February 3, 2012
Collective Action Waiver Roundup
NRLB - Last month, a 2-member panel of the National Labor Relations Board held that an arbitration agreement that contains a collective action waiver violates §8(a)(1) of the National Labor Relations Act (NLRA).
Amex - For the third time, the Second Circuit invalidated the class action waiver in American Express' contracts with merchants. The court reasoned that a "careful reading" of both Concepcion and Stolt-Nielsen "demonstrates that neither one addresses the issue presented here: whether a class-action arbitration waiver clause is enforceable even if the plaintiffs are able to demonstrate that the practical effect of enforcement would be to preclude their ability to vindicate their federal statutory rights."
FINRA - The Financial Industry Regulatory Authority (FINRA), Wall Street's self-regulatory organization, sued Charles Schwab. FINRA alleges that Schwab violated industry rules by adding a collective action waiver to customer account agreements.
[Meredith R. Miller]
February 2, 2012
Crime Doesn't Pay (Contracts Damages)
As we’ve previously noted here, Jesse Dimmick fled murder charges against him in Colorado and made his way to Kansas. As reported in The Topeka Capital-Journal, Kansas police officers were in pursuit of Dimmick and punctured his tires of the stolen van he was driving using something called "stop sticks" (pictured -- according to Wikipedia the device is also known as traffic spikes, tire shredders, one-way traffic treadles, and stingers and is formally known as a tire deflation device). His van came to a stop in front of the home of a newly married couple, Jared and Lindsay Rowley.
According to Dimmick, he entered the newlyweds’ home and offered them an unspecified amount of money if they would permit him to hide from the police. Dimmick claimed that the Rowleys agreed and that the parties had thus created a legally binding oral contract. However, after Dimmick fell asleep, the Rowleys left their home and contacted the police. When entering the home, the police claim that an officer’s gun accidentally discharged, striking Dimmick in the back.
Originally, the Rowleys filed suit in the Shawnee County District Court against Dimmick seeking damages in the amount of $75,000 for trespass, intrusion and negligent infliction of emotional distress. Dimmick countersued for $160,000, which was the amount of his hospital bills and an additional $75,000 for pain and suffering, alleging that as a result of the Dimmick’s breach of contract he had suffered a gunshot to his back, which almost killed him.
Attorney Bob Keeshan, for the Rowleys, filed a motion to dismiss Dimmick’s suit. Keeshan argued that such a contact would not be legally binding because it was made while the Rowleys were under duress, being held at knifepoint. Last month, Judge Franklin Theis sustained the motion to dismiss.
Dimmick has also filed charges against the city of Topeka and the police officer whose gun discharged. Trial for this case is set for early April. In Colorado, Dimmick awaits his trial for the September 2009 murder of Michael Curtis.
Dimmick may have lost this round, but in another sense, he has already won. His law suit was the runaway winner in the 2011 poll for the most outrageous law suit on the web site, Faces of Lawsuit Abuse.org.
[JT w/ Janelle Thompson]
Introducing the ContractsProf Blog Interns 2.0
One year ago, we introduced our first set of ContractsProf Blog interns. That crowd has moved on, so we now welcome a fresh crop. They are (pictured above from left to right): Janelle Thompson, Justin Berggren and Christina Phillips. Janelle and Christina are both first-year students; Justin is a second-year student, all at the Valparaiso University Law School (formerly the Valparaiso University School of Law).
When not performing research assistance related to the scholarly writings of their Dear Leader, the interns will be drafting blog posts, which you will be seeing soon.
February 1, 2012
New in Print
Anelize Slom Aguiar, The Law Applicable to International Trade Transactions with Brazilian Parties: A Comparative Study of the Brazilian Law, the CISG, and the American Law about Contract Formation, 17 Law & Bus. Rev. Am. 487 (2011)
Yuval Feldman and Doron Teichman, Are all Contractual Obligations Created Equal? 100 Geo. L.J. 5 (2011).
Darren A. Prum, Green Building Liability: Considering the Applicable Standard of Care and Strategies for Establishing a Different Level by Agreement. 8 Hastings Bus. L.J. 33 (2012)
January 31, 2012
Weekly Top Tens from the Social Science Research Network
Last Chance to Vote for the Top Law Review Article
Today is the deadline for voting for the top contracts law scholarship of 2011. The list of finalists will be posted on the blog next week. The winner will be announced and the first-place prize will be awarded at the Spring Contracts conference in March. At left is an image of a trophy, which should give you some idea of just how prestigious this prize is (this is no guarantee that there will be a trophy).
You can find more information about the conference here.
You can find the list of law review articles here. Send your votes to firstname.lastname@example.org.
January 30, 2012
Waiting for Those College Acceptances Just Became More Stressful....
Dozens of applicants to Vassar College celebrated their acceptances -- but only for a couple of hours. (The link is here - I wonder what Lisa Kudrow and Meryl Streep think about this snafu...?) These applicants were later informed, also electronically, that those acceptances were sent in error. At least Vassar didn't text their rejections....
Did the acceptances create an enforceable contract? Over at Concurring Opinions, Lawrence Cunningham has a post arguing that they probably did not. I don't think the answer is clear without knowing more about the circumstances of the early decision process. Another possibility - could Vassar argue this was merely preliminary negotiations and there was no agreement until the enrollment contract was signed and accepted? (This might not get Vassar off the hook with at least some students since the article indicates that a few paid their deposit and so might have sent in their enrollment contracts....) It's an interesting issue - and one that is bound to arise more often with electronic communications. Speaking of which, I wouldn't be surprised if there is a browse- or clickwrap contract for Vassar's website which covers this scenario. If there isn't, there will be soon.
Vassar's Early Decision Snafu as Contracts Hypo
Could a computerized letter error made by Vassar College (the alma mater of the pictured Meryl Streep) potentially serve as an instructive hypo for students beginning their study of Contracts? My tentative thought is "yes," at least for those who start with formation versus damages. As the NYT reported over the weekend, Vassar College recently emailed decision letters to its "early decision" undergrad applicants. For many of those applicants, euphoria ensued. A few hours later, that euphoria was replaced by anger and grief. Why the emotional switcheroo? Well, it seems that some of the applicants mistakenly received a test-version of an acceptance letter (all of which said, "Congratulations...") instead of their actual decision letter (some of which said, "Congratulations..." but many more of which said, "We are sorry to inform you that..."). Because all of the posted test-version letters were acceptances, many applicants initially thought they had been accepted only to find out later that: (i) the letter they first saw was the wrong one, and (ii) the "right" letter was a denial. What makes this difficult situation particularly interesting from a Contracts perspective is that the early decision applicants reportedly had to commit to attending Vassar if admitted. Thus, one may be able to characterize their applications as binding "offers to attend," which Vassar then arguably accepted via the test-version letter, thereby forming a contract and making Vassar's later attempted revocation invalid. Alternatively, one could view the application as an invitation to deal, with the test-version of the letter as the offer, which Vassar then promptly revoked prior to acceptance. Although the applicants also could emphasize reliance, the short period of time between the posting of the test-version letter and the right letter likely mimimizes that possibility (that said, at least one applicant reportedly considered withdrawing her applications elsewhere upon receipt of the acceptance so perhaps there's more potential reliance here than the time lapse would indicate). As with many stories like this one, the precise facts matter. But that's what class time is for--considering the "what if..." questions using facts of our own creation.
[Heidi R. Anderson, h/t to Anonymous Contracts I student]
Speaking of $16 Million, Ron Perelman Must Pay Former Partner
The number $16 million seems to be in the air. Last week, Meredith Miller reported on a $16 million typo. Over the weekend, we learned of a decision in Donald Drapkin's suit against billionaire corporate raider Ron Perelman (pictured). Perelman likely has not been ordered to pay so much money to an individual since his divorce from Faith Golding. Except for when he divorced Claudia Cohen. Unless he paid that much when he divorced Patricia Duff. Well, and let's not forget Ellen Barkin.
Fans of the course alternatively known as Corporations, Business Organizations or Business Associations are familiar with Ron Perelman, as are Mergers and Acquisitions afficianados. A notorious greenmailer, Perelman did battle with Revlon's Michel Bergerac and prevailed in a case we have previously discussed here.
As reported in The New York Times here, it took a federal jury a bit over an hour to determine that Mr. Drapkin had abided by the terms of his 2007 separation agreement from Mr. Perelman's holding company, MacAndrews and Forbes. While Wall Street insiders wonder why a man worth $12 billion would quibble over a paltry $16 million sum owed to a long-time associate, Mr. Perelman's attorneys have announced plans to file a motion asking the judge to set aside the jury verdict. An appeal will likely follow.
At issue was whether or not Mr. Drapkin had fully complied with his contractual obligation to destroy all files relating to the company. Some such files were found on the laptop computer of his personal assistant. The parties disputed both whether Mr. Drapkin was allowed to retain some copies and whether or not the alleged breach was material. According to the Times,
The case was largely fought in the weeds of contract law, with lawyers arguing over the interpretation of particular words and phrases. At issue was whether Mr. Drapkin, who now runs a hedge fund in New York, had “substantially performed” under the contract.
Hold on there a minute? Is the New York Times calling the doctrine of substantial performance a weed? Hello? New York Times?!? Have you ever heard of the New York Court of Appeals and a little-known Judge named Benjamin Cardozo? He authored an opinion in a humble case called Jacob and Youngs v. Kent that is among the most beautiful pieces of writing in the history of American jurisprudence. In it, Cardozo articulates the doctrine that you now denigrate as a "weed" as follows:
This is merely to say that the law will be slow to impute the purpose, in the silence of the parties, where the significance of the default is grievously out of proportion to the oppression of the forfeiture. The willful transgressor must accept the penalty of his transgression. For him there is no occasion to mitigate the rigor of implied conditions. The transgressor whose default is unintentional and trivial may hope for mercy if he will offer atonement for his wrong.
From lesser weeds jurists have harvested a bounty that feeds the multitudes.