Saturday, April 1, 2017
Here are the logos together, in happier times, from one of the movies at issue in this case, Henry Poole Is Here
A recent case out of California, Camelot Pictures LLC v. Lakeshore Entertainment Group, LLC, B269430, gives us a nice run-down on statute of limitations in contracts cases, in that state at least. The case involves breaches of "Equity Term Sheets" between two entertainment companies involved in making together the movies Pathology and Henry Poole Is Here. Unfortunately for Camelot in this case, it raised the issue of these breaches by Lakeshore too late.
Camelot sued Lakeshore in November 2013 and eventually won an award in excess of $300,000. The problem, though, was, as Lakeshore argued on appeals, Camelot's claim was outside the four-year statute of limitations governing breaches of contract in California. And the appellate court agreed.
The appellate court provided a summary of how the statute of limitations works for breaches of contract in California. Generally, the cause of action is considered to have accrued at the time of the breach, "regardless of whether any substantial damage is apparent or ascertainable." However, in "certain, limited circumstances," the accrual-on-breach rule can be replaced by the "discovery rule," which provides that breaches that are "committed in secret" and whose harm is not "reasonably discoverable" will be considered to have accrued on the date of the discovery of the breach, not the date the breach occurred.
The trial court found that the discovery rule applied, and that Camelot had not discovered Lakeshore's breaches until the summer of 2011, within the statute of limitations period. That date was the date on which Camelot was advised by a consultant that Lakeshore's alternate accounting methodology was not beneficial to Camelot. However, Camelot had known that Lakeshore was using an alternate accounting methodology--in violation of the Equity Term Sheets--since December 2008. On that date, Camelot explicitly raised the fact that Lakeshore was not complying with the terms of the Equity Term Sheets. Camelot simply failed to pursue this lack of compliance for several years. Lakeshore's breach was therefore not "committed in secret" such that the discovery rule should apply. Indeed, Camelot admitted that it knew about the breach as soon as Lakeshore committed it; Lakeshore made no efforts to conceal it. Camelot did not know the impact of that breach until much later, but it could have discovered the impact much sooner, had it employed a consultant sooner than three years later to look into Lakeshore's conduct. Therefore, the trial court's judgment for Camelot was reversed.
Friday, March 11, 2016
I bet we'd have a lot fewer people fighting arbitration clauses if arbitration = tweeting J.K. Rowling.
As reported around the Internet, a student and her high school science teacher entered into a contract concerning whether Rowling would write another Harry Potter book. The contract called for the loser to declare the victor "Mighty" (a much more charming form of consideration than payment of a sum of money).
The article (from last month) reports that there were two possible Harry Potter pieces of creativity to be contended with. One is the prequel movie Fantastic Beasts and Where to Find Them. Rowling wrote the original textbook (which already existed at the time the contract was entered into and so isn't part of the dispute) and also wrote the screenplay for the movie, which could have been in dispute. However, the article points out that Rowling wrote the screenplay to the movie, and the contract concerns a Harry Potter "novel." Even if you wish to make an argument that screenplays should have been included in the definition of the contractual term "novel," it seems like Fantastic Beasts would fail because it does not "feature the character Harry Potter as part of the main plotline," as required by the contract. (At least, so I assume from what I know about the movie so far.)
The other piece of Harry Potter creativity being debated under the contract, and the one for which Rowling was called in to arbitrate, concerned Harry Potter and the Cursed Child, a play focusing on Harry as an adult and his relationship with his children, especially his son Albus. Cursed Child raised issues: It was a play but it is being billed as "the eighth story," the script will be published in text form, and the website claims it's "based on an original story by J.K. Rowling, Jack Thorne and John Tiffany." It does seem as if, considering this is a "play," even its published script would not be considered a "novel" under the contact. However, the student who was a party to the contract sought further clarification from Rowling.
Using the convenient method of Twitter, the student explained her contract to Rowling and asked for a decision on whether Cursed Child would fulfill the terms of the contract. Rowling responded, confirming that Cursed Child is a play and also noting that, while she had contributed to the story, Jack Thorne was the "writer" of the play.
The student was pleased that her clear contractual terms meant that she was still the victor, but also noted that the term of the contract had not yet run. Since the publication of the article and the arbitration of the Cursed Child dispute, J.K. Rowling has announced a new set of stories to be collected under the title History of Magic in North America. So far, these stories also seem not to fulfill the terms of the contract, as they seem more like "extra books" rather than "an entirely new book," and they do not seem to feature Harry Potter at all. However, Rowling seems to be dancing right around the edges of this contract's terms.
Wednesday, March 2, 2016
This case out of California, Gilkyson v. Disney Enterprises, Inc., B260103, involves the song "The Bare Necessities," which, as you can see from the above, is readily available on YouTube. The song was written by Terry Gilkyson (this might come up in a trivia competition someday, you never know). His adult children are the plaintiffs in this case.
In the 1960s, Gilkyson wrote several songs for Disney pursuant to a work-for-hire contract under which Disney was deemed the author and owner of the songs and Gilkyson was paid $1,000 per song together with ongoing royalties for certain licensing. The contract specifically excluded royalties for use of the songs in "motion pictures, photoplays, books, merchandising, television, radio and endeavors of the same or similar nature." Disney has paid royalties on the song to Gilkyson and his heirs but Disney has never paid royalties for use of the songs in any audiovisual medium, including DVDs. The Gilkyson heirs disagree with Disney's interpretation of the contract and believe that they are entitled to royalties for use of the songs on VHS tapes and DVDs. Disney argues that the four-year statute of limitations on breach of contract actions bars all of the Gilkysons' claims, because all of the VHS tapes and DVDs complained about were first issued sometime prior to 2007. Therefore, according to Disney, Gilkyson should have brought this claim by 2011, not, as it did, in 2013.
Disney loses this argument, however, based on the continuous accrual doctrine: "[E]ach breach of a recurring obligation is independently actionable." Basically, California law interprets the contract with Disney as being divisible, with each breach of that contract actionable and subject to its own statute of limitation period. Therefore, the court concluded that the Gilkysons could seek recovery of the royalties that were due for a period beginning four years from the filing of their complaint (so, from 2009 onward). According to this court, the California state court jurisprudence on this appears to be clear (although note that, at the trial court level, this case was dismissed without applying the continuous accrual doctrine). Disney pointed to a Central District of California case from 2001 that rejected the plaintiff's continuous accrual doctrine argument, but this California state court noted that it did so without any citation to any California case and that this court disagreed with that case's conclusion.
So it's on to the next step for these parties: fighting over the interpretation of the contract. Or settlement.
Monday, February 22, 2016
Last weekend I watched, for the first time in my adulthood, "Willy Wonka and the Chocolate Factory." The 1971 version with Gene Wilder. I've never seen the more recent version with Johnny Depp, but, after reacquainting myself with Gene Wilder's Willy Wonka, I ask you why you would ever need another Willy Wonka. Wilder is perfect.
~~SPOILERS FOR THE MOVIE BELOW~~(IF YOU HAVEN'T SEEN IT, GO WATCH IT NOW, IMMEDIATELY. YOU HAVE SO MUCH TIME AND SO LITTLE TO DO. WAIT. STOP. REVERSE THAT.)
Because it was the first time I'd seen it since going to law school, it was also the first time I'd thought about it from the legal perspective. And, weirdly, contract law actually plays a central role in the movie. As soon as the children enter the factory, Wonka has them sign a contract.
Just the children, not their accompanying guardians, which is interesting to me, as I would have had everyone sign it. You'd think Wonka would be just as worried about the adults handing over Everlasting Gob-Stoppers to the competition, but then again, since the whole thing was just an elaborate set-up, I guess he didn't care. The only clause we can really see in the contract is a gigantic release from liability provision. The adult characters are instantly suspicious of the contract. They raise the argument that they need to read it before they sign it (an act which appears to be actually impossible, given the vanishing print at the bottom). Wonka sort of shrugs and says, "Eh, if you don't sign it, you can't come in." It seems to me like there's a good argument that there's procedural unconscionability showing up, given that Wonka's made it impossible to actually read the contract and is dismissive of their desire to know what they're signing before they enter the factory. Of course, the flipside to that is the flipside that almost always comes up when you talk about unconscionability: No one is forcing these people to tour the factory. They can walk out if they like. They don't have to enter the crazy Willy Wonka contract.
The other issue raised by this scene is that the children are all minors, so this contract is voidable.
(This scene also gives you the timeless assessment that contracts are "for suckers.")
The children all sign the contract, of course. (That would make for an interesting movie: Responsible Legal Decisions in Response to Willy Wonka's Craziness. Everyone turns and walks out instead of entering the factory run by the creepy guy no one's seen in years.) (Wonka really should be so much creepier than he is. I'm telling you, Wilder is genius in this role.)
Having signed the contract, they are let loose in the wonders of the factory, where they immediately proceed to get themselves grievously injured one by one, all taken in casual stride by Wonka, perhaps buoyed by his release from liability provision:
The conclusion of the movie, once again, revolves around contract law. Charlie inquires as to the lifetime supply of chocolate he's supposed to receive, and Wonka points out that he's no longer entitled to it because he breached the contract he signed at the beginning. Wonka quotes the contract, and my main reaction to it is to shake my head and say, "All those Latin words! All those hereinbefores!" It's an excellent example of an incomprehensible contract. I propose we start calling all contracts filled to the brim with Latin and hereinbefores "Wonka contracts." And my second reaction is: That's another movie I'd watch: Willy Wonka in Law School.
(Random fact, but the actor playing Charlie apparently did not know that Wilder was going to yell so furiously in that scene. His startled reaction is genuine.)
Don't worry, if you haven't seen the movie, there's a happy ending.
One closing thought on Willy Wonka and contracts. I figure that there are two choices when it comes to Contracts classes: You're either the room of Pure Imagination...
...or you're the tunnel scene...
Sunday, February 7, 2016
In a case that is a sad testament to today’s apparently increasing loneliness in the Western world despite much technological progress that could have alleviated some of that, but instead only seems to have made it worse, a woman created a YouTube channel bearing the rather uncharming name “bulbheadmyass.” On it, she posted 24 music videos of her band. These videos gathered almost half a million views and many favorable comments. There was no commercial component to the videos. The woman was not trying to sell video or audio versions of the band’s music. Instead, her “sole reward was the acclaim that she received from the YouTube community and the opportunity to make new friends.” (The case is Lewis v. YouTube, H041127, California Court of Appeal .)
Claiming that this woman had breached the company’s Terms of Service, YouTube removed the videos from its website. The woman filed suit claiming breach of contract and seeking specific performance. She alleged that YouTube breached the contract with her when it removed her videos from the website against her will and without notice. The trial court sustained YouTube’s demurrer on the basis that the Terms of Service contained a liability limitation stating that “[i]n no event shall YouTube … be liable … for any … errors or omissions in any content.” Plaintiff had argued that the case was not one of errors or omissions in any content, but rather a deletion of content without prior notice. The appellate court, however, held that the liability limitation governed the issue and that the trial court had correctly sustained the demurrer.
YouTube did, though, agree to restore plaintiff’s video content. YouTube, of course, does not charge for featuring anyone’s videos. Rather, it makes money off the advertising it can generate because of the many hits it receives. (Its revenue is several billion dollars a year.) However, YouTube did not restore the videos to their pre-deletion status, i.e. with comments, URLs from other users who had linked to it, and view counts. (Compare this to SSRN resetting your scholarship records: you’ll lose your view count and all other tracking data should that happen). The court contrasted the case with another where the contract had set forth exactly how to grant specific performance in case of a breach (also a technology case). But in the YouTube case, said the court, “no provision in the Terms of Service can serve as the basis for the relief that [plaintiff] seeks.”
Really? Does it take all that much technological savvy by a court to simply ask YouTube to restore plaintiff’s accounts to their “as were” condition? YouTube may actually not simply have deleted the accounts altogether. If they had, they would undoubtedly have backups. Instead, various technological accounts are simply “turned off” and are thus not accessible to the general public, but they still exist. What really seems to have been at issue here was an annoying plaintiff who was unlikeable to both the court and YouTube. It seems that the court was too eager to dismiss plaintiff’s specific performance claim and chose the too-easy way out by claiming lack of technological knowledge. In 2016, it does not seem to strain the imagination too much to expect billion-dollar IT companies to have ways of doing just what plaintiff sought here. Then again: with a name such as “bulbheadmyass,” maybe it was a case of “you got what you asked for.”
Monday, February 1, 2016
Okay, there's actual contract stuff to talk about in this case, but mostly I was fascinated to learn that IMAX theaters rent the movie-showing equipment from IMAX and, in 2004 at least, the cost was $41,400 in annual maintenance fees plus the greater of $75,000 or 7% of the box office receipts in annual rent. So, if you win the lottery and want an IMAX theater in your house, there's a rough idea of the kind of costs you're looking at.
And now that we've learned that fascinating tidbit of information, what happens when you get into a fight with IMAX about whether the equipment it's leased you is capable of playing "Hollywood" movies?
That's what happened in a recent case out of the Middle District of Pennsylvania, IMAX Corp. v. The Capital Center, Civ. No. 1:15-CV-0378. In that dispute, Capital Center alleged that it told IMAX it wanted to rent its equipment so it would be able to show "Hollywood" movies. In 2004, it entered into a fifteen-year lease of IMAX's movie-showing equipment/software/etc. Apparently around 2014, IMAX announced that it had developed new technology that rendered the equipment Capital Center had rented obsolete, interfering with Capital Center's ability to play "Hollywood" movies. (I keep putting "Hollywood" in quotation marks because it's in quotation marks in the opinion. Clearly Capital Center considered it a direct quote and an important characterization.)
In reaction to the new technology, Capital Center stopped paying rent on the old technology, apparently because it felt its equipment was now valueless. IMAX pointed out that Capital Center had therefore breached the contract and IMAX was entitled to the remainder due under the lease in liquidated damages (a clause in the contract). Capital Center gave the equipment back to IMAX, and IMAX sued to collect the money it claimed it was due under the contract. Capital Center raised in response defenses of mutual mistake and frustration of purpose. It also claimed IMAX had no right to demand the further rent amounts because Capital Center no longer had possession of the equipment. Finally, it claimed that IMAX had not properly disclaimed its warranty that the equipment was fit for a particular purpose, i.e., playing "Hollywood" movies. Unfortunately for Capital Center, none of these defenses succeeded.
Capital Center's mutual mistake defense centered on the "mistake" that both parties made that the equipment that was the subject of the lease would still be capable of playing "Hollywood" movies fifteen years later. However, the mutual mistake defense exists to vindicate mistakes of fact, not errors in predicting the future; this situation was the latter. There was no "fact" that IMAX thought it knew that the equipment would still be valid in fifteen years. And, in fact, the agreement itself contemplated as much, because the agreement contained a clause noting that IMAX might upgrade its equipment and setting forth the terms by which Capital Center could receive the improved equipment. Difficult for Capital Center to argue that the parties were mistaken about the future viability of the equipment in question when the agreement itself noted that the equipment in question might not be viable in the future.
The frustration of purpose defense failed for a similar reason. Here, the purpose of the contract might have been to play "Hollywood" movies but there was no unforeseen event that occurred after the signing of the contract that frustrated that purpose. The agreement itself predicted that the equipment might not continue to be viable for the showing of "Hollywood" movies. Therefore, the continued viability of the equipment could not be said to have been a basic assumption of the contract.
As for the argument that IMAX shouldn't be entitled to future rent payments because IMAX was in possession of the equipment, under Pennsylvania law, IMAX was entitled to choose either future rent payments or repossession of the equipment. However, IMAX didn't seek to repossess the equipment; Capital Center gave the equipment back to IMAX of its own volition. Therefore, IMAX wasn't seeking repossession, only the future rent payments: a choice it was allowed to make.
Finally, the contract between the parties had contained a clause in which IMAX disclaimed all of the usual warranties, including suitability to a particular use, i.e., showing "Hollywood" movies. Under Pennsylvania law, such a disclaimer is valid as long as it is "conspicuous." Capital Center tried to argue that the disclaimer in question wasn't conspicuous, but it was the only clause in the seven-page Schedule B of the agreement that was in bold font, which, according to the precedent, rendered it "sufficiently conspicuous."
Monday, January 25, 2016
The average price for a movie ticket in the United States is apparently $8.61. A recent case out of Ohio, Capital City Community Urban Development v. Columbus City, Case No. 13CVH-01-833 (behind a paywall), dealt with the question of whether a dollar movie is still feasible when most movies cost more than $8.00.
The contractual provision at issue was: "The Buyer agrees to provide Saturday movies for children once the theater is operational, and for as long as feasible. The cost is to be $1.00 or less for a double feature." (So, in fact, it was fifty cents a movie.) The clause actually wasn't that old (from what I could discern from the facts, it seems to have only been written in 2002), so it wasn't as if the dollar price was intended to be profitable, which both parties acknowledged. However, the issue was that the defendant had sought donations to offset the cost of the features and been unsuccessful. That meant that the theater would suffer a loss of $100,000 a year to fulfill the contractual provision, which would have been a substantial hardship to the theater. Moreover, the double feature wasn't very popular in the community. In a theater with a capacity of 400, it usually only attracted a few dozen patrons.
The parties fought over whether the definition of feasibility included a consideration of the economics of the issue. There was some precedent that feasibility required looking at the finances of the situation. Also, compellingly in the court's view, feasibility had to take into account the finances or else it had no meaning. The argument that "feasible" meant "capable of being done" without looking to the finances meant that it would be "feasible" basically as long as the theater was open, i.e., as long as the theater had a projection. That would mean that it would be "feasible" until the theater closed down entirely. If that was the meaning of the word "feasible," there was really no reason to have that specification in the contract: it would have just been a clause in effect until the theater closed.
This all makes sense to me, especially considering that there didn't seem to be much public interest in having the double feature continue. However, what's really striking to me about this opinion is the statement that "Columbus never showed a Saturday children's movie." So apparently Columbus's argument was really that it was never feasible to have the double feature. This meant Columbus agreed to a provision in the contract that it apparently never intended to comply with? That's not a wrinkle that gets introduced in this case--in fact, the line that no double feature had ever been shown is basically a throwaway line--but I found it to be the most striking detail.
Monday, July 13, 2015
We have some news from the world of hockey, that is, the sport of the 2015 Stanley Cup Champion Chicago Blackhawks (logo pictured). While elite teams (like the Blackhawks) struggle to keep their rosters under the salary camp (Goodbye Patrick Sharp; Goodbye Brandon Saad -- thanks for the memories and the Cups!), as reported on ESPN.com, the L.A. Kings used an alleged "material" breach of contract to terminate center Mike Richards rather than buying him out to evade the cap. The alleged material breach was at first mysterious, but it has now bee reported, e.g., here on Forbes.com, that Richards was detained at the Canadian border in illegal possession of OxyContin. But the Forbes report also indicates that Richards' mere arrest is not grounds for termination, and even if he is convicted, the NHL's drug policy does not call for termination. It calls for substance abuse treatment. Go Blackhawks!
The Bangor Daily News reports that author Tess Gerritsen has dropped her $10 million law suit against Warner Bros. for breach of contract in connection with the film "Gravity." As we reported previously, a District Court in California dismissed her complaint but allowed her twenty days to amend and refile. The complaint is based on a $1 million contract Gerritsen signed in 1999 to sell the book’s feature film rights to a company that was eventually purchased by Warner Bros. Gerritsen has admitted that the film "is not based on" her book, but she asserts that the book clearly inspired the film.
Monday, December 29, 2014
Join Alliance for Justice at the Association of American Law Schools’ (AALS) Annual Meeting to celebrate the release of the new short documentary,
Lost in the Fine Print
Examining the Impact of Forced Arbitration
Saturday, January 3, 2015
MARRIOT WARDMAN PARK HOTEL
Buried in everyday agreements for products, services, and jobs is fine print saying when you are harmed, you can’t go before an impartial jury or judge. Instead, these forced arbitration clauses send you to a decision-maker picked by the company that wronged you. Not surprisingly, one study found that arbitrators rule for companies over consumers 94 percent of the time. And you’re stuck with their decision because there’s no appeal. It’s a rigged system that helps companies evade responsibility for violating anti-discrimination, consumer protection, and public health laws.
Narrated by former U.S. Secretary of Labor Robert Reich, AFJ’s new 20 minute documentary Lost in the Fine Print tells the story of three everyday people who found themselves trapped in the system of forced arbitration—and the impact of this system on their lives and livelihoods. The cocktail reception will feature a film screening and brief remarks.
Nan Aron, President, Alliance for Justice
Paul Kirgis, Professor, St. John’s University School of Law and Chair, AALS Section on Alternative Dispute Resolution
Nancy Kim, Professor of Law, California Western School of Law; Chair, AALS Section on Contracts and author, Wrap Contracts
Judith Resnik, Arthur Liman Professor of Law, Yale Law School
Michelle Schwartz, Director of Justice Programs, Alliance for Justice
Host Committee (in formation):
*All titles and university affiliations are listed for identification purposes only.
Theresa A. Amato, Distinguished Scholar in Residence, Loyola University Chicago
Frank Askin, Distinguished Professor of Law, Robert E. Knowlton Scholar, and Director of Constitutional Rights Clinic, Rutgers School of Law—Newark
Robin Bradley Kar, Professor of Law and Philosophy, University of Illinois College of Law
Raymond H. Brescia, Associate Professor of Law and Director of the Government Law Center, Albany Law School
Katherine S. Broderick, Dean and Professor of Law, University of the District of Columbia David A. Clarke School of Law
Sarah E. Burns, Professor of Clinical Law, NYU School of Law
Erwin Chemerinsky, Dean of the School of Law, University of California, Irvine
Liz Ryan Cole, Professor, Vermont Law School
James E. Coleman, Jr., John S. Bradway Professor of the Practice of Law; Director, Center for Criminal
Justice and Professional Responsibility and Co-Director, Wrongful Convictions Clinic, Duke University School of Law
Joshua P. Davis, Associate Dean for Academic Affairs & Director, Center for Law and Ethics, University of San Francisco School of Law
Peter Edelman, Professor of Law, Georgetown University Law Center
Catherine Fisk, Chancellor’s Professor of Law, University of California, Irvine School of Law
Celeste Hammond, Professor and Director, Center for Real Estate Law, John Marshall Law School
Ann C. Hodges, Professor of Law, University of Richmond School of Law
Michael Hunter Schwartz, Dean and Professor of Law, University of Arkansas at Little Rock William H. Bowen School of Law
Robert A. Katz, Professor of Law, Indiana University Robert H. McKinney School of Law
Amalia D. Kessler, Lewis Talbot and Nadine Hearn Shelton Professor of International Legal Studies, Stanford Law School
Peter Linzer, Professor of Law, University of Houston Law Center
Dennis O. Lynch, Professor and Dean Emeritus, University of Miami School of Law
Margaret L. Moses, Professor of Law and Director, International Law and Practice Program, Loyola University Chicago School of Law
David B. Oppenheimer, Clinical Professor of Law & Director of Professional Skills, UC Berkeley School of Law
Nancy Polikoff, Professor of Law, American University Washington College of Law
Margaret Jane Radin, Henry King Ransom Professor of Law, University of Michigan Law School and author of Boilerplate
Maritza Reyes, Associate Professor of Law, Florida A&M University College of Law
Daniel B. Rodriguez, Dean and Harold Washington Professor, Northwestern University School of Law and President, AALS
Florence Wagman Roisman, William F. Harvey Professor of Law and Chancellor’s Professor, Indiana University Robert H. McKinney School of Law
Kathryn Sabbeth, Assistant Professor of Law, University of North Carolina School of Law
Peter M. Shane, Jacob E. Davis and Jacob E. Davis II Chair in Law, Ohio State University Moritz College of Law
Shirin Sinnar, Assistant Professor of Law, Stanford Law School
Jean Sternlight, Director of the Saltman Center for Conflict Resolution and Michael and Sonja Saltman Professor of Law, University of Nevada Las Vegas William S. Boyd School of Law
Joan Vogel, Professor of Law, Vermont Law School
Adam Zimmerman, Associate Professor of Law, Loyola Law School, Los Angeles
PS: Lost in the Fine Print is a game-changer. It demystifies the concept of forced arbitration, and urges us to demand change. Nationwide, law professors are using the film as a resource to educate students about this issue. Click here to download or order your free copy of the film.
Tuesday, December 23, 2014
I recently saw the last Hobbit movie, The Battle of the Five Armies. I found it highly entertaining and was delighted to find a discussion about contracts between Bard, the leader of Laketown, and the King of the Dwarves, Thorin Oakenshield, during a pivotal moment in the movie. The two engage in a back-and-forth about the meaning of a bargain, contract defenses (coercion and duress), and the importance of keeping promises. In short, all the issues that come up regularly on this blog. This isn't the first time that contracts have come up in a Hobbit movie. The morality of promise-keeping is an important theme in the movie as it has been in the others.
Speaking of the Hobbit, the Weinstein brothers have lost their fight against Warner Bros. over the profits to the last two Hobbit movies. As discussed previously on this blog, the issue involved the meaning of "first motion picture" of each book but not "remakes." The Hobbit book was split into three movies and the Weinsteins argued that they should get a percentage from each movie; Warner Bros. claimed that they should only get royalties from the first Hobbit movie. Unfortunately for contracts enthusiasts, the matter was sent to arbitration against the wishes of the Weinstein Bros. who wanted it to play out in court so we may never find out the basis for the arbitrator's ruling.
Thursday, November 20, 2014
In a couple of previous posts I've described the International Commerical Arbitration Moot (ICAM) and detailed some aspects of this year's problem. None of this is news to the contracts, sales, and arbitration professors around the country who are involved in this activity. Still I am surprised at how many schools do not have teams. I have also noted the possible use of the yearly ICAM problem as a source or inspiration of exam questions.
For professors who are interested in starting a team there are many things to consider other than substance. These involve selecting and preparing a team. Here at Florida this means trimming a class of 30 or so hopeful students down to a team of 4 to 6. It is a complicated task. We try as much as possible to hold try outs that resemble the actual competition in Vienna. Other coaches know that the ICAM competition requires students to know the facts and law with precision and to have certain mannerisms that the mainly European judges find appealing. For example, speaking slowly is critical since many if not most judges will have English as a second language. Also, the closer the English spoken is to British English, the better. Why? Most of the arbitrators will have learned English abroad. The use of virtually any slang means you should move up your departure date from Vienna because you will not go far in the competition. "Gonna" must be "going to." "Wanna" must be "want to." No "big bucks." No "you guys." etc. If there such a thing as an eloquent yet casual style, that seems to work best. Yes, theater is involved and the coaches are directors as much as teachers. Even "costumes" seem to count. I watched a rather uncomfortable session in which an arbitrator dressed down a competitor who had, well, "dressed down" by not having the top button of his shirt buttoned. I think most coaches would agree the competition starts when the students arrive at the U.S. departure airport because from that point forward they may be rubbing shoulders with the arbitrators they will encounter in Vienna.
Monday, November 17, 2014
In The Blues Brothers, the band performs at Bob's Country Bunker. All things considered, the show goes rather well:
After the show, the Brothers ask to be paid. The owner offered to pay $200 for the performance, but the band owed $300 for beer. Elwood objects that they had been told that they would not have to pay for the first round, but the owner refuses to treat that as a waiver. A student asked me about the scene, and I'm not sure how it might be resolved. I would treat it as a matter of interpretation and expect that a court could hear expert testimony about the customary terms of contracts with bands at establishments such as Bob's Country Bunker.
But then there is a second issue (or third, if you think waiver is the second issue). The Brothers got the gig by pretending to be another band, The Good Ole Boys. So Bob has an argument that he was fraudulently induced to contract with Jake and Elwood. If that is so, they might be better off seeking to recover in quantum meruit, since Bob told them "that's some of the best goddam music we've had in the Country Bunker in a long time." The audience hurled what seemed like hundreds of bottles of beer at the band during the performance, so Bob must have made quite a bit in drink (or projectile) sales. On the other hand, I don't know what it costs to clean up that mess.
Hat tip to Valpo 1L Brandon Carter for calling my attention to the scene and to the fact that he is watching old movies when he should be studying law!
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.
Monday, October 6, 2014
The problem is up for the 22nd Annual International Commerical Arbitration Moot. Between now and early December, teams will write the brief for the Claimant. In mid January the brief for the Respondent is due. And then, in March, 200-300 teams from law schools around the world will gather in Vienna for the competition.
There is no limit to the number of students on a team but they must argue in pairs. Typically one student handles the procedural issues and one the substantive or the CISG issues. There are 4 rounds to start with the 64 highest scoring teams moving on to a single elimination tournament.
The problems identify an actual arbitration agency whose rules govern the procedures, This year the procedural issues center around whether the Claimant the right to make an emergency appeal to the arbitration agency and whether the Respondent may join the parent company of the Claimant for purposes of its counterclaim. In one of those puzzles that charactizes the Moot, the parent company "endored" the contract at issue but claims not to be a party do it.
The substantive issue concerns a letter of credit which does not conform (or does it?) to what was called for in the contract. The buyer attempts to "cure" in a sense but the seller says "too late, we have already avoided the contract." Thus, it raises avoidance and cure isssues under the CISG.
This is, at best, a first cut on the problem. As the weeks pass, the problem will reveal itself as the layers are peeled off.
I am happy to trade notes and views with other interested profs.
[In the meantime, try to find the third man.]
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.”
Wednesday, October 30, 2013
A contract dispute powers A Man of Property, the first volume of John Galsworthy's The Forsyte Saga, to its conclusion. Now, I admit, the synopsis that follows is not based on the novels, which I have not read. It is based on the 2002/2003 television mini-series. I will happily stand corrected if any Galsworthy fans want to point out discrepancies between the film and novel accounts of the contracts case.
Soames Forsyte loved his wife Irene, but he wanted to possess her, and she only consented to marry him. Difficulties arose when Irene took an interest in a young architect, Bosinney, who was to wed Soames's second cousin (I believe), June.
Soames, unaware at this point of the connection between Bosinney & Irene, decides to build a country home to get Irene away from the distractions of London -- in particular he means to separate her from June. Meanwhile, Bosinney and Irene become lovers, and at the same time, rather unwisely, Bosinney keeps raising the contract price for the home he builds for Soames.
Bosinney and Irene finally push Soames beyond all endurance, and he decides to sue Bosinney for breach of contract because Bosinney has exceeded the agreed-upon, adjusted contract price for the house. Bosinney is in a bad spot. He can't afford to pay Soames for the extra costs -- they approach Bosinney's annual income. Nor can he afford to have a breach of contract claim hanging over him in connection with his first major project. Indeed, based on the success of his first project, other well-bred Englishmen are beginning to approach him as potential clients, but when they learn of his dispute with Soames, all is put on hold.
From the outset, one senses that Soames has Bosinney cornered and will destroy him. Bosinney believes, rather absurdly, that he can win the case, but Soames is a solicitor and he can hire the best trial lawyer in London. Bosinney hasn't a chance. Perhaps it's all for the best then when he is run over by a carriage and killed just before the case is lost. Soames ends up selling the house to his Uncle. The sale price might give us a better sense of the extent of the legal injustice wrought in Forsyte v. Bosinney.
Thursday, May 9, 2013
For many lawyers, To Kill a Mockingbird (TKAM) is at the top of their list of "favorite books/movies about a lawyer." TKAM is about more than lawyering, of course. It's about racism, family, class and much more. This week, TKAM also is about "fraudulent inducement," "consideration" (a lack thereof) and "fiduciary duty." All of those subjects are in the complaint filed by TKAM author, (Nelle) Harper Lee, against her purported literary agent.
In the suit, Lee alleges that Samuel L. Pinkus (and a few other defendants) fraudulently induced her to sign her TKAM rights over to one of Pinkus's companies in 2007 and again in 2011. According to Lee, Pinkus, the son-in-law of Lee's longtime agent, Eugene Winick, transferred many of Winick's clients to himself when Winick fell ill in 2006. Pinkus then allegedly misappropriated royalties and failed to promote Lee's copyright in the U.S. and abroad.
For Contracts professors, the Lee v. Pinkus suit provides some interesting hypos to discuss when teaching fraud, consideration, and assignments of rights. Regarding fraud, Lee alleges that Pinkus lied to her about what she was signing at a time when she was particularly vulnerable due to a recent stroke and declining eyesight. Consideration is in play because there allegedly was no consideration from Pinkus to Lee in exchange for Lee's transfer of rights to Pinkus. Assignment issues arose because the many companies who owed Lee royalties reportedly struggled to figure out which company or companies they should pay given Pinkus's many shell companies. Overall, it's a sad story for Ms. Lee but one that students may find particularly engaging.
[Heidi R. Anderson]
p.s. Although there are many quote-worthy passages in TKAM, a favorite of mine (useful when advising students about their writing) is: “Atticus told me to delete the adjectives and I'd have the facts.” Please feel free to share your favorites in the comments.
Tuesday, April 30, 2013
We are grateful to the website Lexology.com and to Ellen D. Marcus of Zuckerman Spaeder LLP for this informative and interesting post about this complaint filed in the Northern District of Illinois by Merry Gentlemen, LLC against actor and director, Michael Keaton. According to the complaint, Keaton breached his contract to act in and direct a film called Merry Gentlemen by failing to deliver it on time and by marketing his own version of the film to the Sundance Film Festival. The film cratered, grossing only $350,000 at the box office. Moreover, the producers allege that Keaton's various breaches caused "substantial delays and increased expenses in the completion and release of the movie," thus causing the producers to suffer "substantial financial loss."
Ms. Marcus's post picks it up there, citing Restatement 2d's Section 347 on the elements of expectation damages and illustrating what sort of sums the producers might be looking to recover. Ms. Marcus has to speculate, as the producers cite no figures beyond those required to meet the amount-in-controversy requirement to get their diversity claim into a federal court.
Whether or not the allegations of the complaint are true, they paint a nice picture of the behind-the-scenes machinanations invovled in getting a film out to the viewing public. According to the complaint, Keaton produced a "first cut" that all agreed was unsatisfactory. There then followed both a "Chicago cut," edited by the producers and by Ron Lazzeretti, the screenwriter and the producers' original choice for director, as well as Keaton's second director's cut.
The producers then shopped the Chicago cut to the Sundance Film Festival, where they were awarded a prime venue. Keaton then allegedly threatened not to appear at Sundance unless his cut was screened. That was a dealbreaker for Sundance, so despite already having sunk $4 million in to the film, the producers claim they had no choice but to agree to screen Keaton's second cut at the festival. They did so through a Settlement and Release (attached to the complaint, but not to the online version) entered into with Keaton, which they now claim was without consideration, despite the recital of consideration in the agreement, and entered into under duress.
Despite all of this, the complaint alleges that the Sundance screening was a success, since the USA Today identified "Merry Gentlemen" as one of ten stand-out films screened that year. But the producers were unable to capitalize on this success, since Keaton's alleged continuing dereliction of his directorial duties resulted in dealys of the release of the film from October of November 2008 to May 2009. The producers allege that the film was a Christmas movie (or at least was set around Christmas time), so Keaton's delays caused the movie to premiere during the wrong season.
The producers allege that Keaton continued to refuse to cooperate with them after Sundance. Somehow, the movie nonetheless was released to some positive reviews:
The movie, as released (based upon Keaton’s second cut and numerous changes made by plaintiff), received substantial critical praise. Roger Ebert called the film “original, absorbing and curiously moving in ways that are far from expected.” The New York Times’ Manohla Dargis called it “[a]n austere, nearly perfect character study of two mismatched yet ideally matched souls.” David Letterman said on his Late Night talk show, “What a tremendous film . . . . I loved it.”
Note to the producers' attorneys: if you've got Roger Ebert and Manohla Dargis in your corner, you don't need Letterman (or The USA Today for that matter).
Nonetheless, the film did not succeed, grossing only $350,000, allegedly because of Keaton's failure to promote it. Indeed, some of the complaints allegations relating to Keaton's promotion efforts suggest some real issues. Upon being asked by an interviewer if she had accurately summarized the film's plot, Keaton allegedly responded that he had not seen it for a while.
We note also that Ms. Marcus's post is cross-posted on Suits by Suits, a legal blog about disputes between companies and their executives, a site to which we may occasionally return for more blog fodder.
Thursday, January 24, 2013
Nancy Kim beat me to the punch by posting about the contract that Bilbo Baggins enters into with Thorin's crew in The Hobbit. I was so upset that she beat me to the punch on the subject matter that I docked her a month salary from her position as contributing editor on the blog.
Now we've both been shown up (and how!), by James Daily, identifed here by Wired.com as
a lawyer and co-author of The Law and Superheroes, [who] typically focuses his legal critiques on the superhero world at the Law and the Multiverse website he runs with fellow lawyer and co-author Ryan Davidson.
Apparently, Mr. Daily got his hands on a replica of the five-foot-long scroll that was used as the contracts prop in the film. He then goes through the contract provision by provision and reaches the following conclusion:
One the whole, the contract is pretty well written. There are some anachronisms, unnecessary clauses, typos, and a small number of clear drafting errors, but given the contract’s length and its role in the film (which is to say not a huge one, especially in the particulars) it’s an impressive piece of work. I congratulate prop-maker and artist Daniel Reeve on a strong piece of work.
He provides a link for those interested in purchasing their own version of the contract, for a mere $500. " If you’d like an even more accurate replica of the contract, Weta’s online store has a version with hand-made touches by Mr. Reeve."
We tip our hats to Mr. Daily.
But I have my own thoughts about the contract that Mr. Daily does not mention. First, the price term of the contract is ambiguous, since it promises Bilbo "only cash on delivery, up to and not exceeding one fourteenth of total profits (if any)," which on my reading does not really guarantee him anything. On the other hand, the dwarves do promise to pay for Bilbo's funeral expenses, if necessary, so I think under the contract terms, he's better off dead.
This ambiguity is only partially clarified with the later provision that "the company shall retain any and all Recovered Goods until such a time as a full and final reckoning can be made, from which the Total Profits can then be established. Then, and only then, will the Burglar’s fourteenth share be calculated and decided." While this provision would strengthen any potential argument Bilbo might make that he should get no less and no more than a fourteenth share, if the contract does not define "full and final reckoning," he might have to wait quite some time to get that share, perhaps beyond his own final reckoning, and then it's Frodo's problem.
In addition, to address a matter of genuine concern; i.e., one that actually plays a role in the book, the contract does not specify the manner of delivery of payment. As Bilbo points out in Chapter 18 (spoiler alert: the mission to recover Smaug's treasure was a success), "How on [Middle] earth should I have got all that treasure home without war and murder all along the way, I don't know." Mr. Daily offers a solution: since the contract does not actually entitle Bilbo to any protion of Smaug's treasure but only to the value of a 1/14 share, the Dwarves could have wired a check to Bilbo's bank in the Shire (or the Middle Earth equivalent to a wire transfer). But in the book, Bilbo waived his right to the spoils of war beyond "two small chests, one filled with silver, and the other with gold, such as one strong pony should carry."
The fact that he did so suggests that really no part of the contract mattered much in the end. And that is as it should be, since the bonds formed by those who joined Thorin's crew went well beyond those that can be reduced to any writing or even to any trilogy of films.
[JT, with hat tip to Mark Edwin Burge of the Texas Wesleyan School of Law for directing us to the Wired.com site]
Monday, December 31, 2012
The other night, I finally got to see The Hobbit: An Unexpected Journey. Having recently spent several months in New Zealand (the home of Peter Jackson’s Weta studio), I had been surrounded by Hobbit-mania and was interested to see whether the movie proved worthy of the hype. I wasn’t disappointed. Although some critics were, well, critical, I thought it was an extremely entertaining movie that made time fly. Making a highly entertaining movie even better, a lengthy contract played a pivotal role. When Gandalf the Wizard, and Thorin and his company of dwarves seek Bilbo Baggins’ (i.e. the aforesaid hobbit’s) assistance to accompany them as burglar on an unexpected journey, they first ask him to sign a contract. The contract, several pages long, outlines in detail his compensation (i.e. consideration) and contains warnings and numerous disclaimers of liability in favor of Thorin & Co. Being a wise hobbit, Bilbo actually reads the contract, faints, and then refuses to sign it. The next morning, he awakens to a quiet house (dwarves know how to party, but apparently do so responsibly). Bilbo has a change of heart, decides he does want excitement and adventure, signs the contract, picks it up, and runs out of his house to join the departing dwarves. This is where --for a contracts prof -- the tension is most high. Having rejected the terms of the contract the night before, we know that the hobbit no longer has the power of acceptance. Therefore, when Bilbo thrusts his signed contract into the hands of one of the dwarves, he is only making an offer. It is the dwarf (who apparently has authority to accept on behalf of the other dwarves) who has the power of acceptance. I don’t think I need a spoiler alert before revealing that they do accept (there wouldn’t be much of a movie if they didn’t).
There were so many things to like about the movie, not the least of which was the way it illustrated how relational contracts set expectations, shape relationships and establish trust. At one point, Bilbo seeks to desert the dwarves. Although one could argue changed circumstances, I think a better explanation would be that given Thorin’s disparaging comments about Bilbo’s suitability for the journey, Bilbo decides to adjust his performance obligations accordingly. But events (and the always fascinating Gollum) intervene. In the end, Bilbo carries out his contractual obligations, proving that - even in Middle Earth - contracts are alive and well.