Monday, December 8, 2014
Following up on Myanna Dellinger's post from last week, we noticed this story about Airbnb and Uber. Both companies are leaders of the so-called new sharing economy, but what they really love to share (unequally) is risk. The article explains how insurance works for both companies, and the clear message is: it isn't clear that it will, at least not for the Uber drivers or people who use Airbnb to rent out their homes or apartments for days or weeks at a time. Actually, the article has very little to say about Uber, which doesn't really share risk at all -- it tells its drivers to self-insure, and then the drivers run into trouble (if they run into things) because their insurance does not cover commercial activities.
According to the Times article, regular homeowners' insureance will not cover Airbnb renters because most standard homeowners' insurance policies do not cover harms caused by commercial activities. Airbnb thus has taken out a secondary insurance policy that will cover up to $1 million in liability for the renters who use its site, and Airbnb is offering this policy to its users for free. For reasons that are not really clear in the article, its author Ron Lieber suggests that Airbnb might not really provide insurance to its renters. He points to Airbnb's checkered history of encouraging renters to ignore local ordinances and not being there for its renters who then ran afoul of the law. He suggests that Airbnb's secondary insruance scheme might not cover the sorts of liabilities that renters might face, and it is clear that some primary homeowners' policies would also exclude liabilities arising out of commercial activiities.
And, as long as we are piling on Uber, Saturday's New York Times also featured an opinion piece by Joe Nocera. According to Nocera, it is impossible to reach Uber by phone because, according to Nocera, Uber says having a phone center or customer service line is not in Uber's business model. If you try to call the listing for Uber in New York City, you get another company, über, a New York design firm. The owner of über claims that she fields between 1 and 10 calls a day from Uber customers seeking assistance. She has even had to go to court to explain to the judge that the plaintiff sued the wrong Uber, or the wrong über.
Friday, December 5, 2014
In today’s “sharing economy,” more and more private individuals attempt to earn some (additional) money in untraditional ways such as selling various things on eBay, driving cars for alternative passenger transportation services such as Uber and Lyft, and providing lodging in private homes on sites such as airbnb. Not only do these services raise many regulatory, licensing, insurance zoning and other issues, they also present a real risk to many hopeful 1099 workers who – as the relevant companies themselves – can vastly misjudge the potential of new attempted products or services.
Take, for example, Lyft drivers. In May, the shared ride company introduced luxury rides via its Lyft Plus program. At least in San Francisco, the drivers had to pay $34,000 out of their own pockets for the large, “loaded” Ford Explorers required by Lyft for drivers to participate in the program. The idea was that passengers would pay twice the normal Lynx rate to get the extra space and perceived luxury of being whisked around town in a large SUV. A bit behind the curve, you think? Indeed. The program was an instantaneous fiasco in San Francisco (the company still advertises the program, but at “only” 1.5 times the price of a regular ride and touting the program as having space enough for six people). Soon, drivers were back to simply getting regular rides– often just at $5 or $6 – just to stay busy. This is obviously not viable in a city with expensive gasoline and cars that get only around $14 miles per gallon, not to mention the purchase price of the new SUVs.
Responding to drivers’ initial concerns, Lyft had promised that they should “not worry about demand, we have that covered.” Realizing that many of its drivers were upset about being stuck with a huge, new gas guzzler without a realistic return on investment, Lyft has offered their Plus drivers help selling the SUVs or a $10,000 bonus… subject to income tax, no less. None of these options, of course, will bring the drivers back to the pre-contractual position. Some drivers admitted to having borrowed money from family members, selling existing cars, even “forgoing other job opportunities for the chance to make more money with Lyft Plus.”
A sad story all the way around. Companies are continually trying to introduce new products and services to find the next “big thing.” This, of course, is laudable, but not so much so when they seemingly cross the line and make unfounded promises to the less savvy or financially strong. Of course, this also does not mean that workers or customers should not exercise a hefty dose of “caveat emptor” in connections such as this, but it is a somewhat concerning aspect of today’s sharing economy that failed product launches can simply be shared with “smaller fish” with less bargaining power and, apparently, a dangerously high risk-willingness bordering desperation in trying to make a dollar in these financially tough times. Whether in this case, the promise that the demand was “covered” could be a contractual misrepresentation or whether it was simply puffery is another story best left to another forum.
Friday, October 31, 2014
A few weeks ago, we blogged here about how some businesses may pay customers to remove negative reviews from sites such as TripAdvisor.
The blog raised the question of just how reliable online reviews are given this practice and, potentially, the business itself (or friends/family) posting numerous positive reviews, thus making for an entirely fake overall review.
Here’s a twist on that: Yelp will actually remove posts without notifying either the reviewed business or the review poster if the latter has not posted enough other reviews on Yelp. Of course, Yelp decides just how many other reviews are “enough.”
This happened recently to my husband, who is an extremely busy IT professional, but who nevertheless got such a good experience from a small local business that he took the time to post a for him rare review of the business with pictures of the product we had bought. A few days later, the business owner contacted him to ask why he had taken the review down again. He had not, but Yelp had for the above reason.
Of course, Yelp probably wants to avoid the occasional rage posting or an overly rosy review. However, the above practice seems unethical and unreasonable. Review sites will by nature have both good and bad reviews. Yelp has chosen to believe that if a person only posts one thing, it must by definition by unreliable as being too far on either end of the spectrum. However, the truth of the matter is that a lot of busy professionals do not have the time for or interest in posting a large amount of reviews. That, of course, does not make an occasional review unreliable, perhaps quite the opposite: if you don’t post a lot of views, the ones you do must reflect truly good or bad experiences.
Not only does Yelp waste reviewer’s time like this, but it does not even explain this policy on its guidelines section of its website.
A healthy dose of skepticism towards review websites seems warranted, which probably does not surprise too many of us.
Monday, October 20, 2014
Class action lawsuits can be a great way for consumers to obtain much necessary leverage against potentially overreaching corporations in ways that would have been impossible without this legal vehicle. But they can also resemble mere litigiousness based on claims that, to laypeople at least, might simply seem silly. Decide for yourself where on this spectrum the recent settlement between Red Bull and a class of consumers falls. The background is as follows:
The energy drink Red Bull contains so much sugar and caffeine that it can probably help keep many a sleepy law professor and law student alert enough to get an immediate and urgent job done. I admit that I have personally enjoyed the drink a few times in the past, but cannot even drink an entire can without my heart simply beating too fast (so I don’t).
Red Bull’s marketing efforts promised consumers a “boost, “wings,” and “improved concentration and reaction speeds.” One consumer alleges in the class action suit that he “had been drinking the product since 2002, but had seen no improvement in his athletic performance.”
It strikes me as being a bad idea to pin one’s hopes on a mere energy drink to improve one’s athletic performance. These types of energy drinks seem to be geared much more towards a temporary sugar high than anything else. At any rate, if the drink doesn’t help, why continue drinking it for another 12 years?
Nonetheless, a group of plaintiffs filed claim asserting breach of express warranty, unjust enrichment, and violations of various states’ consumer protection statutes. The consumers claim that Red Bull’s deceptive conduct and practices mean makes the company’s advertising and marketing more than just “puffery,” but instead deceptive and fraudulent and thus actionable. The company of course denies this, but has chosen to settle the lawsuit “to avoid the cost and distraction of litigation.”
To me, this case seems to be more along the lines of Leonard v. Pepsico than a more viable claim. Having said that, I am of course not in favor of any type of false and misleading corporate claims for mere profit reasons, but a healthy dose of skepticism by consumers is also warranted.
Friday, October 17, 2014
The Alliance for Justice has released a documentary on forced arbitration called Lost in the Fine Print. It's very well-done, highly watchable (meaning your students will stay awake and off Facebook during a viewing), and educational. I recently screened the film during a special session for my Contracts and Advanced Contracts students. It's only about 20 or so minutes and afterward, we had a lively discussion about the pros and cons of arbitration. We discussed the different purposes of arbitration and the pros and cons of arbitration where the parties are both businesses and where one party is a business and the other a consumer. Many of the students had not heard about arbitration and didn't know what it was. Many of those who did know about arbitration didn't know about mandatory arbitration or how the process worked. Several were concerned about the due process aspects. They understood the benefits of arbitration for businesses, but also the problems created by lack of transparency in the process. I thought it was a very nice way to kick start a lively discussion about unconscionability, public policy concerns, economics and the effect of legislation on contract law/case law.
I think it's important for law students to know what arbitration is and it doesn't fit in easily into a typical contracts or civil procedure class so I'm afraid it often goes untaught. The website also has pointers and ideas on how to organize a screening and discussion questions.
Tuesday, October 14, 2014
Jimmy John's, a sandwich chain that frankly I had never heard of but which has over 2,000 franchise locations, apparently makes its employees sign pretty extensive confidentiality and non-compete agreements , as reported by Bob Sullivan and this Huffington Post article. It's not clear to me what trade secrets are involved in making sandwiches, although I am a big fan of more transparency when it comes to what goes in my food and how it's made. As Bob Sullivan points out, in this economy, employment-related agreements for most employees are typically adhesion contracts. Making workers sign non-competes to get a job makes it much harder for them to get their next job. In this case, the employee is prohibited from working for two years at any place that makes 10% of its revenue from any sandwich-type product (broadly defined to include wraps and pitas) that is within 3 miles of any Jimmy Johns location. Given that there are 2,000 such locations, it could make it difficult for some food industry workers to find other jobs.
Monday, October 6, 2014
Conversely, given the above and similar confusion, why in the world wouldn’t companies simply use an “I agree” box to be on the safe side? Even after the case came out, the Barnes and Noble website does, granted, not feature its “TOS” hyperlink as conspicuously as other links on its website and certainly not as obviously as one would have thought the company would have learned to do after the case (see very bottom left-hand corner of website).
What is more, normally a failure to read a contract before agreeing to its terms does not relieve a party of its obligations under the contract. In the case, however, the court said that in online cases, “the onus must be on website owners to put users on notice of the terms to which they wish to bind consumers … they cannot be expected to ferret out hyperlinks to terms and conditions to which they have no reason to suspect they will be bound.” This is similar to a case we blogged about here.
However, it would probably be hard to find an online shopper in today’s world who would truly not expect that somewhere on the website, there is likely a link with terms that the corporation will seek to enforce. The duty to read should arguably be extended to reading websites carefully as well. Another medium is at stake than the paper contracts of yesteryear, but that doesn’t necessarily change the contents. But that is not the law in the Ninth Circuit as it stands today, as evidenced by this case, which unfortunately fails to clarify exactly what the courts think would be enough to constitute constructive notice. So for now, “something more” is the standard. Perhaps this is an issue of “millenials” versus a slightly older generation to which some of the judges deciding these cases belong.
Monday, September 29, 2014
The NYT had an article about e-cigarette label warnings today that was eerily appropriate given our symposium on Omri Ben-Shahar and Carl Schneider's book, More Than You Wanted to Know: The Failure of Mandated Disclosure. The reporter must have been following our blog symposium and seems to have come up with an example that supports the arguments made by Ben-Shahar and Schneider. The article explains how big tobacco companies have been putting warning labels on their e-cigarette packages that are more extensive than those on their tobacco cigarettes. There are several possible explanations for why they are doing this, ranging from the least cynical (they want to be good corporate citizens) to the more cynical (they are trying to set up their smaller e-cigarette competitors for later regulation, possibly reduce demand for e-cigs to boost sales of tobacco cigs, and protect themselves from liability).
I tend to be in the more cynical camp. Big tobacco companies are both attempting to protect themselves from liability by setting forth as many potential dangers of their product as they can, and they are positioning e-cigarettes as "just as" dangerous, if not more, than plain old tobacco cigarettes. The article notes something that readers of the book and blog already know - the disclosures have little effect on consumer purchasing decisions because nobody reads them. The strategy of big tobacco supports the arguments made by Ben Shahar and Schneider that disclosure hurts rather than helps consumers except there's one crucial difference - the companies are putting these extensive disclosures on the labels themselves. They are not mandated. By voluntarily disclosing the harms of e-cigs, big tobacco companies both protect themselves from liability and avert regulation. Doing away with mandated disclosure wouldn't prevent this kind of strategic selective disclosure --selective and strategic in the sense that these companies are only forthcoming with certain products and with certain types of disclosure. It's revealing that one of the companies claiming that e-cigarettes warrant more extensive disclosure than their tobacco counterparts is RJ Reynolds, which succesfully sued the FDA to prevent mandated graphic warnings on cigarette packages.
So - the battle about disclosure continues to rage....
Monday, September 15, 2014
Last week, I was sitting in a waiting room while awaiting an oil change. CNN was on (too loudly and inescapably for my tastes, but I know my tastes are idiosyncratic). In urgent tones, the anchors repeatedly warned us that they had disturbing and graphic video that we might not want to watch. And then they played it. And then they played it again. They played it at actual speed; they played it in slow motion. They dissected it and discussed it, with experts and authorities, between commercial breaks and digressions into other "news," for the entire time I waited for the mechanics to finish with my car. It took over an hour, but that's another story . . .
The video showed a now-former NFL player hit a woman in an elevator, knocking her unconscious. The woman was his fiancee, Janay Palmer, and she is now his wife. What are we to conclude based on the grainy images that we watch because we can't bring ourselves to look away? My first conclusion is that Janay Palmer would not want us to be watching. My more tentative conclusion would be that every time we watch that video, we add to her humiliation and degradation.
At what point did Ms. Palmer give her consent to be videotaped, and at what point did she give consent to have this videotape used in this manner? Let's assume that the surveillance video had a useful purpose -- policing the premises to create a record in case a crime was committed. Let's also assume that we all are aware that when we are in public spaces, we know that video cameras might be present. If this video tape were shared with the police and used to prosecute a criminal, I think there would be strong arguments that Ms. Palmer gave implicit consent for the use of the surveillance video for such purposes. But how did the tape get to TMZ and then on to CNN? Did somebody profit from trafficking in the market for mass voyeurism?
It may be that we think that her consent is not required. We all know that we can be digitally recorded whenever we appear in public. That's just life in the big city in the 21st century. But perhaps we think that because we suffer from heuristic biases and believe that we and people we care about will never end up being the one being shown degraded and humiliated over and over again on national television and the Internet. Perhaps if we were less blinkered by such biases we would not ask whether Ms. Palmer has a right not to be associated with those grainy elevator-camera images. We would ask whether we have any right to view them.
Thursday, September 11, 2014
This is big - Governor Jerry Brown just signed a bill into law that would prohibit non-disparagement clauses in consumer contracts. The law states that contracts between a consumer and business for the "sale or lease of consumer goods or services" may not include a provision waiving a consumer's right to make statements about the business. The section is unwaivable. Furthermore, it is "unlawful" to threaten to enforce a non-disparagement clause. Civil penalties for violation of the law range from up to $2500 for a first violation to $5000 for each subsequent violations. (Violations seem to be based upon actions brought by a consumer or governmental authority, like a city attorney. They are not defined as each formation of a contract!) Furthermore, intentional or willful violations of the law subject the violator to a civil penalty of up to $10,000.
We've written about the dangers of non-disparagement clauses on this blog in the past. It's nice that one state (my home state, no less!) is taking some action. Will we see a California effect as other states follow the Golden State's lead? As I've said before, those non-disparagement clauses aren't such a good idea- now would be a good time for businesses to clean up their contracts.
Wednesday, September 10, 2014
By Myanna Dellinger
Craigslist has decided to crack down on companies that use data from its websites to generate ads on competing websites.
Technically, this can be and is done by various software programs (“spiders, “crawlers,” “scrapers” and the like) that look through craigslist and automatically cull information that can be reposted outside the Craigslist sites.
Courts broadly uphold liquidated damages clauses as long as they are not punitive in nature. Some of the factors that play into this rule is whether actual damages would be difficult to calculate after the breach occurs and whether they are unreasonably large.
With today’s many links to links to links, cross postings and machines retrieving data and using it for various purposes (not only commercial ones), contractual damages calculations may be too difficult and, for a court of law, too timeconsuming to be worth the judicial hassle. Liquidated damages are known to, among other things, present greater judicial efficiencies, which is very relevant in these kinds of cases. Perhaps Contracts Law needs to move towards an even broader recognition of such clauses and not be so concerned with the potential punitive aspect, at least as regards the “difficulty in calculation” aspect of the rule. After all, damages also serve a deterrent function. Sophisticated businesses operating programs specifically designed to retrieve data from other companies’ websites should - and logically must, in 2014 - be said to be on notice that they may be violating contractual agreements if they in effect just lift data from others without paying for it and without getting a specific permission to do so.
And what about consumer rights? If a person for some reason only wants his or her information posted on one particular site, why should it be possible for other companies to override that decision and post the information on other sites as well?
One thing is unavoidable technological change. Quite another is violating reasonable consumer and corporate expectations. Some measure of “stick” seems to be in order here.
Monday, September 8, 2014
In our first post about the Salaita case, we lamented how few posts really wrestled with the contractual (or promissory estoppel) issues in the case. Professor Kar’s post is the most detailed investigation of the contractual issues to appear to date. We also queried whether Salaita's potential constitutional claims against the University of Illinois might turn on the question of whether or not he had a contract with that institution, which is also the institution at which Professor Kar (pictured, at right) teaches. Kar notes:
Critics of the Chancellor’s decision argue that, even if there was no contract, Salaita’s rights to academic freedom vis-à-vis the University of Illinois should apply with equal force at the hiring as at the firing stage.
Professor Kar seems to disagree. He does not rule out entirely the possibility of constitutional and academic freedom claims in the absence of a contract, but he does note that "the existence of a contract should change the nature of the underlying arguments on both sides of this case."
Peofessor Kar's analysis is both passionate, in dealing with an issue that is creating genuine anguish at his institution, and dispassionate, in treating the Salaita case as a forum for the elaboration of his theory of contract law as empowerment. Based on the publicly-available facts, Professor Kar thinks Salaita's contractual claims are quite strong. As he puts it, "If the publicly known facts are all there is to know about this case, then I believe there very likely was a contract in this case, and that it may well have been breached." This is so because (in short), Salaita's offer letter incorporated by reference the American Association of University Professors' (AAUP) principles of academic freedom, and the AAUP interprets those principles to require (at least) warnings hearings before someone in Salaita's position can have his offer letter revoked. At this point, Professor Kar argues, his view of contract as empowerment becomes relevant to the analysis:
The power of the marketplace—in both academic and non-academic contexts—depends on parties’ capacities to make commitments that have certain objective elements to them. In this particular case, this means that the condition of Board of Trustee approval gave the Board some authority to refuse Salaita’s appointment—but not necessarily the authority it subjectively believes it has. If the Board’s unwillingness to approve this appointment reflects an undisclosed and idiosyncratic understanding of its authority, which diverges too sharply from the shared understandings of the national academic community, then there is likely a contract here. And it may well have been breached.
Professor Kar then proceeds to a discussion of the way out for the University of Illinois, which probably would involve a retreat. If the facts are as Professor Kar believes them to be, the Chancellor should "admit that the Salaita decision was in error and state that this matter is—properly speaking—outside of her hands."
I do not disagree with Professor Kar's analysis but I would like to push him on one point that I think is vital in this case and in his theory of empowerment generally. As a normative theory, I find Professor Kar's theory attractive, but I wonder about its applicability to situations of grossly unequal bargaining power, and I believe the Salaita case is such a situation. Professor Kar takes up this issue in earnest at the end of the second part of his work on contract as empowerment On page 73, Professor Kar acknowledges that parties "rarely enter into contracts from perfectly equal bargaining positions" and he notes that, "[i]t would therefore be significantly disempowering if parties were only bound by contracts negotiated in these circumstances."
But parties are routinely bound in circumstances when they have no real bargaining power. In such circumstances, even if Professor Kar is right that contracts law ought to be about empowerment, much of contract law (and this point has been made at great length by Peggy Radin, Nancy Kim, Oren Bar-Gill and others), is currently extremely disempowering for ordinary consumers and even for small businesses when (as in Italian Colors) they have to contract with corporate behemoths.
Professor Kar's assessment of Salaita's contractual claims turns on communal understandings of the contractual obligations that arise in such circumstances:
The University of Illinois is part of a much larger academic community, which extends well beyond the confines of Illinois. Its contractual interactions with other members of this community will thus be subjected to some tests for consistency with national understandings of how these interactions typically work. This includes national understandings about the appropriate relationship between government-appointed entities, like the Board of Trustees, and faculty decisions about hiring at academic institutions that aim to pursue knowledge impartially and in the absence of political influence.
As the conversation that has been taking place on the blogosphere thus far suggests, there may be no national consensus on the subject. Some contracts scholars will agree with Professor Kar; others, like Dave Hoffman, think that Salaita's contractual and promissory estoppel claims are weak, and they are weak precisely because Salaita lacked the bargaining power to protect himself. And if Salaita's case were to go before an adjudicatory body, it will not be decided based on whether contracts ought to be empowering but on whether the already empowered University of Illinois can escape any contractual obligation that might empower Professor Salaita.
Monday, August 25, 2014
As Jeremy Telman previously noted, the unhiring of Steven Salaita has caused quite a stir in academic circles. There was even an article in the Chronicle of Higher Education briefly discussing the contractual issues, which included the arguments made by Prof. Michael Dorf and Prof. David Hoffman. I think they both have good arguments but I tend to think this is a real contract and not an issue of promissory estoppel. The reason I believe this has to do with what constitutes a "reasonable interpretation" under these circumstances. I think both parties intended a contract and a "reasonable person" standing in the shoes of Salaita would have believed there was an offer. The offer was clearly accepted. What about the issue regarding final Board approval? Does that make his belief there was an offer - which he accepted - unreasonable? I don't think so given the norms surrounding this which essentially act as gap fillers and the way the parties acted both before and after the offer was accepted. I think the best interpretation - really, the only reasonable one given the hiring practices in academia - is that the Board approval was a rubber stamp but one that could be withheld if the hired party did something unexpected, like commit a crime. In other words, I think there was an offer that was accepted and that the discretionary authority of the board to approve his appointment was subject to the duty of good faith and fair dealing - i.e. the Board would only withhold approval for good cause. I don't think this was a conditional offer - the language would have to be much more explicit than it seemed to be and to interpret it that way would constitute a forfeiture (which courts don't like) - and yes, I considered whether it could be a condition to the effectiveness of a contract. That question caused me some angst but I still don't think it was given the hiring norms in general, and the way the parties acted.
There was, however, an implied term in the contract that Salaita would not do anything or that no information would come out that would change the nature of the bargain for the university. For example, if it turned out that he didn't really have a PhD or that he plagiarized some of his work, that would be grounds for the Board to refuse to approve his appointment. In that case, the Board could refuse to approve his hiring without breaching its good faith obligation.
The real dispute here is whether Salaita's tweets constituted a breach of that implied term (i.e. did it undermine the bargain that the university thought it was getting?) I think that's really what the disagreement in the academic community is about and why the real contractual issue has to do with interpretation - and the meaning of academic freedom.
Wednesday, August 6, 2014
Friday, July 18, 2014
By Myanna Dellinger
A woman owes $20 to Kohl’s on a credit card. The debt collector allegedly started to “harass” the woman over the debt, calling her cell phone up to 22 times per week as early as 6 a.m. and occasionally after midnight. What would a reasonable customer do? Probably pay the debt, which the woman admits was only a “measly $20.” What did this woman do? Not to pay the small debt, telling the caller that they had “the wrong number,” and follow the great American tradition of filing suit, alleging violations of the 1991 Telephone Consumer Protection Act which, among other things, makes it illegal to call cell phones using auto dialers or prerecorded voices without the recipient’s consent.
Consumer protection rules also prohibit collection agencies from calling before 8 a.m. and after 9 p.m., calling multiple times during one day, leaving voicemail messages at a work number, or continuing to call a work phone number if told not to.
Last year, Bank of America agreed to pay $32 million to settle claims relating to allegations of illegally using robo-debt collectors. Discover also settled a claim alleging that they violated the rules by calling people’s cell phones without their consent. Just recently, a man’s recorded 20-minute call to Comcast pleading with their representative to cancel his cable and internet service went viral online.
The legal moral of these stories is that companies are not and should, of course, not be allowed to harass anyone to collect on debt owed to them or refuse to cancel services no longer wanted. However, what about companies such as Kohl’s who are presumably owed very large amounts of money although in the form of many small debts? Is it reasonable that customers such as the above can do what she admits doing, simply saying “screw it” to the company and in fact reverse the roles of debtor and creditor by hoping for a settlement via a lawsuit on a questionable background? Surely not.
I once owned a small company and can attest to the difficulty of collecting on debts even with extensive accurate documentation. The only way my debt collecting service or myself were able to collect many outstanding amounts was precisely to make repeat requests and reminders (although, of course, in a professional manner). As a matter of principle, customers should not be able to get away with simply choosing not to pay for services or products they have ordered, even if the outstanding amounts are small. If companies have followed the law, perhaps time has come for them to refuse settling to once again re-establish the roles of debtor and creditor. This, one could hope, would lead irresponsible consumers to live up to their financial obligations, as must the rest of society.
Wednesday, July 16, 2014
It's been hard for me to avert my eyes from the train wreck happening at American Apparel. Yes, I heard the rumors about the shocking behavior of its former CEO, but the revelations of some of the past accusations by former employees are news to me. But, as Steven Davidoff Solomon points out in today's NYT, it's not surprising that the public didn't hear about the most egregious employee claims. American Apparel required all its employees to sign agreements containing arbitration clauses. Davidoff Solomon writes:
"The purpose of these clauses was clear: to ensure that any dispute was kept quiet and protect the company from excessive damages. It certainly didn’t appear to benefit employees.
American Apparel required that the entire proceeding — including the outcome — be kept confidential. Employees were also contractually barred from disparaging or otherwise say anything bad about Mr. Charney or American Apparel. As if this were not enough, employees also were required to agree not to speak to the news media without the approval of American Apparel."
It wasn't just employees - models had to sign egregious, one-sided contracts, too. These contracts also contained arbitration clauses and very broadly worded non-disparagement clauses.
As Davidoff Solomon notes, American Apparel's board could ignore their CEO's misconduct because there was not much public outcry about it, and there was not much public outcry because the employees and models who brought claims, couldn't discuss what happened to them - their contracts prohibited it. My guess is that these "contracts" were also "at will."
All from a company whose public image was based, at least in part, on fair pay for workers.
Tuesday, July 15, 2014
By Myanna Dellinger
The city of Berkeley, California, may become the first in the nation to require that gas stations affix warning stickers to gas pump handles warning consumers of the many recognized dangers of climate change. The stickers would read:
Global Warming Alert! Burning Gasoline Emits CO2
The City of Berkeley Cares About Global Warming
The state of California has determined that global warming caused by CO2 emissions poses a serious threat to the economic well-being, public health, natural resources, and the environment of California. To be part of the solution, go to www.sustainableberkeley.com
Consumers not only in California, but worldwide are familiar with similar warnings about the dangers of tobacco. The idea with the gas pump stickers is to “gently raise awareness” of the greenhouse gas impacts and the fact that consumers have alternatives. In their book “Nudge,” Richard Thaler and Cass Sunstein addressed the potential effectiveness of fairly subtly encouraging individual persons to act in societally or personally improved ways instead of using more negative enforcement methods such as telling people what not to do. Gas pump stickers would be an example of such a “nudge.”
But is that enough? World scientists have agreed that we must limit temperature increases to approximately 2° C to avoid dangerous climate change. The problem is that we are already headed towards a no less than 5° C increase. To stop this tend, we must reduce greenhouse gas emissions by 80% or more (targets vary somewhat) by 2050. Stickers with nudges are great, but in all likelihood, the world will need a whole lot more than that to reach the goal of curbing potentially catastrophic weather-related calamities.
Of course, the oil and gas industry opposes the Berkeley idea. The Western States Petroleum Association claimsthat the labels would “compel speech in violation of the 1st Amendment” and that “far less restrictive means exist to disseminate this information to the public without imposing onerous restrictions on businesses.” Why this type of sticker would, in contrast to, for example, labels on cigarette packaging, be so “onerous” and “restrictive” is not clear. Given the extent of available knowledge of climate change and its potential catastrophic effects on people and our natural environment, the industry is very much behind the curve in hoping for “less restrictive means.” More restrictive means than labels on dangerous products are arguably needed. Even more behind the curve is the Association’s claim that the information on the stickers is merely “opinion” that should not be “accorded the status of ‘fact’”. The Berkeley city attorney has vetted the potential ordinance and found the proposed language to be not only sufficiently narrow, but also to have been adopted by California citizens as the official policy of the state.
It seems that instead of facing reality, the oil and gas industry would rather keep consumers in the dark and force them to adopt or continue self-destructive habits. That didn’t work in the case of cigarettes and likely will not in this case either. We are a free country and can, within limits, buy and sell what we want to. But there are and should be restrictions. In this case, the “restriction” is actually not one at all; it is simply a matter of publishing facts. Surely, in America in 2014, no one can seriously dispute the desirability of doing that.
The Berkeley City Council is expected to address the issue in September.
Wednesday, July 9, 2014
By Myanna Dellinger
Recently, I blogged here on Aereo’s attempt to provide inexpensive TV programming to consumers by capturing and rebroadcasting cable TV operators’ products without paying the large fees charged by those operators. The technology is complex, but at bottom, Aereo argued that they were not breaking copyright laws because they merely enabled consumers to capture TV that was available over airwaves and via cloud technology anyway.
In the recent narrow 6-3 Supreme Court ruling, the Courts said that Aereo was “substantially similar” to a cable TV company since it sold a service that enabled subscribers to watch copyrighted TV programs shortly after they were broadcast by the cable companies. The Court found that “Aereo performs petitioners’ works publicly,” which violates the Copyright Act. The fact that Aereo uses slightly different technology than the cable companies does not make a “critical difference,” said the Court. Since the ruling, Aereo has suspended its operations and posted a message on its website that calls the Court’s outcome "a massive setback to consumers."
Whether or not the Supreme Court is legally right in this case is debatable, but it at least seems to be behind the technological curve. Of course the cable TV companies resisted Aereo’s services just as IBM did not predict the need for very many personal computers, Kodak failed to adjust quickly enough to the digital camera craze, music companies initially resisted digital files and online streaming of songs. But if companies want to survive in these technologically advanced times, it clearly does not make sense to resist technological changes. They should embrace not only technology, but also, in a free market, competition so long as, of course, no laws are violated. We also do not use typewriters anymore simply to protect the status quo of the companies that made them.
It is remarkable how much cable companies attempt to resist the fact that many, if not most, of us simply do not have time to watch hundreds of TV stations and thus should not have to buy huge, expensive package solutions. Not one of the traditional cable TV companies seem to consider the business advantage of offering more individualized solutions, which is technologically possible today. Instead, they are willing to waste money and time on resisting change all the way to the Supreme Court, not realizing that the change is coming whether or not they want it.
Surely an innovative company will soon be able to work its way around traditional cable companies’ strong position on this market while at the same time observing the Supreme Court’s markedly narrow holding. Some have already started doing so. Aereo itself promises that it is only “paus[ing] our operations temporarily as we consult with the court and map out our next steps.”
Thursday, July 3, 2014
Such is the rhetorical power of a contract, even one that nobody reads.
They also say "your trust is important to us."
Did Facebook act in bad faith by manipulating users' data feeds? It's at least arguable that they did.
Now, about the research results - as far as what the results showed, I'm not sure that the study did prove that positive posts enhanced users moods (and vice versa). A user may have changed the nature of a post in order to conform to the prevailing mood, but that doesn't mean they actually felt happier. Positive posts from others might have forced users to "fake it" by writing more positive posts and vice versa. So I'm not convinced that the research refuted the claim that happy Facebook posts depressed some FB users...
Friday, June 27, 2014
Several months back, I blogged about KlearGear's efforts to enforce a $3500 nondisparagement clause in their Terms of Sale against the Palmers, a Utah couple that had written a negative review about the company. It was a case so bizarre that I had a hard time believing that it was true and not some internet rumor. Even though the terms of sale most likely didn't apply to the Palmers --or to anyone given the improper presentation on the website-- KlearGear reported the couple's failure to pay the ridiculous $3500 fee to a collections agency which, in turn, hurt the couple's credit score. The couple, represented by Public Citizen, sued KlearGear and a court recently issued a default judgment against the company and awarded the couple $306,750 in compensatory and punitive damages. Consumerist has the full story here.
Congratulations to the Palmers and Scott Michelman from Public Citizen who has been representing the couple. And let this be a warning to other companies who might try to sneak a similar type of clause in their consumer contracts....