ContractsProf Blog

Editor: D. A. Jeremy Telman
Valparaiso Univ. Law School

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Monday, November 12, 2012

Second Circuit Upholds Summary Judgment in Favor of Holders of Argentina's Defaulted Bonds

Argentine FlagIn NML Capital v. The Republic of Argentina, the U.S. Court of Appeal for the Second Circuit has affirmed the District Court's grant of summary judgment in favor of bondholders of Argentina's defaulted bonds, but it remanded the case to allow the District Court to clarify the mechanics of its injunction requiring that Argentina pay plaintiffs concurrently or inadvance of payments made to other bondholders.

Argentina began issuing debt securities in 1994, and plaintiffs purchsed the Fiscal Agency Agreement ("FAA") bonds between 1998 and 2010.  When Argentina defaulted on the FAA bonds in 2001, its President declared a "temporary moratorium" on principal and interest payments on more than $80 billion of its public external debt, including the FAA bonds.  That moratorium has been extended, and Argentina has made no principal or interest payments on the FAA bonds.  Instead, Argentina initiated exchange offers in both 2005 and 2010, allowing FAA bondholders to exchange their defaulted bonds for new unsecured and unsubordinated external debt in exchange for waivers of their rights and remedies under the FAA.

While Argentina successfully restructured 91% of its foreign debt under the two exchange offers (the Exchange Bonds), plaintiffs declined the exchange.  The FAA included a pari passu provision which represented that "[t]he payment obligations of the Republic under the Securities shall at all times rank at lesat equally with all its other present and future unsecured and unsubordinated External Indebtedness debt."  Despite the pari passu provision, Argentina made all payments due on the Exchange Bonds. 

Alleging violation of the FAA's pari passu provision, plaintiffis sued Argentina, alleging breach of contract and seeking injunctive relief, including specific performance of the pari passu provision, which should prevent Argentina from discriminating against FAA bonds in favor of other unsubordinated, foreign bonds. The District Court first temporarily and then permanently enjoined Argentina from making payments on the Exchange Bonds without making comparable payments on the defaulted debt. Rejecting Argentina's six arguments that the Distrcit Court had erred, the Second Circuit affirmed the injunction, finding that Argentina had violated the pari passu provision by ranking its payment obligations on the defaulted debt below its obligations to the holders of the Exchange Bonds.  

[JT]

November 12, 2012 in Recent Cases | Permalink | Comments (0) | TrackBack (0)

Wednesday, November 7, 2012

Former Attorney Sues Stephen King

As reported here by the BloombergBusinessweek, Jay Kramer, former attorney for master of horror, Stephen King, filed suit in New York’s Supreme Court against the author’s agents, Arthur B. Greene and Susan Greene of the Arthur B. Greene Literary Agency, alleging conversion of commissions for work performed, breach of contract, quantum merit/unjust enrichment, and tortious interference.

Stephenking_house
Stephen King's Very Spooky House in Bangor, ME

 

Kramer was fired on March 30th after having worked for Mr. King for thirty years.  He alleges that the defendants have withheld his commission for several projects that he helped broker, including film and television production projects based on King's writings: Secret Window, The Stand, and 1408, among others.   Kramer alleges that after he was fired, the Greenes “jointly and severally began diverting the sums owed to [him] to their own account.”  Kramer is asking for $1 million in damages.

[Christina Phillips & JT]

November 7, 2012 in Celebrity Contracts, In the News, Recent Cases | Permalink | Comments (0) | TrackBack (0)

New in Print

Pile of BooksKenneth S. Corts, The Interaction of Implicit and Explicit Contracts in Construction and Procurement Contracting. 28 J.L. Econ. & Org. 550 (2012)

Carolyn L. Dessin, Arbitrability and Vulnerability, 21 Temp. Pol. & Civ. Rts. L. Rev. 349 (2012) 

Maj. Sean Elameto, U.S. Air Force, Guarding the Guardians: Accountability in Qui Tam Litigation under the Civil False Claims Act, 41 Pub. Cont. L.J. 813 (2012)

Philip S. Hadji, Death Benefits for Servicemembers: A Case Study on the Department of Veterans Affairs and Its Life Insurance Contract, 41 Pub. Cont. L.J. 777 (2012). 

Chunlin Leonard,The Unbearable Lightness of Consent in Contract Law, 63 Case West. L. Rev. 57 (2012)

Maj. Airon A. Mothershed, U.S. Air Force. The $435 Hammer and the $600 Toilet Seat Scandals: Does Media Coverage of Procurement Scandals Lead to Procurement Reform? 41 Pub. Cont. L.J. 855 (2012)

Maj. William Charles Moorhouse, U.S. Army, Expediency at the Expense of Governmental Propriety: Personal Service Contractors in the Procurement Office. 41 Pub. Cont. L.J. 917 (2012)

Nicholas Sanders, A Response to Ryan P. Carpenter's The bottom of the Smart Weapon Production Chain: Securing the Supply of Rare Earth Elements for the U.S. Military, 41 Pub. Cont. L.J. 957 (2012)

Alexander Stremitzer, Opportunistic Termination, 28 J.L. Econ. & Org. 381 (2012)

Maj. John Bryan Warnock, U.S. Air Force, Principled or Practical Responsibility: Sixty Years of Discussion, 41 Pub. Cont. L.J. 916 (2012) 

[JT]

November 7, 2012 in Recent Scholarship | Permalink | TrackBack (0)

Tuesday, November 6, 2012

Alleged Former Manager's Claims against Britney Spears Dismissed

Britney_Spears_X-Factor_2012Sam Lufti, former self-proclaimed manager to Britney Spears (left), filed suit against the “Baby One More Time” pop-star for breach of contract, against her father for assault and battery, and against her mother for defamation. Lutfi alleges he had a multi-year contract with the singer that entitled him to 15% of her income. However, as reported here by the New York Daily News, Lufti was unable to recall ever telling a single person that Spears promised to pay him 15% of her income, nor was he able to produce an adequate written contract. He could only provide a form contract that  he downloaded from the internet, which he claimed he had used to make an oral agreement with Ms. Spears.

As reported on Fox News here, the suit was dismissed on Friday as Mr. Lufti was able to make out any of his claims against Ms. Spears or her parents.

[Christina Phillips & JT]

November 6, 2012 in Celebrity Contracts, In the News, Recent Cases | Permalink | Comments (0) | TrackBack (0)

Weekly Top Tens from the Social Science Research Network

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

September 6, 2012 to November 5, 2012

RankDownloadsPaper Title
1 239 Queues in Law 
Ronen PerryTal Zarsky
University of Haifa - Faculty of Law, University of Haifa - Faculty of Law
2 147 Seduction by Contract: Law, Economics and Psychology in Consumer Markets - Introduction 
Oren Bar-Gill
New York University (NYU) - School of Law
3 143 Rethinking the Nature of the Firm: The Corporation as a Governance Object 
Peer Zumbansen
York University - Osgoode Hall Law School
4 134 Express Contract Terms and the Implied Contractual Covenant of Delaware Law 
Mohsen Manesh
University of Oregon School of Law, 
Date posted to database: September 25, 2012 
Last Revised: September 30, 2012
5 130 Another Step Towards Harmonization in EU Contract Law: The Common European Sales Law 
Maud PiersCedric Vanleenhove
Ghent University, Ghent University
6 121 When Nudges Fail: Slippery Defaults 
Lauren E. Willis
Loyola Law School Los Angeles
7 94 Intellectual Property and Agriculture: The Case on Soybeans and Monsanto 
Marcelo Dias VarellaMarcelo Dias Varella
University Center of Brasilia, University of California, Berkeley - School of Law
8 79 Moving Beyond Naïve Foreclosure Analysis 
Joshua D. Wright
George Mason University - School of Law, Faculty
9 76 Consequences of An Ineffective Agreement to Use the Common European Sales Law 
Caroline HarveyMichael Schillig
University of Oxford, University of London - King's College London
10 67 Mass Procedures as a Form of 'Regulatory Arbitration' – Abaclat v. Argentine Republic and the International Investment Regime 
S.I. Strong
University of Missouri School of Law

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

September 6, 2012 to November 5, 2012

RankDownloadsPaper Title
1 143 Rethinking the Nature of the Firm: The Corporation as a Governance Object 
Peer Zumbansen
York University - Osgoode Hall Law School
2 134 Express Contract Terms and the Implied Contractual Covenant of Delaware Law 
Mohsen Manesh
University of Oregon School of Law
3 130 Another Step Towards Harmonization in EU Contract Law: The Common European Sales Law 
Maud PiersCedric Vanleenhove
Ghent University, Ghent University
4 121 When Nudges Fail: Slippery Defaults 
Lauren E. Willis
Loyola Law School Los Angeles
5 110 Harmonization of Private International Law in Europe and Application of Foreign Law: The Madrid Principles of 2010 
Carlos Esplugues
University of Valencia - Faculty of Law
6 79 Moving Beyond Naïve Foreclosure Analysis 
Joshua D. Wright
George Mason University - School of Law, Faculty
7 66 Lexis Nexus Complexus: Comparative Contract Law and International Accounting Collide in the IASB-FASB Revenue Recognition Exposure Draft 
Kurt S. SchulzkeGerlinde Berger-WalliserPier Luigi Marchini
Kennesaw State University, University of Connecticut, University of Parma - Department of Economics
8 63 Lewellyn Slept Here: A Short History of Sticky Contracts and Feudalism 
Cheryl B. PrestonEli McCann
Brigham Young University - J. Reuben Clark Law School, Unaffiliated Authors - affiliation not provided to SSRN
9 60 The Subprime Mortgage Crisis and Economic Checks and Balances 
Chunlin Leonhard
Loyola University New Orleans College of Law
10 56 Misrepresentation: The Restatement's Second Mistake 
Stephanie R. Hoffer
Ohio State University (OSU) - Michael E. Moritz College of Law

 

[JT]

November 6, 2012 in Recent Scholarship | Permalink | TrackBack (0)

Monday, November 5, 2012

Contracts Limerick of the Week: Special Guest Poet, Chris Osborn


OsbornThis week we have a guest blogger, Chris Osborn (pictured), a relative newcomer to the world of contracts profs, but already setting cases to Limericks.  Below is Chris's summary of Hooters of America v. Phillips, 173 F.3d 933 (4th Cir. 1999).

In Phillips, a waitress employed at a Hooters restaurant in Myrtle Beach, SC reported to her manager that she had been sexually harassed by the local franchise owner’s brother.  Ms. Phillips claimed that the manager responded that she should “let it go,” whereupon she resigned and retained counsel.  When her attorney contacted the franchisor, Hooters of America, Inc. (Hooters), and gave notice of the claim, Hooters invoked an arbitration clause in an employment agreement that the claimant had signed several years after she was hired.  Hooters then filed a declaratory judgment action in federal district court and a motion to enjoin the plaintiff from filing suit (which was treated as a motion to compel arbitration).  

In opposing the motion, Ms. Phillips contended that the arbitration clause was not entered knowingly and voluntarily, was unconscionable, and was not supported by consideration.   The U.S. District Court for the District of South Carolina found the arbitration clause unenforceable, holding inter alia that since the clause was not contained in her initial employment contract, it had to be supported by some additional consideration.  The court then examined the mutual promise to arbitrate unenforceable.  In particular, the court found that the arbitration Rules & Procedures bound the employee but gave the employer alone the right to terminate the agreement to arbitrate at any time on 30 days’ notice.  Moreover, the Rules and Procedures also held the employer to significantly less onerous pleading, discovery, and trial procedures.  Accordingly, the court ruled that Hooters’ promise to arbitrate was illusory (which makes it reminiscent of another case recently reduced to a Limerick, Vassilkovska), and thus it could not serve as consideration for the employee’s promise to submit her claims to arbitration.

The Fourth Circuit affirmed.

Here are the (three!) Limericks:

When Miss Phillips, crying conduct discriminatory
Sought redress for her boss’ tomfoolery
            Her employer said, “Wait,
            You made a promise to arbitrate!”
But the court ruled the whole thing illusory.

“When harassed on the job (wouldn’t ya know?)
A young Hooter’s girl could not “let it go….”
            When the restaurant stalled,
            The court was appalled
“Was there any consideration here?  No. “

When a harassed young waitress brought suit
Her employer did not give a hoot
            It tried to stay litigation
            And demand arbitration
But the court ruled the sham clause was moot.

[JT]

November 5, 2012 in Contract Profs, Limericks, Teaching | Permalink | Comments (0) | TrackBack (0)

Friday, November 2, 2012

A Claim of Impracticability

Just last week I proclaimed to our inimitable editor D.A. Jeremy Telman that I was renewing my vows to the blog.  Since that promise, Hurricane Sandy happened and I am without power and water.  So, I have to claim impracticability.  I will start posting again shortly.

[Meredith R. Miller]

November 2, 2012 in About this Blog, Miscellaneous | Permalink | TrackBack (0)