Monday, February 1, 2016
Okay, there's actual contract stuff to talk about in this case, but mostly I was fascinated to learn that IMAX theaters rent the movie-showing equipment from IMAX and, in 2004 at least, the cost was $41,400 in annual maintenance fees plus the greater of $75,000 or 7% of the box office receipts in annual rent. So, if you win the lottery and want an IMAX theater in your house, there's a rough idea of the kind of costs you're looking at.
And now that we've learned that fascinating tidbit of information, what happens when you get into a fight with IMAX about whether the equipment it's leased you is capable of playing "Hollywood" movies?
That's what happened in a recent case out of the Middle District of Pennsylvania, IMAX Corp. v. The Capital Center, Civ. No. 1:15-CV-0378. In that dispute, Capital Center alleged that it told IMAX it wanted to rent its equipment so it would be able to show "Hollywood" movies. In 2004, it entered into a fifteen-year lease of IMAX's movie-showing equipment/software/etc. Apparently around 2014, IMAX announced that it had developed new technology that rendered the equipment Capital Center had rented obsolete, interfering with Capital Center's ability to play "Hollywood" movies. (I keep putting "Hollywood" in quotation marks because it's in quotation marks in the opinion. Clearly Capital Center considered it a direct quote and an important characterization.)
In reaction to the new technology, Capital Center stopped paying rent on the old technology, apparently because it felt its equipment was now valueless. IMAX pointed out that Capital Center had therefore breached the contract and IMAX was entitled to the remainder due under the lease in liquidated damages (a clause in the contract). Capital Center gave the equipment back to IMAX, and IMAX sued to collect the money it claimed it was due under the contract. Capital Center raised in response defenses of mutual mistake and frustration of purpose. It also claimed IMAX had no right to demand the further rent amounts because Capital Center no longer had possession of the equipment. Finally, it claimed that IMAX had not properly disclaimed its warranty that the equipment was fit for a particular purpose, i.e., playing "Hollywood" movies. Unfortunately for Capital Center, none of these defenses succeeded.
Capital Center's mutual mistake defense centered on the "mistake" that both parties made that the equipment that was the subject of the lease would still be capable of playing "Hollywood" movies fifteen years later. However, the mutual mistake defense exists to vindicate mistakes of fact, not errors in predicting the future; this situation was the latter. There was no "fact" that IMAX thought it knew that the equipment would still be valid in fifteen years. And, in fact, the agreement itself contemplated as much, because the agreement contained a clause noting that IMAX might upgrade its equipment and setting forth the terms by which Capital Center could receive the improved equipment. Difficult for Capital Center to argue that the parties were mistaken about the future viability of the equipment in question when the agreement itself noted that the equipment in question might not be viable in the future.
The frustration of purpose defense failed for a similar reason. Here, the purpose of the contract might have been to play "Hollywood" movies but there was no unforeseen event that occurred after the signing of the contract that frustrated that purpose. The agreement itself predicted that the equipment might not continue to be viable for the showing of "Hollywood" movies. Therefore, the continued viability of the equipment could not be said to have been a basic assumption of the contract.
As for the argument that IMAX shouldn't be entitled to future rent payments because IMAX was in possession of the equipment, under Pennsylvania law, IMAX was entitled to choose either future rent payments or repossession of the equipment. However, IMAX didn't seek to repossess the equipment; Capital Center gave the equipment back to IMAX of its own volition. Therefore, IMAX wasn't seeking repossession, only the future rent payments: a choice it was allowed to make.
Finally, the contract between the parties had contained a clause in which IMAX disclaimed all of the usual warranties, including suitability to a particular use, i.e., showing "Hollywood" movies. Under Pennsylvania law, such a disclaimer is valid as long as it is "conspicuous." Capital Center tried to argue that the disclaimer in question wasn't conspicuous, but it was the only clause in the seven-page Schedule B of the agreement that was in bold font, which, according to the precedent, rendered it "sufficiently conspicuous."
Sunday, January 31, 2016
Ian Kerr of the University of Ottawa's Centre for Law, Technology and society has an interesting post from last September on a topic of that has been of occasional discussion on this blog, and which I came across only recently. In "The Arrival of Artificial Intelligence and 'The Death of Contract,'" Kerr outlines some of the foreseeable challenges facing today's students of contract law due to disruptive technology:
On the market today are a number of AI products that carry out contract review and analysis. Kira, an AI system used to review and analyze more than US$100 billion worth of corporate transactions (millions of pages), is said to reduce contract review times by up to 60%. Likewise, a Canadian product called Beagle (“We sniff out the fine print so you don’t have to”) is faster than any human, reading at .05 seconds per page. It reads your contract in seconds and understands who the parties are, their responsibilities, their liabilities, how to get out of it and more. These are amazing products that improve accuracy and eliminate a lot of the “grunt work” in commercial transactions.
But hey—my Contracts students are no dummies. They can do the math. Crunch the numbers and you have a lot of articling students and legal associates otherwise paid to carry out due diligence who now have their hands in their pockets and are looking for stuff to do in order to meet their daily billables. What will they do instead?
In some ways, such concerns are just teardrops in an ocean full of so-called smart contracts that are barely visible in the murky depths of tomorrow. Their DRM-driven protocols are likely to facilitate, verify, and enforce the negotiation and performance of contracts. In some cases, smart contracts will obviate the need for legal drafting altogether—because you don’t actually need legal documents to enforce these kinds of contracts. They are self-executing; computer code ensures their enforcement.
Kerr's concludes that smart contracts and their technological relatives are no more the death of contract than what Grant Gilmore pronounced, but that the change is worrisome, including to our relational understanding of contract doctrine and its practice:
I suspect we will face some significant changes and I am not sure that it’s all good. Self-executing contracts, like the DRM-systems upon which they are built, are specifically designed to promote the wholesale replacement of relational aspects of contract such as trust, promise, consent and enforcement. As such, they do injury to traditional contract theory and practice. While I have no doubt that an AI-infused legal landscape can to some extent accommodate these losses by creating functional equivalents where historical concepts no longer make sense (just as e-commerce has been quite successful in finding functional equivalents for the hand-written signature, etc.), I do worry that some innovations in AI-contracting could well have a negative effect on human contracting behavior and relationships.
The entire post is worth a read for anyone interested in the impact of technology on contracts.
Monday, January 25, 2016
The average price for a movie ticket in the United States is apparently $8.61. A recent case out of Ohio, Capital City Community Urban Development v. Columbus City, Case No. 13CVH-01-833 (behind a paywall), dealt with the question of whether a dollar movie is still feasible when most movies cost more than $8.00.
The contractual provision at issue was: "The Buyer agrees to provide Saturday movies for children once the theater is operational, and for as long as feasible. The cost is to be $1.00 or less for a double feature." (So, in fact, it was fifty cents a movie.) The clause actually wasn't that old (from what I could discern from the facts, it seems to have only been written in 2002), so it wasn't as if the dollar price was intended to be profitable, which both parties acknowledged. However, the issue was that the defendant had sought donations to offset the cost of the features and been unsuccessful. That meant that the theater would suffer a loss of $100,000 a year to fulfill the contractual provision, which would have been a substantial hardship to the theater. Moreover, the double feature wasn't very popular in the community. In a theater with a capacity of 400, it usually only attracted a few dozen patrons.
The parties fought over whether the definition of feasibility included a consideration of the economics of the issue. There was some precedent that feasibility required looking at the finances of the situation. Also, compellingly in the court's view, feasibility had to take into account the finances or else it had no meaning. The argument that "feasible" meant "capable of being done" without looking to the finances meant that it would be "feasible" basically as long as the theater was open, i.e., as long as the theater had a projection. That would mean that it would be "feasible" until the theater closed down entirely. If that was the meaning of the word "feasible," there was really no reason to have that specification in the contract: it would have just been a clause in effect until the theater closed.
This all makes sense to me, especially considering that there didn't seem to be much public interest in having the double feature continue. However, what's really striking to me about this opinion is the statement that "Columbus never showed a Saturday children's movie." So apparently Columbus's argument was really that it was never feasible to have the double feature. This meant Columbus agreed to a provision in the contract that it apparently never intended to comply with? That's not a wrinkle that gets introduced in this case--in fact, the line that no double feature had ever been shown is basically a throwaway line--but I found it to be the most striking detail.
Thursday, January 21, 2016
On Thursday, the U.S. Circuit Court of Appeals for the D.C. Circuit heard arguments about whether a clothing company illegally fired three retail store employees for their Facebook posts criticizing the employer. The case involves the as-of-yet little developed area of how labor law applies to social media usage as well as other complex issues of contracts and employment law. The case is Design Technology Group v. NLRB, Case Number 20-CA-035511. The case also demonstrates the issue of poor workplace conditions and how little employees can do under contracts law or other bodies of law against this, which I have blogged about before (most recently here). I am not an employment law expert. I simply find this case very interesting from the point of view of how social media law is developing in relation to what is, after all, also an employment contract.
In the case, three employees repeatedly brought various safety concerns to the attention of the store manager. Among other things, the employees felt that the area of San Francisco where the store was located was relatively unsafe at certain times of the evening and that, perhaps, store hours could thus be changed to alleviate this problem. Homeless people would also gather in numbers outside the store to watch a burlesque video that the store played on a big TV screen right inside a window, thus potentially also attracting various (other) unsavory characters.
Allegedly, the store manager did not respond to these safety concerns and treated the employees in an immature and unprofessional way. The three employees discussed the events not at the water cooler, which is so yesteryear, but on Facebook. These posts included messages such as
- “It’s pretty obvious that my manager is as immature as a person can be and she proved that this evening even more so. I’m am unbelieveably [sic] stressed out and I can’t believe NO ONE is doing anything about it! The way she treats us in NOT okay but no one cares because everytime [sic] we try to solve conflicts NOTHING GETS DONE!!... “
- “800 miles away yet she’s still continues to make our lives miserable. phenomenal!”
- “hey dudes it’s totally cool, tomorrow I’m bringing a California Worker’s Rights book to work. My mom works for a law firm that specializes in labor laws and BOY will you be surprised by all the crap that’s going on that’s in violation 8) see you tomorrow!”
One of the employees did bring the California worker’s rights book—which covered issues such as benefits, discrimination, the right to organize, safety, health, and sanitation—to work and put it in the break room where other employees looked through it, noticing that they were entitled to water and sufficient heat.
This same employee also (naïvely) sent resumes from the company computer in spite of company rules allowing only sporadic computer access (the store manager had allegedly set a bad example by using the store computer for personal purposes herself). The company discovered this as well as the Facebook posts, and fired the three employees.
The company argues that the workers commented on Facebook only in order to create a pretext for filing a claim with the NLRB. The smoking gun, according to the company, is the following exchange of (select, but most salient) Facebook postings:
- “OMG the most AMAZING thing just happened!!!! J”
- “What … did they fire that one mean bitch for you?”
- “Nooooo they fired me and my assistant manager because “it just wasn’t working out” we both laughed and said see yaaah and hugged each other while giggling ….Muhahahahaha!!! “So they’ve fallen into my crutches [sic].”
The use of the expression “Muhahaha” is, according to the company, the smoking gun indicating the employee’s desire to get fired. It does indeed seem to indicate _some_ reveling in the turn of events, but arguably not a desire to be fired. The “top definition” of the phrase on the user-created online “Urban Dictionary” is, today, “supost [sic] to be an evil laugh when being typed in a game.” Case briefs list it as “An evil laugh. A laugh one does when they are about to do something evil. Such as when a villain has a plot to take over the world, he does this laugh right before it goes into effect. Also a noise made by people who have just gotten away with an evil deed or crime….” The “evil laughter” entry on Wikipedia describes the phrase Muhahaha as being “commonly used on internet Blogs, Bulletin board systems, and games. There, [it is] generally used when some form of victory is attained, or to indicate superiority over someone else.”
The company appeals a ruling from the National Labor Relations Board (“NRLB”) finding the terminations unlawful because the employees’ discussions of working conditions were protected concerted activities under the National Labor Relations Act. The company claims that the comments were not legally protected because they were part of a scheme to manufacture an unfair labor practice claim.
It will be interesting to see how the Court of Appeals will address the social media aspect of this case. One the one hand, it does seem exceptionally naïve to expect to be able post anything in writing on the internet – Facebook, no less – without it potentially being seen by one’s current or future employer. I’m sorry, but in 2016, that should not come as a surprise to anyone (note that the company also used email monitoring software to discover whether its employees applied for jobs with competitors, which at least one of the employees here did). Note to employees who may not have a home computer or internet access: use a library computer.
On the other hand: does it really matter what employees post to their “friends” about their jobs, absent torts or other clear violations of the law (not alleged here)? Isn’t that to be expected today just as employees previously and still also talk in person about their jobs? Isn’t the only difference in this case that the posts are in writing and thus traceable whereas “old-fashioned” gossip was not? If employees merely state the truths, as seem to have been the case in this instance perhaps apart from the last “Muhahaha” comment, isn’t it overreaching by the employer to actually _fire_ the employees if they, of course, otherwise provided good services? Even if the employees are exaggerating, boasting, or outright lying, should employers be able to fire employees merely because of private comments on Facebook posted to one’s online “friends”?
An alternative idea might be to consider whether the employees were actually on to something that (gasp!) could help improve a poor work situation for the better.
The National Federation of Independent Business’ Small Business Legal enter has filed an amicus brief in support of the company, alleging that the NLRB decision “allow[s] employees regardless of their motive or actual misconduct to become termination-proof simply by making comments relating to their employment online.”
That’s hardly what the employees are arguing here. They do, however, argue a right to discuss their employment situation online without a snooping employer terminating them just for doing so. In this case, the employees had, noticeably, tried to improve highly important workplace issues in a fruitful way. The situation did, however, escalate. In and of itself, however, the “fallen into my clutches” comment, although of admittedly debatable intent, does not seem to indicate that the employees were attempting to manufacture an unfair labor practice claim. The employees seemed to have been primarily concerned with safety issues and working conditions, but were fired in retaliation for their critical online arguments. That, to me, seems like a fair argument.
Stay tuned for the outcome of this case!
Wednesday, January 20, 2016
When I was in law school, I remember starting to be really struck by how often I had to sign liability releases: going to play paintball, renting skis, etc. A recent case out of the Tenth Circuit, Espinoza v. Arkansas Valley Adventures, had to deal with just such a release in the context of a tragic whitewater rafting accident.
The plaintiff's mother drowned when her raft capsized during a rafting trip organized by the defendant. She had signed a contract that released the defendant from liability for negligence. The plaintiff agreed that his mother had signed the release but tried to argue that the release was unenforceable. As a matter of Colorado law, though, he lost. The court found the release enforceable both as a matter of public policy and under the particular circumstances of the mother's signing.
The court explained that Colorado uses four facts to determine whether a release of liability for negligence is enforceable:
(1) the existence [or nonexistence] of a duty to the public; (2) the nature of the service performed; (3) whether the contract was fairly entered into; and (4) whether the intention of the parties is expressed in clear and unambiguous language.
The court concluded that, while other states were free to disagree on this, Colorado had decided that corporations providing recreational activities are allowed to protect themselves from liability for negligence. The court stated that this is a valid policy choice for Colorado to make because it arguably encourages the active, outdoorsy lifestyle that the state of Colorado cherishes and wants to protect and promote. Without such ability to protect themselves, companies might be discouraged from offering recreational activities like horseback riding, snowboarding, or whitewater rafting. And in fact other courts in Colorado had explicitly found that companies offering whitewater rafting trips can protect themselves from liability for negligence using a contractual release. The court stated that the Colorado legislature was free to introduce a statute that would change this legal precedent, but, as it stood, the court was bound to follow the precedent.
Having decided that the release was not against public policy according to the first two factors of the balancing test, the court then further decided that the plaintiff's mother had fairly entered into the contract with full knowledge of the risks at stake. The court dismissed the plaintiff's expert testimony that the rapids his mother was exposed to were too advanced for a beginner (in contrast to what the defendant had assured her) by pointing to the fact that the defendant had expert testimony that the rapids were suitable for beginners. Finally, the court noted that the release had the typical all-caps language that you see on these sorts of contracts. You know: "HAZARDOUS AND INVOLVES THE RISK OF PHYSICAL INJURY AND/OR DEATH" and "THIS IS A RELEASE OF LIABILITY & WAIVER OF LEGAL RIGHTS." The truth is, seldom does any consumer seeing that stuff really take it a serious communication of a great risk of death, I think. Especially not when there was some evidence that the consumer has been assured the trip in question was suitable for families with children. Nonetheless, the court found that the language of the release unambiguously informed the plaintiff's mother of the risks of the activity and the fact that she was releasing the defendant from liability should those risks come to pass.
There was a dissent in this case, however, who agreed that the release wasn't against public policy but disagreed on the conclusion that the contract had been fairly entered into. In the dissent's view, the contradictory testimony about the level of difficulty of the rapids meant that the question should have gone to the jury.
I don't spend a lot of time in my Contracts class talking in detail about liability releases for negligence, but this case made me think that I should talk about them more, because they really do seem to arise in the context of so many activities.
Tuesday, January 19, 2016
Do law students intending to practice in the areas of contracts and commercial law particularly need to consider the risk of being replaced by artificial intelligence? It wouldn't hurt.
At this month's AALS annual meeting, Harvard Law School Dean Martha Minnow made some headlines with her comments that the threat to the jobs of human lawyers from artificial intelligence is overhyped:
Minow said she didn’t see computers having a role in matters that require subjective legal judgment. “Assessment and critique of justice and justice mechanisms, I don’t see AI taking that on. Nor do I see AI taking on ethics,” she said. “I don’t mean to suggest there is no relation between AI and ethical suggestions, but I don’t think you’ll ever get rid of the human being. There will always be a need for human beings.”
Dean Minnow's points of optimism--that matters of justice and ethics will require a human component--seem substantially correct, but they highlight a particular problem in the contract and commercial law fields. Matters of human justice, like the administration of criminal penalties and the protection of civil rights, are a natural bulwark against the replacement of lawyers by computers in those fields. The values at stake are ones that we, as a society, would be (fortunately) fundamentally queasy about taking out of human hands. But what if the stakes are "mere" money, as is frequently the case with contracts? That is the kind of area where increased efficiencies and removal of the human element give less pause.
This sort of automation of transactional work is certainly underway, ranging from the drafting of basic transactional documents through websites like Legal Zoom to the intriguing use of smart contracts that can govern and enforce themselves, such as through application of Bitcoin-style blockchain technology. In short, teachers of Contracts are training students in a field with a high degree of risk of being automated out of existence.
Robolawyer is coming, so how do we prepare our Contracts students to become lawyers whose value-adding proposition is not susceptible to automation? This question has many answers, I suspect, but we won't reach any of them unless we start by recognizing the problem.
Monday, January 18, 2016
The plaintiff in this case had a bunch of videos on YouTube. One day, she found that YouTube had deleted them. The videos had had close to 500,000 views at the time YouTube deleted them. The plaintiff claimed that she spent a lot of time and money promoting them but there was no commercial aspect to the videos; she didn't make any money off of them.
Upon realizing YouTube had deleted her videos, she sent YouTube an e-mail asking what had happened and if her videos could be restored. She received in response what appeared to be a form e-mail informing her that she'd violated YouTube's terms and conditions but not giving any truly specific information. The best that I can discern is that YouTube thought she was a spammer.
The plaintiff replied to the e-mail from YouTube saying that she had not engaged in any behavior violating the terms and conditions. She received another response from YouTube identical to the first. She filed a formal appeal with YouTube, and received another identical response.
So that brings us to the lawsuit in question, in which the plaintiff was alleging that YouTube violated the covenant of good faith and fair dealing implicit in its terms and conditions when it deleted her videos unjustifiably and without any notice.
To be honest, I see the plaintiff's point and I'm kind of on her side. It's frustrating when you have no idea what you've done wrong and you can't get a website to explain anything to you and you just feel kind of powerless. The good news is that at some point she did get YouTube's attention enough that it did restore her videos. I don't know if that happened before or after the lawsuit was filed.
It seems, therefore, like the plaintiff got what she wanted, which was restoration of her videos. The lawsuit appears to have really been about trying to get damages, but the court pointed out that YouTube's terms and conditions (which, let's face it, none of us reads) contained a limitation of liability clause that is valid in California, so the plaintiff couldn't seek any damages.
I think this is a situation where the court just thought that plaintiff had what she wanted and was just being greedy. I would be curious to see another case challenging the limitation of liability clause where the plaintiff could prove actual damages that might sway a sympathetic judge. But, for now, YouTube's terms and conditions do act to protect YouTube from having to pay out damages. If you find yourself a victim of YouTube's apparently aggressive anti-spamming patrol, you might just have to settle in for a bit of a fight in getting YouTube's attention, without much hope of compensation for any of that time and effort.
Wednesday, January 13, 2016
A recent case out of Ohio, Oryann, Ltd. v. SL & MB, LLC, highlights how complicated it can be to determine whether a contract ever existed in the first place.
This case involved the sale and purchase of a horse farm that was being operated as a horse-boarding business. The parties agreed on a price of $640,000, and in all of their communications back and forth, that price was always stated as being the price for the real estate of the farm. There was no written reference to purchase of the business and its assets until the parties were through with their negotiations and signing the final papers. Those final papers indicated that the buyer was buying real estate for $350,000 and the business for $290,000. The business sale contract referenced "Exhibit A" as listing the assets that were being transferred, but Exhibit A was never completed.
A disagreement arose between the parties, and the trial court found that there was never any meeting of the minds with respect to the sale of the business and it was illusory because it didn't have enough specificity to show that anyone was bound to do anything due to the fact that there was never any enumeration of the assets to be transferred (given the blank Exhibit A). While the trial court enforced the real estate contract in the amount of $350,000, it threw the business sale contract out as unenforceable.
The appellate court, however, disagreed with the trial court's conclusion. To the appellate court, it was obvious from the language of the contracts and the behavior of the parties that there was a meeting of the minds with respect to the sale of the business and that the parties were bound by the contract. The appellate court noted that the two contracts were intended to be read as one entire deal, not two separate deals the way the trial court was reading it. The appellate court thought that if the parties intended to be bound by the real estate contract (as the trial court had found), then it had to follow that they intended to be bound by the business sale contract as well, as the contracts' language expressly referenced each other and the fact that they were one deal. And, as the appellate court noted, the trial court's ruling on the contracts meant that the trial court was ignoring was ignoring the fact that, at all times, the amount of money the parties were discussing was $640,000. It didn't make sense to then pretend that the parties had only intended to pay half of that.
The appellate court was untroubled by the blank Exhibit A. The business sale contract's language explicitly stated that "all" of the business would be transferred; the purchasing party took possession and ran the business for over a year without complaining about a lack of specificity in the contract because of the missing Exhibit A; and the evidence showed that the parties did indeed transfer over their business assets. The appellate court thought it was therefore clear from the parties' behavior that they understood what the business sale contract achieved, even without the Exhibit A.
So, where the trial court had seen questionable conduct, the appellate court found an enforceable contract.
The key to the trial court's ruling might actually be in the parties' testimony as to why they ended up executing two separate contracts: They wished to lessen the amount of real estate tax paid in the transaction. I think the trial court thought that the parties clearly thought the real estate was worth $640,000, didn't want to pay the taxes owed on that, and so pretended the real estate was only worth $350,000 in order to avoid those taxes. In fact, it appears from the parties' testimony that that's exactly what they did. I think the trial court disapproved of that and that its ruling probably reflects its unwillingness to endorse the parties' behavior.
Thursday, January 7, 2016
Recently, Stacey blogged here about whether tenure is a contract. Yesterday, the news broke that a tenured associate political science professor at Wheaton College, a private Christian university, may soon get to test that theory.
Shortly after the San Bernadino, California, shooting massacre, Professor Larycia Hawkins stated on her Facebook account (which listed her profession and employer) that she “stand[s] in religious solidarity with Muslims because they, like me, a Christian, are people of the book. And as Pope Francis stated last week, we worship the same God." She elaborated that “we are formed of the same primordial clay, descendants of the same cradle of humankind--a cave in Sterkfontein, South Africa that I had the privilege to descend into to plumb the depths of our common humanity in 2014.” She also wore a hijab in “embodied solidarity” with Muslim women.
The response by the College is, for now, the equivalent of “You’re fired.” The College placed Professor Hawkins on administrative leave in December "to explore significant questions regarding the theological implications of her recent public statements, including but not limited to those indicating the relationship of Christianity to Islam." Further, "Wheaton College faculty and staff make a commitment to accept and model our institution's faith foundations with integrity, compassion and theological clarity. As they participate in various causes, it is essential that faculty and staff engage in and speak about public issues in ways that faithfully represent the college's evangelical Statement of Faith." According to Wheaton College President Ryken, however, the College also “support[s] the protection of all Americans including the right to the free exercise of religion, as guaranteed by the Constitution of the United States." Professor Hawkins’ legal team is, according to televised news statements on 1/6, exploring the possibility of a lawsuit should the professor’s preferred solution – mediation and an amicable solution – turn out to be impossible.
This case raises serious questions about the academic freedom of tenured professors – even untenured ones - with which we as law professors are also very familiar. This is perhaps even more so in the cases of private colleges. It seems to me that with a message along the lines of what even Pope Francis uttered along with a reasoned (meta)physical explanation of her views and the College’s self-professed acceptance of freedom of religion, Professor Hawkins did not act in a way that should, under notions of academic freedom, get her fired. If we as law professors do not agree with or wish to challenge certain traditional or even untraditional legal views, are we not allowed to do so because the institutions we work for or the majority of our colleagues hold another view? One would hope so. Most of us can probably agree that academic freedom is exactly all about being able to, within reason at least, provoke deeper thought in relation to what we teach. Note that Dr. Hawkins did not teach religious studies, but political science. With the current embittered debate about Muslims and terrorism around the world, Dr. Hawkins arguably raised some interesting points even if one does not agree with her statements from a Christian point of view.
Stay tuned for more news on this case!
Sunday, January 3, 2016
Exactly one year ago, I blogged here about United Airlines and Orbitz suing a 22-year old creator of a website that lets travelers find the cheapest airfare possible between two desired cities. Travelers would buy tickets to a cheaper end destination, but get off at stopover point to which a ticket would have been more expensive. For example, if you want to travel from New York to Chicago, it may be cheaper to buy one-way airfare all the way to San Francisco, not check any luggage, and simply get off in Chicago.
The problem with that, according to the airline industry: that is “unfair competition” and “deceptive behavior.” (Yes, the _airline industry_ truly alleged that.) Additionally, the plaintiffs claimed that the website promoted “strictly prohibited” travel; a breach of contracts cause of action under the airlines’ contract of carriage.
It seems that the United Airlines attorneys may not have remembered their 1L Contracts course well enough, for a contracts cause of action must, of course, be between the parties themselves or intended third party beneficiaries. The website in question was simply a third party with only incidental effects and benefits under the circumstances. Without more, such a party cannot be sued under contract law. (This may also be a free speech issue.)
Orbitz has since settled the suit. Recently, a federal lawsuit was dismissed for lack of personal jurisdiction over the now 23-year old website inventor. United Airlines has not indicated whether it plans further legal action.
Along these lines, cruise ship passengers are similarly not allowed to get off a cruise ship in a domestic port if embarking in another domestic port unless the cruise ship is built in the United States and owned by U.S. citizens. This is because the Passenger Vessel Services Act of 1866 – enacted to support American shipping – requires passengers sailing exclusively between U.S. ports to travel in ships built in this country and owned by American owners. Thus, cruise ships traveling from, for example, San Diego to Alaska and back will often stop in Canada in order not to break the law. But if the vessel also stops in, for example, San Francisco and you want to get off, you will be subject to a $300 fine which, under cruise ship contracts of carriages, will be passed on to the passenger. See 19 CFR 4.80A and a government handbook here.
Convoluted, right? Indeed. Necessary? In this day and age: not in my opinion. As I wrote in my initial blogs on the issue, if one has a contract for a given product or service, pays it in full, and does not do anything that will harm the seller’s business situation, there should be no contractual or regulatory prohibitions against simply deciding not to actually consume the product or use the service one has bought. Again: if you buy a loaf of bread, there is also nothing that says that you actually have to eat it. You don’t have to sit and watch all sorts of TV channels simply because you bought the channel line-up. In my opinion, United Airlines and Orbitz were trying to hinder healthy competition and understandable consumer conduct. What is still rather incomprehensible to me in this context is why in the world airlines would have anything against passengers getting off at a midway point. It’s less work for them to perform and it gives them a chance to, if they allowed the conduct openly, resell the same seat twice. A win-win-win situation, it seems, for the original passenger, the airline, and the passenger that might want to buy the second leg at a potentially later point in time at whatever price then would be applicable. The same goes for the typically unaffordable “change fees” applied by most airlines: if they charged less (a change can very easily be done by travelers on a website with no airline interaction) and the consumer was willing to pay the then-applicable rate for the new date (prices typically go up, not down, as the departure dates approach), the airlines might actually benefit from being able to sell the given-up seat. Of course, they don’t see it that way… yet.
In many ways, traveling in this country seems to be going full circle in that it is becoming an expensive luxury. Thankfully, new low-cost airlines also appear on the market to provide much needed competition in this close-knit industry that, in the United States, seems to be able to carefully skirt around anti-trust rules without too many legal allegations of wrongdoing. (See here for allegations against United, American, Delta and Southwest Airlines for controlling capacity in order to keep airline prices up).
Happy New Year and safe travels!
Wednesday, December 23, 2015
I'm probably going to develop a personal expertise in the limited field of Parking Sagas; be forewarned.
This case, Gietzen v. Goveia, B255925, out of the Second Appellate District of the Court of Appeal of California, concerned a shopping center that leased spaces to several businesses. One of these businesses was a restaurant called Yolanda's and another of these businesses was a gym called 24 Hour Fitness. When Gietzen, the owner of Yolanda's, entered into negotiations with the developers of the shopping center, he asked who the other tenants of the shopping center were going to be. Apparently, Amy Williams, one of the developers' agents, told him that the anchor tenant was likely to be a marine hardware company. In fact, negotiations with the hardware company eventually fell through and the anchor tenant ended up being 24 Hour Fitness.
Apparently, in California at least, it is fairly well known among real estate-related business people that gyms can "cause major parking congestion problems." Here is where I betray that I do not belong to a gym, so I have no first-hand experience of this. But apparently very many people are much more dedicated to working out than I realized, because the gym in this case ended up utilizing around 95% of the available parking spaces. Williams had apparently known this was likely to happen based on previous similar experiences with gyms in shopping centers she'd helped develop, and Gietzen also said that he knew gyms caused such issues and would never have leased space in the shopping center if he'd known a gym was going to be an anchor tenant.
Amid evidence that potential Yolanda's patrons were actually eating at other restaurants because they didn't want to deal with the lack of parking at the Yolanda's shopping center, Gietzen complained, as did other tenants having similar problems. Eventually, several solutions were attempted, but the parking lot still remained almost entirely full of gym patrons to the detriment of the other tenants. So, eventually, Gietzen sued, alleging, among other things, breach of contract and breach of the covenant of good faith and fair dealing.
The relevant clause of the contract was Article 9.1: "The Common Area shall be available for the nonexclusive use of Tenant during the full term of this Lease or any extension of the term hereof . . . ." The Common Area included the parking lot. The court interpreted that clause to mean that the common area had to actually be available for the tenant to use; the availability could not be hypothetical. Because 95% of the common area was being monopolized by the anchor tenant gym, the court found that Gietzen had been denied use of the common area in breach of the contract. The shopping center developers tried to argue that this interpretation implied that gyms can never be allowed to be shopping center tenants because of their propensity to take up so many parking spaces at all times. The court found, however, that no such implication was required.
As far as the breach of covenant of good faith and fair dealing, the shopping center developers pointed to a clause in the lease that said no covenants were implied. But the court said that good faith is required of all contracts, and that courts would not allow a contract to permit a party to act in bad faith based on a statement as vague as the one this contract contained: "The good faith of the parties is essential to all contracts. No agreement, no matter how finely crafted, will protect a party if the other party is not acting in good faith. If indeed [the developer] is contending that the lease allows it to act in bad faith, it must point to a clause more specific than a general clause against implied covenants."
Mainly I felt like I had to share this case so that I can spread around my guilt over not being one of those many people parked at the gym.
Monday, December 21, 2015
Shoplifting is a major problem to retailers. In 2014, for example, retailers lost $44 billion nationwide to theft by shoplifters, employees and vendors. But how about this for an apparently very popular “solution”: Retailers such as Bloomingdale’s, Wal-Mart, Burlington Coat Factory, DSW Inc. and even Goodwill Industries have signed up with CEC, a company that provides “restorative justice” for profit.
Here’s how it works: Retailers sign a contract with CEC under which CEC will provide “life skills” courses to shoplifters caught by the retailers. The retailers pay nothing for this “service.” Rather, shoplifters must pay the company $500 for a six-hour course and sign a confession. If they refuse to do so, they are threatened with criminal prosecution and allegedly intimidated in several other ways. According to CEC, “over 1 million individuals have gone through the core program.” Do the math (if you trust the company’s statement) and you’ll see that contracting to sell justice and self-help is apparently quite lucrative.
According to CEC, this is all a good thing. In a statement apparently now removed from the company’s website, but reported here, the company purports to give “low-level, first-time shoplifters a valuable opportunity to learn how to make better choices, while saving them a criminal record and sparing law enforcement resources.” According to CEC now [http://www.correctiveeducation.com/home/cec-restore]: “CEC’s Adult Educational Program focuses on developing practical skills that will help achieve social goals. The dual approach of addressing behavior while promoting provident living helps reinforce change.”
What’s the problem with this alleged win-win situation? According to at least the San Francisco city attorney, the conduct is a violation of the California Business and Professions Code. It also alleged to amount to extortion, false imprisonment, coercion and deception. The city attorney has filed suit. CEC defends, claiming that its “vision is to reinvent the way crimes are handled, starting with retail theft.” Indeed. Do we, however, trust companies to sell justice for us via private contracts? Comment below!
Once, when I lived in a city, my car got towed. I was properly, legally parked at the time I parked the car. Unfortunately, after I parked the car, the city came by and put up a sign saying they were cutting down a tree the next day and my car needed to be moved. Unfortunately, the car wasn't parked on the street where I lived (that's city living for you) and also unfortunately, I didn't go back to my car for a few days (also city living for you). When I went to retrieve my car for a driving errand and found it missing, I had a moment of utter panic that it had been stolen. Then I noticed the bedraggled sign and realized it must have been towed. Thus commenced a long, involved saga. My license plate number was not reported online as having been towed, so I had to take two separate buses across the length of the city to a police station, where I waited in a very long line of people doing various police business to be told yes, it had been towed, but no, it wasn't in the system, and I had to go another opposite side of the city (I was making a triangle) to retrieve it and I had to BRING CASH (I was told this many times, in oral all-caps). Which meant that first I had to locate an ATM in an area of the city with which I was unfamiliar, and then take more buses to the tow company location. This entire ordeal (which I maintain wasn't entirely my fault, considering I think it was unrealistic of the city to provide so little notice of the tree issue, because the vast majority of us city-dwellers don't go to our cars on a daily basis) took the better part of my day and cost hundreds of dollars but, at the end of it, at least I got my car back (and then afterward I had to keep making out-of-my-way trips on a daily basis to make sure that my car hadn't become subject to any weird new towing orders).
I tell all of you this saga because when I started reading the fact pattern of Parham v. Cih Properties, Civil Case No. 14-1706 (RJL), out of the District Court for the District of Columbia, I had flashbacks. In that case, the plaintiff lived in an apartment complex that had a parking lot. (There is a prior Parham v. Cih Properties case, involving a plaintiff with a different first name, possibly the plaintiff's mother.) She alleged that her car was towed from the lot. After allegedly having to engage in a complicated search, the plaintiff determined that the car had been ticketed for having "dead tags" and had been sent "to be crushed for scrap metal." The plaintiff alleged that her car did not have dead tags and also that the tag number she was given on the ticket wasn't even the tag number of her car. At any rate, the plaintiff has never actually been able to locate the man who allegedly towed the car and so has never actually located her car and so never received her car back. So, she's sued.
Why, you might wonder, am I talking about all these parking sagas in the ContractsProf Blog? Well, there was a breach of contract aspect to this case, in that she alleged that she had a contract with the apartment complex that the complex breached when it authorized the towing of her car. However, the only contract between the plaintiff and the apartment complex was a thirty-year-old lease agreement that explicitly stated that parking was not covered by the agreement. Therefore, the court found there was no breach of any contract.
I understand the court's analysis but I'm incredibly perplexed and wish I had more information. Was there never any updating of the lease agreement in the ensuing thirty years? Surely the rent had been increased, at least? And, honestly, under what authority was she parking in the parking lot? Whenever I have had parking in a city lot, it came with tags or cards or permits or something, so that the parking could be managed. And never, in a city situation, has the parking been free. The parking here was apparently located in Washington, D.C. (see above photo for an only-slightly-out-of-date depiction of parking in Washington, D.C.), so I wish knew more about the circumstances under which the parking lot was being governed. I just find it difficult to believe that there wasn't some sort of agreement somewhere between the plaintiff and someone about what the parking situation was, even if the agreement was only oral in nature, or even if we had to turn to promissory estoppel to get there. But am I thinking about this from a completely wrong angle somehow?
The plaintiff in this case was proceeding pro se, which might have contributed to the fact that there wasn't enough evidence for the plaintiff to survive summary judgment. Indeed, none of the plaintiff's claims (which included fraud and consumer protection claims) survived summary judgment.
This case made me think of my own parking saga because, well, what would I have done if I'd just never been able to locate my car again? Even though I thought it was unfair that I was forced to inconveniently traipse all over the city and produce hundreds of dollars in cash based on what I considered a "surprise" towing sign, I think I also vaguely thought that probably one of the "terms" of my agreement with the city under which it had given me a street parking permit was that I would check on the car at least every twenty-four hours. So, although I was annoyed during my saga, I put most of the blame on myself. I have no idea what I would have done if I'd never found my car, though.
Thursday, December 17, 2015
We received the following great comment from Professor Neil Sobol of Texas A&M. Instead of simply letting it sit in the Comments field, I thought I would post it directly here and encourage anyone interested to read Professor Sobol's article. Thanks!
Telephone fees assessed inmates are just one example of a myriad of charges assessed to criminal defendants that are used to help fund declining state and local budgets. Often the fees go beyond simple reimbursement of expenses and are unrelated to the underlying offenses. In the case of telephone charges (as Congress members described in an October 20, 2015 letter to the F.C.C.),“ up to 60 percent of what prisoners’ families pay to receive phone calls from their incarcerated loved ones has nothing to do with the cost of the phone services provided.”
Fees assessed to inmates are just one component of the growing problem of criminal justice debt that currently affects millions of individuals. Criminal justice debt includes fees, fines, and restitution. Monetary charges can be imposed at any stage criminal proceedings: pre-conviction, sentencing, incarceration, or probation.
Unfortunately, the use of the charges can be abusive. The Department of Justice’s scathing report on the Ferguson Police Department describes a system where the city, the police, and courts were more concerned with collection of revenue than public safety. Moreover, the abuses relating to criminal justice debt described in the report are not limited to Ferguson.
The impact is most severe on poor and minorities (and their families) who often have to choose between paying for family necessities and their criminal justice debt. Failure to pay criminal justice debt can result in arrest and incarceration. I have written an article, Charging the Poor: Criminal Justice Debt & Modern-Day Debtors’ Prisons, 75 Maryland Law Review (forthcoming 2016), that addresses the unfortunate resurgence of debtors’ prisons based on incarceration of those unable to pay criminal justice debt. For those interested, the draft is available at http://ssrn.com/abstract=2704029
Wednesday, December 16, 2015
How does paying 18 cents a minute for a local phone call in 2015 sound to you – fair enough or a scam? How about 23 cents a minute for a non-local call? If you think that no one can possibly charge that much today or that no one in their right minds would pay it, think again (ok, at least the former).
In Orange County, California, jails, the average phone call costs just that. In return for providing phone service in a county’s jail system, a telecommunications company typically guarantees the county a multi-million dollar “commission” as well as a percentage of the revenue. For example, Alabama company Global Tel-Link guarantees a payment of $15 million or two-thirds of phone revenue, whichever is greater, to Los Angeles County. To be able to pay such a high price, the phone companies of course pass the cost on to the end clients; the inmates in at least Southern California counties.
The inmates and their families have had enough. They filed suit recently against Los Angeles and nearby counties alleging that the fee for inmate telephone calls are “grossly unfair and excessive” and amount to an illegal moneymaking scheme for local governments.
Before you ask yourself who is calling the kettle black, as I must admit I did when I first learned of this story, think of this: criminal recidivism is greatly reduced by family communication. The Federal Communications Commission last month capped local call rates and trimmed the cap on interstate long-distance calls for this and other reasons. Mothers with husbands in jail have paid several thousand dollars to telecommunications companies so that their children can talk to their fathers, undoubtedly a benefit to not only the families, but also society in the long run.
Of course, the inmates have few alternatives as cell phones are very typically not allowed in jail.
It continually amazes me how much Americans are willing or have to pay for phone service, Internet service, and cable TV service. In the case of inmates, of course, they have little choice. To avoid paying large monthly fees for cell phone service, I have kept my “dumb phone,” but instead find myself annoyed at still, in 2015, not being able to get more selective cable TV for only those stations I truly watch (the news, if you can call it that these days). Monopolies or not: communications companies still typically have the upper hand in contractual bargaining situations.
Monday, December 14, 2015
On Saturday, a new international treaty surplanting the expired Kyoto Protocol was finally reached by 195 nations. For business contracting and numerous, if not all, aspects of life now and in the future, the global climate will be key.
The main aim of the agreement is to keep temperature rise “well below” 2° C. The nations will additionally “pursue efforts” to limit the temperature increase to 1.5° C. Thousands of scientists have for a long time reiterated the belief that temperatures rising above 2° Celsius could be devastating, so the aspirational goal of 1.5° C is, of course, a positive sign that national leaders may finally be realizing the dire straits of the planet’s climate situation.
So, this is good news, right? To some extent, yes. “The Paris Agreement for the first time brings all nations into a common cause based on their historic, current and future responsibilities.” However, current national commitments still do not go far enough. As they currently stand, we are headed towards a warming of more than 3° C; much higher than the scientifically advisable goal. The national pledges must be increased over time. Starting in 2018, each country will have to submit new plans every five years to reach the 1.5/2° goal by 2100. The thought is that even though current coals do not suffice to keep climate warming to the agreed-upon limits, they will over time, starting soon.
History shows, though, that many nations have so far neither been ready nor politically able to make effective greenhouse gas reduction commitments. Previous aspirational goals have not been realized by the great majority of nations, although some not only met, but exceeded their commitments. It’s tempting to note that “time will tell if the situation changes this time,” but we simply don’t have much time to turn around the problem before it is too late for many regions, species and peoples around the world. For example, a temperature increase of 2° C will still be very problematic for low-lying nations such as many small island states, who seem to have been almost entirely forgotten about by many in this context. That, however, was considered one of the “prices” to be paid for reaching the deal. (A true contractual-like bargaining strategy.) Human rights are only mentioned in the preamble to the Agreement and not in the Agreement itself.
Nation themselves will determine their “intended nationally determined contributions,” which are not directly legally binding under notions of hard law as they are not mandatory with top-down enforcement if the nations fail to do so. Among other factors, the word "contribution" and not, for example, "commitments" demonstrate the legal cautiousness of the agreement. Nations must, of course, still strive to reach their goals under the UNFCCC and the notion of pacta sunt servanda, but these are not worded in a manner that gives them a firm, legally binding effect. The only directly legally binding parts of the Agreement are some procedural aspects such as the review procedures.
Of course, the reason why the Agreement was adopted by so many parties was precisely that no legal requirements were imposed on nations. Some, such as the United States, would not have accepted this. A senior Obama administration official notes that the Agreement "does not require submission to the Senate because of the way it is structured and because the pieces that are binding are already part of existing agreements.” A legally smart and pragmatic maneuver. But it still remains to be seen whether the United States and other nations act – and act quickly enough - to prevent the problem escalating in spite of good intentions. I may be one of the few in this context, but I’m still skeptical. The intended time frames still seem too long to me and the actual promised action too meager. I fear that these are simply the “Emperor’s New Clothes,” celebrated so much, perhaps, because of so many years of no action.
Nonetheless, it is certainly remarkable and a very good sign that the world community finally agreed on the dangers posed by climate change and thus a 2° C limit. That's a good start. In the words of Miguel Arias Cañete, the European Union’s commissioner for energy and climate action, “[t]oday, we celebrate, [t]omorrow, we have to act. This is what the world expects of us.” But if we have simply turned a corner back to where we came from, namely hoping that sufficient action will be taken soon and pointing out that the world expects that, we might have celebrated a bit too early. I hope I am wrong. Climate change is like a cancer: horrible, always inconvenient, and tough to deal with at many levels. But the longer one waits in tackling it, the worse it will get.
Sunday, December 13, 2015
Back in October, the New York Court of Appeals decided in principle that candidates for the bar must demonstrate that they have acquired legal skills (as opposed to just the legal knowledge traditionally tested on the bar exam). Our sister blog, Legal Skills Prof Blog, summarizes here some of the options being considered by the court's task force on the all-important question of how to implement such a skills requirement. The activity in New York is, in many respects, a supersized or advanced version of curricular rule changes adopted by the ABA.
This curricular movement is, I believe, an opportunity for those who teach Contracts. Skills taught in law school have traditionally had a substantial bent towards litigation, a bent that is unsurprising in a curriculum dominated by the case method. Even inroads by our friends in alternative dispute resolution still deal with skills applied after a dispute has arisen between parties. When we teach Contracts principally through appellate opinions, we follow the same after-the-fact approach toward doctrine. It doesn't have to be that way. The subject of Contracts is inherently a matter of transactional importance that should be our students' gateway to transactional thinking. By transactional, I mean an emphasis on "before the fact" lawyering where the goal is to prevent a dispute from occurring in the first place. In an era of greater focus on the acquisition of legal-practice skills, Contracts is the place where we have the possibility early on to ensure to skills include a focus on dispute prevention, not just dispute cure.
Transactional thinking is not inherently built-in to the case method and thus likely requires the introduction of skills exercises alongside traditional pedagogical approaches. More resources than ever are available now to enable us to make Contracts a gateway to transactional thinking, fortunately. Implementing such a shift still requires substantial work, however, but the change is one that is in our students' best interests if we can do it well.
Thursday, December 10, 2015
Will the legal hiring and general business situation never change for the better? Maybe, but commentators still think that future change on the legal market will come from structural and innovative, rather than cyclical, change. For example, in addition to relatively simple steps such as hiring outside staffing agencies and sharing office centers, some firms are launching their own subsidiaries providing legally related services such as contract, data and cyber security management along with ediscovery.
Until recently, law firms offered these and other services. As outside service providers have proved to be able to provide certain key services more efficiently and cost effectively than traditional law firms, the latter have lost business that they are now desperately trying to recoup.
Imitation is still the most sincere form of flattery. It is not only on the market for legal services that copycats abound; this has also proved to be the case with, for example, many shared economy service websites such as Uber, Lyft, Airbnb, VRBO and others. As soon as one company idea and website turns out to be successful, others just like it seem to shoot up within weeks or months. However, instead of simply trying to do what others are already doing and doing well, it would be nice if companies – law firms among them – would try to think about how they could do things better instead of just trying to, as often seems the case, (re)gain business by taking market shares from others. Exactly how law firms should do so is, of course, the million-dollar question, but it seems clear that innovation is prized both within and beyond the legal field. That will benefit our students if jobs are created by actual law firms rather than by service providers not hiring people with JDs.
Tuesday, December 8, 2015
A few days ago, I blogged here on an attempt by some university professors in California to unionize and to obtain better pay and working conditions in general.
In China, university reform is also underway, but, at least in part, with a much more troublesome intent and potentially dire effects for the nation and the world.
The Guardian reports that China’s education minister has vowed to “drive smart alecks, dissenters and thieves” from the country’s university classrooms. This is part of a wider anti-corruption campaign launched by President Xi three years ago.
The alleged misconduct ranges from action that seems reasonable (firing university leaders for filing fake expense reports and taking bribes from students) across the pitiful and almost laughable (punishing senior university officials for engaging in illicit acts of “hedonism” by, for example, driving luxury cars) to the outright shocking and extremely troublesome, seen with Western eyes. For example, several university chiefs have been toppled for “flouting Communist party rules.” Attempts are made to ban books that attempt to spread “Western values.” The education minister has also called for “greater political screening of academics before they are hired” and is worried that “enemy forces” are attempting to “infiltrate university campuses” in order to “turn young minds against the party.”
Liberal academics claim that the discussion and study of sensitive topics has generally become increasingly difficult under the leadership of President Xi.
All this is indeed very troublesome indeed. However, before we roll our eyes too much at these serious Chinese events, let us just remember that the United States academic world is far from perfect either. Recall, for example, the recent defunding of various law school and other university clinics on East Coast campuses for, at bottom, being too liberal and assisting the lower class in obtaining better pay and working conditions. A former senior faculty colleague personally told me once that one of my papers on (are you ready?) climate change was almost “too political” in Orange County, California. The article discussed mainstream factual aspects, including business and investment issues, of climate change that are now, just a few years later, being discussed in Paris by all media, including conservative outlets. Recently, numerous attempts at diversifying college campuses across the nation have shed light on potential elitism and racism in American universities. Nope, we are far from perfect ourselves. But when an entire nation deliberately and officially seeks to censor learning processes, there is indeed cause for alarm.
Last year, I had the great honor, joy and privilege of teaching international environmental law at a prime Chinese university. I brought up such “sensitive” topics as public participation in government law- and decision-making, climate change, and trade in endangered species. I was videotaped doing so (this is normal practice in China). I was also not invited back this past summer. Maybe my teaching is simply no good. Maybe more senior and “famous” lecturers were chosen. I cannot blame the university for doing so at all. I know that I have a lot with which I can contribute to any educational institution, but I also bow to and honor the many experienced, learned and very well published colleagues on the “market” these days. However, hate to think that I was, perhaps, censored away. I don’t think that is the case. If it was, then I am nonetheless happy to have at least contributed with a few provocative, Western thoughts. Perhaps I was just too much of a smart aleck...
Monday, December 7, 2015
Commercial class-action practitioner Kevin M. McGinty here describes the final settlement of the infamous 2013 theft of credit and debit card data from retail giant Target's point-of sale terminals:
On Tuesday, December 1, Target entered into a settlement agreement with a class of banks and financial institutions that issued the credit and debit cards that were compromised in the 2013 event. The settlement was the result of negotiations following closely on the heels of an order by the court certifying a card issuer class. This last settlement resolves card issuers’ claims that were not previously resolved in Target's August 2015 settlement with Visa, which provided $67 million to resolve claims made by Visa card issuing banks under Visa’s fraud resolution process. Also separate from this settlement is the $10 million settlement of the claims of consumers whose cards were compromised by the data theft, which Target concluded with the consumer class in March 2015.
The current settlement provides for payment of an additional $39,357,939.38 for the benefit of class member banks. Of that amount, $19,107,939.38 will be used to fund settlements under MasterCard’s fraud resolution process....
The $10 million paid in the consumer settlement may seem at first blush to be grossly disproportionate to the roughly $107 million allocated to the card networks and their issuing banks. It actually isn't. The card payment system is built on private contracts that are themselves heavily impacted by federal consumer protection laws like the Truth-in-Lending Act and the Electronic-Funds-Transfer Act. Together, the contracts and federal law place liability for unauthorized purchases squarely on the issuer banks acting through the card networks. Thus, we should expect the consumer losses from Target's data breach to be minimal compared to those borne by the banks, who were obligated to fund the consumer losses pending recovery from Target as the ultimately responsible party for this particular data breach.
Sometimes the legal system works more-or-less how it is intended. The consumers actually were protected in this instance.