January 04, 2012
Richard Craswell on Frigaliment
Stanford Law's Richard Craswell has shared with us a link to his collection of contracts YouTube videos. But a pig this good you eat one leg at a time. So for now, we just include his song about Frigaliment, Judge Friendly's great chicken coup. It's not like we haven't written about this case before, for example, here, here, here, here and here.
But we never tire of new approaches to the case. Here's Richard Craswell's:
December 06, 2011
New York Times Provides Massive Archive for ContractsProfs Teaching Peevyhouse
Contracts profs love teaching Peevyhouse. We at the blog love Peevyhouse. We have composed songs and poems, we’ve written scholarship about the case. There is even a movie. We just can’t get enough of it. And as if there were not already enough materials available to profs looking to jazz up their Peevyhouse discussion, the New York Times has this big front-page story, which is part of an on-going series of articles, plus the Times has also established an online archive of oil and gas leases.
The Times story relates the experience of Scott Ely and his father, who entered into a lease to allow Cabot Oil and Gas engage in gas drilling on their land. They were left with “toxic drilling sludge stored in large waste ponds” on their property. When the waste seeped out, it contaminated the drinking water on a separate property. Mr. Ely sued. Cabot’s spokesman contends that “the company’s cleanup measures met or exceeded state requirements.”
The Times’ review of 111,000 similar leases suggests that many or most such leases do not provide all of the contractual protections that landowners like the Elys expect.
For more very interesting information on the complications associated with oil and gas exploration in Pennsylvania, we recommend this episode of This American Life.
November 23, 2011
Let's Dance: Hoffman on Mentoring v Scamming
In a characteristically insightful blog post, Dave Hoffman uses Vokes v. Arthur Murray as a nice launching point to discuss some aspects of the scam-critiques aimed at law schools. Vokes is such a great teaching case, and Dave's post leaves me feeling like I could have done a better job teaching it this year.
There's not much to add to the mix in the scamosphere, as many bloggers, including some of our own here at ContractsProf, have already commented very thoughtfully. In my humble opinion, the law school scam coverage is old news often sloppily reported with the vitriol amps turned up higher. And the coverage of these law school scam stories, at the New York Times in particular, seems completely disproportionate to the coverage of the number of other significant things happening in the world. (You really want cynicism? These stories get linked all over and end up on the most read and emailed list on the newspaper's website, driving page views. Page views drive advertising revenue. So, why not write another law-school-is-a-scam article?).
Anyhow, perhaps ironically in light of the recent spate of "scam" coverage about law schools, it seems that the vast majority of my students had very little sympathy for Ms. Vokes.
[Meredith R. Miller]
November 08, 2011
Hitler's Take on the Chicken Case
Ever wonder how the facts and primary arguments in Frigaliment, a.k.a. The Chicken Case, could be illustrated via a humorous video clip involving Hitler? Yeah, me neither. Until now.
Last night, a former student of mine sent me a link to a "Hitler Rant" on this very case. For those who, like me, are too old and boring busy to have heard of HItler Rants before, they are an internet meme in which various "authors" craft humorous captions on all sorts of topics and insert them into the same clip from the critically-acclaimed German film, Downfall. For those who, like me, are children of the '80s, think Mad Libs for movie trailers. (Our fearless leader, Jeremy Telman, previously blogged about the phenomenon, and its application to contract doctrine, here.) As you likely recall, in Frigaliment, the core of the dispute was whether an agreement to purchase "chicken" should be interpreted as applying to only "young" chicken or any chicken. As for the Hitler Rant regarding Frigaliment? Well, you just have to see it for yourself.
[Heidi R. Anderson, h/t anonymous student]
October 31, 2011
Volatility in the Cotton Market Leads to Record Number of Breaches
The WSJ reports on the volatile cotton market and the record number of contract disputes that have arisen as a result. Here's a sample:
Just how binding is a binding agreement?
In the cotton market, dozens of remorseful buyers are putting that question to the test.
Since they agreed earlier this year to buy thousands of bales of cotton when prices were at record highs, cotton mills have seen prices tumble 54%. So, as delivery time nears and bills come due, some have decided not to pay up.
In a phenomenon that may be unique to the cotton market, contracts are considered by many buyers to be little more than a message of intent, with any agreement up for negotiation. And because the market is so farflung—merchants in the U.S. often trade with thousands of small buyers in Bangladesh or Indonesia—regular legal battles can be costly and lengthy.
Thanks to the wild swings in cotton prices, the industry is facing a record number of contract disputes. The International Cotton Association has received 168 requests for arbitration this year. That is the most since the industry's self regulator starting keeping track in 2000.
This year, it is mostly mills and other buyers backing out, industry officials and traders say. They bought when cotton was as pricey as $2.1515 a pound, the record hit in March. On Monday, cotton for December delivery rose 0.9% to close at 97.94 cents a pound on ICE Futures U.S.
Shrugging off those contractual obligations has made cotton prices jumpy. Having backed out of deals struck in the futures market, buyers have gone into the spot, or cash, market to get what they needed to spin thread for T-shirts, underwear and the like. Those reverberations have been felt by clothing makers of all sizes, whose margins were squeezed by the run-up in prices and now have to decide whether they can lower prices ahead of the holiday season.
"Both the textile mills [and] the merchant...have had a great deal of trouble in managing their risk," said Joe Nicosia, chief executive of Allenberg Cotton Co., the cotton arm of French trading house Louis Dreyfus Group, during an industry conference call in July.
When mills don't live up to their end of the deal, cotton merchants, including big, multinational commodity-trading firms, are at times left holding the bag.
Each year, 100,000 to 200,000 cotton contracts are signed, said Terry Townsend, executive director of the International Cotton Advisory Committee, a group that advises cotton-growing nations. For the crop year that ended July 31, about 10% of contracts have been defaulted on, said Mr. Townsend.
Defaults are a fixture in the cotton market.
You mean the buyer and seller didn't agree to shipment of the cotton on the Peerless?
For more (including a snazzy graphic with data), scale the WSJ paywall and read the article. As one commenter wrote: "A deal's a deal until a better deal comes along."
[Meredith R. Miller]
August 23, 2011
Lucy v. Zehmer, Interrupted
I've survived a contracts conference shipwreck. And now I can say I've experienced an earthquake in the middle of teaching Lucy v. Zehmer. Apparently the epicenter is in Mineral, Virginia, population 500. Coincidentally, this looks to be only about a two-hour drive from MCKenney, Virginia, home of the Ye Olde Virginnie.
I hope everyone and everything nearby is safe.
[Meredith R. Miller]
July 01, 2011
Protection of Domestic Industry UK Style
Today's Guardian has a story about two cabinet ministers who have sent a carefully worded letter of complaint to British Prime Minister David Cameron protesting the award of a £3 billion contract for the manufacture of train carriages (cars) to the German company, Siemens. The ministers are upset that the contract was not awarded to Bombardier, which employs 3,000 people in Derby and is the last remaining train factory in Britain.
The ministers apparently express concern that Britain EU partners do not play fair. After all, the German government recently awarded a £5.4 billion high-speed train contract to German-based Siemens. And just last year, the French government awarded a £540 million contract to Siemens rather than to Paris-based Alstom.
Wait a minute. Doesn't this suggest that Siemens always wins these big contracts rather than that member states of the EU engage in favoritism? Moreover, Bombardier is not even a UK company. It's Canadian! A union representative in Derby is quoted by the Guardian as expressing concern that Bombardier will shut down operations in England. After all, if it can't win a UK contract, what's the point of even having a factory there? Simple solution. Sell the factory to Siemens. They seem pretty busy.
June 22, 2011
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]
April 20, 2011
Charlie Sheen Claims that Arbitration Provision is Unconscionable.
Just when I thought that the Charlie Sheen saga was over (at least from a Contract Law blogging perspective), this comes along. Charlie Sheen--entangled in a contractual dispute with his employer, Warner Brothers--first claimed that his contract had no morals clause (which turned out to be false) and later claimed (and said) all sorts of much crazier things. Now, Sheen and his lawyers are arguing that the provision in his contract requiring any dispute to be resolved via arbitration is unconscionable. Yes, you read that correctly. Charlie Sheen--whom many have described as having no conscience--is claiming unconscionability.
When I teach the concept of unconscionability, I emphasize that a provision is unconscionable only if there is both procedural unconscionability (one party has substantially more bargaining power than the other, among other factors) and substantive unconscionability (the term itself unreasonably favors one party). I also state that there is a sliding scale--the more procedural unconscionability you can show, the less substantive unconscionability you need to show, and vice versa. Admittedly, these are generalizations, but they're the kind of generalizations that tend to work well for first-year Contracts students.
I doubt Charlie Sheen could show either procedural or substantive unconscionability here. As Warner Brothers' lawyers note, the procedural element likely is lacking when the party claiming that he had little bargaining power was able to bargain for "$2 million dollars for [every] 22 minute[s] of television." To counter that point, Sheen's lawyers understandably emphasize that Sheen's contract was "non-negotiable" and, on the substantive side, was quite "onerous." I am not familiar with the nuances of California law on this subject so it will be interesting to see how this particular case is decided.
It's not unheard of for courts to rule that arbitration provisions are unconscionable (see our earlier post regarding the AT&T case recently heard by the Supreme Court). However, if you are tired of hearing about Mr. Sheen, you should hope that the court finds that the arbitration term was valid. That's because...if it is unconscionable, the case most likely will be heard in a California court, where the whole thing will be filmed and potentially broadcast to us all. Yikes.
For previous ContractsProf Blog posts about other Sheen-focused Contract Law topics, see here (Warner Brothers' termination notice), here (Warner Brothers' complaint), here (Sheen's countersuit alleging interfence with contractual relations), here (Sheen's bargaining power--perhaps relevant to his unconscionability claim), and here. At this point, I'm wondering if I could teach every Contract Law topic via Charlie Sheen. The textbook, entitled, "Winning at Contract Law!" sure would be fun to write.
April 18, 2011
A Passover Retreat: Good or Service?
It is time to get into the Passover spirit by revisiting Fallsview Glatt Kosher Caterers v. Rosenfeld, 7 Misc.3d 557 (Civ. Ct. Kings County, NY, 2005), which gave us the opportunity to pause and consider: is a “Passover retreat” predominantly a good or service under the UCC? (Which, also came to be known as an added, fifth question for the youngest child at the seder).
Plaintiff Fallsview operated a retreat during Passover at Kutscher’s Country Club. (A Jewishy resort in the Catskills where, as a young child, I spent all of my grandmother’s laundry quarters on Ms. Pac-Man). For those that did not grow up going to B’nai Brith conventions in “The Country” (that’s what the NYC Jews called it), see this video, which comports with my memory.
Fallsview’s “retreat” included accommodations, entertainment and kosher food service. Willie Rosenfeld allegedly reserved spaces for 15 members of his family and agreed to pay $24,050 for the retreat. Fallsview made necessary arrangements, but Rosenfeld failed to appear at the hotel and did not remit the payment. Fallsview sued Rosenfeld for breach of contract.
Rosenfeld moved to dismiss, pointing to the statute of frauds. Rosenfeld argued that there was no agreement and, even if there was, it was oral and did not satisfy UCC 2-201, which requires that contracts for the sale of goods for the price of $500 or more be in writing. Fallsview’s response: the UCC does not apply because the Passover retreat is a service, not a good.
Because the alleged contract called for accommodations, entertainment and food, it was a hybrid transaction, and the court looked to whether goods or services predominated. Rosenfeld argued that the retreat was about food, a conclusion that he argued was “compelled by the very nature of the Passover holiday”:
The essential religious obligation during this eight day period- and the principal reason why people attend events similar to the Program sponsored by plaintiff- is in order to facilitate their fulfillment of the requirement to eat only food which is prepared in strict accordance with the mandate of Jewish law for Passover, i.e., food which is ‘Kosher for Passover’. It is the desire to obtain these ‘goods'-and not the urge for ‘entertainment’ or ‘accommodations'-that motivates customers to subscribe to such ‘Programs.’
But the court noted all of the possible daily activities at the retreat included “tennis, racquetball, swimming, Swedish massage, ‘make over face lift show,’ ‘trivia time,’ aerobics, bingo, ice skating, dancing, ‘showtime,’ ‘power walk,’ arts and crafts, day camp, ping-pong, Yiddish theater, board games, horse racing, horseback riding, wine tasting, and indoor bocci-and that is only through Wednesday.” There were also “ traditional and Orthodox religious services, lectures on religious and other subjects (presumably with a religious or cultural perspective), and a series of activities that are clearly designed to be of interest to families of observant Jews during a highly significant period in their calendar. “ The all-inclusive price covered these activities, as well as accommodations and food.
The court (Battaglia, J., who coincidentally, used to teach at my home institution), sided with Fallsview and decided the essence of the retreat was a “family and communal ‘experience’” and, therefore, was defined primarily by services and not by goods. Rodenfeld’s motion to dismiss was denied.
[Meredith R. Miller]
March 14, 2011
Audiofile of Interview with Son of Plaintiff in Lucy v. Zehmer
This article reexamines Lucy v. Zehmer, a staple in most contracts courses, and makes the following discoveries: (1) Lucy, acting as a middleman for southern Virginia’s burgeoning pulp and paper industry, sought the Ferguson Farm for its rich timber reserves; (2) Lucy was one of scores of aggressive timber middlemen eager to purchase timberland across the region, in what amounted to a chaotic land grab that left a wake of shady transactions and colorful litigation; and (3) Within the eight years of winning injunctive relief from the Virginia Supreme Court and purchasing the Ferguson Farm from Zehmer for $50,000, Lucy earned approximately $142,000 from the land and its natural resources. These findings bring into question the opinion’s assertion that $50,000 was a fair price, its conclusion that Zehmer’s actions indicated contractual intent, and its confidence that the objective method captured the relevant background in which Lucy’s and Zehmer’s exchange took place. More generally, they suggest that conclusions reached by the objective method are highly dependent on the facts that are retold and the context in which they occur.
March 10, 2011
Self Promotion: Telman on the Totten Doctrine
I have floated my ideas about Totten on this blog before here and here. My students booed and hissed when I scolded Honest Abe for having breached his promise to pay William Lloyd for espionage services provided during the Civil War. "Too soon," they howled. Undeterred, I have developed my ideas about Totten in a new article, Intolerable Abuses: Rendition for Torture and the State Secrets Privilege, now available for dowload on SSRN. The discussion of the Totten doctrine takes up pages 15-45 of the draft.
That part explores the ambiguities of the case and decries its deployment in the state secrets privilege context in cases that do not involve contractual claims. The case is ambiguous because in the space of a two page opinion, the Supreme Court gives numerous reasons for refusing to enforce the government's alleged promise to Mr. Lloyd. Perhaps there was an implied promise of secrecy. Perhaps public policy forbids the disclosure and thus the enforcement of such a policy. Perhaps there is some sort of evidentiary privilege that prevents the claim from going forward, but if so, its operation is unlike that of any other evidentiary privilege. And then in the end, what is the Totten doctrine? Is it simply the application of one of the above-mentioned contracts or evidentiary doctrines or is it a principle of non-justiciability?
The discussion of Totten takes up about 1/3 of the piece. Here is the abstract for the whole thing:
In Mohamed v. Jeppesen Dataplan, Inc., the Ninth Circuit, sitting en banc, issued a 6–5 opinion dismissing a complaint brought by five men claiming to have been victims of the U.S. government’s extraordinary rendition program, alleged to involve international kidnapping and torture at foreign facilities. Procedurally required to accept plaintiffs’ allegations as true, the court nonetheless dismissed the complaint before discovery had begun based on the state secrets privilege and the Totten doctrine, finding that the very subject matter of plaintiffs’ complaint is a state secret and that the defendant corporation could not defend itself without evidence subject to the privilege. This Article contends that courts should almost never dismiss suits based on the state secrets privilege and should never do so in a case like Jeppesen Dataplan, in which plaintiffs did not need discovery to make out their prima facie case alleging torts by the government or its contractors.
While much has been written on the state secrets privilege since 9/11, this Article focuses on the role of the Totten doctrine in transforming the state secrets privilege into something like a government immunity doctrine. The Article first argues that Totten was wrongly decided because it is overprotective of state secrecy and requires dismissal with prejudice of suits that would more appropriately be dismissed without prejudice, subject to re-filing when the relevant secrets are declassified. The Article next contends that Totten is a very narrow doctrine that cannot and should not have any role in informing cases such as Jeppesen Dataplan in which plaintiffs did not contract with the government.
In addition, the Article argues that the state secrets privilege, as laid out in the 1953 Reynolds case and subsequently expanded by lower courts, permits pre-discovery dismissal of suits based on the state secrets privilege and thus exacerbates the pro government bias already present in Reynolds. The Article explores seven ways in which lower court decisions have all tended to make it easier for the government to assert the state secrets privilege, while the lack of penalties for overly aggressive assertion of the privilege results in intolerable abuses.
While the Article thus offers fundamental critiques of both the Totten doctrine and the state secrets privilege, it does not advocate disclosure of state secrets. Rather, in a concluding section, the Article draws on federal statutory schemes relating to the introduction of classified information in criminal trials and offers numerous alternatives to judgment in favor of the government and its contractors before discovery has begun in cases implicating state secrets. Congress has repeatedly empowered courts to make decisions that protect government secrecy while facilitating limited access to secret information when necessary in the interests of justice and open government. In some cases, the government’s inability to defend itself may necessitate the socialization of the costs associated with national security secrets, but that result is preferable to forcing plaintiffs to bear all the costs of government secrecy.
March 03, 2011
The Suez Canal and Impracticability - A Video Clip for Class
Given the current political turmoil in Egypt, a discussion of the Suez Crisis and impracticability may actually meet with fewer yawning students this year. In preparing to present a hypothetical based on the cases (e.g., American Trading and Production v. Shell Int'l Marine Ltd, 453 F.2d 939 (2d Cir. 1972), I discovered some newsreel footage from 1956, which may help tell the story:
There are many other clips, but this one seemed like just the right length for class. Coincidentally, today, Reuters reports that Egypt's Suez Canal Authority announced that it will leave transit fees unchanged until the end of 2011.
[Meredith R. Miller]
December 03, 2010
Wilkes v. Springside Nursing Home: Defendant Dr. Leon Riche
It was Riche whose disputes with Stanley Wilkes triggered the freeze-out in the case. Image courtesy Eric Gouvin (Western New England).
December 02, 2010
Wilkes v. Springside Nursing Home: Plaintiff Stanley Wilkes
A high school grad with a talent for real estate, Wilkes had the vision in the early 1950s that private nursing homes would become a major industry. Image courtesty Eric Gouvin (Western New England).
December 01, 2010
Wilkes v. Springside Nursing Home: The images
Courtesy of Eric Gouvin (Western New England) we're delighted to publish some of the images of the case he collected as part of his recent (and highly enjoyable) conference on that staple of Business Associations casebooks, Wilkes v. Springside Nursing Home. We'll be publishing one a day. Enjoy!
Here's the Springside Nursing Home before renovations.
November 25, 2010
On a day like today, when the first icy (45° F) blast of winter is coming down the verdant Brazos Valley, chilling the rattlesnakes and rattling the Mexican junipers at Château Snyder, it's nice to sit in front of a fire with a steaming Tom & Jerry and think about . . . chicken feet.
Why chicken feet? Because they (along with chicken skin) are prominent features of what I think is the only U.S. Supreme Court case about Thanksgiving turkeys. The case is M. Kraus & Bros., Inc. v. United States, 327 U.S. 614; 66 S. Ct. 705; 90 L. Ed. 894 (1946). It's a criminal case, but it does have something to do with contract law.
The case takes us back to Thanksgiving 1943, when wartime price controls have led to a serious shortage of meat (and lots of other things) in the U.S. Because turkeys are in short supply, prices naturally tend to rise. The Roosevelt Administration responds with the Emergency Price Control Act of 1942, which makes it a criminal offense to sell certain things (including turkeys) prices above a price "established" by the Office of Price Administration. Because that price is fairly low, demand for turkeys at Thanksgiving 1943 far exceeds the supply.
The defendant operates a wholesale meat and poultry business in New York City. In prior years it has usually received 100-150 rail cars of turkeys, but in 1943 it only gets one (1) car, and must decide how to divide that relative handful among its customers. Because it can't raise prices, it decides to bundle the turkeys with chicken feet, chicken skin, and chicken gizzards, so that its customers who buy turkeys must also buy the other products.
The defendant is indicted. The prosecution claims that by tying the turkeys to other products of dubious value the seller had violated the Price Administrator's regulations, which provided:
Price limitations set forth in this Revised Maximum Price Regulation No. 269 shall not be evaded whether by direct or indirect methods, in connection with any offer, solicitation, agreement, sale, delivery, purchase or receipt of, or relating to, the commodities prices of which are herein regulated, alone or in conjunction with any other commodity, or by way of commission, service, transportation, or other charge, or discount, premium, or other privilege or other trade understanding or otherwise.
The jury convicted and the Second Circuit affirmed. The Supreme Court -- perhaps still not as friendly and accomodating to economic regulations as it would later become -- reversed the conviction 5-3 (Jackson did not participate), although the justices issued four separate opinions. Relying heavily on the fact that the Administrator in other regulations had specifically mentioned "tying agreements" but did not do so in Regulation 269, Justice Murphy,Stone, Rutledge, Frankfurter, and Douglas all more or less agreed that a tying arrangement in which the goods had some value was not an "evasion" of the regulations, although Douglas and Rutledge (joined by Frankfurter) wrote concurrences as well. Black wrote the dissent, joined by Burton and Reed.
It's interesting that only ten ears after unanimously striking down poultry price regulations in A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495, 55 S. Ct. 837; 79 L. Ed. 1570 (1935), not a single justice even questioned the government's authority to set the price of every turkey in the United States. As Mr. Dooley noted, "No matther whether th' constitution follows th' flag or not, th' supreme coort follows th' iliction returns.”
P.S. In case you're wondering what value chicken feet would have, here's a tasty recipe..
November 12, 2010
What is "chicken"?
Courtesty of a student of Bill Dodge (UC-Hastings), a nice illustration for use when you teach Frigaliment Importing Co. v. B.N.S. International Sales Corp., 190 F.Supp. 116 (S.D.N.Y. 1960).
October 26, 2010
Red Owl, Professor Kingsfield, and Mary Tyler Moore
Turns out that MTM went shopping at a Red Owl store in Minneapolis -- as you can see on the video of the show's opening he's posted on the site. I'm older than Gordon, but I enjoyed the show, too, though the bit of trivia I recall is "Whose jersey is she wearing while washing the car?"
Unlike Gordon, I wasn't a fan of The Paper Chase, I was more into a short-lived show called The Storefront Lawyers. I don't have a video, but here are the Ventures with the show's VERY cool opening theme -- which fortunately doesn't sound anything like Seals & Crofts:
Speaking of Hoffman, be sure to check out Bill Whitford's and Stewart Macauley's fascinating backgrounder, Hoffman v. Red Owl Stores: The Rest of the Story.
P.S. She's wearing Fran Tarkenton's #10 Minnesota Vikings jersey.
May 03, 2010
Business Associations Limerick of the Week: CTS Corporation v. Dynamics Corproation of America
I turned up a Limerick from a case I haven't taught in a few years, so I thought I would share it. The connection to contracts law is pretty attenuated, but I'm sure we could find one if we looked hard enough. The issue in the case was whether or not Indiana's anti-takeover statute, the Control Share Acquisitions Chapter of Indiana's Business Corporation law, should be struck down as inconsistent with the Williams Act and the Commerce Clause.
The Williams Act provides for disclosure when any party gains control of over 5% of an issuer's shares. It also provides for certain procedural and substantive limitations on tender offers. The Indiana Act provided additional protections against tender offers for Indiana corporations by requiring a shareholder vote on whether or not the acquiror would be permitted to vote its shares once it crossed certain thresholds of ownership: 20%, 33.3%, 50%.
Judge Posner, writing for the Seventh Circuit and following the Supreme Court's plurality decision in Edgar v. MITE Corp., struck down the Indiana Act as inconsistent with the Williams Act and also with the Commerce Clause. Justice Powell (pictured), writing for the majority of the Supreme Court, reversed. While the Illinois statute at issue in MITE favored existing management over the rights of acquirors and shareholders alike, the Indiana Act was consistent with the aims of the Williams Act, in that it favored neither acquirors nor incumbent management and sought only to protect the rights of shareholders. It's impact on interstate commerce was negligible, and even if there was some slight discriminatory effect, that discrimination was acceptable in light of the internal affairs doctrine, that for the most part leaves the regulation of corporations to the state legislators that create corporations in the first place.
Justice Scalia concurred. He had no disagreement with Justice Powell on the law, but he was irked that Justice Powell ventured a judgment on the aim of the statute. He regarded it as "extraordinary to think taht the constitutionality of the Act should depend on" whether the Court thought that the Indiana Act aimed to protect shareholders of incumbent management. Justice Scalia seemed open to the view that the Indiana Act was idiotic but lawful and should be upheld regardless of its folly. Three dissenting Justices, following Posner's reasoning, would have found the Indiana Act to be a kind of unlawful folly.
CTS Corporation v. Dynamics Corporation of America
The Williams Act does not preclude
A state from protecting its brood.
Posner dislikes it;
Scalia won't strike it:
"It's law, so what if it's crude?"