ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Friday, July 27, 2018

23andMe decides to exercise its right to do pretty much whatever it wants with your DNA

23andMe, one of the services that takes your saliva and analyzes your DNA for you, has announced a partnership with GlaxoSmithKline to use its DNA database to develop targeted drugs. I've written before about the fairly broad consent Ancestry.com's similar home DNA service elicited under its terms and conditions, which 23andMe also enjoyed. According to the article, 23andMe considers itself to have gained consent from its users, and is allowing users to opt out if you wish. 

I think most of us have little problem with our DNA being used to find cures for terrible diseases and afflictions. If my DNA could be used to cure cancer, I am happy to line right up. (And, in fact, when my father had cancer, we did provide express consent to his doctors for us to assist in their DNA research.) But I think most of us, if asked, would have said something like, "I want my DNA to be used to cure cancer so people with cancer can be cured." 

However, the way the pharmaceutical industry works in this country, that's not exactly what happens. The cure, as we know because we talk about health insurance A LOT, is then available to those who can afford it. Many of Wikipedia's drug entries keep track of the cost of pharmaceuticals in the U.S. against the cost of producing the drug, as can be seen here. So I don't want to sound like a terrible person trying to stall progress, but, well, the users in the database paid to use 23andMe, and now their DNA is being sold to a pharmaceutical company, so 23andMe has now made money off of the DNA twice, and then it's going to get used to develop into medications that will then be sold again, back to the people who need the medications, who may be the same people whose DNA was used to develop the drug. At that point your DNA has been profited off of three times, and never by you, and possibly twice at your own personal expense. And, if history is anything to go by, that pharmaceutical is your DNA coming back to you at a tremendous mark-up. So you could find yourself in a position where you paid to have a pharmaceutical company take your DNA, turn it into the drug that could save your life, and then ask you to pay, again, much more money than you have, to gain access to the drug. You paid to donate your DNA so they could charge you for the benefits it provides. And, according to the terms and conditions, you consented to that. 

July 27, 2018 in Commentary, Current Affairs, In the News, Science, True Contracts, Web/Tech | Permalink | Comments (0)

Friday, July 20, 2018

Court finds a no-media clause contrary to public policy

A recent case out of the Southern District of New York, Garcia v. Good for Life by 81, Inc., 17-CV-07228 (BCM) (behind paywall), is an examination of a settlement agreement implicating the Fair Labor Standards Act ("FLSA"). It's interesting for the language it's willing to approve vs. the language it says should not be contained in the agreement. 

First, the court expresses concern about the contract's releases being overly broad and rewrites them, concerned that the language as written would have attempted to bar claims by a "second cousin once removed." Upon revision, the court is comfortable with the releases, but the court declares unenforceable the no-assistance and no-media provisions. The court finds it a violation of the FLSA to bar the plaintiff from assisting other individuals who might have a claim against the employer. The court also states that the effective "partial confidentiality clause" preventing the plaintiff from contacting the media is "contrary to well-established public policy." I found this last ruling especially interesting in our age of widepsread NDAs, which I've blogged about a bunch. I agree that such a clause would "prevent the spread of information" in a way that would be harmful to other wronged victims trying to vindicate their rights; we should keep talking about that when it comes to NDAs. 

July 20, 2018 in Commentary, Labor Contracts, Recent Cases, True Contracts | Permalink | Comments (0)

Wednesday, July 18, 2018

Surprise Charges for Emergency Room Services… Once Again

I blogged about the issue of emergency room and hospital “surprise charges” before, but this important issue is well worth re-addressing in the context of a new case.  Many court decisions and articles are still generated about the topic, but with no good solution yet from a patient/consumer point of view.

Here is the classic scenario: A person receives urgent medical care in an emergency room.  Upon admission, he or she is presented with a contract stating, for example, that he or she will pay for the services “in accordance with the regular rates and terms” of the hospital or emergency room.  But how does one ever know what those charges will be?  Does that make them an open price term?  If so, is the medical provider under an obligation to pay only the reasonable value of the services provided or can they charge pre-posted list rates?  Who decides what is “reasonable” and not in a market marked by, for most of us, very high prices?  If the provider charges what appears to be a very high amount, is the entire contract void for unconscionability?

A current case I came across addresses these issues (class certification was granted).  The uninsured “self-pay” patient, Mr. Cesar Solorio, signed a three-page admissions contract stating the above.  Once released, he got an un-itemized bill for $7,812.  He filed suit for breach of contract asking the court to, among other things, clarify how the contractual language “in accordance with the regular rates and terms of  [medical center] should be interpreted and applied.  Mr. Solorio alleges that the language constitutes an open price term that, under applicable law, is an agreement to pay only the reasonable value of the items received and not the posted rates by the medical center. Solorio also alleges that the medical charges were artificially inflated and more than four times higher than the actual fees and charges collected by the medical center. 

I still find these types of contracts highly problematic seen from a consumer/patient point of view. I have myself been subjected to a similar treatment (so to speak) by an emergency room that also, after the fact, sent me a much higher bill than what I was initially “promised” (orally and probably non-binding, but still).  Several items were double if not triple billed.  Patients can complain and complain, but what can we really do?  Not much, it seems, as these types of cases keep re-appearing. 

Yes, of course we want urgent medical treatment if we need it.  Yes, that is expensive.  But clearly, we also have a contractual (and moral) right notto be ripped off.  And maybe some services that might initially seem urgent could actually wait… In my own case and, I know, that of many others, medical providers are very eager to promote their treatment as highly necessary and urgent/”a good idea.”  That may, I hate to say, simply be a way for the medical providers to make more money.

As it is now, the burden seems to be on the patient seeking services to bargain for and document having received a promise that is limited in scope to … what?  Is this just an impossible issue to solve from a contractual point of view?  It seems to be.  That’s where health insurance comes into play, but reality remains that not everyone has that.  The “free market” takes over, but, in my opinion, that is far from optimum in this particular context.

The case is Cesar Solorio v. Fresno Community Hospital and Medical Center, Ca. Super. Ct. NO. 15CECG03165, 2018 WL 3373411. 

July 18, 2018 in Commentary, Miscellaneous, Science, True Contracts | Permalink | Comments (2)

Termination for any reason at all means that you can terminate for, well, any reason at all

A recent decision out of Ohio, Whitt v. The Vindicator Printing Company, Case No. 15 MA 0168, discusses the limits of the implied covenant of good faith and fair dealing. In the case, the contract contained a provision permitting termination of the contract for "malfeasance . . . , or at the will of either party for any reason or no reason" upon thirty days written notice. Vindicator terminated the contract with Whitt after an altercation between Whitt and a temp employee working for Vindicator. Whitt sued for, among other things, breach of contract, complaining that Vindictor had wrongfully terminated the contract only seven months into its three-year term. Whitt alleged that Vindictor violated the implied covenant of good faith and fair dealing because it terminated the contract after Whitt was a victim of criminal assault at the hands of Vindicator's employee. 

The court noted, though, that the requirement of good faith should not give a court the ability to second-guess decisions made within the context of the contract. The termination provision of the contract did not require just cause, which was what Whitt was trying to read in. Rather, the contract permitted Vindicator to terminate it for no reason whatsoever, so the exact circumstances of the termination did not matter. 

I think many people assume that contracts provide a level of reliability and predictability that doesn't exist if those contracts permit termination for any reason, or for no reason. I think Whitt assumed that this contract would stay in effect unless he did something terrible, but that's not how the termination clause was worded. 

(h/t to D. C. Toedt for the free link!)

July 18, 2018 in Commentary, Recent Cases, True Contracts | Permalink | Comments (2)

Wednesday, July 4, 2018

Pleading breach of contract adequately

Here's a short case out of the District of New Jersey, Hall v. Revolt Media & TV, LLC, Civil Action No. 17-2217 (JMV) (MF), in which the plaintiff failed to adequately plead his breach of contract claim. I'm blogging it because I don't spend a lot of time teaching my students about complaint-drafting; there are always just so many other things I'm quickly trying to discuss. But this case strikes me as a nice straightforward way to talk about it. The claim fails because all of the plaintiff's allegations were about contract negotiations: He contacted the defendant to discuss a contract, he sent the defendant a contract that was never signed, he continued to attempt to contact the defendant to negotiate the contract, etc. The court said there was never an allegation that any contract had actually been finalized. Nor did the complaint contain any details about the terms of the contract, such that the court could not tell what had allegedly been breached. I think this can be used as a way to focus the students on what they do need to be sure to include in breach of contract allegations. 

And being sure to also plead promissory estoppel would be a good idea. The complaint did adequately plead unjust enrichment, so this case can act as a good way to teach the distinctions of that cause of action as well. 

July 4, 2018 in Commentary, Recent Cases, Teaching, True Contracts | Permalink | Comments (0)

Monday, July 2, 2018

An "exceedingly rare" case where a court discounted testimony, relying in part on the witness's admitted "habit of routinely lying" in the course of business

A recent case out of Michigan, Strategy and Execution Inc. v. LXR Biotech LLC, No. 337105, speaks to the perils of not putting agreements in writing (or doing so and subsequently losing the writing). The parties had a written contract that stated that they would arrive at performance criteria at a later time. But the parties disputed ever entering into a later agreement over the performance criteria. No party produced any written document. LXR's principal testified that the parties reached an oral agreement that he memorialized in writing but the writing was later lost. However, this testimony was not corroborated by any other witness except for one who gave "conflicting testimony" regarding the document. LXR's principal had admitted to "routinely lying" because he apparently thought it to be "good business practice." Furthermore, none of the "voluminous" emails exchanged between the parties ever referenced any agreement on the performance criteria. The court therefore agreed that "this is one of the exceedingly rare cases in which a witness's testimony is insufficient to find a jury question." Despite the testimony, the court was permitted to enter a directed verdict on the breach of contract claim. 

Written contracts are not always required, but this case is an example of why they are often desirable to have, and to keep safe!

(There were other points of appeal in the case relating to other clauses of  the contract and some jury instruction issues.)

July 2, 2018 in Commentary, Recent Cases, Teaching, True Contracts, Web/Tech | Permalink | Comments (0)

Friday, June 29, 2018

If you want something specific, ask for it in your contract

A recent case out of the Second Circuit, Ortho-Clinical Diagnostics Bermuda Co. Ltd. v. FMC, LLC, No. 17-2400-cv (behind paywall), is another case about interpretation of contract terms -- twice over. Because here the parties entered into a contract, fought over breach of that contract, and then entered into a settlement agreement, which they were also fighting over. The moral is that, if you want something specific, you should ask for it rather than relying on unspoken industry practices. 

The initial agreement between the parties was about an IT operating system. Although the system was going to cost $70 million, the contract wasn't very detailed, with no technical specifications or description of building methods. The parties' relationship deteriorated and they eventually entered into a Settlement Agreement to terminate the project. Under these new terms, FCM would be released from its obligation to provide the system to Ortho, while providing assistance while Ortho transitioned to a different contractor. After execution of the Settlement Agreement, Ortho apparently realized that FCM was not as far along as Ortho had thought and had not prepared certain items that Ortho had assumed it had prepared, and so Ortho claimed that as a result the IT system cost more and took longer. 

The court, however, noted that there was nothing in the contract requiring FCM to produce the certain deliverables Ortho had been looking for. Ortho claimed it was "standard practice in the industry," but the court said that wasn't the equivalent of it being a contractual obligation. FCM was contractually required to provide assistance -- no more, no less. There was nothing in the contract about the job having to be at a particular stage of completion, or that any particular deliverables or documentation had to exist. 

The court also pointed out that Ortho had released its claims regarding the original agreement in the Settlement Agreement. Ortho tried to argue that it had released claims but not damages but the court called that "a nonsensical reading." 

June 29, 2018 in Commentary, Law Schools, Recent Cases, Teaching, True Contracts, Web/Tech | Permalink | Comments (0)

Wednesday, June 27, 2018

Your contract should say what you want; fancier terms are not always a good thing

A recent case out of the Southern District of New York, Treasure Chest Themed Value Mail, Inc. v. David Morris International, Inc., 17 Civ. 1 (NRB), deals with a digital marketing contract, presenting a variety of straightforward interpretation questions that could be helpful for basic examples for some things to look out for in contract drafting. 

The parties entered into a contract in which Treasure Chest was required to provide "greater than 300,000 follow up weekly digital impressions." The first dispute was over whether "digital impressions" was too ambiguous to be enforced. The court, however, easily defined "digital impression" with reference to investopedia.com. The court distinguished "digital impression" from "email," saying if the parties had meant "email" they would have used the word "email." A lesson in just using what you wish to say if that's indeed what you want; fancier terms are not always necessary and might just leave some room open for arguments about ambiguity and interpretation. 

There was also a dispute over whether it was ambiguous that compensation was "up to" a certain amount. But the court disagreed, saying it was clear that this simply meant the contract would not exceed a certain amount. 

Therefore, the court found there was a valid contract, that Treasure Chest fulfilled all of its obligations under the contract, and David Morris did not, so Treasure Chest was entitled to damages. Treasure Chest also sought attorneys' fees, but the court found that the contract was not clear enough to justify attorneys' fees. The contract said that "costs necessary to collect" past due balances could be awarded, but the court said that did not satisfy the "high standard" for collection of attorneys' fees via contract. Again, if attorneys' fees are what you want, attorneys' fees are probably what you should say. 

June 27, 2018 in Commentary, Recent Cases, Teaching, True Contracts, Web/Tech | Permalink | Comments (0)

Wednesday, June 20, 2018

Is the viral umpire video a breach of contract?

Recently a video went viral showing a 2016 altercation around an umpire ejecting Mets pitcher Noah Syndergaard after he threw a fastball behind the Dodgers' Chase Utley. Umpires wear microphones during Major LeagueBaseball games, and the resulting (often loud and profane) discussions with Mets players and especially Mets manager Terry Collins was recorded. 

The video recently surfaced in an apparent leak, because MLB has announced its intention to try to scrub the video from the internet. MLB's reason for this is that it violates a "commitment" that "certain types of interactions" involving umpires during baseball games would not be made public, claiming it was "in the collective bargaining agreement" and that there was "no choice" but to scrub the video from the internet. Indeed, according to one report it had already been scrubbed

Not so fast, though, because I found it still embedded in news reports about it. It's hard to get anything to vanish from the internet, especially once it's gone viral, but it's not that difficult to locate this video at all. 

And it's not hard to see why it went viral. It's a fascinating glimpse into a part of the game fans seldom get to see. As others have pointed out, the umpire does a fantastic job in the clip, so it's hardly like he's being cast in a bad light. The manager doesn't even come across all that poorly. In fact, in my opinion, the party that comes out of the clip looking the worst is Major League Baseball and its confusing way of handling the explosive Chase Utley situation. 

It's unclear what "interactions" were agreed to be withheld from the public, but this one is certainly an interesting one. I'd love to know what the contract terms actually are. 

June 20, 2018 in Commentary, Current Affairs, Film, In the News, Labor Contracts, Sports, Television, True Contracts, Web/Tech | Permalink | Comments (0)

Friday, June 15, 2018

It's True: People Really Are Getting Dumber and Dumber

New scientific studies have proven what we might all have been jokingly saying, but which apparently is true: the world population is increasing, but IQ levels are decreasing.   The reason?  Nurture, not nature. 

The studies claim that after 1975, IQ levels started to drop because of, it is thought, "environmental factors."  These could include pollution, changes in the education system and media environment, nutrition, reading less, and being online more.   Yikes.

"It's not that dumb people are having more kids than smart people, to put it crudely. It's something to do with the environment, because we're seeing the same differences within families," said one of the co-authors and lead researchers on the project.

For us, this is not good news for obvious reasons.  But are we, in fact, a contributing cause?  I know that some of my students, for example, do not enjoy and sometimes simply will not read long homework assignments, don't read privately, and indeed spend large amounts of time online.  I'm sure your students are not very unlike mine in that respect.  Other studies that I don't have handy here also demonstrate that our students have difficulty reading longer texts simply because they are not used to reading anything much longer than blog posts, twitter feeds, and maybe the occasional article here and there, but certainly not books.  

Read the entire findings.  References to "changes in the education system" and "decreasing access to education" are disturbing.

 

 

June 15, 2018 in Commentary, Contract Profs, In the News, Law Schools, Miscellaneous, Science, Teaching | Permalink | Comments (1)

Wednesday, June 13, 2018

Employees Beware: You are Contractually Presumed to be At-will

A new case out of Minnesota and subsequently the United States Court of Appeals for the Eighth Circuit once again confirms what we suspect already: if there is any doubt about an employee’s status, he or she is likely to be held to be an at-will employee.  Consider this:

Daniel Ayala is hired as an at-will employee in 2006 to serve as a vice president for CyberPower.  In 2012, Ayala and CyberPower agree to convert his position to executive vice president for sales and general manager for Latin America. The written contract details his salary and compensation status, stating that the agreement “outlines the new salary and bonus structure to remain in place until$150 million USD [sic] is reached.  It is not a multiyear commitment or employment contract for either party” (emphasis added).  Ayala is fired before sales could reach $150.  He claims breach of contract, contractual fraud, and unpaid wages, arguing that he was no longer an at-will employee, but rather should have been allowed to remain with the company at least until, as stated in the contract, the sales reached $150 million.  CyberPower also relies on the contractual language, arguing that it unambiguously did notmodify his status as an at-will employee as contained the phrase that it was “not a multiyear commitment or employment contract.” Unknown

The appellate court agreed with CyberPower, highlighting the fact that the text of the agreement indicates that it governed compensation only.  In Minnesota, there is a “strong presumption of at-will employment” which was applied here. The court also pointed out that Ayala did not produce any evidence supporting his claim that the company defrauded him by promising a definite term of employment and then firing him before the completion of the term.

Fair enough, it seems… until you consider the following as well: Ayala performed very well in his first sales position, bring the company’s annual sales from “virtually nothing” to almost $50 million by 2012.  He aspired to become the company’s president when the original president, Robert Lovett, decided to retire.  Lovett allegedly assured Ayala that he would be considered for that position but - surprise! - chose his son Brent as his successor when he retired in 2012.  Ayala then expressed his desire to leave the company, but was persuaded to stay to mentor Brent (thus expecting Ayala to train his own replacement, in effect.). Ayala was assured that if he stayed, he would receive “better compensation, a promotion and a written contract ensuring Ayala long-term employment.”  He was indeed promoted and, per the contract, promised to be able to stay “until” sales reached a certain amount, if the contractual language had been weighed that way.  Further, the contract does not say that his position was in fact at-will.  His previous contract had, in contrast, specifically said so. Images

Because of the parol evidence rule and, probably, the lack of written evidence of the negotiation statements, Ayala lost.  The presumption about at-will employment may have been correctly applied.  Not all court cases are resolved in a fair way for the employees.  But the case clearly reeks of nepotism, luring an employee to stay with a company under false pretenses, and broken oral promises. True, Ayala did not have evidence of the oral negotiations, but neither did CyberPower.

Why is it apparently so darned important in U.S. society to treat employees as mere objects that can be disposed of at will, by definition?  Why would it be so horrible to have to give employees a decent amount of notice and perhaps even a reasonable reason for being let go?  Many other highly developed nations around the world – especially those in Europe – do not employ such law.  These nations do very well.  Companies there make good profits.  Employees have more job security.  They are equally, if not more, productive than American workers.  What’s so bad about that?! 

Clearly, cultural factors play a role in this context. That’s unlikely to change.  In the meantime, employees in the U.S. should continue to be critical towards oral promises made by their employers and get every important term in writing.  Of course, that is easier said than done in today’s often difficult job market and resulting reasonable fears of losing or not getting a coveted position. Employees such as Ayala should not be seen as mere impersonal chess pieces that can be manipulated and moved around for employer benefits only.  But they often are.

The case is Daniel Ayala v. CyberPower Systems (USA), Inc., 2018 WL 2703102.

June 13, 2018 in Commentary, Labor Contracts, True Contracts | Permalink | Comments (4)

Arbitration clause enforceability seems like a pretty safe bet these days

There is very little you can bet on in life but it seems like the continued prevalence of arbitration clauses is one of them. We just had a Supreme Court ruling confirming that, and a recent case out of Nebraska, Heineman v. The Evangelical Lutheran Good Samaritan Society, No. S-17-983, continues in the same vein. 

In the case, a nursing home resident sued the facility for injuries he sustained while living there. The nursing home facility sought to arbitrate the dispute under the arbitration clause Heineman agreed to before being admitted as a resident of the facility. The lower court refused to enforce the arbitration clause based on lack of mutuality of obligation as well as finding it contrary to public policy. The appellate court, however, disagreed. 

First, Heineman's argument on mutality of obligation concerned allegations that the nursing home facility had filed lawsuits against its residents without pursuing arbitration first. Heineman therefore argued that the nursing home's conduct indicated that only Heineman was bound by the arbitration clause. However, Heineman's argument depended on the court taking judicial notice of those lawsuits, considering that, as drafted, the arbitration clause did bind the nursing home. For some reason, though, this was apparently not an argument Heineman made at the lower court level, because the appellate court refused to take judicial notice of the lawsuits because they had not been presented to the trial court.

As far as the public policy concern went, the lower court had relied on a federal regulation prohibiting arbitration clauses as a requirement for admission to long-term care facilities. However, that regulation was passed almost two years after Heineman signed his arbitration clause, and at any rate has been enjoined from application by a federal court. Because there was no other legislation expressing a public policy against arbitration in the context of nursing-home facilities, the court found the arbitration clause was enforceable.

June 13, 2018 in Commentary, Current Affairs, Recent Cases, True Contracts | Permalink | Comments (0)

Monday, June 11, 2018

Saving illusory promises with implied covenants of good faith and fair dealing

If you teach Lady Duff-Gordon, as I teach Lady Duff-Gordon, you know that it's a fun case that lets you talk about a frankly pretty incredible life. But it's also an older case, so here's a more recent case out of New York using the implied covenant of good faith and fair dealing to potentially save an allegedly illusory promise, Ely v. Phase One Networks, Inc., 2667/2017 (behind paywall). 

The plaintiff is a composer. The defendant is a company that produces music albums. The parties entered into recording and co-publishing agreements. The plaintiff sought a declaratory judgment that the contracts are unenforceable because they are illusory and unconscionable and moved for summary judgment. The court found that factual disputes existed as to both the unconscionability and illusory allegations. The analysis on unconscionability was very brief, but the court did provide a slightly deeper analysis on the illusory promise front. Although the recording contract provided that the recordings were "subject to the defendant's approval in its sole judgment," the court noted that the covenant of good faith and fair dealing "implicit in all contracts" meant that "the defendant could not unreasonably withhold approval." 

June 11, 2018 in Commentary, Famous Cases, Law Schools, Recent Cases, Teaching, True Contracts | Permalink | Comments (0)

Friday, June 1, 2018

Why do employers sue employees who leave to work for companies that don't compete against them?

A recent case out of the Eastern District of Pennsylvania, Catalyst Outdoor Advertising, LLC v. Douglas, Civil Action No. 18-1470, declined to enforce a non-compete against the defendant Douglas, who had gone to work for an outdoor advertising firm that covered Manhattan and the Bronx. Catalyst, meanwhile, worked out of the Philadelphia area. The non-compete in question had no geographic limitations, which the court took issue with, noting it "covers the entire world." Catalyst asked the court to define reasonable geographic limits for the non-compete but the court declined to do so, stating, "[D]efining the boundaries is not our job." Additionally, because Catalyst operated in Southeastern Pennsylvania (with one billboard along the New Jersey Turnpike) and Douglas's new employer operated only within New York City, the court found that the two companies were not in competition with each other. 

The court also found that Douglas had no confidential information belonging to Catalyst and that there was no evidence the information she knew from working at Catalyst would be beneficial in the entirely new territory of New York City. Therefore, the court concluded there was no likelihood of irreparable harm. 

This is one of those cases that, from a pragmatic standpoint, makes little sense to me. Why would Catalyst pursue a court case against an employee going to work for a company not in its geographic area? The court's irreparable harm analysis seems right to me, that the employee here didn't have any specialized knowledge that could hurt Catalyst, given it didn't compete against the new employer. So, in that case, why is this case worth the money spent by Catalyst to bring it? Even if Catalyst had been successful, what was Catalyst's concrete gain? Is it just that companies don't want any employees to leave ever? Given the breadth of the non-compete in the first place, Catalyst might just be overprotective. Or is there some fact about this case left out of the opinion that makes it make more sense? Is Catalyst contemplating expansion down the road into New York City and is worried this employee might somehow make their plans less successful? This case is in the preliminary injunction stage, so maybe there is information that could arise later that would make it look more likely that Catalyst would succeed on the merits. It seems like Catalyst would have presented that information to the court at this point, though. 

June 1, 2018 in Commentary, Labor Contracts, Recent Cases, True Contracts | Permalink | Comments (0)

Wednesday, May 30, 2018

Temperatures Affecting Test Scores - Bar Results Too?

Although this post does not have anything to do with contracts law, it is hopefully interesting to many of you law professors anyway.

Scientific research shows that in years with warmer temperatures, students score worse on tests.  The link is "significant."  Researchers calculated that for every 0.55° C increase in average temperature over the year, there was a 1% fall in learning.  

Colder days did not seem to damage achievement - but the negative impact began to be measurable as temperatures rose above 21° degrees C.  The reduction in learning accelerated once temperatures rose above 32° C and even more so above 38° C.

A simple solution could be to use more airconditioning on test days.  The more complex, but necessary, solution is to curb climate change.  The world is still not doing enough in that respect despite the 2015 Paris Agreement.  In particular, it is problematic that the USA has announced its withdrawal from the climate change agreement.

Could increasing temperatures also be part of the reason for our students' worse and worse bar performances?  Apparently so.  

May 30, 2018 in Commentary, Contract Profs, Current Affairs, In the News, Law Schools, Legislation, Science | Permalink

Friday, May 25, 2018

Trump Seeks to Alter Post Office Contracts with Amazon

As widely reported in, for example, the Washington Post, whose owner founded Amazon, President Trump has pushed Postmaster General Megan Brennan to double the rate that the post office charges Amazon.com and some, but not all, similar online retailers.  

The contracts between the Postal Service and Amazon are secret out of concerns for the company's delivery systems.  They must additionally be reviewed by a regulatory commission before being changed.  That, perhaps unsurprisingly, does not seem to phase President Trump who appears to be upset at both Amazon and the Washington Post.   The dislike of the latter needs no explanation, but why Amazon?  Trump has accused it of pushing brick-and-mortar stores out of business.  Others point out that if it weren't for Amazon, it is the post office which may be out of business.

Aside from the political aspects of this, does Trump have a point?  Is Amazon to blame for regular stores going out of business?  I am no business historian, but it seems that Amazon and others are taking advantage of what the marketplace wants: easy online shopping.  Yes, it is very sad that smaller, "regular" stores are closing down, most of us probably agree on that.  But retail shopping and other types of business contracting will evolve over time as it has in this context.  That's hardly because Amazon was founded; surely, the situation is vice versa.  Such delivery services are fulfilling a need that arose because of other developments.

From an environmental point of view, less private vehicle driving (for shopping, etc.) is better.  Concentrating the driving among fewer vehicles (FedEx, UPS, USPS, etc.) is probably better, although I have done researched this statement very recently.  One fear may be the additional and perhaps nonexistent/overly urgent need for stuff that is created when it becomes very easy to buy, e.g., toilet paper and cat litter online even though that may in and of itself create more driving rather than just shopping for these items when one is out and about anyway, but that is another discussion.

Suffice it to say that Trump should respect the federal laws governing the Postal Service _and_ existing contracts. What a concept!  If the pricing structure should be changed, it clearly should not be done almost single-handedly by a president.  

Meanwhile, the rest of us could consider if it is really necessary to, for example, get Saturday snail mail deliveries and to pay only about 42 cents to send a letter when the price of such service is easily quadruple that in other Western nations (Denmark, for example, where national postal service has been cut back to twice a week only and where virtually all post offices have been closed).  Fairly simple changes could help the post office towards better financial health.  This, in turn, would help both businesses and private parties.  

 

May 25, 2018 in Commentary, Current Affairs, E-commerce, Government Contracting, In the News, Legislation | Permalink | Comments (1)

Wednesday, May 23, 2018

Banks Violating Federally Mandated Contract Law Provisions

PNC Bank, Wells Fargo and U.S. Bank have been sued for charging interest from homeowners paying off their mortgages early without disclosing how to avoid the charges in spite of HUD rules requiring the latter (and, in the case of one California plaintiff, the California Unfair Competition Law).  When do they ever learn, you ask yourself? - Not soon enough, seems to be the answer. 

This is how the most recent scandal went down (and might still be, so anyone wishing to pay off their mortgages before time, be aware): Homeowners paying off their mortgages ahead of schedule were charged “post-payment interest charges” for the entire month in which the loan was otherwise paid off.  What’s the big deal, you ask yourself?  Consider this: Lead California plaintiff Sandi Vare alleged that she asked PNC for a payoff statement when refinancing her home in July 2016.  She was charged $1,227.16 in interest for the entire month, despite the fact that her loan was paid off on July 16; roughly $600 too much.  Even for you and I, that’s a good chunk of change. Images-1

Banks, it seems, try whatever they can to fog and outright cheat their own clients in many contexts and certainly in the home financing/refinancing ones.  I am personally altering my home loan with Wells Fargo to 1) pay a chunk extra into the principal and 2) pay the loan off in a shorter timeframe than the current one.  The amount of fogging and, in effect, secret “code talk” one has to be subject to or use to achieve such a simple objective is amazing.  For example, if one does not mention the word “recast,” the bank representative may not mention this or may not outline the otherwise relatively advantageous terms of obtaining such a contractual amendment. If one does not very specifically ask for the interest rates and amounts per month, total loan period and interest vs. principal amount, etc. (you get it), the bank – at least Wells Fargo – does not seem to lay out all the details that could work in the borrower’s favor.  Granted, they do if one asks them to do so, but is this this amount of fogging, secrecy, and, in the case of the above-mentioned lawsuit, outright disregard of not only contractual ethics, but also state and federal law what we wish to accept as society just so that banks, who have repeated proved to not follow the law, ethics or even sound market-based risk principles, can continue to make money on services that their customers actively seek to avoid?  One would hope not, but as this case shows, more litigation is apparently needed to continue reigning in overly greedy banks. Images

The case is Vare et. al v. PNC Bank, U.S. District Court for the Northern District of California, 18-2988. The lawsuit is asking for a nationwide class for breach of contract.  Wells Fargo and U.S. Bank defeated nationwide class status last year as too many state-specific rules were involved in that case. 

May 23, 2018 in Commentary, Current Affairs, In the News, Legislation, True Contracts | Permalink

Tuesday, May 22, 2018

Update: In Which Arbitration Reigns Supreme (Supreme Court Kind-Of Pun Intended)

I just blogged about the Ninth Circuit case of Morris v. Ernst & Young, and the Supreme Court has now come out with its decision, reversing the Ninth Circuit (shorter analysis here). Where the Ninth Circuit found that arbitration clauses prohibiting concerted actions by employees violated the National Labor Relations Act, the Supreme Court found that permitting concerted actions by employees where arbitration clauses existed would violate the Federal Arbitration Act. Justice Ginsburg wrote a long dissent; the majority opinion was written by Justice Gorsuch. The trend out of the Supreme Court has been that arbitration trumps every other policy. The Federal Arbitration Act is like the royal flush of statutes.

In a world where contracts with arbitration clauses govern almost every imaginable transaction, courts are forced into interesting decisions to press against the primacy of arbitration. So, for instance, on the same day the Supreme Court handed down its decision, the Western District of Pennsylvania declined to enforce an arbitration provision in Jones v. Samsung Electronics America, Case No. 2:17-cv-00571-MAP (behind paywall). Jones sought to bring a class action against Samsung based on alleged defects in its S3 cell phones. Samsung sought to arbitrate, citing the contract allegedly contained in the instruction booklet included with the phone. But the court disagreed that the arbitration clause was enforceable. It found that the clause was "tucked away" in a section entitled "Manufacturer's Warranty" contained in a 64-page booklet. The court agreed that the clause might possibly have been more inconspicuous, but found that

the degree of prominence of the Arbitration Agreement here seems calibrated with dual goals: on the one hand, just enough to persuade a court to smother potential litigation; on the other hand, not enough to make it likely that a consumer will actually notice the Agreement and perhaps hesitate to buy. It is one thing to hold consumers to agreements they have not read; it is another to hold them to agreements that, perhaps by design, they will probably never know about.

The court's decision here makes some sense, but it seems rooted in a somewhat fictional hypothetical. I don't know but I feel like Samsung could sell its phones with an instruction booklet with "ARBITRATION CLAUSE" in big, bold, red letters with exclamation points on the front of it, and I'm not sure it would in fact cause most consumers to "hesitate to buy," especially not if the majority of other cell phones contain similar arbitration clauses (the major cell phone carriers do).

But the bigger fiction at issue here is the idea that we're all "voluntarily" entering into these contracts. I mean, we are, to the extent that it's "voluntary" to have a cell phone in today's world. The answer to that question is: It is, to some extent, but not to the extent that we're willing to forego one entirely based on the mere possibility we might want to sue someday and can't. We all take risks, and maybe the court's view is this a risk that doesn't pay off for the consumer, oh, well, but it seems like the consumer has almost no power to take any other kind of risk. (This is, of course, not limited to cell phone contracts. So the real question is: is it "voluntary" to be a consumer in our capitalist society?) Likewise, is it "voluntary" to accept a job that require arbitrations, if you need a job to survive and jobs without arbitration clauses might be tough to come by?

There are statutory ways to shift the supremacy of arbitration, of course, as the Supreme Court's decision acknowledges. And at one point the FCC was contemplating doing something about the type of arbitration clause the court looked at in Jones. Maybe add it to your list of things to contact your representatives about, if you so desire.  

May 22, 2018 in Commentary, Labor Contracts, Recent Cases, True Contracts, Web/Tech | Permalink | Comments (0)

Monday, April 30, 2018

Opting out of Facebook once you've opted in (or, you can check out anytime you like, but you can never leave)

In the earlier years of the twenty-first century, I did what now literally billions of people have done and opened a Facebook account. I didn't use it for very long, and in fact I stopped using it probably almost ten years ago at this point. I stopped for a variety of reasons, but I left the account up because of that rule about how bodies at rest tend to stay at rest, I suppose. I didn't use it, it was just a passively existing thing, and it seemed like effort to get rid of it. 

With everything coming out about Facebook and data, I started wondering why I still had that account sitting there. I didn't think Facebook had a whole lot of data on me since I'd stopped using it so many years ago, but I figured, What was the point of giving it any info on me at all? Why not just delete the account?

I don't know if you've ever tried to delete your Facebook account. There are two options: deactivation, which deactivates your account but continues its existence, or deletion, which actually deletes your account. I wanted the latter, which requires you to fill out a contact form saying you would like to delete your account. So, in January, I filled out the form and received a verification email saying that my account would be deleted within the next two weeks, and I moved on with my life. 

Except. No, I didn't. Because Facebook kept emailing me little updates about my friends on Facebook, even though I kept clicking the "unsubscribe" link to try to get out of the emails. And then an email came in saying that someone had sent me a message. Which seemed like something they shouldn't be able to do if my account was deleted. I asked a friend still on Facebook to check for me, and she said that yup, I was still on Facebook. My account had never been deleted. 

And now's where the confusion really started, because, well, after literally months of dealing with this, I have to admit: I have no idea how to contact Facebook without being on Facebook. It's so convoluted that in fact an entire scam has mushroomed up around it, taking advantage of people who just want to try to get in touch with Facebook.

Facebook's log-in page (if you're logged out of Facebook) has no real contact info on it. The "About" link takes you to Facebook's Facebook page (so meta!), which contains links to a "website" and "company" info, both of which take you to "Page Not Found" pages, which is kind of hilarious to me. It seems to recommend you use Facebook Messenger to contact them, but...I'm not on Facebook Messenger. That's the whole point.

When you click on the "Help" link, it takes you to a FAQ page divided by topics, some of which are about account deletion but it seems to just be a bunch of people complaining about how Facebook won't delete their accounts. Or, what's worse, suggesting you call a customer service number that seems to be a scam, as evidenced by complaints here and here; by the fact that NPR did a previous story on the fact that Facebook has no customer service number; and the fact that Facebook itself appears to say it's a scam, as the below Google snippet shows:

Facebook

That link looked to me like exactly what I'm trying to track down, so I clicked on it, but, alas, it's only available to me if I join Facebook. 

So it looks like, once you've opted into Facebook, there really is no opting out. I've tweeted at them  with no response and tried some general email addresses (info@facebook; support@facebook) with no response. The emails I keep trying to unsubscribe from give me a physical mailing address, so I guess I could send them a letter asking them to follow through and delete my account and also unsubscribe me from the email lists, but I'm not hopeful that will get a response, either. 

I am hardly the first person to realize that Facebook is nearly impossible to get in touch with (the Sikhs for Justice case seems to have kicked off based at least in part on an inability to get any substantive responses from Facebook), but it seems like, in the wake of a lot of questions about control over our own data, our first step might at least make it a requirement that websites provide contact info for discussions about that data -- contact info that doesn't require you to first "opt in" to their terms and conditions (which is exactly what I'm trying to get out of!). 

We've been doing a lot of talking about the terms and conditions we agree to without reading them, and I guess I always assumed that if I changed my mind, I could back out. Facebook's terms and conditions even allow for that, stating that I can delete my account at any time. But it has turned out not to be nearly so simple, and I am literally flummoxed as to what options I have, seeing as how I don't really feel like going to court in the State of California, as required by the terms and conditions. It looks like I have an account on Facebook, whether I like it or not, for the foreseeable future. You don't realize how much privacy you've already given up until you try to get just a bit of it back. 

April 30, 2018 in Commentary, Current Affairs, In the News, True Contracts, Web/Tech | Permalink | Comments (0)

Tuesday, April 17, 2018

"Similar in concept" IHOP diner follow-up!

Thanks to Andy Feldstein of Huntington Technology Finance, who sent me an email after reading yesterday's IHOP post. Reading the opinion left me confused, but Andy points out that a visit to the Gunther Toody's website sheds a lot of light on the matter. Andy wrote that to the extent "similar in concept" has meaning, it's pretty clear IHOP and Gunther Toody's are two diners with extremely dissimilar concepts. Agreed. This was very helpful in clearing things up! 

April 17, 2018 in Commentary, Food and Drink, Recent Cases, True Contracts, Web/Tech | Permalink | Comments (0)