ContractsProf Blog

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

A Member of the Law Professor Blogs Network

Thursday, December 20, 2012

From Our Self-Promotion Department: Telman on Totten (Again)

LincolnThey say that doing the same thing over and over and expecting different results is the hallmark of insanity.  But it's also the hallmark of scholarship.  I have just posted on SSRN the shortest version yet of my argument for why we should not conflate the state secrets privilege with the Totten doctrine.  The good people over at the American University National Security Law Brief have agreed to publish it, so it should be up with them early next year.

Totten establishes a justiciability rule: people who enter into voluntary secret agreemetns with the government cannot sue to enforce those agreements because doing so would violate the implied terms that the agreements are to be kept secret.  Thus, Totten, estate administrator for a man who alleged that he had entered into a spy contract with President Lincoln (here pictured before he became either a vampire hunter or Daniel Day Lewis) but had not been paid, could not recover on the contract.  That basic principle was subsequently expanded in Tenet v. Doe to bar not just suits on contracts but all suits to enforce secret agreements with the government.

So, I have my issues with Totten, which I think has become overbroad, as I explained here.  But the point of the current article is simple and straightforward:  The state secrets privilege is an evidentiary privilege.  It is neither a contracts doctrine nor a justiciability doctrine.  The conflation of Totten with the SSP has resulted in the unwarranted pre-discovery dismissal of colorable claims alleging tort and constittuional violations by the government and its contractors.

But for those who want to see the draft, you can download it on SSRN here.  This is the abstract:

The state secrets privilege (SSP) has become a major hindrance to litigation that seeks to challenge abuses of executive power in the context of the War on Terror. The Supreme Court first embraced and gave shape to the SSP as an evidentiary privilege in a 1953 case, United States v. Reynolds. Increasingly, the government relies on the SSP to seek pre-discovery dismissal of suits alleging torts and constitutional violations by the government. Lower federal courts have permitted such pre-discovery dismissal because they have confused the SSP with a non-justiciability doctrine derived from an 1875 case, Totten v. United States. The Totten doctrine only applies to claims brought by people who have entered into voluntary relationships with the government, but it is now being invoked when the government seeks dismissal of tort claims through the SSP. While the government should invoke the SSP whenever necessary to prevent disclosure of information that might jeopardize national security, such invocations of the SSP should never result in pre-discovery dismissal.

[JT]

December 20, 2012 in Famous Cases, Recent Scholarship | Permalink | Comments (2) | TrackBack (0)

Wednesday, December 19, 2012

Thoughts on the Instagram Kerfuffle

Stop me if you've heard this one before - Facebook changes its Terms in a way that its users find offensive and invasive of their privacy.  Uproar ensues and Facebook promises that the changes are harmless and everyone is just overreacting.  Facebook backs off, a little, and then pushes the boundaries a little further next time, regaining even more ground against its users.  Sound familiar? 

When Facebook bought Instagram for (approximately) $750 million dollars, we should have known the time was coming when Instagram would piss off its users, too.  Well, that time is here.  Instagram posted changes to its Terms of Use this week which made users concerned that the company could use their content (i.e. photos) in advertisements.  So that lovely picture you took of your sweet grandmother could be used in an ad for Depends. The media was all over it, and you can read about it here, and here, and here

I think the public backlash is a very good thing since it reminds companies that there are at least some people who are reading their online agreements.  Unfortunately, they are usually only reading the terms of companies that already have a monopoly in the marketplace.  It's not easy for unhappy Facebookers, Googlers or Instagramers to pick up their content and go elsewhere - where would they go? 

What makes my skin crawl, however, is the misleading reassurances doled out by companies when they are called on their online agreements.  Instagram, for example, states on its blog that users shouldn't fear, because it respects them, really it does:

"Instagram users own their content and Instagram does not claim any ownership rights over your photos. Nothing about this has changed. We respect that there are creative artists and hobbyists alike that pour their heart into creating beautiful photos, and we respect that your photos are your photos. Period.

I always want you to feel comfortable sharing your photos on Instagram and we will always work hard to foster and respect our community and go out of our way to support its rights."

While it may be true that Instagram users own their content, Instagram does take a pretty broad license from its users:

"Instead, you hereby grant to Instagram a non-exclusive, fully paid and royalty-free, transferable, sub-licensable, worldwide license to use the Content that you post on or through the Service, except that you can control who can view certain of your Content and activities on the Service as described in the Service's Privacy Policy, available here: http://instagram.com/legal/privacy/."

As Instagram knows, it doesn't need to own your content in order to use it as if it owned it.  All it needs is a broad license, like the one it has.  Note that it has the right to "use" the content - and doesn't define what that means or restrict that use very much.

The Privacy Policy states that Instagram may use the information to in the following ways:

  • "provide personalized content and information to you and others, which could include online ads or other forms of marketing
  • provide, improve, test, and monitor the effectiveness of our Service
  • develop and test new products and features
  • monitor metrics such as total number of visitors, traffic, and demographic patterns"

I found this sentence particularly sneaky:

"We will not rent or sell your information to third parties outside Instagram (or the group of companies of which Instagram is a part) without your consent, except as noted in this Policy"

Did you like the "except as noted in this Policy" ?  And, as Contracts profs know, "consent" means something other than what a layperson might think - it can mean just using a website in many cases.  There is similar broad language here:

"We may also share certain information such as cookie data with third-party advertising partners. This information would allow third-party ad networks to, among other things, deliver targeted advertisements that they believe will be of most interest to you." 

I'm not as concerned about the targeted advertisements (which doesn't mean I'm not concerned at all) as I am about the "such as" and "among other things."

And remember, the Terms do expressly state:

"Some or all of the Service may be supported by advertising revenue. To help us deliver interesting paid or sponsored content or promotions, you agree that a business or other entity may pay us to display your username, likeness, photos (along with any associated metadata), and/or actions you take, in connection with paid or sponsored content or promotions, without any compensation to you."

The company reassures its users, on its blog that it is not their "intention" to "sell" user photos.  The company says it is working on language to make that clear.  Let's hope so, but my guess is that they are probably going to use more mealy language like "at the moment" or "sell as a good defined under the UCC," or something that leaves wide open the possibility that it can make money off user photos by selling them to third party advertisers. 

I'd suggest you save Granny some embarrassment and delete that photo now.

[Nancy Kim]

 

December 19, 2012 in Commentary, Current Affairs, Miscellaneous, True Contracts, Web/Tech, Weblogs | Permalink | Comments (0) | TrackBack (0)

New in Print

Kevin E. Pile of BooksMartingayle,  Non-Competition Agreements in Virginia in the Aftermath of Home Paramount Pest Control v. Shaffer. 47 U. Rich. L. Rev. 457 (2012)

Erin O'Hara O'Connor, Kenneth J. Martin and Randall S. Thomas, Customizing Employment Arbitration. 98 Iowa L. Rev. 133 (2012)

Daniel P. O'Gorman,  Promises, Policies, and Principles: The Supreme Court and Contractual Obligation in Labor Relations. 22 Cornell J.L. & Pub. Pol'y 93 (2012)

Nathan B. Oman,  Markets as a Moral Foundation for Contract Law. 98 Iowa L. Rev. 183 (2012) 

Cheryl B. Preston, and Eli McCann, Llewellyn Slept Here: A Short History of Sticky Contracts and Feudalism. 91 Or. L. Rev. 129 (2012)

[JT]

December 19, 2012 in Recent Scholarship | Permalink | TrackBack (0)

Tuesday, December 18, 2012

On Legal Ed Reform, Elephants and 800-Pound Gorillas

Adult_gorilla_costume_mascotJeremy has been writing thoughtfully on these pages about curricular reform.  Those interested in the subject (and/or metaphors about elephants and 800 pound gorillas) may want to read the comment that my extraordinary colleague (and contractsprof) Jack Graves and I submitted to the ABA Task Force ont he Future of Legal Education.  Here's the link.

[Meredith R. Miller]

December 18, 2012 in Commentary, Law Schools | Permalink | Comments (1) | TrackBack (0)

Clickwrap Contract Containing Arbitration and Forum Selection Clauses Upheld in 10th Circuit

10th Cir.At this point, it should come as no surprise that consumers can be held to the terms of agreements they enter into by clicking on a box next the words "I agree" on a computer screen or simply by continuing to use services after being provided with notice of the terms.  But what if the computer screen belongs to a technician who installs your television and voice communications services?  And what if notice of the change in terms to your internet service comes in an e-mail notifying you that you are accepting new terms by continuing to use the service?

In Hancock v. American Telegraph and Telephone Co., Inc., the 10th Circuit held that contracts entered into through such mechanisms are enforceable.  The 10th Circuit affirmed a District Court ruling dismissing all of plaintiffs claims based on forum selection and arbitration clauses.

On appeal, plaintiffs argued they did not knowingly accept AT&T's terms, claiming that the registration process to sign up for AT&T's services was complex and confusing and thus deprived them of an opportunity to give meaningful assent to governing terms.  Plaintiffs also raised factual issues that they thought should have precluded dismissal.  For example, one of the plaintiffs submitted an affidavit claiming that he was never informed of AT&T's terms of service and never agreed to them.  When the "I agree" box is on a technician's computer rather than on the consumer's, how do we know who clicked the box?  In a footnote, the court found immaterial the distinction between clicking a box on a technician's laptop and one on your own. 

As to plaintiffs' arguments about the obscurity of the registration process, their best case was Specht v. Netscape Commc’ns Corp., 306 F.3d 17 (2d Cir. 2002), in which the court struck down terms that were hidden because the consumer would have had to scroll down a screen in order to find them.   But the Tenth Circuit distinguished this case from Specht and found that AT&T's terms were not hidden.  In order to register for AT&T's internet services, consumers must first acknowledge that they have read and agreed to AT&T's terms, and a technician may not install television and voice services until the consumer has acknowledged receipt of AT&T's terms.

Based on declarations providing information of AT&T's standard practices, the Tenth Circuit found that the District Court had not erred in resolving factual disputes in AT&T's favor.  

[JT]

December 18, 2012 in Recent Cases | Permalink | Comments (0) | TrackBack (0)

Weekly Top Tens from the Social Science Research Council

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

October 19, 2012 to December 18, 2012

RankDownloadsPaper Title
1 328 The Cross-Border Freedom of Form Principle Under Reservation: The Role of Articles 12 and 96 CISG in Theory and Practice 
Ulrich G. Schroeter
University of Mannheim - Faculty of Law
2 304 Libertarianism, Law and Economics, and the Common Law 
Todd J. Zywicki
George Mason University - School of Law, Faculty
3 213 Losing the Paper – Mortgage Assignments, Note Transfers and Consumer Protection 
Alan M. White
City University of New York (CUNY) - School of Law
4 174 CISG and CESL 
Ulrich Magnus
c/o Max Planck Institute for Comparative and International Private Law
5 124 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
6 101 Commercial Sales: The Common European Sales Law Compared to the Vienna Sales Convention 
Marco LoosHarriët Schelhaas
University of Amsterdam - Centre for the Study of European Contract Law (CSECL), Unaffiliated Authors - affiliation not provided to SSRN
7 101 The Historical Origins of America's Mortgage Laws 
Andra C. Ghent
Arizona State University (ASU) - Finance Department
8 93 Sovereign Immunity and Sovereign Debt 
Mark C. Weidemaier
University of North Carolina (UNC) at Chapel Hill - School of Law
9 91 An EU Law for Cross-Border Sales Only – Its Meaning and Implications in Open Markets 
Jürgen Basedow
Max Planck Institute for Comparative and International Private Law
10 86 Contracting About Private Benefits of Control 
Ronald J. GilsonAlan Schwartz
Stanford Law School, Yale Law School

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

October 19, 2012 to December 18, 2012

RankDownloadsPaper Title
1 328 The Cross-Border Freedom of Form Principle Under Reservation: The Role of Articles 12 and 96 CISG in Theory and Practice 
Ulrich G. Schroeter
University of Mannheim - Faculty of Law
2 213 Losing the Paper – Mortgage Assignments, Note Transfers and Consumer Protection 
Alan M. White
City University of New York (CUNY) - School of Law
3 174 CISG and CESL 
Ulrich Magnus
c/o Max Planck Institute for Comparative and International Private Law
4 124 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
5 101 Commercial Sales: The Common European Sales Law Compared to the Vienna Sales Convention 
Marco LoosHarriët Schelhaas
University of Amsterdam - Centre for the Study of European Contract Law (CSECL), Unaffiliated Authors - affiliation not provided to SSRN
6 91 An EU Law for Cross-Border Sales Only – Its Meaning and Implications in Open Markets 
Jürgen Basedow
Max Planck Institute for Comparative and International Private Law
7 85 A People's History of Collective Action Clauses 
Mark C. WeidemaierG. Mitu Gulati
University of North Carolina (UNC) at Chapel Hill - School of Law, Duke University - School of Law
8 76 Contract Theory and the Failures of Public-Private Contracting 
Wendy Netter EpsteinWendy Netter Epstein
Illinois Institute of Technology - Chicago-Kent College of Law, Kirkland & Ellis
9 74 In Defense of Commercial Capitalism: Lessius, Partnerships and the Contractus Trinus 
Wim Decock
Max-Planck-Institute for European Legal History
10 58 Set in Stone? Change and Innovation in Consumer Standard Form Contracts 
Florencia Marotta-WurglerRobert Brendan Taylor
New York University (NYU) - School of Law, Kirkland & Ellis

[JT]

December 18, 2012 in Recent Scholarship | Permalink | TrackBack (0)

Monday, December 17, 2012

World's #1 Golfer Sued for Breach of Endorsement Contract

Rory_McIlroyHaving jumped the shark last week with posts about curricular reform, we have decided to stick with what we know: sports contracts. 

As reported here in the Telegraph, Rory McIlroy (pictured), this year's world #1 golfer, is not Tiger Woods.  In addition, it appears that Mr. McIlroy has been endorsing Oakley sportswar until recently and now wants to jump ship and join team Nike.  Oakley is claiming a right of first refusal and claims that it offered to match Nike's offer to Mr. McIlroy.  He apparently spurned that offer and so is, according to Oakley, in breach of contract.

Oakley is claiming that it is irreparably harmed by the breach and seeks to enjoin Mr. McIlroy from enjoying the benefits of his $200 million Nike agreement.  In the alternative, Oakley is seeking unspecified damages.

Reading between the lines, there do appear to be issues that are of some interest.  Usually a right of first refusal requires the holder of the right to match the competing offer.  But ESPN.com suggests that Oakley was only offering McIlroy $60 million to continue endorsing its products.  Perhaps that amount is equal to the portion of McIlroy's Nike deal that relates to Nike apparel.  In addition, ESPN reports on an e-mail sent by Oakley to McIlroy's agent back in September when contract negotiations were breaking down.  The e-mail read,  "Understood. We are out of the mix. No contract for 2013."

McIlroy will argue that the e-mail suggests that Oakley waived its option to renew its agreement with McIlroy.  Oakley contends that, notwithstanding the September e-mail, negotiations resumed and Oakley claims to have matched Nike's offer.

So, there will be unwonted excitement on the golf tour next year as viewers tune in to see what McIlroy is wearing.

[JT]

December 17, 2012 in Celebrity Contracts, In the News, Sports | Permalink | Comments (0) | TrackBack (0)