausible.  As in the General Dynamics/Boeing case currently pending before the U.S. Supreme Court, this part of RCG's case relied in part on its allegations that the government had superior knowledge and thus  had a duty to disclose that knowledge to RCG.  Specifically, RCG maintained that since the Navy knew of its own interpretation of the statute, it should have let RCG know that it would be wasting its time if it bid on the property for the purpose of turning it into a gravel pit.  The court rejected this argument, pointing out the relevant standard: "RCG is held accountable for 'knowledge of law . . . appropriate to the subject matter' and 'reasonable professional competence in reading' the contract. 

[JT]

 

January 17, 2011 in Government Contracting, Recent Cases | Permalink | Comments (0) | TrackBack (0)