Friday, October 16, 2015
Class action plaintiffs began working with Cellular Sales (Cellular), which sells Verizon wireless services, in 2010. Cellular required that they form a business entity like an LLC and that they sign a sales agreement that identified them as independent contractors. The sales agreements did not contain arbitration clauses. In 2011, the plaintiffs became employees of Cellular and signed new compensation agreements that did contain arbitration clauses. When plaintiffs brought claims that, before the compensation agreements entered into force, they were misclassified as independent contractors when they were really employees, Cellular sought to compel arbitration. The District Court denied that motion.
In Holick v. Cellular Sales of New York, the Seventh Circuit affirmed. Although the Court acknowledged that an arbitration clause can apply retroactively, it cannot do so when the cause of action arises under a contract that does not contain an arbitration clause. In construing arbitration clauses, courts must give effect to the parties' intentions, and the Seventh Circuit saw no evidence that the parties intended to arbitrate disputes arising pursuant to their sales agreements.
Not so small aside: in its opinion the Seventh Circuit notes that plaintiffs relied heavily on an unpublished Fourth Circuit opinion. I found this curious and so I dug a bit. According to the Illinois Bar Journal the Seventh Circuit changed its rules relating to unpublished opinions in 2006. It is now permissible to cite to unpublished opinions issued on or after January 1, 2007. Citation to unpublished opinions issued prior to 2007 is still prohibited. Well, this is progress. As my colleague, David Cleveland has argued in numerous articles, unpublished opinions are a bad idea, and allowing parties to cite to them goes a long way towards eliminating the dangers of the designation.
But why draw the line at 2007? When I was in college, I saw a play called Sister Mary Ignatius Explains It All to You. I have no idea what compelled me to see that play and even less idea why I remember this one joke, but here it is: Sister Mary Ignatius explains that before Vatican II, unbaptized babies were consigned to limbo. After Vatican II, they are allowed to enter heaven. Sister Mary Ignatius is asked what becomes of the pre-Vatican II babies that were in Limbo. She pauses. "They are still in limbo." Maybe it was the delivery, but I still love that line, and remember it 30 years later. Yup, the rest of my college years are a blur.
Interestingly enough, I read on Slate that in 2007, the Vatican investigated the concept of limbo and either eliminated it entirely or at least determined that unbaptized babies do not end up there. The articles I read suggest that limbo was just for unbaptized babies, but I thought the virtuous pagans (like Virgil pictured right) were there as well (discussing prosody I am told). In any case, 2007. The very same year that unpublished opinions emerged from limbo! Coincidence?
Monday, October 12, 2015
Some shoppers on Sears.com thought it was their lucky day when they saw expensive play sets and fancy toys available for the low price of $11.95. Consumerist has the story here. If you saw a storybook cottage that typically costs hundreds of dollars listed for sale at the low, low price of $11.95, what would you think? That's right. Unless it was advertised as a huge blowout sale, you would probably guess it was a mistake. Apparently, Sears lists items sold by third parties and gets a cut - and this time, a third party had made a pricing error on its items. Of course, some Sears sellers were upset - even though Sears refunded their money and gave them a $5 gift card. So, for all those upset sellers, let's run through the mistake scenario to see whether the law would be on your side:
Was this a mistake of a basic assumption? - Yes, it was a pricing error and pricing errors are generally considered basic assumption mistakes.
Was the mistake made by one or both parties (was it a mutual or unilateral mistake?) - Here, Sears mistakenly believed that the prices listed on its website were accurate (not all $11.95) while the customers saw what the prices were - $11.95 - so it was a unilateral mistake made by Sears.
Did it have a material effect? Yes, there's a big difference between $11.95 and hundreds of dollars so Sears would make less money on the transaction.
Did the non-mistaken party (the Sears customers) know or should they have known of the mistake? - Yes, because they should know that expensive playsets are typically not sold for such a low price unless it is part of a promotion or clearance sale.
Did the mistaken party bear the risk of the mistake? You might think Sears would, since it is their website. But based upon existing case law (i.e. Donovan v. RRL Corp), since there's no lack of good faith here and Sears presumably acted reasonably in managing its website - it does not constitute "neglect of a legal duty" and Sears likely doesn't bear the risk of the mistake.
So - there you have it. Sorry kids - guess you'll just have to go outside and build your own play castles with branches and old bed sheets...
Monday, October 5, 2015
This week, the The New York Times Magazine's the "The Ethicist" column is finally given over to an actual ethicist, Kwame Anthony Appiah, who is a fabulous choice. Similarly excellent is the editors' choice to add a bonus advice column from "Judge John Hodgman" and to print said column in a font that people over 40 can read (Judge Hodgman's column used to appear on a page designed to appeal to young hipsters and to put off people who really need to just bite the bullet and use reading glasses).
I hate to disagree with so learned a judge, but I think Judge Hodgman errs in his opening opinion in the new format. His column assesses whether a written commitment is binding. The writing reads as follows, "I, Taylor W., will allow Cora W. to dress me as a woman this Christmas." Judge Hodgman describes the writing as "contract," his end of which Taylor W. must uphold.
Sorry, Judge. I see nothing more than a gratuitous promise here. There is no consideration. Moreover, this seems to be a social and not a legally binding agreement. I question whether the parties ever intended to be legally bound. Taylor W. may be bound in foro conscientiae, but he is not bound under the law of contracts.
Thursday, October 1, 2015
Because we're all not insecure enough, there's a new app out there that let's people rate other people on a scale of 1-5. There's no need to take their class,(Rate Your Professor) or eat at their restaurant (Yelp) or ride in their car (Uber)- now you can rate someone just for breathing, and if you don't like the way they breathe, you can tell the whole world about it on the Peeple App.
They may be truly naive or they may be disingenuous (we've seen greed and self-serving rhetoric masquerading as idealism from other companies), but the two founders claim that the purpose of the app is about uplifting people --to borrow from The Princess Bride, I don't think that word means what they think it means. As with all things digital, there are terms and conditions that the founders say will allow them to prevent bullying on the site. But I'm not so sure - Twitter and Facebook have no-bullying policies (or their equivalent) and that hasn't really stopped the bullying....
It's unclear whether the app will survive regulators' scrutiny as it requires the poster to submit the subject's phone number in order to create the subject's profile.
Friday, September 11, 2015
A woman visits a Nordstrom Rack store and sees a cardigan that she really likes. It costs $49.97, but features a “Compare At” price tag of $218.00 representing “77% worth of savings.” The woman buys the sweater, allegedly believing that the sweater really had been sold by Nordstrom itself or other department stores at the higher price. The receipt states, “You SAVED: $168.03 Congratulations! You saved more than you spent. You're a shopping genius!” If neither Nordstrom, Nordstrom Rack nor other retailers ever sold the cardigan at the higher price, is that common-law fraud, breach of contract, or unjust enrichment?
Posting any kind of “before” prices that have never truly been in effect does, at first blush, seem fraudulent. But it is not fraud, at least according to Shaulis v. Nordstrom, Inc., d/b/a/ Nordstrom Rack. “It is well-settled that a common-law action for fraud requires a pecuniary loss.” Here, the court found none as “plaintiff did not allege that she did not receive the sweater or that she paid more than the sweater is worth. Maybe so, but what about fraud in the inducement? This was not at issue in the case, but arguably should have been. “Fraud in the inducement occurs when a party contends it would not have entered into the agreement ‘but for’ the fraudulent statements made by the other." That is precisely what the plaintiff here seems to claim. Could the pecuniary loss then not simply be the price paid for an item believing it was a better deal than it actually was? If I buy a painting I like, but it is not the Rembrandt I was told it was, can I not sue for fraud simply because I actually got a painting that can hang on a wall and has the value it was sold for? Alas, that goes to show that plaintiffs must “win their own cases,” as the saying goes.
Plaintiff also claimed that Nordstrom was unjustly enriched by obtaining revenues and profits that it would not otherwise have obtained absent its conduct. The court found this to be a conclusory statement that did not allege that Nordstrom retained a benefit that would be inequitable without payment for its value.
Bad faith, at least? Not even that. Plaintiff complained that Nordstrom “either explicitly violated” the contract or violated the implied covenant of good faith and fair dealing by including a “Compare At” price that “does not exist in the marketplace within the meaning of the requirements of the Code of Massachusetts Regulations.” Having found that the common law allegations are not coextensive with or suffice under a regulatory claim, the court found no breach of the good faith covenant since the “complaint does not allege that the sweater was worth less than what plaintiff paid, or that plaintiff did not receive the benefit of the bargain. By charging this agreed price in exchange for ownership of the clothing, [Nordstrom] gave the plaintiff[ ] the benefit of [her] bargain.”
This case shows what we probably all know: you cannot really trust retailers’ “sales” prices, “before and after” statements and the like. They simply rank alongside puffery. Whether this is acceptable under the common law or state regulations is another story. The practice seems widespread, however, so buyer beware. “The more you shop, the more you save”? I don’t think so. As one of my students recently commented in class when I asked the somewhat philosophical question of why businesses exist: “to rip you off.” Well, maybe not quite, but some business behavior does seem questionable and at least unnecessary.
Tuesday, September 1, 2015
Uber. It just seems to always be in the news for one more lawsuit, doesn’t it. In late August, the district attorneys for San Francisco and Los Angeles filed a civil complaint against the company alleging that it is making misrepresentations about its safety procedures. The complaint, i.a., reads that Uber’s “false and misleading statements are so woven into the fabric of Uber’s safety narrative that they render Uber’s entire safety message misleading.”
On its website, Uber promises that “from the moment you request a ride to the moment you arrive, the Uber experience has been designed from the ground up with your safety in mind” and that “Ridesharing and livery drivers in the U.S. are screened through a process that includes county, federal, and multi-state criminal background checks. Uber also reviews drivers’ motor vehicle records throughout their time driving with Uber.”
However, Uber does not use fingerprint identication technology, which means that the company cannot search state and federal databases, only commercial ones.
The result? People with highly questionable backgrounds end up being on Uber’s payroll. For example, one “Uber driver was convicted of second-degree murder in 1982. He spent 26 years in prison, was released in 2008 and applied to Uber. A background report turned up no records relating to his murder conviction. He gave rides to over 1,100 Uber customers.” Yikes. Another “Another driver was convicted on felony charges for lewd acts with children. He gave over 5,600 rides to Uber customers.”
Add this to the ongoing lawsuit about whether Uber’s drivers should be legally classified as “employees” or “contractors,” and Uber is in a mound of legal trouble.
Certainly, a misrepresentation seems to have been made if the company deliberately touts its safety and its “industry-leading background check process” yet only uses a commercial database that does not even necessarily ensure that its drivers are who they say they are.
Still, Uber remains one of the most valuable start-ups in the world. It and similar “sharing economy” companies such as Airbnb have gained a good foothold on a market with a clear demand for new types of services. So far, so good. But initial success should not and does not equate with a “free-for all” situation just because these new companies are highly successful, at least initially. It seems that they are learning that lesson. Lyft, for example, already settled with prosecutors in regards to its safety. Perhaps Uber will follow suit.
Friday, August 21, 2015
Earlier this summer, I blogged on cheating website Ashley Madison promising to provide "100% discreet service" and a group of hackers threatening to reveal the website's customers if the website was not removed. Well, it was not, and this past week, the group made good on its promise or threat, depending on how one views the issue, to make the stolen database easily available to the general public.
In spite of Ashley Madison's promise to be "100% discreet" (whatever that means), the fine print used in its contracts also states, "We cannot ensure the security or privacy of information you provide through the Internet." No contractual promises seen to have been breached if that had been the only promise made. But as Steve Hedley wrote in his comment (see below), some of those inconvenienced by the hack include a number who paid a fee of $19 specifically for a "full delete". Does US contract law really allow Ashley Madison to take their money and then rely on fine print to justify a complete failure? That is a very good point and indeed does not seem to be the case. It could, of course, be that those who paid for a full delete got it and were _not_ among the ones in the publicized batch, but judging solely from media reports on this account, complaints have been made that the promised "full deletes" were not undertaken, so it seems that at least some that paid _additional_ money to become deleted from the website did not get what they paid for. That's a breach. Thanks, Steve Hedley, for that comment.
But the matter is more serious and sad than that: the website was/is apparently also used for finding homosexual partners, which is illegal and carries the death penalty in countries such as Iran, Saudi Arabia, and the United Arab Emirates, where two users were listed.
Not surprisingly, this story again shows the importance of internet data security. One would think that after the recent HomeDepot, Target and other database breach episodes, people would have learned, but apparently, this is not the case.
Thursday, August 20, 2015
We started up again this week, so I am once again having the pleasure of introducing students to the glorious realm of contracts law. Today, we will be delving into Article 2 of the Uniform Commercial Code for the first time, starting with concepts like "goods" and "merchants." I use Blum's Examples and Explanations as a supplement to the cases I use with my students. He has a series of questions about whether various transactions are sales of goods. One involves the sale of a cow.
Me: Is a cow a good?
Student: Yes, it is a good.
Me: How do you know that a cow is a good?
Student: A cow is a good because UCC §2-105 defines "goods" to include all things moveable at the time identified for sale. It also specifies that the unborn young of animals are goods, so it follows a fortiori that the animals themselves also must be goods.
Me: Interesting, but the answer I was looking for was "because it moooooooooves."
Blum then moves on to more difficult examples involving hybrid contracts. The Contracts Listserv has been hopping with discussion of this very topic. I remain puzzled by the preference for the preponderant purpose test. As I argued here, the gravamen of the action test makes far more sense to me.
Monday, August 10, 2015
We shared with our readers Professor Robin Kar's views on the case a while back.
You can find Professor Kar's latest here.
Tuesday, August 4, 2015
A new Los Angeles Times investigation has revealed that nine out of ten students drop out of unaccredited law schools in California. Of the few students that graduate, only one in five ultimately become a lawyer. In other words, a mere 2% of the people that initially enroll in an unaccredited law school end up being attorneys. Shameful at best. One example of one person who did not make it as an attorney is former Los Angeles mayor Antonio Villaraigosa who went to “People’s College of Law” and took the bar four times, but never passed.
Unaccredited law schools are said to flourish in California. The state is one of only three in the nation that allow students from unaccredited law schools to take the bar test (the others are Alaska and Tennessee). Unaccredited schools in California are held to very few academic standards by regulatory bodies and, by their very nature, none by accrediting agencies.
Most of the unaccredited law schools are owned by small corporations or even private individuals. One, for example, is owned by a“Larry H. Layton, who opened his school in a … strip mall above a now-shuttered Mexican restaurant. He thought the Larry H. Layton School of Law, which charges about $15,000 a year, would grow quickly. But according to the state bar records, he has had six students since 2010.”
Experts again say that action must be taken. For example, Robert Fellmeth, the Price Professor of Public Interest Law at the University of San Diego School of Law, has stated that unaccredited schools “aren't even diploma mills, they are failure factories. They're selling false hope to people who are willing to put everything out there for a chance to be a lawyer."
As before, the problem goes beyond unaccredited law schools. Several ABA accredited law schools also demonstrate both poor employment and bar passage statistics, although the problem seems to be the most severe when it comes to unaccredited schools.
This story is not new to your or many others. However, it serves as a reminder of the continued importance of both insiders and outsiders taking a renewed look at regulations for (and broader expectations of) law schools in California and beyond. As always, purchasers of anything including educational “services” (which, as the above other and many other studies show, can all too easily turn out to be disservices) should be on the lookout for what they buy. A great deal of naivety by new students seems to be contributing to the problem. However, that does not justify the tactics and perhaps even the existence of some of these educational providers. Having said that, I also – again – cannot help ask myself what in the world some of these students are thinking in believing that they can beat such harsh odds. Hope springs eternal, it seems, when it comes to wanting to become a California attorney.
Thursday, July 30, 2015
I earlier blogged on an American TV personality's contract to hunt and kill one of the most highly endangered species on earth: a black rhino. That hunt has now been completed at a price tag of $350,000. The asserted reasoning for wanting to undertake the hunt: the money would allegedly help the species conservation overall and the local population. Studies, however, show that only 3-5% of that money goes to the local population. Some experts believe that the money could be much better spent for both the local population and the species via, for example, tourism to see the animals alive. This brings in three to fifteen times of what is created through so-called "trophy hunting."
This past week, the world community was again outraged over yet another American's hunt - this time through a contract with a local rancher and professional assistant hunter - of Cecil the Lion. The price? A mere $50,000 or so. This case has criminal aspects as well since the landowner involved did not have a permit to kill a lion. The hunter previously served a year of probation over false statements made in connection with his hunting methods: bow and arrow.
This is also how the locally famous and collared Cecil - a study subject of Oxford University - was initially hunted down, lured by bait on a car to leave a local national park, shot, but not killed, by Minnesota dentist Walter Palmer, and eventually shot with a gun no less than 40 hours after being wounded by Palmer.
Comments by famous and regular people alike have been posted widely since then. For example, said Sharon Osbourne: ""I hope that #WalterPalmer loses his home, his practice & his money. He has already lost his soul."
I recognize that some people - including some experts - argue for the continued allowance of this kind of hunting. Others believe it is a very bad idea for many biological, criminal, ethical, and other reasons to allow this practice. If you are interested in signing a petition to Zimbabwe Robert Mugabe to stop issuing hunting permits to kill endangered animals, click here. It will take you less than 60 seconds.
Thursday, July 23, 2015
You cannot say that we are boring you this week. Our blogs have included considerations on advertising on porn sites and having one’s illicit affairs forgotten contractually. Add to that the news that this week, Roman Catholic nuns, the archdiocese of Los Angeles, the formerly Jesuit student turned California Governor Brown and Pope Francis all had something to say about contracting about major and, admittedly, some minor issues.
To start with the important: Pope Francis famously issued his Encyclical Letter Laudato Si’ “On Care for our Common Home.” In it, he critiques “cap and trade agreements,” which by some are considered to be a mere euphemism for contractual permits to pollute and not the required ultimate solution to CO2 emissions. In the Pope’s opinion, “The strategy of buying and selling carbon credits can lead to a new form of speculation which would not help reduce the emission of polluting gases worldwide. This system seems to provide a quick and easy solution under the guise of a certain commitment to the environment, but in no way does it allow for the radical change which present circumstances require. Rather, it may simply become a ploy which permits maintaining the excessive consumption of some countries and sectors.” Well said.
Governor Brown, however, disagrees: Brown shrugged off Francis' comments. "There's a lot of different ways," he told reporters, "that cap and trade can be part of a very imaginative and aggressive program." Brown, however, does agree with the Pope that we are “dealing with the biggest threat of our time. If you discount nuclear annihilation, this is the next one. If we don’t annihilate ourselves with nuclear bombs then it's climate change. It’s a big deal and he’s on it.”
In less significant contractual news, Roar, Firework, and I Kissed a Girl and I Liked It singer Katy Perry is interested in buying a convent owned by two Sisters of the Most Holy and Immaculate Heart of the Blessed Virgin. Why? Take a look at these pictures. The only problem is who actually has the right to sell the convent to begin with: the Sisters or the archdiocese. When two of the sisters found out the identity of the potential buyer (Perry), they became uninterested in selling to her because of her “public image.” They now prefer selling to a local restaurateur whereas the archdiocese prefers to complete the sale to Perry, although she bid less ($14.5 million) on the property than the restaurateur ($15.5 million). Perry may be about to learn that image is indeed everything in California, even when it comes to the Divine. Perry is no stranger to religion herself as she was, ironically, raised in a Christian home by two pastor parents.
Monday, July 20, 2015
In 2014, the Court of Justice of the European Union famously held that “[i]ndividuals have the right - under certain conditions - to ask search engines to remove links with personal information about them. This applies where “the information is inaccurate, inadequate, irrelevant or excessive” for the purpose of otherwise legitimate data collection. “A case-by-case assessment is needed considering the type of information in question, its sensitivity for the individual’s private life and the interest of the public in having access to that information.”
A few days ago, infamous adultery-enabling website Ashley Madison and “sister” site (no pun intended) EstablishedMen.com, which “connects ambitious and attractive young women with successful and generous benefactors to fulfill their lifestyle needs,” was hacked into by “The Impact Team,” a group of apparently offended hackers who threatened to release “all customer records, including profiles with all the customers’ secret sexual fantasies and matching credit card transactions, real names and addresses, and employee documents and emails” unless the owner of the sites, Avid Life Media, removes the controversial websites from the Internet permanently.
Notwithstanding legal issues regarding, perhaps, prostitution, do customers have a right to be forgotten? Not in general in the USA so far. Even if a provision similar to the EU law applied here, it would only govern search engines. Ashley Madison had, however, contractually promised its paying users a “full delete” in return for a fee of $19. The problem? Apparently that the site(s) still kept purchase details with names. Further, of course, that the company promised and still promises “100% discreet service.” Both seemingly clear contractual promises.
Although the above example may, for perhaps good reason, simply cause you to think that the so-called “clients” above have only gotten what they asked for, the underlying bigger issues remain: why in the world, after first Target, then HomeDepot and others, can companies not find out how to securely protect their customers’ data “100%”? And why should we, in the United States, not have a general right to be deleted not only from companies’ records, but from search engines, if we want to? I admittedly live a very boring life. I don’t have anything to hide. But if I once in a blue moon sign up for something as simple as Meetup.com to go hiking with others, my name and/or image is almost certain to appear within a few days online. I find that annoying. I don’t want my students, for example, to know where I occasionally may meet friends for happy hour. But unless I invest relatively large amount of time in figuring out how to use and not use new technology (which I see that I have to, given the popularity of LinkedIn and the like), I may end up online anyway. That’s not what I signed up for.
As for Ashley Madison, the company has apparently been adding users so rapidly that it has been considering an initial public offering. You can truly get everything on the Internet these days, perhaps apart from data security.
I was never a business person. I grew up hoping to some day live in a commune. That dream collapsed when I experienced the idiocy of rural life, so I did the next least practical thing and got a Ph.D. in German history. But now I teach contracts and business associations. My brother is still living the dream (sort of), residing on a kibbutz in the Arava. But the kibbutz has a factory that makes sealable plastic bags, and my brother actually works for an engineering company located on a neighboring kibbutz. In short, there is no escape from commercial enterprise.
In some ways, Alex Blumberg's project is the perfect fit for someone like me, who teaches and studies commercial transactions from the convenient distance of the academy. Blumberg comes from public radio, where he co-hosted Planet Money and was a producer for This American Life. He decided to go over to the dark side and created his own media company, which eventually became Gimlet Media, a producer and distributor of high-quality podcasts. I am not yet hooked on its other projects, but I am extremely taken with StartUp, and I recommend it to people who teach business courses, including business and media law.
In StartUp, Blumberg and his team wrestle publicly with every private thing associated with setting up a new company. The show provides a unique, well-edited but still very intimate, behind-the-scenes view of new companies. The first season focused on Blumberg's own company, Gimlet Media, including hilarious episodes devoted to naming the company. Blumberg had settled on the name "Orelo," but when he told his wife that he had selected that name because it means "ear" in Esperanto, she burst out laughing, and when she finally caught her breath, she gasped out "That's so . . . dumb. . . . So dumb!" He was also considering American Podcasting Corporation. He explained to one of his unimpressed investors that the name would be a throwback to older media companies like ABC. The disenchanted investor said something like, "No, no, I get it." My real question that I wish the podcast had addressed is why did you form a corporation rather than an LLC? That would have been a great episode for my business associations course!!
StartUp's second season covered a very different type of company, Dating Ring, an online dating service that was supposed to have, as its special gimmick, a team of matchmakers who actually set you up with people you will likely connect with. I don't know if this was Blumberg's design, but I really loved the contrast between Season 1, which covered a company that I wanted to succeed and that did succeed, and Season 2, which covered I company that I wanted to fail, and pretty much did fail. I hated Dating Ring from the moment its founders announced that they wanted to be the Uber of dating. As followers of this blog know, Uber has its own problems, but the analogy highlighted the tension at the heart of Dating Ring's model -- they want to help you find true love, but they want to do it in a seamless, mechanized way. They also considered advertising on porn sites, because nothing says "I want to bring you home to my mother" like "I met her through a website that was linked to on my favorite porn site." Season 2 provides great insights into some of the many reasons why a company can fail, despite having smart, dedicated people with talent and energy and an idea that some investors think promising.
But the second season was also invaluable for its reporting on fundraising, on the mindset of people who want to become entrepreneurs and the crazy rollercoaster ride that most new companies experience. At one point, Dating Ring's founders go to a consultant who is really like a couple's therapist for start-up founders. From a distance it seemed a bit ridiculous, but one could also easily imagine how in such an intimate relationship the idea "I don't have a large enough equity stake" could translate into "I don't think you really love me and value me the way you ought to do."
I am looking forward to Season 3 almost as much as I am looking forward to Season 2 of Serial.
Wednesday, July 8, 2015
There but for fortune . . . . I spent three happy years teaching in the history department at the College of Charleston. Having studied in New York for nearly ten years, I never imagined myself living in the South, but Charleston is a charming city, and the College of Charleston was a gem when I was there, with a dedicated faculty of scholars and teachers and an unbelievably beautiful campus. When I learned that Charleston was opening a law school, I was very tempted to apply for a position.
Charleston's Post & Courier reported on Monday that Charleston Law School (CLS) has terminated seven faculty members, including two tenured faculty members. The two filed lawsuits in late June alleging breach of contract. They are seeking an injunction that would allow them to retain their status as tenured professors while also enjoining the CLS's owners from making expenditures that might otherwise be used to pay them their salary. The two fired professors were signatories of a letter published by 17 CLS faculty members in the Post & Courier in mid May. I assume that they are alleging retaliatory firing in violation of the very thing tenure is designed to protect. Certainly, the optics are bad. A preliminary injunction hearing is scheduled for the end of the month.
I have no doubt that, if I had decided to apply for a faculty position at Charleston and been hired there, I would have signed that letter. And then I too might be experiencing the joy of having to file a lawsuit in order to keep my tenured position. I do not know enough of the details to speak to the merits of the professors' claims, but my inclination it to root for them.
Friday, June 5, 2015
It was an easy decision for Judge Posner; he granted Sprint's motion to compel arbitration without too much difficulty, leaving him time to ruminate more generally on the purposes of the Federal Arbitration Act. We summarized his views as follows:
Having quickly dispensed with plaintiffs' opposition to the motion to compel arbitration, Judge Posner then focused his attention on Sprint's effusive celebration of arbitration provisions as "a darling of federal policy" (Judge Posner's wording). Judge Posner emphasized that language encouraging judges to enforce arbitration clauses was a corrective to an era when judges disfavored arbitration. The aim of federal policy is neither to favor nor disfavor arbitration but to compel arbitration when the parties have agreed to arbitrate claims. Fortunately for Sprint, this case was, in Judge Posner's view, not a close call.
Judge Posner then when on to note Sprint's motives in challenging the denial for arbitration when, in Judge Posner's view, the Andermanns will lose on the merits wherever their claim is decided. Judge Posner pointed out that Sprint wants to avoid class action litigation, which is prohibited under the applicable arbitration provision. He also noted that without the class action option, the claim is unlikely to be brought at all. Judge Posner then explained the absurd results that would follow from a finding that Sprint had violated the TCPA, thus effectively deciding a claim that the Seventh Circuit ruling will prevent from ever being brought, before catching himself and noting that the decision is really for the arbiter and limiting the Court's ruling to the instruction that the claim be sent to arbitration.
Fordham Law Professor Aditi Bachi (pictured) now has a post up over at the New Private Law blog in which she uses Judge Posner's opinion as an occasion to ruminate on the need for a federal arbitration policy. As she puts it:
Putting aside for the moment what stance federal courts should take (and which Congressional statutes might speak to the question), arbitration is too substantial a public policy issue for courts to approach these terms with ostensible neutrality. In the absence of an articulated policy, we are likely to end up with courts that are in practice either friendly or hostile but march under the banner of neutrality.
We look forward to the ensuing policy debate, which is long past due.
Thursday, May 28, 2015
Wednesday, May 20, 2015
Should salary levels be regulated or mainly left to individual contractual negotiations between the employee and his/her employer? The former, according to the Los Angeles City Council and governance entities in several other cities and states.
On Tuesday, Los Angeles decided to increase the minimum salary to $15 an hour by 2020. Other cities such as San Francisco, Chicago, New York, and Seattle have passed similar measures. Liberal strongholds, you say? Think again. Republican-leading states like Alaska and South Dakota have also raised their state-level minimum wages by ballot initiative. Some companies such as Walmart and Facebook have raised their wages voluntarily.
But the effect is likely to be particularly strong here in Los Angeles, where around 50% of the work force earn less than $15 an hour. That’s right: in an urban area with super-rich movie studios, high-tech companies, hotels, restaurants, health companies and much more, half of “regular” employees barely earn a living salary. In New York state, around one third of workers make less than $15 an hour. Take into consideration that the cost of living in some cities such as Los Angeles and maybe even more so San Francisco and New York is very high. In fact, studies show that every single part of Los Angeles is unaffordable on only $15 an hour if a person spends only the recommended one third on housing.
“Assuming a person earning $15 an hour is also working 40 a week, which is rare for a minimum wage employee, and that they're not taking any days off, they'd be earning $31,200 a year. An Economic Policy Institute study released in March found that a single, childless person living in Los Angeles has to make $34,324 a year just to live in decent conditions (and that was using data from 2013).”
Opponents, however, say that initiatives such as the above will make some cities into “wage islands” with businesses moving to places where they can pay employees less. Others call the initiative a “social experiment that they would never do on their own employees” (they just did...) But “even economists who support increasing the minimum wage say there is not enough historical data to predict the effect of a $15 minimum wage, an unprecedented increase. A wage increase to $12 an hour over the next few years would achieve about the same purchasing power as the minimum wage in the late 1960s, the most recent peak.”
Time will tell if the sky falls from the above initiative or if the system in a rich urban area such as Los Angeles can cope. Said Gil Cedillo, a councilman who represents some of the poorest sections of the city and worries that some small businesses will shut down, “I would prefer that the cost of this was really burdened by those at the highest income levels. Instead, it’s going to be coming from people who are just a rung or two up the ladder here.”
This is, of course, not only an issue of the value of low-wage work and fending for yourself to not end up at the bottom of the salary chain. It is a matter of alleviating urban poverty and improving the nation’s overall economy for a sufficient amount of people to better get the economy back on track for more than the few.
Wednesday, May 6, 2015
This week, Los Angeles City Attorney Mike Feuer famously filed suit against Wells Fargo claiming that the bank's high-pressure sales culture set unrealistic quotas, spurring employees to engage in fraudulent conduct to keep their jobs and boost the company's profits.
Allegedly (and in my personal experience as I bank with Wells Fargo), the bank would open various bank accounts against its customer’s wills, charge fees for the related “services,” and refuse to close the accounts again for various official-sounding reasons, making it very cumbersome to deal with the bank. The bank’s practices often hurt its customers' credit rankings.
Employees have described “how staffers, fearing disciplinary action from managers, begged friends and family members to open ghost accounts. The employees said they also opened accounts they knew customers didn't want, forged signatures on account paperwork and falsified phone numbers of angry customers so they couldn't be reached for customer satisfaction surveys.”
The city's lawsuit alleges that the root of the problem is an unrealistic sales quota system enforced by constant monitoring of each employee — as much as four times a day. "Managers constantly hound, berate, demean and threaten employees to meet these unreachable quotas," the lawsuit claims. Last year, 26% of the bank’s income came from fee income such as from fees from debit and credit cards accounts, trust and investment accounts. The banking industry is currently set up in such a way that around 85% of institutions would go bankrupt if they do not have fee income.
This comes only three years after Wells Fargo agreed to pay $175 million to settle accusations that its independent brokers discriminated against black and Hispanic borrowers during the housing boom and treated these borrowers in predatory ways.
All this in the name of “growth,” traditionally thought of as the sine qua non of industrialized economies, even in financially tough times where simply maintaining status quo – and not going out of business - would seem to be acceptable for now from at least a layman’s, logical standpoint.
In recent years, more and more economists have advanced the view that unbridled growth or even growth per se may simply not be attainable or desirable. After all, we live on a planet with limited resources – financial and environmental - and limited opportunities. This especially holds true in relation to the “1% problem.” Nonetheless, questioning growth has been said to be “like arguing against gasoline at a Formula One race.” So I’m making that argument here, although I acknowledge that I am not an economist: by setting our national (and personal) economies up for ever-continuing growth, we are playing with fire. There is only so much of a need for various things and services, as the above Wells Fargo suit so amply demonstrates. Granted, the global population is growing, but much of that growth is in developing nations where people frankly cannot afford to buy many of the products and services often so angrily pushed by modern companies worldwide. In the Global North, C-level managers are often rewarded via measurements of growth and if they cannot produce the expected growth results, they risk being fired. Sometimes, simply doing the right thing by customers and employees may actually be enough as long as the company would remain sound and in business. Of course, this requires a shift in thinking by shareholders who contribute greatly under our current investment models to the demand for never-ending growth. Overconsumption and waste is a vast ecological problem as well. It has been said that “we must reform economics to reflect ecological reality: nature is not, after all, just a pile of raw materials waiting to be transformed into products and then waste; rather, ecosystem integrity is a precondition for society's survival.”
Growth is, of course, good and desirable if possible. But if, as seems to be the case, it’s coming to a point where we destroy our own chances of healthy long-term survival and wreck the emotional and financial lives of employees and clients in the meantime, something is seriously wrong.
Tuesday, May 5, 2015
Yesterday's post has inspired quite a bit of traffic here and elsewhere. Over on Brian Leiter's Law School Reports, Michael Simkovic asks whether conditional scholarships are good for law students.
Deborah Merritt responds on the Law School Cafe and answers the question in the negative. She thinks conditional scholarships mostly help law schools, and they hurt students by creating a stressful competitive environment.
Michael Simkovic (again on Leiter) disagrees. He argues that conditional scholarships motivate students to work hard in law school and cites to studies linking motivation and academic performance.
Deborah Merritt shoots back on the Law School Cafe.
And Michael Simkovic again responds on Leiter.
It is hard for me to keep up with the pace at which these people blog.
I have only a few quick points to make in response to Professor Merritt, whose remarks are largely critical of the position I have taken here:
- It seems we are all agreed that the disclosure problems related to conditional scholarships have largely been addressed through the ABA website that enables students to comparison shop among scholarship offers from various schools and know their chances of retaining their conditional scholarships. Some law schools routinely offer a lot of merit scholarships in the first year knowing that most students will not retain them thereafter. But that information is now easily available, and we will see if students vote with their feet against such a model.
- Professor Merritt properly chastises me for treating Wikipedia's listing of normalization curves as authoritative. I think Wikipedia is a good place to start, but my main point is that information about normalization curves should be readily available for each school a student is considering attending.
- I find the absence of curves in undergraduate grading perplexing, and I find it astonishing that anybody would think non-curves are better than curves. I could easily design an exam that all my students would ace (above 90% correct) and an exam that all my students would fail (below 60% correct). But there is nothing holy about base ten, and my aim should not be to design a test so perfectly calibrated that the difference between a 91% and an 89% is meaningful but the difference between 86% and 84% is not. My aim in assessment is, among other things, to have a tool that helps me distinguish within a group of students who have had the same educational experience. A curve helps me do that better than random divisions at every point at which the score passes a 0.
- Professor Merritt points to a study in which the J.D. placed only sixth in a ranking of the best graduate degrees. As if that were a bad thing! Three of the degrees that ranked more highly are Ph.D. programs likely to take twice as long as the J.D. and the others likely require higher math or computer programming skills. This extremely high ranking for the J.D. is terrific news. By the way, the MBA, a frequent alternative to the J.D., ranked 14th.
- Professor Merritt tells an anecdote about a student who decided not to pursue a J.D. when she learned of conditional scholarships. She decided to take her graduate tuition dollars elsewhere, but where? Unless she earned a Ph.D. in statistics, computer science or physics, or a Masters Degree in human computer interaction or biostatistics, according to the study cited by Professor Merritt, she made a poor choice.
Professor Merritt's second post turns on an anecdote about teaching the same course (torts) the same way to different students and getting very different results. As a consequence, she had to give students in the "smart section" who did better on the exam worse grades than some students who did worse on the exam in the weaker section. Three thoughts:
First, one cannot step into the same river twice. One semester when I taught history at the College of Charleston in the 1990s, I had four sections of Western Civ., all on a Tuesday/Thursday schedule (they were long days!). Same readings, same outside materials, same assignments, same lecture notes. Each section developed its own identity. They were four different courses.
Second, in fifteen years of teaching at both the college and law school level, I have never had a similar problem. An anecdote is not an argument. No system of grading is perfect, and I can live with small injustices around the edges of grade normalization. Whether or not a student retains a conditional scholarship is not determined by her performance in any one course.
Third, consider the insight of Professor Merritt's plucky college student who decided against a J.D. Knowing only undergraduate education, the student remarked, “It’s not like there’s a quota on the number of A’s or anything.” In that world, the undergraduate professor gives A's to all of the students in the "smart section" who "earned" them according to some mysterious but fixed standard. Outside of the STEM courses, the undergraduate professor can also give As to the best students in the weaker section, even though the same performance would have earned them a B in the "smart section." Within the STEM courses, imagine the stampede of angry pre-med students from the weaker section who will decry the injustice that there were no A's in their section but eight in the other. I pity the department chair who has to sort out that mess.
Links to Related Posts:
The Current Series
XI:Another Transparency Issue: Conditional Merit-Based Scholarships
X: Siloing: The Next Unneeded Import from Undergraduate Education
IX: Legal Education in the News and on the Blogosphere
VIII: Myanna Dellinger, Caveat Emptor and Law School Transparency
VII: Myanna Dellinger, On Issue-Spotting and Hiding the Ball
VI: Issue Spotting: A Response to a Comment
V: Did Legal Education Take a Wrong Turn in Separating Skills and Doctrine?
IV: What Is the Place of Core Doctrinal Teaching and Scholarship in the New Curriculum?
III: My Advice to Law School Transparency: Declare Victory and Move On
II: SLOs and Why I Hide the Ball (and Why You Don't Have To)
I: Why Is the Legal Academy Incapable of Standing Up for Itself?
Related Posts form 2012:
Thoughts on Curricular Reform VI: Preparing the Academically Adrift for Practice
Thoughts on Curricular Reform V: A Coordinated Curriculum and Academic Freedom
Thoughts on Curricular Reform IV: The Place of Scholarship in the 21st Century Legal Academy
Thoughts On Curricular Reform III: The Costs of Change
Thoughts on Curricular Reform II: Teaching Materials
Thoughts on Curricular Reform I: The Problem