Wednesday, July 31, 2013
Today's New York Times features an article on a relatively recent sports phenomenon -- the one-day contract. In a nutshell, the one-days permit a retired player to re-sign with the team he played for in his prime, so that he can retire as a member of that team. The player then shows up at the stadium and the fans can cheer him one last time (until the next opportunity comes around). The team may benefit from the one-day contract in that fans may show up to cheer a retired star and re-experience a team's glory days. The Times charaterizes these contracts as effecting for the players "a meaningless return to a team so they can reflect on how meaningful that team was to them."
This characterization strikes me as unfortunate. The return is far from meaningless. In fact, the contract is all about meaning and not at all about playing a particular sport or even about money for the athlete. San Francisco 49er star Jerry Rice (pictured) was given a one-day contract that actually specified an amount, consisting of his rookie year (1985), his number (80), his retirement year ('06) and then 49, totaling $1,985,806.49. But according to the Times (and Wikipedia), the amount was ceremonial. Rice was not actually paid anything when he re-signed with the 49ers. In baseball, the actual contracts are with farm teams, as teams cannot afford to give up a roster spot during the season -- even for one day. This too is evidence that the contracts are not meaningless.
One blogger thinks the one-day contract phenomenon has gone too far, arguing both that it is meaningless and trivial and that it is an attempt at revisionist history. These players did not actually end their careers with the teams that meant the most to those careers, and so the one-day contracts perpetrate a fraud.
Another way to look at it is that sports is imitating art, at least if the television series Lost is art. Like the characters on Lost, these players get to return to a virtual reality in which they share experiences with the people who meant the most to them at the time in their lives when they had their biggest impact.
Thursday, July 4, 2013
There have been a few articles over the past few days about Bobby Bonilla's contract with the New York Mets. Bonilla played for the Mets until he retired in 2001. At that point, he still had $5.9 million outstanding on his contract. Rather than giving Bonilla a lump sum payment, the Mets opted to pay him start paying him in 2011. The Mets are to pay Bonilla a total of $29.8 million over 25 years.
Cork Gaines of the Business Insider explains that this was a good deal for the Mets in terms of their bottom line on the Bonilla contract. Assuming an 8% rate of return, the long-term payout deal is worth $10 million less over time to Bonilla than would a one-time payout. And, because the Mets had the use for teny years of the $5.9 million that they owed Bonilla until the payouts began in 2011, they were able to invest that money, and the come out at the other end looking pretty good, assuming an 8% annual return on investment and ignoring all other issues, like the tax consequences of the transaction.
In the New York Times, Jeff Z. Klein and Mary Pilon are decidedly less positive about the Bonilla contract, but they dutifully report that all parties involved stil believe they acted in their own best interest. The Times provides some details missing from the Buinsss Insider report. The Mets needed to get Bonilla off their books and out of their clubhouse so that they could free up space under the MLB salary cap and free themselves from an underperforming player who had become a distraction.
We have expressed our view before that multi-million dollar, multi-year deals for veteran ballplayers are irrational. With baseball mania for statistics, it ought to be possible to fine-tune baseball contracts with incentives so that players actually get paid for performance (you know, like CEOs) rather than getting paid for hitting .250 when they are 35 because they hit .320 when they were 29.
Wednesday, May 22, 2013
We interrrupt the highbrow discussion of boilerplate and SCOTUS cases to bring you this breaking news from news.com.au that falls right within the utterly sweet spot of contracts and pop culture:
YOU party at Justin Bieber's house? You tell no one - or it'll cost you $5 million.
After a string of bad press in recent months, the 19-year-old has taken the extreme measure of asking guests to sign a confidentiality agreement before they enter his property.
TMZ claims to have obtained a document that everyone must sign before entering his property for one of the infamous get-togethers.
Entitled a Liability Waiver and Release, the website says the paper states that guests must not make comments or post anything on social media about what happened inside the house.
This reportedly includes the "physical health, or the philosophical, spiritual or other views or characteristics" of Justin and other partygoers.
Anyone in breach of the waiver can be sued for an enormous amount of money.
You blog? $5 million. You tweet? $5 million. You Instagram? $5 million.
While no one knows exactly what goes on inside these parties, the document also warns the get-togethers may include activities that are "potentially hazardous and you should not participate unless you are medically able and properly trained".
The risks involved apparently include "minor injuries to catastrophic injuries, including death".
Justin may be eager to change public perception after hitting headlines for a number of controversial reasons lately.
As well as turning up late for a UK gig and being accused of assaulting a neighbour, the star has now come under fire for "abandoning" his pet monkey.
Here's a copy of the document that TMZ claims is the NDA.
Where exactly was this news story when I needed an exam question? And is this liquidated damages clause a penalty?
[Meredith R. Miller]
Thursday, May 9, 2013
Duke Ellington’s grandson brought a breach of contract action against a group of music publishers; he sought to recover royalties allegedly due under a 1961 contract. Under that contract, Ellington and his heirs are described as the “First Party” and several music publishers, including EMI Mills, are referred to as the “Second Party.” On appeal from the dismissal of the case, Ellington’s grandson pointed to paragraph 3(a) of the contract which required the Second Party to pay Ellington "a sum equal to fifty (50 percent) percent of the net revenue actually received by the Second Party from…foreign publication" of Ellington's compositions. Ellington’s grandson argued that the music publishers had since acquired ownership of the foreign subpublishers, thereby skimming net revenue actually received in the form of fees and, in turn, payment due to Ellington’s heirs.
The appellate court explained the contract and the grandson’s argument:
This is known in the music publishing industry as a "net receipts" arrangement by which a composer, such as Ellington, would collect royalties based on income received by a publisher after the deduction of fees charged by foreign subpublishers. As stated in plaintiff's brief, "net receipts" arrangements were standard when the agreement was executed in 1961. Plaintiff also notes that at that time foreign subpublishers were typically unaffiliated with domestic publishers such as Mills Music. Over time, however, EMI Mills, like other publishers, acquired ownership of the foreign subpublishers through which revenues derived from foreign subpublications were generated. Accordingly, in this case, fees that previously had been charged by independent foreign subpublishers under the instant net receipts agreement are now being charged by subpublishers owned by EMI Mills. Plaintiff asserts that EMI Mills has enabled itself to skim his claimed share of royalties from the Duke Ellington compositions by paying commissions to its affiliated foreign subpublishers before remitting the bargained-for royalty payments to Duke Ellington's heirs.
Ellington’s grandson asserted on appeal that the agreement is ambiguous as to whether "net revenue actually received by the Second Party" entails revenue received from EMI Mills's foreign subpublisher affiliates. The appellate court found no ambiguity in the agreement; the court stated that the agreement “by its terms, requires EMI Mills to pay Ellington’s heirs 50 percent of the net revenue actually received from foreign publication of Ellington’s compositions.” It reasoned:
"Foreign publication" has one unmistakable meaning regardless of whether it is performed by independent or affiliated subpublishers. Given the plain meaning of the agreement's language, plaintiff's argument that foreign subpublishers were generally unaffiliated in 1961, when the agreement was executed, is immaterial.
The court continued by stating that “the complaint sets forth no basis for plaintiff's apparent premise that subpublishers owned by EMI Mills should render their services for free although independent subpublishers were presumably compensated for rendering identical services.” Thus, dismissal of the suit was affirmed.
Ellington v. EMI Music, 651558/10, NYLJ 1202598616249, at *1 (App. Div., 1st, Decided May 2, 2013).
[Meredith R. Miller]
Tuesday, May 7, 2013
Lil Wayne Loses Endorsement Over Emmett Till Lyrics, But Don't Worry, Celebrating Violence Against Women Is Still Fine
As reported here in Rolling Stone, Mountain Dew has terminated its endorsement deal with Lil Wayne because of offensive lyrics in an unauthorized leak of a remix of Future's "Karate Chop." The offensive lyrics can be found here, except that the online version omits the reference to Emmett Till, a fourteen year old African-American boy who was tortured and killed in Mississippi in 1955, after allegedly having whistled at a white woman. Lil Wayne's lyrics brag that he will do to a woman's vagina what was done to Emmett Till.
Emmett Till's family was outraged by the reference. As noted in the New York Times, although Rolling Stone and others have characterized Lil Wayne's response as an apology, the family recognized that it was not an apology. Lil Wayne "acknolwedged" the family's hurt and pledged not to reference Emmett Till in his lyrics in the future.
What is really striking is the utter lack of comment on the rest of the lyrics. The reference to Emmett Till imay only be the most offensive thing about the song, but all of the lyrics in Lil Wayne's verse are absolutely vile. The Times reports that Al Sharpton has been called in to take advantage of this "teaching moment" to help young artists like Lil Wayne understand more about the civil rights movement.
Violence against women is also a civil rights issue.
Tuesday, April 30, 2013
We are grateful to the website Lexology.com and to Ellen D. Marcus of Zuckerman Spaeder LLP for this informative and interesting post about this complaint filed in the Northern District of Illinois by Merry Gentlemen, LLC against actor and director, Michael Keaton. According to the complaint, Keaton breached his contract to act in and direct a film called Merry Gentlemen by failing to deliver it on time and by marketing his own version of the film to the Sundance Film Festival. The film cratered, grossing only $350,000 at the box office. Moreover, the producers allege that Keaton's various breaches caused "substantial delays and increased expenses in the completion and release of the movie," thus causing the producers to suffer "substantial financial loss."
Ms. Marcus's post picks it up there, citing Restatement 2d's Section 347 on the elements of expectation damages and illustrating what sort of sums the producers might be looking to recover. Ms. Marcus has to speculate, as the producers cite no figures beyond those required to meet the amount-in-controversy requirement to get their diversity claim into a federal court.
Whether or not the allegations of the complaint are true, they paint a nice picture of the behind-the-scenes machinanations invovled in getting a film out to the viewing public. According to the complaint, Keaton produced a "first cut" that all agreed was unsatisfactory. There then followed both a "Chicago cut," edited by the producers and by Ron Lazzeretti, the screenwriter and the producers' original choice for director, as well as Keaton's second director's cut.
The producers then shopped the Chicago cut to the Sundance Film Festival, where they were awarded a prime venue. Keaton then allegedly threatened not to appear at Sundance unless his cut was screened. That was a dealbreaker for Sundance, so despite already having sunk $4 million in to the film, the producers claim they had no choice but to agree to screen Keaton's second cut at the festival. They did so through a Settlement and Release (attached to the complaint, but not to the online version) entered into with Keaton, which they now claim was without consideration, despite the recital of consideration in the agreement, and entered into under duress.
Despite all of this, the complaint alleges that the Sundance screening was a success, since the USA Today identified "Merry Gentlemen" as one of ten stand-out films screened that year. But the producers were unable to capitalize on this success, since Keaton's alleged continuing dereliction of his directorial duties resulted in dealys of the release of the film from October of November 2008 to May 2009. The producers allege that the film was a Christmas movie (or at least was set around Christmas time), so Keaton's delays caused the movie to premiere during the wrong season.
The producers allege that Keaton continued to refuse to cooperate with them after Sundance. Somehow, the movie nonetheless was released to some positive reviews:
The movie, as released (based upon Keaton’s second cut and numerous changes made by plaintiff), received substantial critical praise. Roger Ebert called the film “original, absorbing and curiously moving in ways that are far from expected.” The New York Times’ Manohla Dargis called it “[a]n austere, nearly perfect character study of two mismatched yet ideally matched souls.” David Letterman said on his Late Night talk show, “What a tremendous film . . . . I loved it.”
Note to the producers' attorneys: if you've got Roger Ebert and Manohla Dargis in your corner, you don't need Letterman (or The USA Today for that matter).
Nonetheless, the film did not succeed, grossing only $350,000, allegedly because of Keaton's failure to promote it. Indeed, some of the complaints allegations relating to Keaton's promotion efforts suggest some real issues. Upon being asked by an interviewer if she had accurately summarized the film's plot, Keaton allegedly responded that he had not seen it for a while.
We note also that Ms. Marcus's post is cross-posted on Suits by Suits, a legal blog about disputes between companies and their executives, a site to which we may occasionally return for more blog fodder.
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]
Wednesday, April 3, 2013
The entertainment mogul Shawn “Jay-Z” Carter has added another hat, er, baseball cap, to his rather extensive collection. The NYT reports that his company, Roc Nation Sports, just signed up to represent Robinson Cano, the New York Yankees second baseman. I’ve long been interested in Jay-Z’s business acumen and his ability to gauge where unpredictable markets are headed (and made a brief mention of it in this short essay). More than that, he seems to be making the most of these changes rather than resisting them. When he signed with LiveNation in 2008, Jay-Z was one of the first musicians to work with, rather than fight or deny, the changes in the music business (Madonna, another savvy business person, did too). He took that money and started Roc Nation (of which Roc Nation Sports is a part). Now he’s realizing the potential to be found in the blurring of sports and entertainment (and the public's perception of athletes and entertainers) . An athlete typically has a relatively short shelf life in the field, so why not make that short shelf life as lucrative as possible? Furthermore, an athlete may have a longer shelf life as a brand. Gven the coalescence of sports and entertainment, and the way social media makes celebrities so accessible, there's a lot of revenue generating opportunities there. So why should this be interesting to readers of this blog, many of whom may have no interest in baseball? Sure, Jay-Z is probably a great negotiator and the contract – if we ever get to see it – will be interesting. But more than that, we should be like Jay-Z and recognize how quickly the landscape and technology changes – and consider what impact those changes might have on our contracts. For example, there are outstanding recording/distribution contracts which predate digital distribution formats. Are digital recordings included under such contracts? ( The Eminem case touches upon a related issue having to do with a failure to anticipate digital tunes). The book publishing industry is another sector that is undergoing much disruption. While no lawyer is expected to be an oracle, it may help your client – or help your students to help their future clients) to think about future marketplace and technological changes during contract negotiations, especially where the contract is a long term one.
Tuesday, March 19, 2013
Elvis Kool Dumervil, the star defensive end for the Denver Broncos, has been in the news recently based on an alleged mix-up involving a contract renegotiation with the team. I have read multiple reports and still cannot figure out exactly what happened from a contractual formation standpoint. But here's my current understanding and analysis...
Dumervil's contract with the Broncos, like most NFL player contracts, had an "opt out" of sorts for the Broncos. Under the contract, the Broncos could either pay Dumervil $12 million to play next season--and have that entire amount count against the team's salary cap--or cut him ("cut" being the sports term for "fire") and only have a portion of his salary count against the team's cap. Without getting into too much detail, each team has a maximum amount of money it is allowed to pay in player salaries per year, subject to various adjustments. If the Broncos were able to reduce how much Dumervil's salary would count against their team's cap, they conceivably would have been able to spend more money to sign other players and improve their team; hence their interest in keeping the cap number down.
To avoid a bad salary cap consequence and still keep Dumervil, the Broncos sought to renegotiate a middle ground. They offered to keep versus cut Dumervil but for a reduced salary amount of $8 million. According to various reports, that offer was only open until 1pm MDT on Friday, March 15th. The Broncos set that deadline because they faced a deadline of their own set by the NFL. Specifically, the only way the Broncos could avoid the full salary cap hit of $12 million under NFL rules was to cut Dumervil by 2pm MDT (or show that they had re-signed him to a different deal). If they cut him prior to 2pm MDT, they'd only take a $5 million hit; if they cut him anytime after 2pm MDT, they'd take a $12 million hit.
In the early afternoon of March 15th, Dumervil reportedly rejected the Broncos' $8 million offer over the phone (thereby terminating the Broncos' offer, most likely). However, Dumervil later told the Broncos that he had changed his mind. The Broncos then renewed their $8 million offer but specified that Dumervil could accept only by faxing his acceptance to them prior to the NFL's 2pm deadline. When the Broncos did not receive a fax from Dumervil by that time, they cut him. Dumervil's agent has said that the fax was sent to the Broncos at 2:06pm due to some delay in getting a fax from Dumervil.
When the story first broke, some media outlets were reporting that a fax machine malfunction was to blame. Thus, many commentators initially expressed frustration that a bungled or late transmission via fax, a now-outdated device, could have such a significant impact. When I heard those reports, it seemed that the media outlets, like some first-year law students, were overemphasizing the need for a writing and deemphasizing the parties' actual intent. As we teach our students, a signed writing often is not required; contracts are formed all the time without that formality. Subject to the statute of frauds and other exceptions, a contract can be formed without a writing, faxed or otherwise. And, unless the offeror limits the form of acceptance to a signed and faxed writing, the acceptance may be communicated in any reasonable manner. In sum, it is intent of the parties that controls. Thus, if the Broncos really wanted to sign Dumervil to a new $8 million deal (that could be completed within 1 year of its making) based on his verbal agreement, no rule of contract law would have prevented it. In other words, if Dumervil truly had communicated his acceptance to the Broncos, the absence of a faxed signature from Dumervil would not prevent contractual formation unless: (i) the Broncos had stated that acceptance could only be via fax or similar writing; or (ii) the contract was one that could not be performed within a year or otherwise subject to the statute of frauds. We would need more facts to analyze both of those issues.
Of course, another possibility outside of traditional contract law (and the proverbial elephant in the locker room) is that the NFL likely has its own rules regarding contractual formation under its collective bargaining agreement or through some other mechanism. That's the part of the mystery about which I have no information at this point. Some reports seem to indicate that the NFL's rules somehow prevented contractual formation and that the Broncos are seeking a change of heart from the NFL. Perhaps someone more familiar with the NFL's rules can comment on that. In the meantime, I think Bronco fans can stop blaming general contract law and continue blaming the Broncos and the NFL. At least for now.
[Heidi R. Anderson]
Monday, March 11, 2013
My co-blogger, Meredith Miller has already commented on the ways in which Martha Stewart is the modern Lady Duff. It really is extraordinary. Martha Stewart is, of course, far more diverse and perhaps more ambitious in terms of the range of products that her company produces, but Lady Duff was quite the force in her day. Remember that Mr. Wood sued her because her agreement to endorse merchandise sold in Sears Roebuck stores allegedly violated their agreement that he was to be her exclusive marketing agent.
As reported in the New York Times, Martha Stewart was in court last week testifying in a showdown between Macy's and J.C. Penney over which company gets to carry Martha Stewart products in its stores. Alas, the facts in this case are much more complicated than the straightforward Wood v. Lady Duff-Gordon. However, the kernel of the dispute is very much reminiscent of the older case.
Martha Stewart's company, now called Martha Stewart Living Omnimedia (MSLO), entered into an agreement with Kmart in 1997 permitting Kmart to sell the company's products in its stores. Ten years later, MSLO entered into a similar agreement with Macy's, and when the agreement with Kmart expired in 2009, Macy's became "the only retailer to sell [MSLO] products in categories like home décor, bedding and bath," according to the Times. In 2011, J.C. Penney started attempting to woo Ms. Stewart into a deal to sell MSLO products in its stores as a mechanism for bolstering its shaky financial performance. James B. Stewart's column in last week's New York Times indicates that, since its new CEO has come on board, J.C. Penney has reported a $4.28 billion loss in sales and laid off 2200 workers, while its share price has dropped 60%.
Upon learning that Ms. Stewart was in bedding with J.C. Penney, Macy's was not well-pleased. In her testimony, Ms. Stewart did not seem to see the problem. When asked if a consumer was likely to buy the same product, say a knife, at two different stores, Ms. Stewart gamely answered that the consumer might have two houses and need one knife for each kitchen. This might explain why she no longer sells her goods at Kmart. What's the point of selling to a demographic that includes renters? She might have added, "I like to keep an extra knife handy for back-stabbing," but her talents for self-mockery (in response to a question about how she spends her time, she responded "I did my time," to the delight of the courtroom audience), do not extend quite that far.
In today's New York Times, David Carr presents an apt anaology: the conflict is like a schoolyard fight between two boys over the most popular girl on the playground. And Carr succinctly explains why Martha Stewart is so popular. Ms. Stewart, he reminds us, "altered the way that people live by decoupling class and taste. . . . When you go into Target or Walmart and see a sage green towel that is soft to the touch, it may not carry her brand, but it reflects her hand. Her tasteful touch — in colors, in cooking, in bedding — is now ubiquitous. . . ." Here too, there are echoes of Lady Duff.
Ms. Stewart expressed surprise that a simple contract dispute would end up in court. It should be possible for the parties to come to an understanding of words written on a page. New York Supreme Court Justice Jeffrey K. Oing may agree, since he sent the case to mediation, but according to James Stewart, he might have arrived at that result through a reasoning process that Ms. Stewart would not endorse. According to James Stewart, the meaning of the contract is clear:
[T]he contract itself seems straightforward, with numerous clauses giving Macy’s exclusive rights to Martha Stewart products in various categories, including “soft home,” like sheets and towels, as well as housewares, home décor and cookware, and specifically limits her rights to distribute her products through any other “department store.”
He adds that there is no question that J.C. Penney is a department store. Justice Oing appeared to agree, since he repeatedly said that the contract is clear, and he granted an earlier injunction. J.C. Penney may have hoped to get around the exclusive contract by setting up a MSLO boutique within its own stores, but James Stewart gives a number of reasons, both legal and factual, and citing to the authoritative Charles Fried on the law, for why that argument is unlikely to fly.
What might fly would be a giant Martha Stewart balloon at the next Macy's Thanksgiving Day Parade. According to James Stewart, Ms. Stewart still asks for and receives free tickets for herself and her grandchildren to that event. Last year, James Stewart reports, she complained that she did not get to sit with the other celebrities who are seated with Macy's CEO, Terry Lundgren. Time for Macy's to show Martha Stewart the love. After all, Macy's does need her products in its stores.
Tuesday, March 5, 2013
LeBron James participated in this year's NBA All-Star game but one former player, Magic Johnson, was not happy. Magic, like many fans, would like to see the league's star players participate in the fun events leading up to the game, such as the slam dunk contest. Apparently, Magic would like that so much that he's willing to offer $1 million to the winner of next year's slam dunk contest if the contest includes LeBron James. He made that offer on ESPN's show, NBA Countdown:
When I first learned of this, I suspected that Magic's statement was an offer to James himself. However, in the video, Magic appears to say that the money would go to the winner of the contest, LeBron or not (OK, sure, the winner likely would be LeBron but you never know--underdogs can win, too).
Jalen Rose, Magic's co-host of the show NBA Countdown, stated that another player, Blake Griffin, would have to participate, too. Magic's verbal agreement with Rose seems to indicate a modified offer--one in which the $1 million payout is now conditioned on the participation of James and Griffin. From the video, it also appears that Magic is bargaining for performance versus promise but I'm not 100% sure.
For professors looking for a modern-day reward-style offer, this could serve as a less political alternative to the recent reward-style offers by Donald Trump and Bill Maher, about which we previously blogged.
[Heidi R. Anderson]
Thursday, February 21, 2013
There's a theory among some of my foodie friends that, when it comes to food, bacon makes everything better. I'm considering a similar theory for teaching Contracts via hypos: when it comes to Contracts hypos, celebrities make everything better. Hypos work. Sure, they "taste" just fine using names like "Buyer," "Client," and "Sub-Contractor," and I use those names most of the time. But using names like "Jason Patric, you know, the guy from Lost Boys and Narc" often makes the hypo better, at least for the few people over 25 who remember those movies. So, in the interest of making hypos better via celebrity a.k.a. bacon, I bring you this story from TMZ (see, you don't actually have to go to sites of ill repute; you can count on me to go to them for you and only bring you the somewhat good, quasi-clean stuff).
As TMZ reports, actor Jason Patric is in a custody dispute with his ex-girlfriend, Danielle Schreiber. Upon their break-up in 2009, Patric allegedly agreed to compensate Schreiber for her troubles via donating his sperm instead of by paying her. Presumably, in exchange for Patric's promised sperm, Schreiber would not sue Patric for support payments. Simple enough (sort of). But wait, there's more! Patric allegedly would donate his sperm to Schreiber only if she also promised not to seek support from him for the child; Schreiber agreed. If this agreement actually was reached, Schreiber must have believed that Patric's sperm was so valuable that she was willing to forgo support payments for herself and for the child that would result. [Insert skepticism here.]
How does this relate to Contracts hypos? It works as a hypo for R.R. v. M.H., which many of us use to teach how a contract can be deemed unenforceable if it violates public policy. In R.R. v. M.H., the court must decide whether to enforce the surrogacy agreement between a fertile father, married to an infertile wife, and the surrogate mother, who also happens to be married, and who was inseminated with the fertile father's donor sperm. I won't go into the case in more detail here; instead, I would like to focus one part of the case has a direct parallel to the Jason Patric dispute.
In R.R. v. M.H., a state statute provided that the husband of a married woman inseminated with donor sperm was treated as the legal father of the child, with all of the associated benefits and obligations that fatherhood carried along with it. The statute was supposed to facilitate the common practice of women being inseminated by a (usually anonymous) sperm donor. Strictly applying the statute to the facts in R.R. v. M.H. would have led to an absurd result. Specifically, it would have meant that the legal father of the child born to the surrogate would have been the surrogate's husband, who had no real interest in the child. The court wisely argued its way around that literal application and ruled differently.
The Patric dispute also involves a law of unintended consequence much like that involved in R.R. v. M.H. A California law states as follows:
"(b) The donor of semen provided to a licensed physician and surgeon or to a licensed sperm bank for use in artificial insemination or in vitro fertilization of a woman other than the donor's wife is treated in law as if he were not the natural father of a child thereby conceived, unless otherwise agreed to in a writing signed by the donor and the woman prior to the conception of the child."
Applying this law to the Patric situation could, like the law in R.R. v. M.H., produce an absurd result. Let's paraphrase the statute with applicable facts in parentheses:
"The donor of semen (Patric) for use in artificial insemenation of a woman (Schreiber) other than the donor's (Patric's) wife (they weren't married) is treated in law as if he (Patric) were not the natural father unless otherwise agreed in a signed writing."
So, even though Patric and Schreiber had been romantically involved, the formalized donation and the couple's unmarried status could negate Patric's claims to custody. It is not clear whether the statute applies and, not being admitted in California, I'd rather not analyze it further. But it always surprises me how what seems like a one-in-a-million kind of case does, in fact, repeat itself. Eventually.
[Heidi R. Anderson]
Monday, February 18, 2013
Tuesday, February 12, 2013
I recently covered the implied duty of good faith and fair dealing in part through the fun case of Locke v. Warner Bros. In Locke, the LA County Superior Court found that Warner Brothers' alleged failure to even consider Ms. Locke's movie proposals could violate the implied duty of good faith and fair dealing in their contract. Although Warner Brothers was not obligated to produce Ms. Locke's projects, it was obligated to exercise its discretionary power regarding her proposals in good faith. If Warner Brothers had, as Ms. Locke alleged, never actually considered her proposals, it would have violated their contract.
After Ms. Locke survived summary judgment, the case later settled. Prior to that time, Ms. Locke also had suggested that Warner Brothers never seriously considered her proposals as a favor to her ex, Clint Eastwood. Locke and Eastwood had worked together on the movie, The Outlaw Josey Wales (poster pictured to the right), and cohabitated for several years therafter. When the two actors split, Eastwood allegedly convinced Warner Brothers to give Locke the "first look" deal as part of his settlement with her and perhaps had even reimbursed Warner Brothers for the money it paid to Locke under its deal with her.
Inspired by this tale of love and faith lost, student Catherine Witting crafted the following limerick and authorized me to share it with the world.
Locke sued the Dubya B,
Saying "Don't you patronize me!
Clint may pay the bill,
But discretion is still
Subject to good faith guarantee!"
For a more recent case that tracks the facts of Locke, see this post regarding director John Singleton from 2011.
We had previously blogged about the demand letter that Donald Trump sent to Bill Maher. Maher dedicated a segment on his show to the dispute, taking aim at Trump's lawyer. Maher begins: “Donald Trump must learn two things: what a joke is and what a contract is.”
The segment is reminiscent of the Leonard v. Pepsico decision when Judge Wood takes on the task of explaining why the harrier jet commercial was "evidently done in jest." Here, Maher continues the humor in explaining why it was parody when challenged Trump to prove that he (Trump) was not born of an orangutan.
Here's the clip:
[Meredith R. Miller]
Thursday, February 7, 2013
Plaintiff Fabian Zanzi alleged that John Travolta sexually assualted and battered him while Zanzi was attending to him aboard a Royal Carribean Cruise ship. In the District Court for the Central District of California, Travolta moved to compel arbitration based on his cruise ticket and Zanzi's employment agreement. On February 1, 2013, as posted on The Hollywood Reporter, the District Court denied Travolta's motion to compel arbitration.
The District Court rejected Travolta's arguments that Zanzi was bound by the arbitration clause in Travolta's ticket because Zanzi, as a non-signatory to the agreement contained in that ticket could not be bound to arbitrate under it. While the court recognized certain exceptions to the rule against binding non-signatories, it found none of them applicable on these facts.
The court similarly rejected Travolta's argument that Zanzi could be bound by the arbitration clause in Travolta's ticket because Zanzi was an agent of Royal Carribean, a signatory. The court noted that "a non-signatory employee is bound to arbitrate under 'agency principles' only to the extent that its principal signed an arbitration agreement with the authority to bind the employee in his individual capacity." Zanzi never authorized his employer to divest him of his right to bring personal claims.
Travolta next argued that Zanzi should be bound by Travolta's ticket's arbitration clause because Zanzi was a third-party beneficiary to the agreement contained in the ticket. The court rejected Travolta's third-party beneficiary theory, finding that the agreement benefits Royal Caribbean and shields it from liability. Any benefits flowing to Zanzi from the ticket are indirect and incidental.
In the alternative, Travolta argued that Zanzi should be estopped from litigating his claims against Travolta in court while also litigating related claims against Royal Caribbean through arbitration as required under Zanzi's employment agreement. Here, Zanzi is a signatory to the agreement; Travolta is not. Travolta contended that estoppel applied because Zanzi had "alleged substantially interdependent and concerted misconduct by the nonsignatory Defendant and signatory Royal Caribbean." The court found that characterization inaccurate. Zanzi alleged sexual assault and battery against Travolta; his allegations against Royal Caribbean relate to how his employers treated him after he reported Travolta's alleged misconduct. Zanzi claimed that he had been confined for five days until Travolta disembarked. In his dispute with Royal Caribbean, Zanzi is claiming false imprisonment and intentional and negligent infliction of emotional distress. The two sets of claims relate to separate acts that occurred at different times and there are no allegations that the parties acted in concert.
Days after this decision was issued, as reported in the Daily Mail online, Zanzi announced that he was dropping his suit, citing litigation costs. Travolta's lawyers dismsses Zanzi's allegations as an attempt to gain fame and money by selling the story to the media.
Monday, February 4, 2013
File this under "objective theory" example that even a law professor could not invent.
On national tv Bill Maher challenged Donald Trump to come forward with Trump's birth certificate to prove that Trump was in fact born from a human father (not an orangutan). Apparently Trump provided his birth certificate and then requested that Maher remit the $5 million. The discussion on Fox News: what did Donald Trump reasonably believe? Was this an offer to enter into a unilateral contract? Watch it here:
Who wins: Trump or Maher?
[Meredith R. Miller h/t Steven Crosley]
Thursday, January 10, 2013
With more people acting like citizen journalists these days, celebrities often are exposed for engaging in various activities they'd rather their fans not know about (insert shameless plug for my privacy-related article, The Mythical Right to Obscurity, here). For example, pictures of Justin Bieber recently surfaced that allegedly show him holding a "blunt," a.k.a. marijuana rolled like a cigarette. How is this related to contracts? Well, in order to avoid future publication of pictures like the blunt pics, Justin Bieber reportedly is posting signs wherever he socializes which state that any pictures taken of him during the socializing belong to Justin Bieber only. In other words, if you are hanging out with Justin Bieber, Baby, you are promising not to distribute (take?) any pictures without his express permission. The questions for our blog are:
(i) Is there a contract? Is my staying in the room, thereby giving him Somebody to Love, acceptance of Justin's proposed terms (like my keeping of the computer in Gateway)?
(ii) Is there consideration? Is Justin's staying in the room valid consideration to support my promise not to share pictures of him? Or is everything ok As Long as [He] Love[s] Me?, and
(iii) Has my use of song-related puns in this and other posts grown tiresome?
In a related post, our own Nancy Kim discussed Chris Brown's practice of requiring fellow partiers to sign a confidentiality agreement.
[Heidi R. Anderson]
Monday, December 17, 2012
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.
Monday, December 3, 2012
As reported here in the New York Post, hip hop artist and producer, Ryan Leslie, offered via YouTube video a $1 million reward for the return of a lost laptop and external hard drive.
Mr. Leslie laptop and an external hard drive were allegedly stolen while he was touring in Cologne. Plaintiff Armin Augstein claimed to have foudn the missing items while walking his dog. He returnd the property to the German police and claimed his reward when notified of its existence.
According to the Post, Mr. Leslie gave two explanations for his refusal to pay the reward. First, Mr. Leslie suggested that Mr. Augstein may have been in on the heist, since he found the laptop fifteen miles from where the theft allegedly took place. Second, Mr. Leslie claimed that his duty to pay was contingent on his ability to retrieve certain musical tracks from the external hard drive, something Mr. Leslie claimed he was unable to do. Because Mr. Leslie had returned the hard drive to the manufacturer, the judge informed the jury that they should assume that Mr. Leslie could have retrieved the tracks before doing so.
During jury deliberations, Mr. Leslie's attorneys attempted to settled, but plaintiff refused. After three hours of deliberation, the jury returned with a decision awarding plaintiff the full $1 million. His lawyer commented that Mr. Augstein was due not just a "thank you" but an apology. The law requires only a check.