Friday, April 19, 2013
The end of the semester is near (cue Alice Cooper). Thus, my class has just completed damages and is moving on to third parties. One of the last damages cases we discussed was Hollywood Fantasy Corp. v. Gabor. In that case, Zsa Zsa Gabor breached a contract with a company started by Leonard Saffir. Saffir organized and promoted celebrity fantasy camps in which regular people could pay a large fee to spend time with and act with celebrities like Gabor. When Gabor breached, Saffir had to cancel the camp and his company went bankrupt.
The Gabor case often is used to illustrate the damage concepts of certainty and reliance. Saffir could not show that his expected lost profits were certain enough but he was able to prove reliance damages. When we discuss the case in class, many students scoff at Saffir's business idea as if it was borderline crazy. However, one student recently drew a parallel between Saffir's plan and the common plan of party promoters who secure celebrity appearances in order to increase attendance at nightclubs and other locales. In one recent version, Philadelphia promoter Bobby Capone (the modern day Saffir?) contracted with X-Factor host and former Saved by the Bell star, Mario "You'll Always Be Slater to Me" Lopez, to appear at a party Capone was planning months later. When Lopez canceled without an excuse, Capone, like Saffir, sued for breach, seeking lost profits and reliance damages (though the complaint does not use those exact words). The comparison's not perfect but it is helpful when trying to understand Mr. Saffir's plans.
And there ends my attempt to compare Mario Lopez to Zsa Zsa Gabor.
[Heidi R. Anderson, h/t to student Rylee Genseal]
Tuesday, April 16, 2013
Under the headline "Contract Law Can Be Interesting!" Nota Bene, a blog by the librarians at the University of Houston O'Quinn Law Library, features a post praising some recent contracts law books. Other interesting posts on the Nota Bene blog include "Objects Fall to Earth," "Smoking May Be Harmful to Your Health," and "Cubs Unlikely to Win World Series this Year."
After proclaiming contracts to be right up there with civil procedure on the list of most boring law courses, he author \recommends two books that can make this daunting subject palatable: Contracts Stories, edited by Douglas Baird, and Larry Cunningham's Contracts in the Real World, about which we posted an online symposium a few months ago.
I also recommend these books, but I'm not sure the blog post's author's marketing strategy is going to work. He says, in effect, "I recommend to you these two books (only one of which I've read) about a subject that doesn't interest you. If you did not enjoy studying contracts, here are two books about contracts that will cause you to upgrade your attitutude towards the subject from 'feh' to 'meh.'"
Whatever. I always thought that the point of books like Contracts Stories is to enable students to learn more about the fascinating cases that they studied in their law courses. They also provide insights into litigation strategies, legal history, business strategies underlying contractual disputes, and lots of other useful supplements to the raw case law. Contracts in the Real World is an excellent representation of the sorts of issues that come up in the world of contracts law all the time. If there were some huge gap bewteen what Larry Cunningham talks about in his book and what we talk about in contracts courses, the book would not be as useful as it is.
Ultimately both books are born of a love of contracts law. And a book is a mirror. . . .
Monday, April 15, 2013
Next month, we will host an online symposium on Margaret Radin's recent book, Boilerplate.
For those who can't wait to get a sesne of the book, you can listen to a Canadian Broadcasting interview with Professor Radin here.
Irony of ironies: in order to listen to this, I had to download an upgrade of Adobe Flash Player, and of course that required my agreement to boilerplate terms and conditions.
There is no escape from boilerplate.
Samuel Muriithi was a driver for Shuttle Express, a shuttle service that transported passengers to and from the Baltimore-Washington International Thurgood Marshall Airport (BWI). Muriithi signed a Unit Franchise Agreement with Shuttle Express in 2007 (the Agreement). He claims that he was misled when he signed the agreement and objects to Shuttle Express having classified him as an independent contractor and franchisee rather than as an employee. He claims entitlement to payment of at least federal minimum wage plus overtime pay.
Based on this claims, Mr. Muriithi brought a Fair Labor Standards Act (FLSA) claim, as well as state law claims, on his own behalf and behalf of a purported class of other similarly situated drivers. in reliance on the Agreement's arbitration provision, which included a fee-splitting provision, a one-year statute of limitation and a class action waiver, Shuttle Express moved to compel arbitration.
The District Court found the arbitration provision unenforceable based on all three features mentioned above. The District Court found that the fee-splitting provision made arbitration so expensive as to deter an arbitration that Mr. Muriithi might consider. In addition, hat provision coupled with the class action waiver would prevent Mr. Muriithi from vindicating his statutory rights. Finally, the District Court found that the one year statute of limitations was unenforceable because inconsistent with the FLSA's two year statute of limitations. Concluding that the arbitration provision was "permeated by substantively unconscionable parts," the District Court found no way to severe the objectionable elements and denied Shuttle Express's motion to compel arbitration. Shuttle Express appealed.
In Muriithi v. Shuttle Expres Inc., decided April 1st, the Fourth Circuit vacated and remanded. The Fourth Circuit quickly established that Mr. Muriithi's dispute with Shuttle Express was subject to the arbitration provision, so the only questions was whether that provision was for some reason unenfroceable. In appealing the District Court's ruling that the class action waiver rendered the provision unconscionable, Shuttle Express contended that AT&T Mobility v. Concepcion foreclosed any such finding. Whilte Muriithi and the District Court attempted to limit Concepcion to cases involving federal pre-emption of state law claims and thus render it inapplicable to Muriithi's FLSA claim, the Fourth Circuit read Concepcion more broadly. It read Concepcion as foreclosing any unconscionability defenses to an otherwise valid arbitration agreement based on a class action waiver.
As to the fee-splitting provision, such a provision can render an arbitration agreement unenforceable, if plaintiff can establish that the "arbitral costs are so high that they effectively preclude a litigant from vindicating his federal statutory rights in an arbitral forum." The Fourth Circuit concluded that Mr. Muriithi failed to make such a showing. Finally, since the statute of limitations was not part of the arbitration clause, the Fourth Circuit found that the District Court had erred in addressing it on a motion to compel arbitration.
The case was remanded to the District Court for an order compelling arbitration, with Suttle Express paying the costs of such arbitration, pursuant to its in-court agreement to do so.