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Valparaiso Univ. Law School

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Friday, November 18, 2011

NY Court of Appeals Holds that "No Layoff" Clause is Ambiguous

The collective bargaining agreement between the Firefighters Union and Johnson City, NY, states:

A. The Village shall not lay-off any member of the bargaining unit during the term of this contract.  B. The Village shall not be required to 'back fill' hire additional members to meet staffing level of expired agreement. 

Images-1Facing budgetary constraints, Johnson eliminated 6 firefighter positions.  The Union filed a grievance, which was denied.  The Union then filed a notice of intent to arbitrate.  By the time the dispute worked its way up to the New York Court of Appeals, the issue was whether the "no layoff clause" is arbitrable.  The Court held that it is not arbitrable because the clause is "not explicit, unambiguous and comprehensive."  Writing for the majority, Judge Pigott reasoned:

From a public policy standpoint, our requirement that "job security" clauses meet this stringent test derives from the notion that before a municipality bargains away its right to eliminate positions or terminate or lay off workers for budgetary, economic or other reasons, the parties must explicitly agree that the municipality is doing so and the scope of the provision must evidence that intent.  Absent compliance with these requirements, a municipality's budgetary decisions will be routinely challenged by employees, and its ability to abolish positions or terminate workers will be subject to the whim of arbitrators.

The pertinent portion of the no-layoff clause here states that the "Village shall not lay–off any member of the bargaining unit during the term of this contract" but this language, in and of itself, does not explicitly prohibit the Village from abolishing firefighter positions out of budgetary necessity (cf. Yonkers Fedn. of Teachers, 40 NY2d at 275-276). Unlike the clause in Yonkers Fedn. of Teachers, the clause here does not explicitly protect the firefighters from the abolition of their positions due to economic and budgetary stringencies. That is not to say that the parties could not have bargained for such a broad clause, only that it is unclear on its face whether they did so at all, which means that the clause is hardly unambiguous (see Crossing Guard Union, 39 NY2d at 965).

The term "layoff" is undefined in the CBA, and is open to different and reasonable interpretations.  Indeed, the parties' disagreement over whether the term "layoff" constitutes a permanent or non-permanent job loss, and whether the Village's abolition of the firefighter positions constituted a layoff, underscores its ambiguity.  Moreover, the clause does not comprehensively prohibit the Village from abolishing firefighter positions, and, given its narrow and limited language, it cannot be construed as such.  Had the Union desired that its members be protected from the elimination of firefighter positions, it could have bargained for such protections.

So, essentially, the New York Court of Appeals held that it was ambiguous whether an elimination of a position constitutes a layoff.  

ImagesJudge Ciparick dissented, writing: 

At a time when the term "layoff" pervades the public dialogue, typically signifying the kind of large scale public and private workforce reductions that have characterized recent economic crises, it is reasonable to conclude that the parties employed that term to succinctly but thoroughly address the threat of job insecurity.  Regardless, then, of whether "layoff," pertained to a temporary period of unemployment or a permanent job cut -- an issue of interpretation, which should be decided by an arbitrator -- the no-layoff clause at issue here should be deemed an explicit, unambiguous and comprehensive job security provision. 

And, here's a recap from WBNG in Binghamton, NY:

Matter of Johnson City Professional Firefighters Local 921 (Village of Johnson City), 2011 Slip Op 08226 (NY Nov. 17, 2011).

[Meredith R. Miller]

 

November 18, 2011 in In the News, Recent Cases | Permalink | Comments (0) | TrackBack (0)

Lawsuit against Southwest Airlines alleging Breach of Free-Drink Coupon Contract

Southwest
Offer, acceptance and consideration? Black label letter contract law? The plaintiffs think so. The story from ABA Journal:

Although the airline revised its policy in August of last year, notifying customers that such coupons would be honored only on the day of the flight after August 2011, a Chicago lawyer is challenging that change.

Adam J. Levitt, who allegedly has about 45 now-worthless free-drink coupons from Southwest, filed suit yesterday in federal court in Chicago, according to Reuters.

The complaint, which seeks class action status, contends that the carrier breached a contract with passengers by changing its policy and refusing to honor the coupons, which have no expiration date. Alcoholic beverages purchased on board otherwise would cost about $5 each.

Levitt, who practices at Wolf Haldenstein Adler Freeman & Herz, is the plaintiff in the case. He is represented by Joseph J. Siprut of the Siprut law firm, who tells the ABA Journal that the situation is akin to a retailer refusing to honor a customer's gift card.

Describing Levitt as a "customer who got burned," Siprut said his client and many others aren't getting the benefit of their bargain. When they purchased their Business Select tickets, they expected to get a free drink, too. But now Southwest has changed the terms of their deal, after the fact.

"This is where a class action lawsuit really is the appropriate mechanism to deal with this issue," Siprut said. Given the $5 value of the free drink, "it only makes sense to do this as a class action on an aggregate basis."

Attorney Tommy Wells of Alabama, a former president of the ABA, says he himself has quite a collection of worthless Southwest drink tickets, too. He plans to use some of them as exhibits when he defends the airline in the case.

The Levitt suit, he tells the ABA Journal, is the second of two would-be federal class actions filed by lawyers against Southwest over the airline's cancellation of its free-drink coupons. The plaintiff has since been substituted in the Birmingham, Ala., federal suit, however, eliminating Wells' plan to ask the original attorney plaintiff, with whom he is friendly, in a deposition why he needs a drink on a one-hour Southwest flight to New Orleans.

The earlier suit, Wells explained, focused more on another type of free-drink ticket earlier offered by Southwest, which essentially was a bonus gift sent out in a coupon book when a customer used Rapid Reward frequent-flyer miles to purchase a ticket.

It is black-letter contract law, Wells said, that such offers can be rescinded prior to acceptance, which would be manifested, in the case of the bonus drink coupons, by actually presenting them for a drink on a Southwest flight.

Similarly, although the free-drink coupons associated with the Business Select tickets purchased by Levitt and others contained no expiration date, they were intended to be used on the ticketed flight, Wells said. However, the ability of customers to print out or duplicate multiple free-drink tickets while booking a flight thwarted that expectation.

Given a choice between keeping flights affordable for all customers on the highly competitive routes that it flies and continuing to offer free drinks to some customers, Southwest opted to eliminate the booze benefit, Wells explained.

In a statement emaiiled to the ABA Journal, the carrier said that "Southwest Airlines works to reward our loyal customers by offering perks for their business. The perks that accompany our Business Select product include a complimentary drink for day of travel, in addition to premiere boarding and extra Rapid Reward points.

"When the Business Select program initially launched, drink coupons associated with the purchase of a Business Select fare did not specify an expiration date," the statement continues. "But we found that some customers were photocopying drink coupons to obtain multiple drinks from a single coupon. We made the decision to post an expiration date on the coupon to prevent the unauthorized copying of the coupons. We cannot directly comment on pending litigation, but we value our customers and we will continue to look for ways to offer rewards for their business."

Wells said the airline is still mulling its options concerning whether to try to consolidate the two would-be class actions in Birmingham and Chicago or attempt to get one of the two cases dismissed.

Not a happy hour for plaintiffs or Southwest.  Cheers!

[Meredith R. Miller]

 

November 18, 2011 in In the News, Teaching | Permalink | Comments (0) | TrackBack (0)

Wednesday, November 16, 2011

New in Print

Pile of BooksSurabhi Ranganathan, Between Complicity and Irrelevance? Industry Associations and the Challenge of Regulating Private Security Contractors, 41 Geo. J. Int'l L. 303 (2010)

It's a relatively thin week, but we can fill it out with this abstract to a new article, Black Lists in EU Contract Law, by Daniela Carusa, that will appear in a forthcoming collection:

Abstract:      
The policing of consumer contracts in EU legislation relies in large part on general clauses (good faith and prevention of significant imbalance) to be applied in member states’ courts. By contrast, EU legislators have occasionally resorted to the legislative technique of black lists, which displace discretionary adjudication and identify as void a finite set of contractual terms. Black lists epitomize an unusually high degree of supranational interference both with the private autonomy of EU citizens and with member states’ prerogatives in private law matters. They offer therefore a privileged stand-point for investigating three under-explored facets of the EU private law project. 

First, while their practical relevance within the EU may be modest, black lists have notably impacted transnational (and trans-Atlantic) contract drafting. The presence of true black lists in some corners of the EU system allows for the impression that enforcement of consumer protection law is much sharper and more coherent than it really is. In the dynamics of consumer law globalization, black lists play a geo-political and economic role that is independent of their actual power within the internal market.

Second, black lists are intrinsically ambiguous as a regulatory strategy. Highlighting the analogy between black lists in consumer law and other well-known enumerated prohibitions in the field of competition law, this paper posits that the formulation of finite regulatory lists is likely to yield paradoxical de-regulatory results in the long term. 

Third, the common perception of black lists as social legislation is only partly accurate. Black lists are indeed aimed at correcting the injustice that results from unleashed private autonomy when the bargaining power of one party (the consumer) is weaker. On the other hand, they add to the costs imposed upon structurally weaker traders in the socio-economic periphery of the Union. 

Given the regulatory, distributive, and discursive ambiguity of black lists, their normative desirability cannot be assessed without a systemic appraisal of the political dynamics of European legal integration. The point applies, more generally, to the whole project of private law harmonization.

[JT]

November 16, 2011 in Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Tuesday, November 15, 2011

Weekly Top Tens 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 

September 3, 2011 to November 2, 2011

RankDownloadsPaper Title
1 308 The Reasonable Person 
Alan D. MillerRonen Perry
University of Haifa - Faculty of Law, University of Haifa - Faculty of Law
2 183 The Foreign Corrupt Practices Act & Government Contractors: Compliance Trends & Collateral Consequences 
Jessica Tillipman
The George Washington University Law School
3 171 The Third Arbitration Trilogy: Stolt-Nielsen, Rent-A-Center, Concepcion and the Future of American Arbitration 
Thomas Stipanowich
Pepperdine University School of Law
4 158 Codification and Flexibility in Private International Law 
Symeon C. Symeonides
Willamette University - College of Law
5 128 The Corporation as Social Contract 
M. KapteinJohan Wempe
Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM), Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM)
6 127 Analyzing Law - A Framework for Understanding Law of All Sorts and for All Purposes (Cases, Exercises and Commentary) 
Neil K. Komesar
University of Wisconsin - Madison
7 117 Bijzondere Overeenkomsten in Kort Bestek (Specific Contracts in a Nutshell) 
Alain-Laurent VerbekePieter Matthias BrulezNicolas CaretteNele Hoekx
University of Leuven, Faculty of Law, Department of Private Law, Unaffiliated Authors - affiliation not provided to SSRN
8 112 Lochner and Constitutional Continuity 
David Bernstein
George Mason University - School of Law, Faculty
9 98 The Three and a Half Minute Transaction: Boilerplate and the Limits of Contract Design 
G. Mitu GulatiRobert E. Scott
Duke University - School of Law, Columbia University - Law School
10 98 Keynote Address: A Regulatory Framework for Managing Systemic Risk 
Steven L. Schwarcz
Duke University - School of Law

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

September 14, 2011 to November 13, 2011

RankDownloadsPaper Title
1 181 The Third Arbitration Trilogy: Stolt-Nielsen, Rent-A-Center, Concepcion and the Future of American Arbitration 
Thomas Stipanowich
Pepperdine University School of Law
2 158 The Three and a Half Minute Transaction: Boilerplate and the Limits of Contract Design 
G. Mitu GulatiRobert E. Scott
Duke University - School of Law, Columbia University - Law School
3 96 The General Principles of Civil Law: Their Nature, Roles and Legitimacy 
Martijn W. Hesselink
University of Amsterdam - Centre for the Study of European Contract Law (CSECL)
4 94 Arbitral Power and the Limits of Contract: The New Trilogy 
Alan Scott Rau
University of Texas at Austin School of Law
5 73 Is Private Law Meaningless? 
Steve Hedley
University College Cork (UCC)
6 71 The Law of Contract: An Introduction 
Jan M. Smits
Maastricht University Faculty of Law - Maastricht European Private Law Institute (M-EPLI)
7 63 Introduction: The Three and a Half Minute Transaction: Boilerplate and the Limits of Contract Design 
G. Mitu GulatiRobert E. Scott
Duke University - School of Law, Columbia University - Law School
8 62 How to Opt into the Common European Sales Law? Brief Comments on the Commission’s Proposal for a Regulation 
Martijn W. Hesselink
University of Amsterdam - Centre for the Study of European Contract Law (CSECL)
9 61 Classical Contract Law, Past and Present 
Anat Rosenberg
Interdisciplinary Center (IDC) Herzliyah - Radzyner School of Law
10 55 The Architecture of Post-National European Contract Law from a Phenomenological Perspective – A Question of Institutions 
Kai Peter Purnhagen
University of Amsterdam Law School

[JT]

November 15, 2011 in Recent Scholarship | Permalink | TrackBack (0)

Monday, November 14, 2011

TOS, Wikileaks and Twitter

Here's another case involving browsewraps or "terms of service" (also known as " the contract that nobody reads") and the way they may interact with other laws in unexpected or surprising ways. A judge recently relied upon Twitter's privacy policy in a case involving Wikileaks. In that case, Judge Liam O'Grady upheld an order allowing federal prosecutors to gain access to information on Twitter accounts held by Wikileaks and by three Wikileaks associates.

The judge held that the individuals had no reasonable expectation of privacy in the Twitter account information, in part, because they were notified via Twitter's privacy policy that the company may retain IP address information. As Christopher Soghoian notes, however, the policy cited by the court is from 2010; the Wikileaks individuals signed up with Twitter in 2008 under another policy. That policy, dated 2007, included this sentence: "We do not associate your IP address with any personally identifiable information to identify you personally, except in case of violation of the Terms of Service."  Not surprisingly, however, the old version also contained the following language which is typically found in online "agreements":

"This Privacy Policy may be updated from time to time for any reason; each version will apply to information collected while it was in place."

I'm not sure whether these "updated from time to time" provisions are or should be valid. In any event, it's important to note that Judge O'Grady specifically did not rule on whether the privacy policy was binding as a contract; rather, the privacy policy was used as evidence weighing in favor of finding that the individuals "voluntarily revealed their IP address information to Twitter."

In other words, while the privacy policy may or may not be binding as a "contract," it was relevant as notice. The standard in determining "reasonable expectation of privacy" under the Fourth Amendment is objective and the consideration of the "totality of the circumstances" included the privacy policy.

But does the language in the 2007 (as opposed to the 2010) policy create a reasonable expectation that the IP address information would not be released to law enforcement authorities. I don't think it does as a matter of interpretation, especially because the 2007 version specifically states that Twitter "may disclose any information to respond "to claims, legal process (including subpoenas)….to prevent or stop any illegal, unethical, or legally actionable activity, or to comply with the law."

[Nancy Kim]

November 14, 2011 in Current Affairs, Recent Cases, Web/Tech, Weblogs | Permalink | Comments (0) | TrackBack (0)

A Dramatic Reading

You've probably often wondered: Why can't I find a recording of any Academy Award winning actors giving dramatic readings of End-User License Agreements?  Well, wonder no longer.  Thanks to a tip from Oklahoma City's Celeste Pagano, we can now share CNET's production of Richard Dreyfuss's reading of Apple's EULA for its iTunes software.

Enjoy

[JT]

November 14, 2011 in E-commerce | Permalink | Comments (0) | TrackBack (0)