Friday, September 30, 2011
We've blogged about the Jamie Leigh Jones case before (here, here and here, and probably other places as well). Jones alleged that she was drugged and gang raped by fellow employees and held in a storage container in Iraq when she was there as a military contractor with Halliburton (now KBR). When Jones sued KBR, KBR sought to compel arbitration pursuant to her employment contract. Her claims were tied up until the 5th Circuit held 2-1 that she could pursue her action in court.
Opponents of "mandatory arbitration" pointed the Jones case as an example of its injustice -- the fact that Jones had to fight so hard just to have her "day in court." (Indeed, Jones' story was featured in the recent documentary "Hot Coffee" that was aired on HBO - we blogged about it here). Her ordeal even prompted Senator Franken to make a more specific call for a ban on military contracts with companies that required employees to arbitrate claims of sexual assault and harassment.
Jones recently lost her case when a Texas jury returned a verdict in favor of KBR (here's one view of why she lost). Now, the latest: Jones has been ordered to pay KBR $145,000 in court fees. That's how our justice system encourages alleged rape victims to come forward?! Seriously, allegations of sexual misconduct are subject to a vast grey area, with attendant problems of proof. Now coming forward as a victim is accompanied by the risk that you'll have to pay court costs, even to one of the world's deepest pockets. (Apparently, KBR sought $2 million, but attorneys' fees were denied).
Jones' lawyer gave this touching statement to the WSJ Law Blog:
Jamie, you remain a hero in my eyes. I am humbled that you chose me to stand for you. I am sorry that we did not walk out of that courtroom with justice, but I am proud to have stood by your side fighting for it for five long years. I am sorry that you have to pay the costs of the defense in this litigation. I am sorry that we will not recover the costs of your prosecution, either. This is a loss that will forever haunt me, my friend. I am truly sorry.
[Meredith R. Miller]
Six months ago, we reported on the departure of Tony Award winning director and MacArthur Foundation certified genius, Julie Taymor, from the trainwreck that is drawing full houses of rubber-neckers, Spiderman: Turn off the Dark. Back then, we noted that the parties seemed to be trying to avoid anything approaching litigation. Well, the gloves seem to be off now.
Today's New York Times reports that the two sides are heading for arbitration early next week, as both sides are claiming breach of contract. Ms. Taymor claims that the Spiderman producers owe her $500,000 in royalties for her work on the musical and that she was paid only a $125,000 fee -- and that was five years ago. She is represented by her union, the Stage Directors and Choreographers Society.
The Times reports that the directors are claiming that she is owed nothing because she was the one who breached the contract by being. . . , well, . . difficult. Details are sketchy because both sides are being very grown-up about all this and not trying to fight it out in the media, which is really a shame because there must be a lot of juicy gossip surrounding the most expensive production in the history of Broadway that is also the top-grossing show on Broadway but still barely makes enough to cover the costs of its unbelievable lavishness.
Thursday, September 29, 2011
Today's New York Times reports that the United Automobile Workers (UAW) union has reached a four-year contract agreement with General Motors (GM). This is shockingly good news in a time of general economic contraction when much is being blamed on the power of unions and their long-term contracts.
GM (whose corporate headquarters is pictured) is willing to put $215 million into increased labor costs in the next three years, but that will represent only a 1 percent increase in its labor costs over that period, according to the Times. The Times also reports that the contract calls for the creation of 6,400 new jobs, the transfer of some work from Mexico to the United States and an increase in entry-level pay.
The deal also includes incentives for workers to accept early retirement. GM expects ten percent of its skilled-trade employees to take the $75,000 being offered and estimates that it will save itself $30 million if they do.
One onion in the ointment is that the company plans to offset much of the costs associated with new bonuses and wage hikes by eliminating a program that provided free legal services for employees. An additional wrinkle, at some plans, the Times reports, fewer than 40% of those eligible bothered to vote.
Apparently the UAW is also close to a deal with Ford.
Wednesday, September 28, 2011
In the “it’s about time” category, the L.A. Times reports that a fed-up entrepreneur has created a database called the “National Fine Print Repository” which it compares to a “CliffsNotes for contracts.” David Hirsch, sick of fine print and “legal gobbledygook” (yes, that's the official term) created a company, Transparency Labs, to help consumers understand what they can't negotiate. Users can search for a contract by company and, if the contract is in the database, a summary of key provisions appears that translates the legalese into English written at the "ninth-grade reading level". The database already has “2,000 contracts for banks, credit card issuers, cellphone companies, and retirement accounts,” – in other words, all the usual suspects. Hirsch hopes to make money by having his site provide a “seal of approval” to companies or by offering a monitoring service for users. I wonder if they'll also negotiate mandatory arbitration clauses, limitations of liabilities and disclaimers? Ahhh, if wishes were horses.....
Tuesday, September 27, 2011
Other generations have had their hardships to deal with: the Black Death, Thirty Years War, the Great Depression, World War II, Mork and Mindy. But we had to survive the disruption of our lives by careers and children, transforming us from well-educated aficionados of all the meats of our cultural stew (including veganism) into the sorts of dullards who haven't seen a film not distributed by Disney since Pulp Fiction.
And then came Netflix. It enabled us to maintain our cultural edge, viewing all of the movies and TV series that people with lives watch from the comforts of our living room couches. And then came streaming! Babysitter, bye-bye! Why pay $10/hour for some high school student to play Barbies with your daughter, when you can plop the tyke in front of the neglecto-matic for endless episodes of SpongeBob and Dora the Explorer, until the inevitable transition to iCarly and Wizards of Waverly Place? And then in the evenings, you broaden your horizons (and vocabulary) with Deadwood and Dexter, intermingled with every film version of Jane Austen, Charles Dickens and Thomas Hardy ever made. Life was good.
And then came the inevitable decline. New price structures were introduced at the same time as Netflix reduced its offerings, as reported here in the New York Times. That's right, folks! Netflix told its customers, "Pay more! Get less! What are you going to do about it? Go to Blockbuster? Bwahahahahaha!" Customers didn't take it sitting down. They got off the couch and walked, as reported here in the NYT, and Netflix's stock took a pummeling as a result, as reported here in the NYT.
Oh, ye of little faith. Contracts to the rescue! Today, the NYT reports that Netflix has entered into a new streaming deal with Dreamworks (take that Starz!). Plus, Netflix has also renewed its deal with Discovery, meaning that Netflix viewers will be able to stream TLC and Animal Planet. So, the question for the future is whether we can fill the hole in our souls with "Say Yes to the Dress."
Time will tell.
Monday, September 26, 2011
Last week, the 9th Circuit issued its opinion in Kolev v. Euromotors West/The Auto Gallery. The facts are pretty humdrum. Diana Kolev brought a "pre-owned" car that developed mechanical problems that she believed were covered under a warranty. The dealership refused to honor her warranty claims, and when she sued for breach of warranties under the Magnuson-Moss Warranty Act (MMWA), breach of contract and unconscionability, the dealership moved to compel arbitration. The District Court granted the motion to compel. After the arbitrator largely sided with the dealership, Ms. Kolev challenged that ruling in the District Court, which upheld the arbitral decision.
On appeal, Judge Stephen Reinhardt (pictured) authored the majority opinion, reversing the District Court's decision to compel arbitration. Ms. Kolev argued that the MMRA bars compelled arbitration of her warranty claims. The majority undertook a two-part Chevron analysis to determine whether that was indeed in the case. In the first part of the Chevron test, the Court found that the MMRA expressed no clear congressional intent with respect to compelled arbitration. However, in the second part of its analysis, the Court found that Congress had delegated to the Federal Trade Commission (FTC) to “prescribe rules setting forth minimum requirements for any informal dispute settlement procedure which is incorporated into the terms of a written warranty.” The FTC then promulgated Rule 703, which prohibits pre-disptue compelled binding arbitration. The Court found this decision of the FTC to be reasonable and therefore binding on the Court, notwithstanding the Supreme Court's repeated admonitiions that the Federal Arbitration Act was to be liberally construed in favor of arbitration.
In so doing, the 9th Circuit created a split, as the 5th and 11th Circuits have both found that the MMRA may not bar pre-dispute mandatory arbitration of warranty claims. The Majority explained its reasoning as follows:
We do so for the following reasons: (1) the FTC interpreted the statute consistent with its carefully reasoned understand- ing of the enacting Congress’s intent, as evidenced by the statute’s language and legislative history; (2) the FTC’s con- struction advances the MMWA’s purpose to protect consum- ers from predatory warrantors and to provide them with fair and informal pre-filing procedures that preserve their rights to enforce their claims for breach of warranty through civil liti- gation in the state or federal courts; and (3) the persistence of the FTC’s rule that the MMWA bars pre-dispute mandatory binding arbitration — expressly reaffirmed more than a decade after the Supreme Court held that the FAA “mandates enforcement of agreements to arbitrate statutory claims” absent “contrary congressional command — requires that the courts afford the agency’s construction particularly strong deference. Because we are required to defer to the reasonable construction of a statute by the agency that Congress has authorized to interpret it, we hold that the MMWA precludes enforcement of pre-dispute agreements such as Porsche’s that require mandatory binding arbitration of consumer warranty claims.
There was, of course, a dissent, which accused the Majority of departing from Supreme Court precedent as well as the decisions of other Circuit Courts. The real problem, in the dissent's view, was a conflation of a a narrow category under the MMWA, "informal dispute settlement procedures" with any altnerative dispute resolution procedure provided by a private contract. As a result, Chevron deference to FTC rules is inappropriate in this case, as the arbitration at issue here is not the kind of informal dispture settlement procedure addressed in Rule 703. Moreover, according to the dissent, the FTC Rule would not be reasonable if it were indeed in tension with the federal policy under the FAA favoring arbitration.
The dissent predicts dire effects if Judge Reinhardt's opinion is allowed to stand. Stay tuned.