Friday, March 30, 2012
Whenever death, disco and breach of contract are in the same story, it must be shared with others. In this case, the children of Charles Stepney, the now-deceased producer of many early Earth, Wind & Fire's hits, are suing the group's founder, Maurice White (and Sony Music Holdings), for breach of contract. Stepney's children claim that no one ever paid Stepney any of the royalties owed to him. I would love to see the terms of the actual contract but neither it nor the complaint are available yet. Stay tuned for an update. In the meantime, Let's Groove!
Wednesday, March 28, 2012
A federal district court in New York recently ruled in Lebowitz v. Dow Jones & Co. that the Wall Street Journal Online's subscriber agreement was not illusory merely because it had a provision that allowed it to change fees at any time. (H/T Eric Goldman's Technology & Marketing Law Blog which has been on a roll with 'wrap contract issues). Pursuant to their agreement, subscribers to the Wall Street Journal Online obtained access to the Wall Street Journal Online and Barron's Online. Dow Jones (parent of both companies) decided to spin off the Barron's service. Existing subscribers were then told they could continue to access one service, but could only access the other for an additional fee. Plaintiffs sued, claiming breach of contract. At issue, was the following clause of the subscription agreement:
"We may change the fees and charges then in effect, or add new fees or charges, by giving you notice in advance....This Agreements contains the final and entire agreement between us regarding your use of the Services and supersedes all previous and contemporaneous oral and written agreements regarding your use of the Services. We may discontinue or change the Services, or their availability to you, at any time."*
The court found that Dow Jones was expressly permitted to change its services and/or fees (it gets a little fuzzy which in the opinion) pursuant to this clause. Plaintiffs argued that interpreting the above clause to mean that Dow Jones can change the fees at any time (even during the term which has already been paid for), would render the argument illusory and so such an interpretation should be avoided. The question then was whether that clause rendered the agreement illusory. The court held that it did not because "Dow Jones acted reasonably, and therefore this provision of the Subscriber Agreement is not illusory." [This seems a bit backward. It should have said that courts will interpret a requirement of reasonableness into seemingly illusory contracts if it's clear the parties intended to enter into the contract - since the court concluded that Dow Jones didn't act unreasonably, there was no breach]. I'm not sure I agree with the court's decision and wish I had a copy of the entire agreement. It seems a better interpretation of the clause would be that Dow Jones could change the fees but that subscribers would be able to discontinue the subscription and get their prepaid amounts back if they did not like the increase. I don't think that was an option. The court seemed to think that there was no real harm done by changing the terms of the agreement (even before the subscription period had expired) because the majority of WSJ Online subscribers didn't access Barron's Online. (It may also have made a difference that plaintiffs were seeking class certification)
*This provision was accidentally dropped when I copied the text in the original version of this post.
** I plan to blog a little bit more about the notice aspects of this case after I've had a chance to review the pleadings in the case.
Frank O. Brown, Jr., Construction Law. 63 Mercer L. Rev. 107 (2011)
Nathan Price Chaney, A Survey of Bad Faith Insurance Tort Cases in Arkansas, 64 Ark. L. Rev. 853 (2011)
Tal Kastner, "Bartleby": A Story of Boilerplate, 23 Law & Lit. 365 (2011)
Tuesday, March 27, 2012
That's the question a Fox news affilliate in St. Louis is asking. Apparently the contractor went door-to-door soliciting homeowners, took significant deposits and never did any of the work. Here's the story:
[Meredith R. Miller]
1. A monloguist named Mike Daisey performed a very successful show, "The Agony and Ecstasy of Steve Jobs" which purports to be, in part, an account of his trip to China to investigate conditions at the factories at which Apple products are manufactured.
2. Ira Glass, host and creator of my favorite radio program, "This American Life" was impressed by Daisey's show and decided to devote an entire episode of "This American Life" to the part of Daisey's monologue that seems to be a piece of investigative reporting.
3. After being alerted to factual errors in Mr. Daisey's monologue, This American Life devoted another entire episode to a retraction of its report on conditions in Apple's factories to the extent that the earlier reporting relied on information provided by Mr. Daisey that turned out to be untrue or unreliable. Mr. Daisey agreed to be interviewed in connection with that retraction and the results were pretty ugly. Mr. Daisey admitted to some outright falsehoods, but he defended the larger truths of his work. His mistake, he claimed, was in agreeing to put his monologue on "This American Life," since it works as theater but not as journalism.
Ira Glass, who as the picture at right indicates, is adorkable but hardly physically imposing, entered a phonebooth, emerged as a truth-seeking action hero, and tore Mike Daisey a new one. There's an exchange, which you can read on page 19 of the transcript of the retraction, in which Glass asks Mike Daisey if he is going to stop representing his monologue as having happened to him. Daisey tried to claim that in the theatrical context "we have different languages for what truth means." Glass, who saw Daisey's show, responds that Daisey is "kidding himself" (i.e., delusional) if he thinks that the people in his audience are not deceived when he relates a first-person monologue as if it happened to him. Daisey claims that they just have different "worldviews," and Glass insists that his own worldview is the normal one.
Mike Daisey, who really seems to be unable to abandon the spotlight, continues to give interviews about his monologue and about the revelations of inaccuracies in the monologue. Eerily enough, one of Mr. Daisey's earlier monologues was about James Frey, whose fake memoir, A Million Little Pieces, famously unraveled (the monologue is called "Truth"). Glass asks Mr. Daisey about that monologue on pages 15 and 16 of the transcript. In that monologue, Daisey had admitted to having fabricated some experiences in order to connect with an audience. Daisey denies that the inaccurancies about his time in China were a result of such a desire to connect. He says, "No, no, because I didn’t, um, no I made a choice to put that, you know, I made a choice to put that detail in that scene, in that way."
Now, reminded of earlier self-important statements about the importance of truth and praising his own scrpulousness in letting his audiences know when he is reporting true events and when he is making stuff up, Daisey has acknowledged that he did not live up to his own standards. As Daisey puts it on his blog,
When I said onstage that I had personally experienced things I in fact did not, I failed to honor the contract I’d established with my audiences over many years and many shows. In doing so, I not only violated their trust, I also made worse art.
Even in this mode, Daisey is unable to refrain from self-aggrandizement. He did violate a trust and make worse art than his shows could have been if he were capable of honesty. But he did not fail to honor a contract because he never entered into a contract with his audience.
After a series of apologies to the various consituencies who may or may not have been harmed or offended by his transgressions, Daisey concludes by invoking one of his acting teachers and pledging:
I will be humble before the work.
That's all well and good, but the acting teacher was probably talking about acting in someone else's play or performing someone else's script or at least showing humility when working with other performers. When one is in the business of first-person monologues and "the work" at issue is a report on one's own experiences, before what exactly is one being humble?
Joshua Mehigan describes his poetry as a means of rendering his narcissism palatable. Perhaps that's what first-person monologues strive for as well. But once the performer becomes thoroughly unpalatable, one is left with a performance of narcissism itself.
Monday, March 26, 2012
I use releases to introduce the concept of consideration in part because most students have signed one somewhat recently. The casebook I use features Reed v. UND (see part IV of the opinion), previously blogged about here, in which a charity race participant waives his right to sue for negligence on behalf of the race organizers. A student tipped me off to the latest trend in such activity releases at the high school level--the waiver of the right to sue for loss of enjoyment in life. This story provides great examples of typical contractual language, parents' understandings of the language, and tort-based explanations for the language.
[H.R. Anderson, hat tip to student Terri Parker]
The Austin American Statesman recently ran a report on the contracts the University of Texas enters into with the coaches of the school's sports teams. The report is unusual in breaking down the incentives paid to coaches. For example, the report notes that Texas's men's basketball coach earned a $125,000 bonus because the team won a spot in the NCAA tournament, despite the fact that the team lost its first game in that tournament. The bonus comes on top of a $3.48 million contract. The women's team also made the tournament and also lost in the first round. Its placement earned the team's coach $10,000 on top of her annual contract of $1.09 million.
UT's senior associate athletic director noted that all coaches' salaries, including bonuses, are paid out of athletic department revenues. He stresses that "no taxpayerr money of other university funding" is used for such purposes. If one is inclined in such a direction, one might object that regardless of the source, the expenditure of that kind of money on sports -- the very fact that the University of Texas feels the need to have a senior associate athletic director -- makes one wonder about the priorities of our educational institutions and allocation of resources.
In Kilgore v. KeyBank, Nat’l Ass’n, plaintiffs brought a class action against KeyBank alleging violations of California’s Unfair Competition Law. The parties received private student loans from KeyBank of between $50,000 and $60,000 to cover their costs while attending a private helicopter vocational school. In connection with their loans, they signed promissory notes (the Notes) which clearly and conspicuously provided for arbitration, choice of law (Ohio), choice of forum (Ohio) and a class-action bar. The Notes permitted parties to opt out of arbitration.
Plaintiffs allege that it would have been impossible for them to complete all requirements for graduation before the vocational school closed after filing for bankruptcy. Plaintiffs they also allege that KeyBank knew the school was an “unfolding disaster” but still provided loan disbursement to the school. Unable to sue their bankrupt helicopter school, the plaintiffs sued Keybank, seeking to enjoin the bank from collecting on the loans or reporting any default on the Notes.
KeyBank moved to compel arbitration. The District Court refused to apply Ohio law, finding that California had a fundamental policy interest in the case, based on its law prohibiting arbitration of claims seeking public injunctive relief. Based on this policy, the District Court refused to compel arbitration in 2009 – that is before the U.S. Supreme Court decided Concepcion. Under Concepcion, agreements to arbitrate may be invalidated by “generally applicable contract defenses such as fraud, duress, or unconscionability,” but not by defenses that relate only to arbitration or “derive their meaning from the fact that an agreement to arbitrate is at issue.” Specifically, the Concepcion Court found that California’s public policy in favor of permitting class actions of small claims is pre-empted where it creates an obstacle to the public policy underlying the FAA, which favors the enforcement of arbitration agreements according to their terms.
The issue in Kilgore was whether California’s public policy favoring the litigation (rather than arbitration) of claims seeking public injunctions could trump the FAA post-Concepcion as it did pre-Concepcion in two California Supreme Court cases, Broughton and Cruz. The Ninth Circuit reluctantly concluded that the Broughton-Cruz line of cases is no longer viable post-Concepcion. As the Supreme Court made clear in Marmet, about which we blogged last month, Concepcion’s reach is broad enough to preempt state public policies other than the specific one addressed in Concepcion. The fact that a state legislature specifically intended to avoid federal preemption under the FAA is irrelevant.
The Court then addressed the unconscionability of the arbitration clause. The Court noted that the arbitration clause was at issue here was not buried in the contract and specified the rights that plaintiffs waived under arbitration. In addition, the contract contained clear instructions on how to opt-out. Finding no procedural unconscionability, the Court saw no need to address potential substantive unconscionability in the arbitration clause. The case was remanded to the District Court with instructions to compel arbitration.
[JT & Janelle Thompson]
Wednesday, March 21, 2012
Earlier this week, the South Dakota Supreme Court heard an appeal in a breach of contract case against Kevin Costner. An artist, Peggy Detmers, sued Costner because she was displeased with where he placed her 17 bronze sculptures of bison and American Indians (pictured here). The case includes questions such as whether "elsewhere" means "anywhere." Also, parol evidence issues. It is an opinion to watch for.
Here's a summary from Boston.com:
A lawyer for Kevin Costner told the South Dakota Supreme Court on Monday that the actor did not breach a contract with an artist when he placed commissioned sculptures of bison and American Indians at a different site than originally was agreed upon.
The Hollywood superstar, who filmed much of his Academy Award-winning movie "Dances with Wolves" in South Dakota, paid Peggy Detmers $300,000 to make 17 bronze sculptures for a resort called The Dunbar he planned in the state's Black Hills. The resort never was built and the sculptures are instead at his Tatanka attraction near Deadwood.
Detmers said she spent more than six years creating the artwork and gave Costner a price break because she anticipated selling smaller sculptures at the resort.
Detmers claims that because The Dunbar was not built and the sculptures were not "agreeably displayed elsewhere," as the contract stipulates, that the sculptures should be sold and she should be entitled to 50 percent of the proceeds.
But a circuit judge ruled last July that Detmers indicated her approval of the Tatanka location by participating in the site's development and several events related to its opening. The Tatanka site houses the sculptures, a museum and a visitor center.
Kyle Wiese, one of two lawyers representing Costner at Monday's hearing, noted Detmers took part in the construction and mock up process and ground breaking ceremony at Tatanka in June 2003.
"All of this conduct -- taking part in the dedication ceremony and giving a speech -- indicated she was agreeable to put these sculptures at this location for the long term," Wiese said. He added that Costner said he would not have put nearly $6 million of his own money into building the Tatanka site if Detmers had not been agreeable to the location.
The Tatanka site is located on 85 acres of land next to 915 acres of land where Costner had envisioned building The Dunbar.
Detmers' lawyer, Andrew Damgaard, concedes Detmers agreed to the placement in 2003 at Tatanka. But he said she was under the impression The Dunbar still would be built.
"It's very clear from the record that people were telling her the resort was intended to be built, that it was intended to be built on that property," he said.
Costner did not attend the argument, which as I understand from the audio recording was held at University of South Dakota Law School. Here is the list of issues on appeal. Here's a good summary of the appeal. And, finally, a link to the audio recording of the argument is found on this page.
[Meredith R. Miller]
Jonathan D. Bateman, When the Numbers Don't Add Up: Oversigning in College Football, 22 Marq. Sports L. Rev. 7 (2011).
J. Herbie DiFonzo and Ruth C. Stern, The Children of Baby M. 39 Cap. U. L. Rev. 345 (2011)
David R. Hansen, A State Law Approach to Preserving Rair Use in Academic Libraries, 22 Fordham Intell. Prop. Media & Ent. L.J. 1 (2011)
Danielle Kie Hart, Cross Purposes & Unintended Consequences: Karl Llewellyn, Article 2, and the Limits of Social Transformation, 12 Nev. L.J. 54 (2011)
Daniel Markovits and Alan Schwartz, The Myth of Efficient Breach: New Defenses of the Expectation Interest, 97 Va. L. Rev. 1939 (2011)
Griffin Toronjo Pivateau, Preserving Human Capital: Using the Noncompete Agreement to Achieve Competitive Advantage, 4 J. Bus. Entrepreneurship & L. 319 (2011)
We crossed virtual swords in the past with The New York Times' original ethicist Randy Cohen. We reported on harassing him with angry letters denouncing his conflation of law and ethics. Mr. Cohen saw the error of his ways and apologized sub silentio in a later column on which we reported here.
Now the Times' "The Ethicist" column is authored by Ariel Kaminer who is much better attuned to the distinction between ethics and law, as evidence in this week's column. Two weeks ago, a correspondent asked Ms. Kaminer if it was permissible to renege on a pledge to a university after learning that the university engages in dubious labor practices. Ms. Kaminer responded in her column that revoking a pledge is permissible because, "A pledge is a good-faith statement of intent, not a contract written in blood." This week, Kaminer acknowledges a comment from a Palo Alto attorney, Geoff Rapoport, informing her that charitable pledges are enforceable because the law assumes that they have been relied.on, so her advice could expose her correspondent to a lawsuit. Mr. Rapoport acknowledged that Ms. Kaminer is in the business of giving ethical advice, and that the ethcial and the legal "only sometimes overlap." She agreed but regretted not having noted the possibility of legal liability.
Ms. Kaminer is extremeely conscientious to do so. As she observes, while a suit is possible, it is not likely. We note that, as the picture on the left indicates, the doctrine in question derives from Judge Cardozo's opinion in Allegheny College, about which we have posted in the past, the holding of which can be found summarized in Section 90(2) of the Restatement (2d) of Contracts. It appears from Mr. Rarpoport's letter that California follows the Restatment (and Cardozo) on this issue.
Tuesday, March 20, 2012
In a putative class action, plaintiffs brought a lawsuit against Facebook alleging that the social networking site violated their right of privacy by misappropriating their names and likenesses for commercial endorsements without their consent. Plaintiffs, minors residing in Illinois, commenced the action in the Southern District of Illinois. Facebook moved to transfer the case to the Northern District of California pursuant to a forum selection clause in Facebook’s terms of service.
Before addressing the validity of the forum selection clause, the court had to determine whether plaintiffs (minors) could disaffirm the clause under the infancy doctrine. The court held that, because plaintiffs have used and continue to use Facebook, they could not disaffirm the forum selection clause. The court reasoned:
The infancy defense may not be used inequitably to retain the benefits of a contract while reneging on the obligations attached to that benefit. * * * Thus, “[i]f an infant enters into any contract subject to conditions or stipulations, the minor cannot take the benefit of the contract without the burden of the conditions or stipulations.” 5 Samuel Williston & Richard A. Lord, A Treatise on the Law of Contracts § 9:14 (4th ed. 1993 & Supp. 2011) (collecting cases). California law is in accord with “the equitable principle that minors, if they would disaffirm a contract, must disaffirm the entire contract, not just the irksome portions.” Holland v. Universal Underwriters Ins. Co., 75 Cal. Rptr. 669, 672 (Cal. Ct. App. 1969). “[N]o person, whether minor or adult, can be permitted to adopt that part of an entire transaction which is beneficial, and reject its burdens. This commanding principle of justice is so well established, that it has become one of the maxims of the law . . . . [Minors] must either accept or repudiate the entire contract,” and “they cannot retain [the contract’s] fruits and at the same time deny its obligations.” Peers v. McLaughlin, 26 P. 119, 120 (Cal. 1891). “A party cannot apply to his own use that part of the transaction which may bring to him a benefit, and repudiate the other, which may not be to his interest to fulfill.” Id.
The court then held that the clause was valid and ordered the transfer of the case.
The lesson: a minor cannot accept the benefits of a contract and then seek to void it in an attempt to escape the consequences of clauses that minor does not like (especially when they “like” on Facebook).
E.K.D. v. Facebook, Inc., No. 11-461-GPM (S.D. of Ill. March 8, 2012) (Murphy, J.)
[Meredith R. Miller]
Don't know what a Get is? We recommend The Sopranos: Season 1, Episode 3. Or you could read this report in Saturday's New York Times. Basically, a Get is a document that effects the religious divorce of a Jewish married couple. Even though a couple might be legally divorced, the woman needs the Get before she can marry again in the Jewish faith. Some observant Jews would consider illegitimate the children of a woman who remarries without a Get.
The problem: some men are hard to Get. They don't want to be married, but they seek to extract money from the wife or her family in order to agree to the Get. That's where Tony Soprano comes in. But the wise guy solution is not always practical, as the Times notes by referencing this criminal complait from New Jersey. It turns out that paying someone to kidnap and assault your ex-husband is a criminal act.
The solution: according to the Times, the Beth Din of America, a leading orthoox Jewish adjudicatory body, has created a pre-nuptial agreement that is consistent with Jewish law (halakhah). Among other things, this kosher pre-nup provides that the husband will pay $150 (adjusted for inflation) for every day during which the couple is separated but not religiously divorced. The effect is to force the husband to support the wife until he agrees to give her a Get.
According to the Times, about 70% of rabbis now either require or encourage the parties to sign the Halakhic pre-nup before stepping under the chuppah (pictured). A new documentary, "Women Unchained" explores the topic in further detail.
Monday, March 19, 2012
One respone from attorney Steven B. Borris objected to the op-ed, providing in part:
Professor Kessler writes that “arbitration awards do not need to be based on the law” and that “arbitrators have their own procedures.” To the contrary, the current federal statute — and the many state ones modeled on it — provides that an arbitration award may be overturned for a variety of reasons, including evident partiality, corruption and misconduct by the arbitrators.
The vast majority of consumer and employment-related arbitrations are administered through independent companies, such as the nonprofit American Arbitration Association. These neutral companies recruit and train experienced attorneys and former judges to sit as arbitrators. We neutrals are beholden to no one. These companies provide a barrier between consumers and the corporations inserting arbitration clauses in their consumer contracts
Prof. Theodore J. St. Antoine (Michigan) wrote that Kessler made some "good points" but "oversimplifies a complex problem." He wrote:
For example, several reputable studies indicate that employees generally do at least as well in arbitration as in court. Even more important, many low-income employees who have been fired unfairly simply cannot afford a lawyer to take their case to court. Arbitration, cheaper and less formal, is their most realistic recourse.
The solution is not the outright prohibition of all pre-dispute agreements to arbitrate, as proposed by the ill-advised Arbitration Fairness Act. It is legislation that would guarantee due process in arbitration, including neutral arbitrators, and ensure that grievants have a voice in their selection and all the remedies that could have been obtained in court.
Finally, Donald L. Kreindler, a lawyer specializing in arbitration, took "strong objection" to the op-ed, disagreeing with claims that arbitration is too costly and that arbitrators are sytematically biased.
Read the responses in full here.
[Meredith R. Miller]
Recently, as reported in the Richmond-Times Dispatch, three former John Tyler Community College (“JTCC”) students are suing the school for breach of contract, seeking compensatory and punitive damages. The suit also names the Virginia Community College System and the Dean of Health Services at JTCC.
The students allege that because the surgical technology program from which they graduated never obtained accreditation, they are unable to find jobs. The students claim that they joined the program with assurances that the program would be accredited before they completed their studies. However, just weeks before they graduated, they learned that the school had not received accreditation, and as a result the students cannot sit for the state certification exam
They claim to have combed through job postings, most of which they are unable to apply for because the jobs require applicants to be certified from an accredited program. The students maintain that potential employers have informed them that JTCC’s lack of accreditation prevented the employers from extending job offers.
According to the Richmond-Times Dispatch, JTCC’s President claims that certification is not required for work as a surgical technologist in Virginia, and that the college would not have started the program without accreditation if such a prerequisite existed. However, the Commission on Accreditation of Allied Health Education Programs (“CAAHEP”) strongly encourages program accreditation. According to jobs.virginia.gov, certification is generally required or strongly preferred for Surgical Technologist positions in state government.
JTCC’s surgical technology program was shut down after one year. JTCC’s President attributes the program’s discontinuation to lack of enrollment
[JT & Christina Phillips]
American casino magnate, billionaire Sheldon G. Adelson (pictured) has been in the news a lot this election year because of his generous donations to a super PAC associated with New Gingrich. Now he is in the news again because he is being sued for breach of contract by a former partner. The New York Times reports that Asian American Entertainment (AAE), controlled by Shi Sheng Hao, aka Marshall Hao, has sued Mr. Adelson's Las Vegas Sands casino and is seeking $375 million in compensation.
The suit alleges that Las Vegas Sands broke off a 2001 agreement to bid for a Macau casino license. According to the Times, Las Vegas Sands won a license to operate a casino in Macau in February 2002. It did so in partnership with a Hong Kong based entity that has since dissolved. AAE sued Las Vegas Sands in Nevada in 2007, but that case was dismissed in 2010 after AAE failed to retain attorneys to press the case. So now AAE has filed its claim in Macau. A Hong Kong Businessman, Richard Suen, won a $58.6 million judgement against Las Vegas Sands in 2008 in a separate suit relating to the Macau license, but that judgment was vacated on appeal and the case is set for retrail.
Gambling revenue rose to $33.5 billion in 2011 in Macau, more than five times that of the Las Vegas strip.
Thursday, March 15, 2012
Two years ago, we reported on a case involving two sisters who feuded over whether a purported agreement to share gambling winnings covered one sister's lottery winnings. At the time, we wondered why humans can't be more like monkeys, who it seems, have an innate sense of the duty to share.
Today's New York Times brings further evidence that, as our higher faculties have evolved, we have not yet reached monkey levels when it comes to fair play in the distribution of lottery winnings. Today's Times provides the story of a construction worker who allegedly bought lottery tickets on behalf of five co-workers. When one of defendant's tickets turned out to be worth $38.5 million, he pocketed the winnings (about $17.5 million after taxes) and quit his job, claiming a foot injury. Defendant claimed that the winning ticket was one that he bought with his own money. A jury disagreed and ordered the defendant to share the winnings. Now, they all get to fight with the IRS to determine the proper taxation rate.
The Times report includes the following telling comment:
“I play by myself because I don’t trust people,” said the man, who would give his name only as Sean, explaining that he regularly played Mega Millions and other games. “Am I shocked he tried to keep the money for himself? No. It’s human nature."
Sean, you should find yourself some monkeys with whom you could play Mega Millions.
The University of Mississippi is seeking applicants for a one-year visit during the 2012-13 academic year. Our primary curricular need is a full-year contracts course. Other subjects are negotiable. Interested applicants must apply on line at jobs.olemiss.edu. Please include a CV and a cover letter (including courses he or she is best prepared to teach). For more information please contact Donna Davis, Chair, Faculty Appointments Committee at email@example.com. Please put "visiting position" in the subject line. The University of Mississippi is an EEO/AA/Title VI/Title IX/Section 504/ADA/ADEA employer.