ContractsProf Blog

The Real Problem with Legal Scholarship

The legal blogs are afire (see our very own Jeremy Telman's post here, and others here , here and here ) about this article  about the impracticability of the law school curriculum. The article takes aim at “chin-stroking scholarship” that supposedly “nobody” reads. I'm puzzled about labeling scholarship as worthless  because it's not more widely read - that doesn't necessarily reflect the potential value of the article.  The article grossly over generalizes the nature of legal scholarship. Maybe it’s my chosen areas (contracts and cyberlaw), but most of what I read --and yes, I do read a lot of law review articles-- tackles real world, sticky social and legal issues caused by technological developments and contemplates possible solutions based on (surprise!) legal doctrine. Theoretical articles, as we contracts profs know, shed light on the “why” questions and thus help in the application of doctrinal rules to novel situations. The bad rap that scholarship receives seems to come from a handful of articles which are published by a handful of journals that push the envelope and get all the attention of (some) journalists and (some) judges. (I’m not commenting about the articles cited in the NYT piece because, unlike the journalist, I try not to judge an article I haven’t read by its title). I don’t think that’s a problem in and of itself – not all of legal scholarship should be about real world solutions and what might seem like an outrageous, pie-in-the-sky idea now may not seem so outrageous in a few years. (The anti-intellectual criticisms in the article remind me of equally inane arguments about the irrelevance of a humanities curriculum, literary novels, classical music and art). What is problematic is when journalists or judges use a handful of articles as examples of what all law review articles are like. These folks just don’t know the good stuff that’s out there -- many articles do in fact explain doctrine, have at least the potential for practical application or contribute in some way to our understanding of the law. The fact that more articles don't get cited by courts is a shame and may reflect more about the elitist bent of (some) judges than it does about the nature of legal scholarship generally. The real problem with legal scholarship is that it's not more widely read.  I think that more judges should read more legal scholarship, and in a wider variety of journals. Maybe then we wouldn’t have short-sighted, doctrinally confused cases like ProCD v. Zeidenberg – a case about which many of us contracts profs have written.  Unfortunately, not enough courts seemed to have read those articles.  Maybe the state of contract law would be better if they had.

 

[Nancy Kim]

More (Illegal) Fun with TOS

In Friday’s Wall Street Journal, Eric Felten writes something that we Contracts Profs know all too well, “Ours is the age of fine print.” He is specifically referring to the terms of use from companies such as Amazon and Apple which he points out can run to “more than 17,000 words of boilerplate.” The length of online contracts is something that I discuss in the book I am currently writing on ‘wrap contracts (or that I should be writing instead of blogging right now). Felten talks about how, back in the day, “we could walk into a record store, pick out a disc and plunk down some cash” whereas now, we have to enter into a contractual relationship before we buy music (something which I’ve blogged about before). The insidious thing about these online contracts, however, is something that has also been mentioned on this blog –they may interact with other laws in unexpected ways. Felten writes, “”under the Justice Department’s expansive reading of the Computer Fraud and Abuse Act, underage Googling, or any other violation of a Terms of Service agreement may well be a crime.” Of course, the good people at the Justice Department scoff at this notion. But despite that scoffing, I think a proper application of contract law and the CFAA would make violations of TOS a violation of the CFAA (and a federal offense). The problem, as Orin Kerr (who is cited in the WSJ article) points out, is that the wording of the CFAA is too broad. But that’s not the only problem – the other problem is that contract law is too lenient with its notions of mutual assent, especially online. If we expect others to take contracts seriously, we should come up with a law of contracts that reflects reality and deserves to be treated seriously.

[Nancy Kim]

TOS, Wikileaks and Twitter

Here's another case involving browsewraps or "terms of service" (also known as " the contract that nobody reads") and the way they may interact with other laws in unexpected or surprising ways. A judge recently relied upon Twitter's privacy policy in a case involving Wikileaks. In that case, Judge Liam O'Grady upheld an order allowing federal prosecutors to gain access to information on Twitter accounts held by Wikileaks and by three Wikileaks associates.

The judge held that the individuals had no reasonable expectation of privacy in the Twitter account information, in part, because they were notified via Twitter's privacy policy that the company may retain IP address information. As Christopher Soghoian notes, however, the policy cited by the court is from 2010; the Wikileaks individuals signed up with Twitter in 2008 under another policy. That policy, dated 2007, included this sentence: "We do not associate your IP address with any personally identifiable information to identify you personally, except in case of violation of the Terms of Service."  Not surprisingly, however, the old version also contained the following language which is typically found in online "agreements":

"This Privacy Policy may be updated from time to time for any reason; each version will apply to information collected while it was in place."

I'm not sure whether these "updated from time to time" provisions are or should be valid. In any event, it's important to note that Judge O'Grady specifically did not rule on whether the privacy policy was binding as a contract; rather, the privacy policy was used as evidence weighing in favor of finding that the individuals "voluntarily revealed their IP address information to Twitter."

In other words, while the privacy policy may or may not be binding as a "contract," it was relevant as notice. The standard in determining "reasonable expectation of privacy" under the Fourth Amendment is objective and the consideration of the "totality of the circumstances" included the privacy policy.

But does the language in the 2007 (as opposed to the 2010) policy create a reasonable expectation that the IP address information would not be released to law enforcement authorities. I don't think it does as a matter of interpretation, especially because the 2007 version specifically states that Twitter "may disclose any information to respond "to claims, legal process (including subpoenas)….to prevent or stop any illegal, unethical, or legally actionable activity, or to comply with the law."

[Nancy Kim]

From Our Far-Flung Correspondents: A New EU Sales Law on the Way?!?

Tadas Klimas, a contracts (among other things) prof in Lithuania and a friend of the blog has shared with us a link to his blog, Civitatus in which he reports on a new opt-in sales law for Europe.  His introductory content is pasted in below, but you can get the full story on his blog:

“The train has left the station.” These were the words of Viviane Reding, Vice-President and Commissioner for Justice, Fundamental Rights and Citizenship, spoken at the ECR European Contract Law Hearing held at the European Parliament in Brussels on May 3^rd, 2011 (which I attended). This is how the question of whether there will or will not be a pan-EU Contracts Code was answered. The “Commisar” was trying to convey the idea that a political decision has been made and that there indeed will be an EU Contracts Code.

Commissioner Reding did not speak with forked-train. It’s been a slow train coming, but the official proposals have now been made. In words more understandable by American standards, the bill has now (just about a month ago – October 11) been proposed and is in committee.

The proposals, including the draft legislation (code) itself, can be downloaded here:

• Proposal for a Regulation of the European Parliament and of the Council on a Common European Sales Law (includes the text of the new Sales Law)
• Impact Assessments
• Executive Summary

Here is an alternate link to the EU Sales Law

Among the highlights of the new trans-European code are these:

1. It is an opt-in code. This is the reverse of the CISG, which is opt-out.
2. It is both Business To Business and Business to Consumer.
3. It affects all cross-border trading, including online sales.
4. It is applicable to cross-border trading and is not applicable to internal (within-country, national) sales. Thus the regime it imposes is one in which consumers purchasing from a seller within the country the consumer resides in will find their contracts governed as per usual by the national law. But consumers from another EU country, if the contract so states, will find the contract (and their consumer-protection laws) governed by this new opt-in EU UCC (Art. 2) (EU Common Sales Law).
5. Supposedly this regime will lower information-costs and enhance, encourage, and expand cross-border trading.
6. And my favorite: it contains a facilitative section enabling the new code’s adoption by EU Member States for national (within-border) sales.

The rationale for the code is more or less the standard iteration in defense of such legal regimes (such as the CISG). 

[JT]

Occupy Wall Street and why it's all contracts fault....

The Occupy Wall Street movement has gained momentum as it spreads to affiliate movements across the country, including in San Diego (Usha Rodrigues has a post about the protest in Athens, GA, and Frank Pasquale has thoughtful observations about the movement in general here). As I alluded briefly in a prior post,the movement highlights some of the difficulties in mobilizing disparate individuals into collective action. You may not have thought the Occupy Wall Street movement was about contracts, but I think it is, at least in part.

Many of the problems arising from the financial crisis and the mortgage crisis (which are mentioned in the movement’s first official declaration ) originated from contracts – contracts that were hard to understand, contracts that were too long, contracts that contained aggressive and surprising terms. Contracts conferred legitimacy on transactions that later turned out to be problematic.Contracts were and are part of the problem in another way. The growing anger and frustration exhibited by the Occupiers of Wall Street stem from a general feeling of helplessness.

Contracts contribute to that feeling. Consumers have given up reading contracts – there are too many, and they are too long and convoluted. If all consumers actually read each contract they “agree” to, the economy would grind to a halt. Imagine– every time you download music, log on to Facebook, rent a car, check your bank balance. You’d never get anything done. Can you imagine if everyone who bought a house read all the paperwork that they signed? It takes an hour just to sign through all the different documents. The lender and the broker and all the various drafting parties don’t actually want you to read the documents – they just want you to sign them. (Heck ,the lenders don’t even read their own documents if the robo-signing controvery is any indication).

Some contracts scholars defend standard form contracts by stating that if the majority of consumers don’t like certain terms, they will push back. It’s the familiar, the “market will respond” argument. The assumption is that if enough consumers really don’t like terms, we will eventually hear about it. The problem is that, given the coordination problems associated with mobilizing individuals who are strangers to each other and dispersed across the country, we may not hear a clear, unified message. More troubling, we won’t hear about mass scale dissatisfaction until mass scale societal harm has already occurred. The “market will respond” argument is a regressive argument, not a progressive, improving one. The Occupy Wall Street Movement is a reaction, not a preventative movement (and David Brooks of the NYT thinks it is a weak one because of it).

But, you might ask, in a free society and in a free market,shouldn’t we respect what two parties voluntarily agree to do? To a certain extent, yes. But it depends. It depends upon the meaning of the word voluntarily. It depends upon the meaning of the word agree. And it depends upon whether (and how and how much) what the contracting parties agree to do impacts the rest of society. Contracts are the vehicle through which banks and other financial institutions carry out their business. They were the tools that lent legitimacy to socially harmful practices. The agreement of two private actors shouldn’t be enforced if it threatens the well-being of society, violates important policy principles, and cripples the economy.

[Nancy Kim]

Some Thoughts on Steve Jobs, Apple and Contracts

Steve Jobs made quite an impact on the world, rethinking the way people use technology and introducing beautifully designed, innovative products. Because this is a contracts blog, I want to discuss the interesting way his company, Apple, uses contracts in its business. Before iTunes, most music was sold to consumers on CDs. Apple is not the first or only company to license rather than sell digital music, but it is the most popular. Because of the enormous popularity of the iPod and iTunes, Apple made it acceptable to license rather than sell music - a concept that at one time seemed strange and somewhat outrageous. The way Apple uses contracts is closely tied to the nature of its innovative products and services (which meld the tangible and the digital), the way they are delivered to the customer, and Apple’s business model. Apple markets itself as more than a purveyor of technology products. Its customers don’t buy a product, they enter into a relationship. Apple reminds customers that they have a relationship, not a one time transaction, and they remind them via contracts. Apple has its customers click each time they purchase a song and each time they download an updated version of iTunes. It's mass consumer relational contracting. (Other companies may do this, too, but I can't think of one offhand that does it the way Apple does). Apple also closes the gap between offline and online contracting. When I bought my iPad not long ago, after I had paid for it, the salesperson (aka the “Genius”) had me click “I agree” to the terms of an agreement on my new iPad before he would hand it over. It made me wonder, will we see more rolling clickwraps? Will clickwraps replace paper contracts in the mass consumer setting? As products become more digital than tangible, will we see more licenses and fewer sales? (I think the answer is yes). As products incorporate more software than hardware, will they no longer be considered “goods”? What types of innovative contracting forms might we expect to confront in the future?

[NK]

Alabama's Immigration Law and the Contracts Clause

  On September 28, 2011, Judge Blackburn of the Northern District of Alabama upheld against federal challenge most of Alabama's new immigration law, proclaimed to be the "toughest in the nation" when it comes to undocumented aliens.  The case is United States v. State of Alabama and the opinion is here (Thank you, thank you, New York Times!  Why do so few organizations provide links to public legal documents?!?).

Among the challenged provisions of the law was Section 27, which bars courts from enforcing contracts with undocumented aliens, assuming the other party to the contract knows of that immigration status.  The federal government challenged this section as preempted by federal immigration laws.  Judge Blackburn spent less than a page on the topic, finding that no federal law specifically addresses the enforceability of contracts with undocumented aliens.  She therefore refused to preliminarily enjoin the enforcement of Section 27. 

Why no Contracts Clause challenge?  Even given that such claims are very difficult to win, it seems like the sort of situation where at least some consideration ought to be given to the Clause.  After all, the language of the Constitution seems to clearly prohibit states from interfering with contractual obligations.  But the Constitution does not mean what is seems to mean (anymore).  In Energy Reserves Group, Inc. v. Kansas Power & Light, the Supreme Court ruled that even if state action amounts to "substantial impairment" of private contracts, such laws can be justified if designed to address a significant and legitimate public purpose, such as remedying a broad or general social or economic problem.  Since the states are not involved in the contracts at issue, courts are generally to defer to the legislature's judgment as to the appropriateness of the chosen remedy.

[JT]

Bargaining in the News

Maybe it’s because my Contracts class is discussing unconscionability and I’ve got bargaining on my mind, but it seems that bargaining was everywhere in the news this week. Jesse Jackson, for example, seems to be calling out Capital’s One’s bargaining naughtiness when he criticizes its marketing practices aimed at vulnerable borrowers. In a different context altogether, Ohio’s governor John Kasich has waded into the collective bargaining fray. Finally, there’s this article about the increase in debit fee charges to consumers. Consumers, of course, don’t like these increases but are in a take ‘em- or- leave ‘em position given the difficulties of mobilizing disparate individuals to bargain collectively. [This article advocates the leaving 'em -- and joining a credit union-- alternative, whereas this article touches upon the problems of mobilizing disparate individuals to bargain collectively]. Super star executives are in a much different bargaining position. As this article and Jeremy's recent post points out, they can negotiate highly lucrative compensation packages , where they receive millions in severance pay even when they are essentially fired for poor performance.

[NK]

Jail time for violating a browsewrap??

In connection with a book I am currently writing on online agreements, I've been thinking a lot (perhaps too much?) about "terms of use" or "browsewrap" agreements. Law professors love to hate 'wrap agreements and bemoan the lack of assent associated with them. But to what extent are these so-called contracts actually problematic? One potential problem is that there are other laws that may interact with and exaggerate the unfairness of calling these terms "contracts." A recent op-ed by George Washington law professor Orin Kerr touches upon one such law, the Computer Fraud and Abuse Act (CFAA). The CFAA was aimed at computer hacking and makes a misdemeanor any computer use that "exceeds authorized access." That's where the lowly, sneaky browsewrap steps in. According to Kerr, "the Justice Department believes that it applies incredibly broadly to include terms of use violations". In other words, if you exceed a website's terms of use - on Facebook, this could mean you failed to keep your contact information "accurate and up-to-date"-- you have exceeded your authorization to use the site. And you haven't only breached a "contract", but you may have committed a crime...?!

[NK]

Josh Hamilton's Grand Slam as a Fun Pre-Midterm Review

Texas Rangers outfielder Josh Hamilton previously has earned media attention in some rather depressing ways, including via his own battle with drug addiction and his attempt to throw a ball to a fan that led to the fan's death.  This time, he is in the news for something that makes others--including Contracts professors--very happy.  A Texas flooring retailer recently ran a promotion promising a refund on their flooring purchase if Hamilton hit a grand slam during September.  And he did!  Click here for the story, the actual ad "as seen on TV," and some written commentary.  I think the clip serves as a fun way to review some contracts issues just prior to midterms.  My students saw partial parallels to Lefkowitz, Leonard, and even Carbolic Smoke Ball and I'm sure there are others.  Go Rangers!

[HR Anderson w/ hat tip to student Matthew Lynn]

So You Think You Can...Contract?

Many of us who start our Contracts classes with contractual formation likely are, or soon will be, discussing offers, acceptance, and the Objective Theory in class.  This recent clip from the popular reality television show, So You Think You Can Dance, may be a fun way to spice up those discussions.  I plan to use it to illustrate the difference between an offer and a mere invitation to offer but I could see using it for other concepts, too, such as the importance of context when judging whether a reasonable person would view the discussion as an offer. 

The relevant portion should begin automatically after a commercial or two.  If not, jump directly to the 26-minute mark.  The exchange is between a contestant on the show, the host of the show, and one of the judges.  The primary potential offer is one to perform in the judge's upcoming re-make of Dirty Dancing. 

[HR Anderson, with H/T to student Elisabeth Whitmire]

Purposefully Plumper Pesci Professes Promissory Estoppel in Pursuit of Producer

For anyone in need of a current case/hypo to help illustrate promissory estoppel (and perhaps the statute of frauds along with unjust enrichment), consider the latest suit filed by famous actor, Joe Pesci.  In his breach of oral contract complaint,* Pesci claims that he was promised the role of round-faced Angelo Ruggiero in a new film about famed gangster, John Gotti, to be played by John Travolta.  In reliance on that promised role, Pesci abandoned his usual diet and exercise routine and gained thirty pounds to look more like Ruggiero.  After the weight gain, producers advised Pesci that he no longer would be playing Ruggiero in exchange for the initially-promised $3 million; instead, he would be offered a lesser role (playing the man who allegedly killed Gotti) for $1 million.  Pesci alleges that the film producers were enriched because they used his established mobster-playing cache to help promote the movie and obtain funding.  The film's current producer claims that Pesci was the one who backed out of the deal after Pesci's preferred director, Nick Cassavetes, quit.  Pesci acknowledges that there was no written contract but a signed writing likely would not be required in this case.   If Pesci can't show an otherwise valid oral contract, promissory estoppel issues to ponder include...Was there an actual promise?  (Pesci points to a press conference and a website announcement as possible sources of the promise.)  Was Pesci's reliance reasonable?  Is there injustice absent enforcement of the promise?  And what exactly are his damages? 

[H.R. Anderson]

* Pages missing

Designer Leaves NASCAR for Formula One, Brings Contract Dispute Along for the Ride

Michael Waltrip of NASCAR fame (fame earned both as a driver and now as a team owner) has filed a complaint against auto designer Mike Coughlan.  The suit claims that Coughlan breached the contract by leaving his position with Waltrip's race team prior to the end of his employment contract term.  And, to make it worse, Coughlan reportedly left Waltrip's team to design cars for the Formula One team, Williams.  Given NASCAR’s reported inferiority complex with respect to the older and allegedly more complex F1 racing (i.e., a kind of racing that requires one to do more than just turn left), this departure "across the pond" was especially vexing to Waltrip.  The particular contractual terms cited include a “loyalty clause” and the duty of good faith and fair dealing.  If the contractual fight takes any dramatic turns, perhaps Sascha Baron-Cohen will reprise his role as a Formula One turned NASCAR driver in the movie version of this dispute. 

[H.R. Anderson]

A Contractual Protest: A Thread to A Can of Worms.

 It is rare that a day passes without some headline or other about the affairs of the major players in the fields of information technology (IT), Internet Business (IB) or Social Networking (SN).   The cast of players - a revolving door of usual suspects – includes Microsoft, Apple, Google, Facebook etc.  The relative harmony that once derived from their clearly differentiated activities – e.g. personal computing, online searching or social networking – is now a thing of the past.  Brittle harmony has given way to -  shades of the 1990s  - blow by blow accounts of smear tactics, strategic protests, general blogfare, and of course, court actions .  Why?  Because the players are slugging it out in the mush pit which the converging IT/IB/SN  arena has become – all for a (bigger) piece of the pie. 

The average observer might be daunted by the copious data and convoluted interrelationships typically involved.    Close contemplation of contractual details, particularly those undergirding the relentless strategizing, negotiating, and (guarded) cooperation of such parties, is clearly something the average observer does not relish.  Yet the nitty gritty of who is doing what to whom, and where, to get to the bottom of what is really going on in a dispute may not be that hard to find.  Help is found in unexpected places – even in very contracts that are dauntingly associated with such transactions.  Or more precisely, even from the angst  created by such contracts.    

There is a struggle, you see, between an industry giant, Microsoft, who is determined not to be past its prime, and an equally determined giant slayer, Google, a relative upstart that is notoriously hungry for power.   Microsoft is determined to reinvent itself.  It is trying to build on its dominant market position to expand beyond the  dated server based computing approach.  The aim is to become the leader of the emerging ‘cloud based enterprise solution revolution’.  All very well.  The thing is, however, that Google is eagerly developing competing products in the same field.  And Google is striving, mightily, to market those products.  So,  here is the rub – Google has been having a hard time persuading potential customers, a significant percentage of whom are loyal customers of Microsoft’s email and other office offerings, to make the switch.

This is why  Google cried foul, and loudly, when the U.S. govt., through the agency of the Department of the Interior (DoI), issued a request for quotations – an invitation for offers as we know – but allegedly indicated that it would not entertain offers from Google.  The DoI subsequently awarded the contract to Microsoft. 

 Google objected to not being invited to the party by filing a bid protest in the U.S. Court of Federal Claims.  In the filing, Google asserted infringements of the Competition in Contracting Act’s policy requirements  which mandated that “technology vendor neutrality as far feasibly possible” must be maintained.  Google has asked the court to enjoin the DoI from awarding the contract to Microsoft until competitive bidding has taken place.

This dispute between the parties has been anything but straightforward.  The DoI has asserted that Google was ineligible for consideration because Google’s products were not certified under the Federal Information Security Management Act (FISMA)  at the time.  But here’s the thing  - it now seems that Google had this certification – or at least for a related product, while Microsoft at the time of the award of the contract, allegedly did not.  Microsoft reportedly received the certification after the award, but this disparity is a fierce point of contention.

Google clearly understands that it has a huge task to unseat the Microsoft behemoth.  Its hopes of entering into what must be an accelerating volume of contracts required for market viability, if not market dominance, depends on a spreading domino effect.  An increasing number of smaller users will need to take their cue (to contractually adopt Google products) from the bigger fish who adopt Google’s applications.

The bigger war for market dominance is not limited to Microsoft and Google, of course.  When this slender threat of a bid protest is traced, it leads to a whole other can of worms: cut throat rivalry not only for cloud computing, but voice over IP, mobile tasking, and mobile payment also (to name a few).  But that can of worms is for another day……

 

EOA

Dances with Ambiguity

It's hard to believe that Kevin Costner never has appeared on this esteeemed blog...until now.  The contract that brings him here was between Costner and an artist involving the sale of...you can't make this stuff up...bison sculpture replicas.  Several years ago, Costner planned to build a luxury resort in South Dakota, the entrance to which would feature a field of dreams bronze bison being hunted by Native Americans (inspired, of course, by his experiences in the film Dances with Wolves).  Although the resort,The Dunbar, never materialized, the sculptures were completed and later featured by Costner as a standalone tourist site aptly named Tatanka. 

In the original agreement between Costner and the artist, Peggy Detmers, Costner was to pay Detmers $250,000 for the sculptures plus a share of the proceeds from future sales of sculpture replicas to wealthy resort visitors.  Detmers claims that she charged Costner far less than the sculptures' actual value, which she estimated to be $4 to $6 million, in anticipation of a significant number of replica sales (because, as any wealthy resort visitor knows, who wants a snow globe when you can have bison...14 of them...you know, for your yard).  Years later, when resort construction was delayed, Costner agreed to pay Detmers an additional $60,000.  The amended letter contract also stated as follows: "[I]f The Dunbar is not built within ten (10) years or the sculptures are not agreeably displayed elsewhere, I will give you 50% of the profits from the sale of the [sculputures] after I have recouped my costs...."  

In 2009, Detmers filed suit to enforce that quoted provision, i.e., to make Costner sell the sculptures and split the proceeds 50/50 with her.  Costner claimed that no sale was required because displaying the sculptures at Tatanka qualified as them being "agreeably displayed elsewhere."  Detmers claimed that she never agreed to that display location.  The court thus had to decide how to interpret the arguably ambiguous term of "agreeably displayed elsewhere."  Earlier this summer, Circuit Judge Randall Macy decided that the forced sale provision had not been triggered because Detmers had agreed, albeit passively, to have the sculptures displayed at Tatanka.  Specifically, Judge Macy stated: "[Detmers's] significant involvement in the Tatanka project and her failure to tell Costner or anyone else that she did not agree with placement at Tatanka indicate she was agreeable to the sculptures' placement at Tatanka for the long term." 

I suppose that the lesson for contract drafters is to specify what "agreeably" means or to avoid that kind of ambiguity altogether.  Drafters at least should specify how the "agreeableness" is to be recorded in order to be effective, such as "upon written consent," with or without the typical "not to be unreasonably withheld" modifier.  The other lesson is to never trust a man who thought that this movie and this movie were 'sure things."

[H.R. Anderson]

Must See TV: Hot Coffee Premieres on HBO on Monday 6/27

Trust me when I tell you that it is very difficult to get friends, family, students and acquaintances engaged in a meaningful discussion of "mandatory arbitration."  Trust me further that there is now a wonderful documentary that manages to make this and other civil justice topics interesting and engaging for everyone.  (Indeed, my viewing companion, proudly not a lawyer, turned to me at one point in the movie and whispered "didn't you write a paper about something like that?")

Last night, I was fortunate enough to invite myself via twitter get invited to a screening of Hot Coffee at HBO.  Hot Coffee is a must see documentary about the way that business interests, "tort reform," judicial elections and "mandatory arbitration" have systematically worked in concert to deny plaintiffs access to civil justice.  It is the work of the energetic and passionate director Susan Saladoff who spent 25 years as a trial lawyer before becoming a filmmaker.  The documentary is well-conceived and thought provoking.  It takes some very complex topics and organizes them and presents them through compelling personal stories.  

The title "Hot Coffee" refers to the iconic case that is ubiquitous in pop culture as a symbol of the frivolous lawsuit: the woman who sued McDonalds because she was served a coffee that was too hot.  The film starts very strong by retelling this story through interviews with the plaintiff's family.  This challenged me (and from the gasps in the theater, I suspect everyone else viewing the film) to see the case in an entirely different light.  With that strong start, the viewer is engaged and ready to hear about damage caps, judicial elections and mandatory arbitration in consumer and employment contracts.

Here's the trailer:

After the film, there was a Q&A session moderated by Jeffrey Toobin.  He appeared to receive the movie very favorably, noting that the fine print in a cell phone contract is not one of the sexy topics that CNN hires him to discuss on the evening news segments (which reminded me of this Dahlia Lithwick piece in Slate, which seemed to begrudgingly report on AT&T v Concepcion).  

Toobin did mention one frustration, which could be leveled as a critique of the film -- that it only presents one point of view.  Notably absent and/or unwilling to participate were voices from the "other side," i.e., those in favor of damage caps and mandatory arbitration.  Saladoff's response, I thought, hit the nail on the head: in so many words, she said that she wanted to tell this side of the story, and the voices in favor of these reforms already had a well-financed platform (and, indeed, overtaken the public consciousness).  Perhaps I am partial to her response because her film paints a picture in line with my world view, and I am just so thrilled to finally see an engaging and accessible presentation explaining the systematic erosion of civil justice at the behest of corporate interests.

Our students come to law school generally ignorant of or misinformed about tort reform, mandatory arbitration and many of the other topics presented in this film.  However, they do at least know of handful of cases -- OJ, Bush v Gore and, of course, the hot coffee case.  I have no doubt that this film will be used in the classroom.  It is masterfully done and captivates those uninitiated with these topics as well as those who have studied them (and even includes a few clips of interviews with George Lakoff).  Please tune in to HBO on Monday night.

[Meredith R. Miller]

A Reminder From Tucson Arizona: The Fuzzy Logic Of Snap Mental Assessments

The heartwarming recovery of Representative Gabrielle Giffords who was inexplicably shot by a clearly troubled Jared Loughner has been an upbeat staple of news reports since January.  Hopes that Rep. Giffords would be recovered sufficiently to attend the launch of the space shuttle Endeavor this April ending have been realized – she travelled to Florida for the launch.  Although the launch is briefly postponed, she was well enough to receive a visit from President Obama, who was also at the launch site with the First Lady to witness the launch.  She plans to return for the rescheduled launch.

The shooter Loughner, who was arrested at the scene and charged with murder and attempted murder, is being assessed in the meantime for his mental fitness to stand trial. His mental state will feature prominently in his trial, and not only in terms of whether he is fit to stand trial.  Amid speculation that it is all but certain that the prosecution will seek the death penalty, it is expected that Loughner will plead insanity as a defense.   Loughner’s statements and journal entries to the effect that his actions were deliberate and premeditated will make the plea of legal insanity a difficult one for him to sustain.

The emerging timeline of Loughner’s movements reveals that he made two trips to Walmart in the early hours of the day of the shooting.   It seems Loughner tried to buy some ammunition at a Walmart store - but was unsuccessful - so he went to another Walmart nearby where he purchased ammunition and a black backpack-style diaper bag.  A similar black bag, now in the possession of the FBI, was later found in a dry riverbed near Loughner's parent’s home.  Seven boxes of ammunition - the same type used in the shooting – and a receipt for the purchase of the bag were found in the bag.  The awful incident has revived calls for more robust gun controls.  The father and fiancé of Representative Gifford’s aide Gabe Zimmerman, who was killed during the shooting, have thrown their support behind renewed campaigns for more restrictive gun control laws. 

This brings me to the contractual hook.  Reports suggest that Loughner was turned away from the first Walmart by a sales clerk.  Walmart demurred later that Loughner was not turned away – that Loughner merely left the store before completing the transaction.   Does it make a difference - is it important how Loughner came to leave the first Walmart empty handed?  , Why the careful clarification by Walmart, in other words?

If the ammunition seeking Loughner was in fact turned away from one Walmart but not from the other, the two transactions invite closer scrutiny.  What did Loughner do in the first store to motivate the rejection of the store clerk?  Did Loughner behave strangely, or did the clerk merely react instinctively to Loughner’s allegedly unnerving persona?  If the clerk in one Walmart store was sufficiently spooked to deny Loughner the sale of ammunition, why didn’t the clerk in the other Walmart store do so also? Was the same behavior perceived as normal by Walmart clerk #2 – or did a determined Loughner have the presence of mind to adjust his behavior to a semblance of normalcy on his second attempt?  The point this scenario highlights, is that it can be difficult for an ordinary person, e.g. someone who is not Dr Drew, to accurately assess the mental fitness of another person to enter into a contract – yet parties to a contract are expected to make snap decisions about the mental fitness of the other to enter into the transaction they are both contemplating..

 A person suffering from a mental illness or defect is given the choice of backing out from a contract in certain circumstances.   This power of avoidance is conditioned on a on a short list of alternative contingencies, including the requirement that the other party be without knowledge of the mental defect or illness.   A seller of weapons has even more sobering reasons to be wary of the mental health of a customer than the risk of avoidance.  It is an offence to sell weapons to mentally ill persons under existing and proposed laws.  It is an offence under s.922 of the federal Gun Control Act 1968, to sell or otherwise dispose of any firearm or ammunition to any person knowing or having reasonable cause to believe that such person has been adjudicated as a mental defective or has been committed to any mental institution for example (italics mine).  While the tests and policies underlying such rules in contractual and criminal contexts are different, the fact remains that a seller may be disadvantaged in either context because he did not respond to  the strangeness of a customer,  or he failed to refuse a sale in circumstances another seller deems strange enough to warrant a refusal.

The wholesomeness of a one party’s mental capacity to contract hinges on a cognitive test or a test of volition.  If a party is unable to understand in a reasonable manner the nature and consequences of the transaction, she fails the cognitive test.  It does not matter if this inability is known to the other party or not.  Even if the other party was unaware of the cognitive disability, the disabled party can avoid the transaction.  If, on the other hand, she is unable to act in a reasonable manner in relation to the transaction, she will fail the volition test.  The results of the volition test - unlike the cognitive test – depend on what the other party knew however.   Not only must the mentally impaired party be unable to act reasonably in relation to the transaction, the other party must be aware that the mentally impaired party is unable to act reasonably before avoidance will be permitted.  The disabled party will not be able to avoid the transaction because of his impaired volition, if the other party did not have reason to know (and did not know) that the disabled party was suffering from said impaired volition.  A cognitive disability confers a broad power to avoid, while a volitional disability confers a limited power to do so.  Whether broad or narrow, the power of avoidance may terminate where the contract was made on fair terms, and the other party had no knowledge of the defect/illness if the contract has in fact been wholly or partly performed.  The power will also be terminated  if the other party had no knowledge and it was made on fair terms if the circumstances has so changed that avoidance would be unjust. 

So, it all hinges on what the other party knew, or ought to have known about the mental fitness of the mentally disabled party – yet what the assessing party knew or ought to have deduced from the circumstances may be arguable or it may be hard to pin down - as in our Walmart situation.  In the contractual context where the objective is to shield a disabled person from obligations neither properly related to nor understood, the fuzzy logic of snap capacity assessments are more  defensible.   The aim is to protect a person of ‘feeble mind’ rather than secure perfect fairness for the perfectly sane other party.    The fact that one party might assess the mentally impaired other party as perfectly sane, whereas another in that situation would or did arrive at a different conclusion is not regarded as a major problem.  “All’ that hangs on the outcome is the ability of the sane party to enforce the transaction, and a court may still rule as it sees fit in the interests of justice (provided the sane party was unaware of the other party’s disability, and the contract was made on fair terms). 

Reliance on such fuzzy logic is less defensible where a wrong assessment of mental ability may result in the commission of an offence.  This may be one reason why some state gun control laws are worded more specifically to prohibit ownership or sale to person deemed mentally unfit by court order, by confinement to a mental hospital or institution,  or where the person is deemed a danger to himself or others pursuant to an unrevoked court order.  There are however some laws that simply prohibit sale to or ownership by persons who are mentally incompetent or of unsound mind.   Others do not even reference mental incapacity at all. 

It may be ultimately decided that the Walmart clerk that sold the ammunition to Loughner had no reason to be aware of Loughner’s alleged mental impairment.  If so, the fact that another clerk refused Loughner the sale will be harmless.  If however it is determined that Loughner was so strange that a reasonable clerk would have been alerted to his mental impairment, the different outcomes in the two stores will land Walmart in trouble.  Whether because the Walmart employee was unreasonably unobservant of Loughner’s alleged mental impairment, or because Walmart did not have in place (or its employees did not observe) safeguards designed to prevent the sale of ammunition to mentally disabled persons, Walmart may get into trouble for selling weapons to an unsuitable person.   

This throws some light on why Walmart would want to clarify that an employee did not find Loughner’s behavior strange - negative inferences may be drawn from the failure of the other Walmart clerk to arrive at the same conclusion, while questions may arise about what measures Walmart has in place to guard against just that type of mishap.

E. O. Akindemowo.

Will the Real Linda Green Please Stand Up?

Important viewing:

Here is the link to the clip on the CBS site.

[Meredith R. Miller]

Killing Two Birds With One e-Bay: Boyfriends, Buyers Beware.

Reading about yet another disciplinary use of eBay, a mad girlfriend who ebayed her cheating boyfriend’s things provides food for thought about contractual expectations in relationships. 

A relationship, in pseudo contractual terms, is the interaction of two persons who, because of mutually agreeable expectations, have chosen to spend time together and are willing to perform in certain ways.  "I am willing to commit to this relationship", a prospective girlfriend might say, "because I want to have a companion for social events – a liberator from the dating jungle - and I’m attracted to you and want to get to know you better".  Marriage, the ultimate relational commitment, is thus described as a marriage contract, while actions for breach of promise to marry - aka heart balm actions - are not unheard of.  (Who on earth, you may wonder,  even thinks of suing for breach of promise to marry these days?  Evidently the few that live in a jurisdiction where the cause of action still exists, and are both extraordinarily peeved and brave enough to pursue a claim.) 

Once upon a time, the idea of an eBaying paramour would have been unthinkable.  Monogamous marital relationships were the default sixty years ago.  Faithfulness was expected ‘till death do us part’, children out of wedlock were a disgrace, and adultery was a heinous wrong.  To put it mildly, times have changed.  Marriage is not the objective of a relationship for many nowadays .  In fact, some statistics would have us believe that marriage is depressingly out of reach for some.   So what might two people be committing to – or to rephrase for the commitment phobic - what might their expectations be when people decide to ‘become an item’?  Monogamy as in a faithful, exclusive, romantic relationship with only one person at a time?  An enjoyable companionship in which compatibility rather than passion is key?  Expectations of trust and respect driving good faith efforts to abstain from all others, or an ‘open relationship’?  Symbiotic cohabitation, or merely a friendship ‘with benefits'?  The last two do not infer expectations of fidelity or exclusivity, so what was the girlfriend expecting?  This incident clearly illustrates the hellish wrath of a woman scorned.  Since the catalyst for her titillating revenge was discovering her boyfriend had been seen with other women, it is safe to infer that she expected fidelity from the guy.

So, she is furious. We don’t know if he expressly or implicitly promised to be faithful, but she clearly expected that he would be.  Likely she would assert, if asked, that he induced her to believe that he would be faithful – that is, if she was not explicitly promised faithfulness (i.e. as an express term of their relational agreement) by the guy.  However they arose, her expectations of faithfulness were disappointed.  Should her ex be allowed to get away with his relational crime – or should he be estopped from denying his obligation to be true (if any) and be accordingly punished?  Presumably she doesn’t want the guy back.  Her actions indicate that she wants to make him pay for the betrayal and she wants it to hurt.  How she goes about this is the crux of the story. The boyfriend preferred her to dress conservatively during their relationship so what does she do?  She posts scantily clad pictures of herself draped with the items in question on eBay.  Revenge and liberation in one fell swoop – so take that, ex boyfriend!

But wait a minute – who’s hurting whom?  To a more conservative eye, she cut her nose off to spite her face by baring – on a global auction site no less – her assets in a demeaning display.  Undignified perhaps, but understandable all the same?  Relationships are more often emotional affairs than business arrangements so it is to be expected that the behavior of the parties will be illogical at times.  A person braver than I might even suggest a correlation between the frequency of illogical responses and the sex (of the actor) involved - but I won’t venture into that particular minefield.  The response of the scornee in this scenario is what should be our focus.  She eBayed the scorner's clothes.  She set up a website.  She advertised the items for auction on eBay.  She linked the risqué auctions to her new website.  This drummed up traffic to her website.  Immodest yes, but maybe not so illogical after all.

Were the items in question hers to sell?  She claims to have bought most of the items.  But even if she did, surely it was with the intention of giving them to him as a gift.  If so, the clothes became his property at that point.  She did not have title to the items and had no right to dispose of them if that was the case.  She didn’t, that is, unless the relationship was based on the understanding – a sub provision of an implicit termination clause? – that in case of unfaithfulness or other just cause, all gifts given to an offending donee will revert to the affronted doner.   Her disposal of the property would be justified alternatively, if it had been abandoned by its owner.  As she reportedly locked him out by changing the locks and has been impervious – thus far - to his alleged pleas to return, the latter is unlikely on the facts.  If in her rage, she has treated someone else’s property as her own, the legal ingredients for conversion –and perhaps theft – have been satisfied.  

Will the scorner-donee-ex-boyfriend have the gumption to strike back – say by suing his scorned ex-girlfriend for the return of his property?  Might he seek damages for whatever injuries he has sustained from this now very public exacting of revenge?  In that case (if you will forgive the puns) , the shoe would be on the other foot – a suit for an intentional tort or negligence, rather than a case for breach of promise to marry (jilting).  Assuming that he chooses not to press criminal charges, that is.  But it seems the boyfriend has attempted at least one retaliatory blow – the auctions were taken down by eBay staff, allegedly at the instigation of her ex, for being too sexy.  Undeterred, the enterprising Miss re-posted the listings in the ''art'' category.  Although the ‘art’ advertised for sale is the collection of photographs showing her modelling different items (of her ex’s clothing), the ingenious gal still manages thus to accomplish her aim of profiting from, and getting rid of, her ex’s clothes.   As an incentive to buy each photograph, she offers to ‘throw in’ (or should that be ‘throw out’?) the actual item photographed as a ‘gift’.  Contractually, prospective buyers more interested in the ‘gift’ item than the photograph may be reassured in at least two ways.  Either the promise of a ‘gift’, though made before the sale, induced the sale, and for that reason may be deemed a term of the contract (i.e. ‘gift’ is a misnomer as the item is jointly supported by the consideration provided by the price paid for ‘the photograph’).  Alternatively,  the promise of the gift, though unsupported by consideration  -  and to that extent not contractually mandated – may still be enforced by means of an estoppel.  Bottom line, the girlfriend followed up her saucy baseline serve with a volley (that was ultimately met by eBay restricting the most risque pictures to the adult section). 

But she may have moved on.  It seems girlfriend has other fish to fry.  Initially motivated by anger, she is now enjoying the attention of being a guest on TV networks here and overseas.  More, she has a new business venture to think about.  "I'm realising that maybe there's something there to explore with a website where I can invite women to also share their breakup stories and maybe also give them the opportunity to sell products and things like that as well," she has reportedly said.  With careful execution, perhaps the conversion of her website into a portal for jilted lover-sellers will not create an exponentially greater liability minefield. 

Of such a budding entrepreneurial empire however, one can only caution: buyers beware – the scorners may strike back!  The Machiavellian tangles of sweet revenge reach far.

Eniola O. Akindemowo.

Return Fire! Charlie Sheen Sues Warner Bros.

Well, he did say he would sue - back when Charlie wanted to revive the show from hiatus. But then Warner Bros went and changed the game when, as the entire world probably knows by now, Warner Bros fired Charlie Sheen.  Charlie, not being the type to take such things lying down, has returned fire with a lawsuit against Warner Bros and Charles Lorre, the producer of Two and a Half Men.  

Charlie - fire-breathing, fire-fisted Charlie - is cast by his lawsuit as the victim - and a defender of the weak.  In short, the lawsuit alleges that Warner Bros. and executive producer Charles Lorre maliciously conspired to wind down Two and a Half Men (2½ M) before Charlie Sheen went on the rampage.  Sheen's suit portrays Warner Bros. as an immoral, conspiratorial, hypocritical, profit hungry betrayer, and Lorre as a fabulously wealthy, egotistical, vindictive bully. 

The lawsuit contends that Sheen's antics were not a problem previously - on the contrary, at a time when the star was at risk of being convicted for a felony punishable with imprisonment, Warner Bros is alleged to have been eager to sign Sheen for another two seasons. 

So what changed?  According to the lawsuit - in two words - Charles Lorre.  Sheen alleges a pattern of harassment, humiliation, and aggravation  against him by Lorre over a period of years (Lorre's 'vanity cards' are referred to in the suit as an example of this).  The suit alleges that Warner Bros. is utterly loyal to Lorre because of the close, lucrative working relationship between Lorre and Warner Bros - Lorre is said to have an office on the Warner Bros lot, and to have three new series, (for which his cut is allegedly higher than what he gets for 2½ M) under development. Stung by Sheen's radio and TV blitz that was supposedly provoked by the said harassment, Lorre allegedly decided to no longer work with Sheen and from the point onward refused to provide new scripts in breach of his contractual obligations.  The suit alleges this is why Sheen was turned away from the set of 2½ M although he had undergone private rehab (that allegedly involved the services of an expert recommended by Lorre) and was ready, willing, and able to get to work.  Sheen further alleges that the line that he was fired for being incapable to fulfil his duties is a trumped up story.  Sheen strongly contends that he is fit and well, sober (as indicated by recently publicized drug test results), and that he is and always has been ready, willing and able to work.  Warner Brothers, in other words, is accused of scheming with Lorre to maliciously suspend the show, and then wrongfully terminate Sheen's contract for no just cause. 

Warner Bros is portrayed as fraudulent, immoral and hypocritical for allegedly pretending to fire Sheen for reasons of moral turpitude when, the suit alleges, it eagerly courted Sheen for the renewal of his contract after he had been charged with a felony and was facing jail time.  Warner Bros is alleged to have reassured Sheen that their contractual relationship would not be jeopardized so long as Sheen's conviction and sentence did not interfere with his recording schedule.  Warner Bros is also portrayed as mercenary and merciless for firing Sheen instead of accommodating him, when he was alleged to be suffering from certain physical and mental illnesses (which ailments Sheen denies in any event).  The portrayal of Sheen as the victim continues through mention of Lorre's "vanity cards" as a deliberate attempt to harass, humiliate and damage Sheen, through to mention of the incident in which Sheen was turned away from the Warner lot.

The lawsuit recites a litany of woes including breach of express terms, anticipatory breach, breach of good faith and fair dealing, breach of duty to a third party beneficiary, intentional interference with rights, interference with prospective economic advantage, frustration of common purposes, disappointment of reasonable expectations and loss of intangible opportunities (continuation as the lead in a star series, and the opportunity to attract endorsements).  Employment discrimination makes an appearance, as well as claims for unpaid wages on behalf of himself and the cast and crew of 2½ M.  The suit seeks compensatory, punitive and exemplary damages, as well as attorneys fees.

Warner Bros' termination letter, and Sheen's lawsuit present two alternative universes in which an innocent plaintiff is utterly wronged by a deliberate defendant.  Given the impression created by Sheen's seemingly erratic behavior in recent times, Warner Bros is seen by some as having a strong case - if indeed it did terminate Sheen for incapacity and his blistering radio and TV rampage.   Warner Bros seeks to portray those events as the last straw that led to a justifiable termination, following evidence of an uncured incapacity or serious medical condition, (a terminable event in Sheen's contract if lasting for ten or more consecutive days, or more than fifteen days in the aggregate over any single production year).  Newspaper accounts seem to suggest that Sheen may have exceeded this allowance, but I wouldn't put my money on Warner Bros just yet.

Regardless of what has been decided in the court of public opinion, incapacity or a serious health (read mental) illness on the part of Sheen has not been proved yet.   If Charlie did exceed the number of incapacitated or sick days permitted, there still may be room for a waiver argument.  If Warner Bros truly sought Sheen out for renew his contract after he was charged with a felony, and further, reassured him that a conviction and jail time would not jeopardize their working relationship, Warner Bros may have waived the moral clause (subject to public policy concerns).   Those actions if proved would also undermine the justifiability of terminating his contract on grounds of moral turpitude (was he allowed to stay in character off set?).  Then there is the question of whether Sheen was terminated because Lorre felt it would be immoral to be a part of Sheen's alleged meltdown, rather than because of Lorre's allegedly egotistical, malicious wishes.  Lorre allegedly has a history of personality clashes with stars he has worked with.

Of course, the whole issue of arbitration still has to be decided.  Warner Bros insists that the contract requires the matter to be arbitrated. Team Sheen has made it clear ,by filing the lawsuit, that it does not share that opinion.  Prepare for a rumble in the Tinseltown jungle.  In the meantime, Charlie still has the (literary) Midas touch.....

Eniola O. Akindemowo.