March 30, 2012
Earth, Wind & Contract
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!
March 28, 2012
WSJ Online's agreement and illusory contracts
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.
New in Print
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)
March 27, 2012
Did Countrywide Shingle and Siding Breach its Contracts?
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]
Mike Daisey Claims to Have Breached a Contract with His Audience
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.
Weekly Top Tens from the Social Science Research Network
March 26, 2012
Enjoyment of Life, Shmenjoyment of Life
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]
Coaching Contracts in Texas
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.
California Public Policy on Arbitration Bows before Concepcion and the FAA
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]