ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Friday, August 26, 2016

Ryan Lochte and Morals Clauses

I have witnessed with interest the evolving story of what exactly happened in Rio involving Ryan Lochte the morning of August 14. Initially Lochte claimed he had been robbed at gunpoint. I later heard through the gossip mill that that story was untrue and that Lochte had in fact beat up some security guards. That turned out, it seems, just to be rumor-mongering, but the story has continued to evolve from there, with both Lochte and the Rio police making statements that later seem untrue, or only partially true, or exaggerated. Slate has a good run-down of the changing versions of Lochte's story, although it's from a week ago. Now Lochte has been charged with filing a false police report, since it does seem clear at this point that no robbery happened. Even that, however, is confusing to parse if you read a lot of articles about it: It seems like the crime is more accurately making a false communication to police, as some articles have eventually stated, since there are conflicting reports about whether a police report was ever filed. 

In the wake of this whole mess, Lochte has lost several of his sponsorship deals (although he's also picked one up). It's unclear, because the contracts don't seem to be public, whether this is a choice of just not renewing the contract (apparently that's the case with Ralph Lauren) or if a violation of a morals clause is being invoked to allow cancellation of the contract (which might be what's going on with Speedo). All of this provokes an interesting morals-clause conversation to me, and we had a bit of discussion about it on the Contracts Professors listserv. It seems clear that Lochte engaged in some sort of inappropriate behavior, and it seems also clear that whatever that behavior was, even the most minor version of the story is arguably a violation of any morals clause out there.

What is most clear is that, no matter what really happened, this has definitely served to tarnish his reputation, and that's is what's striking to me. This story has taken on an enormous life of its own, with many differing versions of it floating around the Internet. This situation has been caused, of course, by Lochte's many differing stories, together with some apparent conflicting statements by the Rio police, coupled with reporting that may have been less than precise itself in describing what was going on. One online story details all the conflicting information and asks the individual reader what they believe about the story.

While this particular maelstrom seems to have some basis in fact, it's not difficult to imagine something like this getting out of control without such justifying behavior at the root of it. Morals clauses tend to be about perception, but does that mean you can manipulate the perception of someone, through no real fault of their own? Take, for instance, the "Ted Cruz is the Zodiac Killer" meme that was popular on the Internet earlier this year. Ted Cruz wasn't born until after some of the Zodiac killings had happened, so he obviously could not have been the Zodiac Killer, and in fact some people interviewed about the meme noted that was the point: what they were saying was impossible. Nevertheless, it was reported that polls indicated 38% of those surveyed thought he might, in fact, be the Zodiac Killer, despite the impossibility. If a substantial number of people start thinking you did something you absolutely did not do, is that enough for a morals clause to be violated, because of the perception that you did it? 

August 26, 2016 in Celebrity Contracts, Commentary, Current Affairs, Games, In the News, Sports, Travel, True Contracts, Web/Tech, Weblogs | Permalink | Comments (0)

Thursday, August 11, 2016

Contracting Against Your Dad Embarrassing You

Which is exactly what Australia's swimming sisters Bronte and Cate Campbell have tried to do. Apparently after their father gave a number of effusive interviews to the press, the sisters turned to contract law in an attempt to protect them from further such events. As this article reports, the sisters entered into a contract with their father in which he promised, "to the best of [his] ability," "not to embarrass [his] daughters on national television."

No word on what their father received in exchange for this promise.

 

August 11, 2016 in Current Affairs, Games, In the News, Sports, Television, True Contracts | Permalink | Comments (0)

Wednesday, June 22, 2016

The Contractual Side of Going for the Gold

The Olympics are almost here, and as we all know, they're big business: lots of television ratings, lots of advertising, lots of endorsements.

Today the District of Oregon is hearing an argument on a preliminary injunction in a contract case with Olympic implications (or an Olympic case with contract implications), Nike USA, Inc. v. Berian, Docket No. 3:16-cv-00743 (behind paywall).

The dispute, which has been widely reported online, is based on Nike's endorsement contract with Boris Berian, a track and field competitor with Olympic hopes. The contract, according to the complaint, gave Nike the right to match any offers made to Berian during a particular period of time. During that time, Berian received an endorsement offer from New Balance. Nike claims in its complaint to have matched the offer, and that Berian breached his contract with Nike when he refused to continue his relationship with Nike.

Berian kept racing. And kept winning. While wearing New Balance gear. So Nike, to keep Berian from furthering his relationship with Nike's competitor New Balance, sued him, serving him with the lawsuit during a big track meet.

Nike's allegations have been countered by Berian, who claims that New Balance's offer to him did not contain a number of restrictions that Nike's offer did contain. However, Nike has countered that by arguing that Berian did not make that clear to Nike and that Nike would have dropped its restrictions if necessary. (Nike seems to have just assumed there had to be restrictions and that any statement otherwise couldn't possibly be true.)

Endorsements are big money, of course. The Nike and New Balance offers are $125,000 for the year. While he's embroiled in the legal dispute, Berian's agent asked for donations to Berian's legal fund.

The judge has already approved a TRO in the case, prohibiting Berian from racing with any equipment other than Nike's. The hearing for the preliminary injunction is today.

June 22, 2016 in Games, In the News, Recent Cases, True Contracts | Permalink | Comments (0)

Tuesday, April 12, 2016

Insurance Policies: Making Fantasy Viable in the Real World

That's not usually a tagline you associate with insurance policies, but it nevertheless appears to be true. 

  Larp Drachenfest 2012 (stseen lõpulahingust)

I feel like I've been doing a lot of blogging about insurance policies lately. So it almost seemed inevitable to me when I received my latest Rec Center e-mail (if you're not signed up, you totally should be!) that there would be a link to an article about insurance policies. However, this article is about how the growing willingness of insurance companies to insure fantasy live action role playing (LARP) events may be helping those events to become more common. As it becomes easier for the average person to get insurance for a LARP event, those events become simpler and less risky to host. So, if you've been wanting to set up your own quest and re-enact some fantasy combat, you can now make sure that people are covered by insurance if they fall during the battle and break an arm. The article notes, by the way, that injuries at LARP events are rare. One of the insurance companies hasn't received a single claim in five years. So this seems like a win-win for everyone. 

You should go read the article, it's really interesting, and a reminder that marijuana facilities aren't the only industry new-ish to the insurance area where policies need to be interpreted. Anything humans can dream up for fun can carry insurance policies with it. I guess they're kinda-sorta the equivalent of a healing spell or potion? (With a lot less magic.)

April 12, 2016 in Games, In the News, True Contracts | Permalink | Comments (0)

Monday, March 14, 2016

Using Contract Law to Protect Guestworkers

 

H-2B visas provide for foreign citizens to work temporarily for American businesses in non-agricultural roles. However, these visas can sometimes lead to abuse of the foreign citizens working under them, as was alleged in a recent case out of the Eighth Circuit, Cuellar-Aguilar v. Deggeller Attractions, No. 15-1219. Also blogged about here from a workplace law point of view, the case involved a group of nineteen workers who had been employed in a traveling carnival. The workers alleged, among other things, that their employer had breached their employment contracts by paying them below the minimum wage. 

The district court found that there had been no contract between the workers and their employer, basing its decision on the federal regulations governing the H-2B visa program. However, the appellate court said that was the incorrect place to look for guidance on whether a contract existed. Rather, the existence of a contract is governed by state common law, and in this case there was enough evidence of a contract to survive a motion to dismiss. The workers received offers of employment from Deggeller and then traveled to the United States in acceptance of those offers, which was enough to establish a contractual relationship. The court then used the federal regulations governing the H-2B visa program to fill in the particular terms of the contract, which included a requirement that the employer pay no less than the minimum wage. Therefore, the workers' allegations that the employer had breached this requirement established a valid contract cause of action. 

Allowing the workers to proceed on a contract theory may seem like a positive development for similarly situated workers who might find themselves taken advantage of. However, I had the pleasure recently of hearing Prof. Annie Smith from the University of Arkansas School of Law speak on the prospect of mandatory arbitration clauses being applied to guestworkers. As we all know, mandatory arbitration clauses are currently in major vogue, and Prof. Smith expressed concern that mandatory arbitration would be detrimental to already vulnerable guestworkers. The decision here might encourage employers like Deggeller to enter into more formal contracts that would include arbitration clauses. If they're going to be found to be in a contractual relationship anyway, presumably the employers would want to exercise control over the terms of that contractual relationship. 

March 14, 2016 in Commentary, Games, Recent Cases, True Contracts | Permalink | Comments (0)

Wednesday, February 3, 2016

Liability Releases for Negligence, New York Trampoline Park Edition

A recent case out of New York, Gosh v. RJMK Park LLC, No. 155024/2015 (thanks to reader Frank for the non-paywall link!), tackled the familiar issue of negligence liability release provisions, this time in the context of a trampoline park that the plaintiffs' child was injured at while playing "trampoline dodgeball." I had no idea what this was, so I looked it up. Here's a video: 

It mainly looks like something people who don't get motion-sick should play (i.e., people who are not me). 

The plaintiffs had signed an agreement with the trampoline park with a clause under which they waived all claims against the trampoline park arising out of negligence. Under New York law, such a clause is unenforceable when "a place of amusement or recreation" with an entry fee is involved as against public policy. 

However, that didn't mean the plaintiffs got everything they wanted in this case. The plaintiffs' argument was that the presence of the negligence liability release clause rendered the entire agreement with the trampoline park unenforceable, including the venue provision that required them to bring suit in Westchester County. The court disagreed: Just because that one provision was unenforceable didn't mean the entire agreement got thrown out. Rather, the court severed the negligence liability release provision as "unrelated" to the main goal of the agreement. It didn't actually clarify what the main objective of the agreement was, just dismissed the release provision as being related to "legal stuff," basically. At any rate, the agreement had contained the standard boilerplate provision stating that any illegal clause should be severed from the agreement and the rest of the agreement enforced, which also supported the court's conclusion. So venue was transferred to Westchester County. 

February 3, 2016 in Commentary, Games, Recent Cases, Sports, True Contracts | Permalink | Comments (2)

Wednesday, December 16, 2015

So You Want to Write a Best-Selling Video Game, Huh?

If so, it's always better to be precise in your negotiations. 

Of course, the flip side of this is that you frequently don't feel like you have the power to demand precision. 

In Bubble Pony v. Facepunch Studios, Civil No. 15-601(DSD/FLN) (sorry, I can only find versions behind paywalls for now), out of the District of Minnesota, Patrick Glynn was a computer programmer in need of a job. He e-mailed Facepunch looking for one, highlighting his abilities (as one does when job-hunting). Facepunch's majority owner, Garry Newman, responded to Glynn's e-mail positively, describing what he was looking for in a new employee and adding:

I want to eventually be in a position where you'd be making games for Facepunch Studios, which we'd sell on Steam, or the apple appstore, or whatever, but once that game makes what we've paid you so far back, you'd get something like a 60% cut of all the profits (probably more, that's kind of TBD). So we'd kind of be investing in your, kind of.

Does that sounds [sic] like the kind of situation you'd like to be in?

Glynn replied that yes, he was interested, and that his "only concerns" were "making rent, paying bills, and buying groceries." Eventually, the parties agreed on compensation of $1,900 per month, to be increased by $100 per month until they reached $3,000. At the time, Glynn's responsibilities were going to be things like fixing bugs and otherwise optimizing Facepunch's existing code. The parties did not further negotiate what would happen if/when Glynn started creating games for Facepunch. They did, however, agree that Glynn was an independent contractor and not an employee. 

Eventually, Glynn began creating games for Facepunch, producing more than 75% of the source code for a game called RUST. RUST was a huge success that "has generated at least $46 million in sales." Facepunch paid Glynn bonuses totaling around $700,000. Facepunch also asked Glynn, after RUST's major success had been established, to draft a document explaining how the RUST programming worked. Once it received the document, Facepunch terminated its relationship with Glynn, pulled RUST off the market, and announced a new "experimental game" based on RUST. 

As you might imagine, Glynn has sued for a number of causes of action, and there are other issues in this case, including an issue of personal jurisdiction, because Facepunch and Newman are both British (the court found personal jurisdiction to exist). However, to focus on the contract issue, the court found that the parties' e-mails on the subject of 60% of the profits if Glynn started developing games never rose to the level of an agreement. The court said that the terms about the compensation were "vague and indefinite," pointing to the words "eventually" and "something like 60%" and "TBD." Therefore, Glynn's breach of contract claims here were dismissed. The court also dismissed his promissory estoppel claims, finding that Newman's e-mail statements were too "vague and indefinite" to constitute promises. 

Glynn should have been sure to clarify his compensation before embarking on developing games for Facepunch. Of course, from Glynn's perspective, he was probably happy just to get a job, and, by the time he started developing games, he might have developed enough of a relationship with Facepunch that he didn't feel it necessary to rock the boat, so to speak. 

Glynn isn't completely out of luck, however. Although the court dismissed most of his claims, the lack of definite terms actually works in his favor in the copyright context. Because the parties were allegedly clear that Glynn was an independent contractor and not an employee, and because there was allegedly no agreement anywhere otherwise (so far, at this early stage), Glynn's claim for joint copyright ownership of RUST (and its associated causes of action) survived the motion to dismiss. So to be continued on the copyright question...

December 16, 2015 in Games, Recent Cases, True Contracts, Web/Tech | Permalink | Comments (0)

Monday, April 27, 2015

Weekly News Roundup

In yet another government outsourcing scheme gone wrong, KOLO TV news is reporting that Nevada is alleging breach of contract against the companies it hired to administer Common Core testing in the state's schools.  Apparently, when thousands of students attempted to log on so that they could take their exams, they received an error message and could not proceed.  Educators across the state are aggrieved, but students across the state are generally fine with it. 

Las_Vegas_slot_machines
Photo by Yamaguchi先生

Nonprofit Quarterly reports that three students, three parents and three alumnae are alleging breach of contract and seeking an injunction to keep open Sweet Briar College in Lynchburg, VA.  They allege that they had entered into express and implied agreements with the College that they would not only have the benefit of a four-year degree from the College but would also enjoy the benefits of being alumnae or of having children who were alumnae.

According to the Des Moines Register, in 2011, an 87-year-old grandmother was playing the slots, when the screen told her that she had a "bonus award" of $41797550.16.  Last week, Iowa's Supreme Court ruled unanimously that she had won $1.85.  They rejected claims of breach of an implied contract and found that the "bonus award" was just the product of a computer glitch.   

April 27, 2015 in Games, Government Contracting, In the News | Permalink | Comments (0) | TrackBack (0)

Friday, October 31, 2014

More on the Puzzling ICAM Problem

 

Crossword_puzzle_with_lady_in_black_coat

As I noted about a month ago the problem for the 2015 International Commercial Artbitration Moot is wonderful for those who like crossword puzzles, solving problems, reading mysteries, or doing detective work. There are facts, deadends, and read herrings galore. No one goes for a big sleep as far as I can tell but there is the dreaded issue of "fundamental breach." In fact, that appears to be the centerpiece of the problem. Just to make it a little twisty, the fundamental breach is by the buyer whose letter of credit may not conform to the contract. Since even that would be too simple, there is a second letter of credit that may or may not conform but which came after the first arguably non comforming one. There are phone calls, emails, letters, accusations, and even an emergency arbitration that, maybe, should not have occurred at all.

At my school 32 students are now writing briefs for the claimants side of the case and preparing for their oral arguments next week. There is something here even for profs not involved in the Moot. Just reading the problem will spark all kinds of ideas for exam questions suitable for  the basic contracts course.

 

October 31, 2014 in Conferences, Contract Profs, Games, Law Schools, Meetings, Teaching | Permalink | Comments (0) | TrackBack (0)

Wednesday, January 22, 2014

A $1 Billion Dollar Unilateral Offer

Warren Buffett and Quicken Loans have teamed up to help make teaching about unilateral contracts and interpretation so much more interesting.  The offer?  One billion dollars to anyone who fills out a perfect 2014 NCAA tournament bracket.

Say what?  Is this serious?  Or is it like that Pepsi commercial - you know the one.

Although at first, this might sound like a joke, once you learn the odds are, by one estimate, one in 9.2 quintillion, you --a reasonable person -- would realize this offer was serious.

All you have to do is fill out a perfect bracket.  (Now might be the time for me to mention that I once won my law firm's pool one year.  Strange but true).

But wait - there's more.  The Business Insider reports that Quicken, which is actually running the contest, will award $100,000 to 20 of the most accurate but not perfect brackets "submitted by qualified entrants in the contest to use toward buying, refinancing or remodeling a home."  The company will also donate $1million  to Detroit and Cleveland non-profit organizations. 

Get ready for March Madness....

 

[Nancy Kim]

 

 

January 22, 2014 in Current Affairs, Games, In the News, Miscellaneous | Permalink | Comments (0) | TrackBack (0)

Saturday, December 7, 2013

Will Tough Mudder's Liability Waiver Hold Up?

Tough Mudder hosts extreme 10-mile obstacle course challenges.  If you are unfamiliar with the company, this video should give you a sense of the challenges Tough Mudder creates: 

Before a participant may enroll in an event and run the course, he/she must agree to an assumption of risk, waiver of liability and indemnity agreement.

Outdoor magazine has a story this month about the tragic death of Avishek Sengupta at a Tough Mudder event in Maryland.  He jumped into the deep, muddy pool at the "Walk the Plank" obstacle and did not emerge.  His tragic death is recounted in harrowing detail in the Outdoor magazine article, which mentions that Avishek's family has sued Tough Mudder and Amphibious Medics, a subcontractor that was onsite to provide rescue services.  

Central in the case will be the enforceability of the waiver of liability.  The parties weren't too fortchoming with litigation strategy but the article does provide:

Tough Mudder won't discuss its strategy for the Senguptas' legal action—nor will anyone from Amphibious Medics—but if the suit goes forward, its lawyers will likely stress the fact that Avi signed what Tough Mudder calls a Death Waiver, exculpating the company of liability for certain acts of "ordinary negligence" and "inherent risks," such as "inadequate or negligent first aid and/or emergency measures" and "errors in judgment by personnel working the event."

But the Boston-area firm Gilbert and Renton, representing Avi's estate, will likely argue that such waivers do not relieve Tough Mudder of the legal "duty of care" that exists whenever a business knowingly creates predictable hazards for the public. In the case of Walk the Plank, the predictable hazard—drowning—is clear enough. Hence the presence of a rescue diver and lifeguards at the obstacle on the day Avi drowned.

This will be an important and interesting case for liability waivers.  Worth following.

[Meredith R. Miller]

 

  

December 7, 2013 in Games, In the News, Sports | Permalink | Comments (0) | TrackBack (0)

Wednesday, November 13, 2013

A Slam Dunk of a Deal

In a situation that underscores the importance of thinking twice about very long term contracts, the NBA wants to end a contract which requires it to pay two brothers a percentage of its broadcast revenues.  Back in 1976, the Silna brothers owned an ABA franchise, the Spirits of St. Louis.  When the ABA merged with the NBA, the Silnas agreed to this bargain - they would dissolve their team in exchange for 1/7 of the television revenues for the four ABA teams that were merged.  The four teams were the Indiana Pacers, the San Antonio Spurs, the Brooklyn Nets and the Denver Nuggets. 

Sure, back in 1976, the Silnas might have looked silly for giving up a huge buyout for something that seemed pretty worthless (the NBA wasn't even televised prime time) but now the deal is being called "the greatest sports deal of all time."  

Not kidding about that "all time" either - the Silvas reportedly received $19 million under the contract last season and the contract term is "in perpetuity."  Fat chance the NBA will be able to scream foul on the basis of lack of mutuality...

 

[Nancy Kim]

November 13, 2013 in Current Affairs, Games, In the News, Miscellaneous, Sports, True Contracts | Permalink | Comments (0) | TrackBack (0)

Tuesday, October 2, 2012

Lawyer Who Forgets About "Offeror is King" Wins, Then Loses, Contest

CrownWhile teaching the concept of "offeror is king" this semester, I said something like, "I wish I had a crown.  One of you should bring me a crown!  There might be some participation points in it for you if you do."  (It sounded less entitled than that quote but you get the point.)  Shortly thereafter, two students brought me a crown--one from Burger King (of course!) and one from a party supply store.  The first one was just slipped under my door but the second one had "terms of acceptance" attached.  The terms stated that I had to use the crown in class and not disclose the student's name in order to accept.  I did both, and my acceptance was deemed substantively valid and timely by the entire class.  

Another student recently alerted me to a New York Times story about a lawyer victimized by the "offeror is king" concept.  The lawyer, Theodore Scott, reportedly produced a winning video and essay in response to a contest offer from Gold Peak Tea.  The contest winner would receive  $100,000 to take a year off and enjoy life (presumably over some tea).  However, after Mr. Scott's video received the highest number of votes and was declared the grand prize winner, Gold Peak Tea had a change of heart.  Apparently, Mr. Scott had requested votes for his contest entry via a crowdsourcing website on which people, well, request votes for things like this.  Gold Peak Tea took the position that Mr. Scott's online plea for votes violated the contest rules.  Because Mr. Scott accepted in a way other than that specified by the offeror, there was no deal, and a different winner was selected. 

As an interesting side note, many folks appear to be bombarding Gold Peak Tea's Facebook page with comments supporting Mr. Scott, the original winner.  The Facebook response from Gold Peak Tea reads as follows: 

    "Gold Peak appreciates input from the community on our Facebook page. The Take the Year Off     program was created to reward a Gold Peak Tea fan with the opportunity to refresh, renew and     refocus. By devoting more time to his three special needs children and bettering his community with     the development of a local equine therapy program, Michael Simpson will take the year off in a     deserving fashion. We’d like to address some of the feedback shared about the Take the Year Off         promotion and how the winner was determined:

 

Michael Simpson was declared the winner after we fully vetted his submission to ensure all content was in adherence with Official Contest Rules (http://CokeURL.com/TTYORules).

Unfortunately, Theodore Scott was disqualified when it was determined during the verification process that he had attempted to inappropriately induce members of the public to vote for his submission, a violation of Official Contest Rules (http://CokeURL.com/TTYORules).

The House Rules for the Gold Peak Tea Facebook page state that users will not “publish, post, distribute or disseminate any defamatory, infringing, obscene, indecent, misleading or unlawful material or information.” Certain posts addressing the Take the Year Off promotion do not abide by these Rules and have been removed (http://CokeURL.com/HouseRules)."

Gold Peak hopes the members of this community will join us in wishing Michael Simpson well in his year off."

Perhaps the ultimate message, then, is not "offeror is king" but, rather, "read the fine print."

[Heidi R. Anderson, hat tip to Ly Tran]

 

 

 

October 2, 2012 in Current Affairs, Games, In the News, Teaching | Permalink | Comments (0) | TrackBack (0)

Thursday, March 15, 2012

Breach of an Implied Contract to Share Lottery Winnings

Two years ago, we reported on a case involving two sisters who feuded over whether a purported agreement to share gambling winnings covered one sister's lottery winnings.  At the time, we wondered why humans can't be more like monkeys, who it seems, have an innate sense of the duty to share

1814_English_State_Lottery_Ticket
Today's New York Times brings further evidence that, as our higher faculties have evolved, we have not yet reached monkey levels when it comes to fair play in the distribution of lottery winnings.  Today's Times provides the story of a construction worker who allegedly bought lottery tickets on behalf of five co-workers.  When one of defendant's tickets turned out to be worth $38.5 million, he pocketed the winnings (about $17.5 million after taxes) and quit his job, claiming a foot injury.  Defendant claimed that the winning ticket was one that he bought with his own money.  A jury disagreed and ordered the defendant to share the winnings.  Now, they all get to fight with the IRS to determine the proper taxation rate. 

The Times report includes the following telling comment:

“I play by myself because I don’t trust people,” said the man, who would give his name only as Sean, explaining that he regularly played Mega Millions and other games. “Am I shocked he tried to keep the money for himself? No. It’s human nature."

Sean, you should find yourself some monkeys with whom you could play Mega Millions.

[JT]

March 15, 2012 in Games, In the News, Recent Cases | Permalink | Comments (0) | TrackBack (0)

Monday, June 27, 2011

Professional Gambler's Suit Reinstated in the 9th Circuit

Clonie_Gowan_2008 In 2009, Cycalona (Clonie) Gowen brought suit in the United States District Court for the District of Nevada against Tiltware and related entities, alleging breach of contract among other things, and sought specific performance.  We reported on this suit previously in this horribly pun-filled post.  Gowen alleged breach of an oral contract made over the phone between herself and Tiltware CEO Raymond Bitar.  Gowen alleged that the contract would pay her 1% of Tiltware’s profits once it became profitable if she would agree to be a celebrity representative for the company and promote Full Tilt Poker, the company’s online poker website.  When Gowen did not receive any compensation for her promotion, she sued.The district court granted defendant Tiltware’s motion to dismiss. 

In a short, unpublished opinion, the 9th Circuit Court of Appeals affirmed in part and reversed in part, dismissing the related entities but reinstating Gowen's claims against Tiltware.  In granting Tiltware’s motion to dismiss the claim, the district court found that Gowen failed to state with specificity the terms of contract she was claiming was breached.  The district court ruled that the claim could not proceed because Gowen did not state her obligations or the terms of the contract in her complaint.  In addition she was not specific about the 1% share in Tiltware she was allegedly supposed to receive.  She did not state when it was calculated from and what other entities of Tiltware would be included in the calculation.

While the 9th Circuit affirmed parts of the District Courts ruling, the panel reversed the dismissal of the breach of contract claim against Tiltware.  The court ruled that there was sufficient information in the pleading to make a breach of contract claim.  The court rejected the Tiltware’s claim that this contract would be barred by the statute of frauds.  Even though this was an oral contract the terms did not preclude performance within one year and therefore the alleged contract would be enforceable.  

The 9th Circuit also reinstated the claims for promissory estoppel and unjust unenrichment, since Gowen alleged that she supported Full Tilt poker and did so relying on the promise of a 1% interest in the company.  The court held that, since Gowen alleged an enforceable contract, the district court erred in dismissing the claim as well as the claims for breach of implied duty of good faith and fair dealing and specific performance.

[JT & Jared Vasiliauskas]

 

June 27, 2011 in Celebrity Contracts, Games, Recent Cases | Permalink | Comments (0) | TrackBack (0)

Wednesday, June 15, 2011

Madden Coder Sues Electronic Arts for Breach of Contract


John_Madden Developer Robin Antonick, the man who originally coded the John Madden (pictured at left) football game for Sega Genesis, has brought a suit against Electronic Arts (EA) claiming a breach of contract stemming from EA's failure to pay royalties for use of his work.  According to Gamasutra, Antonick alleges that "all subsequent versions of the series are derivative works based on technologies he developed, specifically his football player behavior AI, the pseudo 'three-dimensional projection' of the field, the original game's instant replay feature, and the concept of a 'positional camera.'" In the suit, Antonick seeks payment for the use of these innovations.

According to this lengthy report in Bright Side of News, under the original contract, which has been amended since its creation in 1986, Antonick was entitled to royalties of 15% on all sales and 5% for derivative works.  Since Madden football was started it has brought EA approximately $4 billion in profits.  Antonick alleges that his work was used by EA in their other games including their NHL game.  Antonick is seeking the past royalties plus interest.  

Gamasutra reports that earlier this month, EA filed a motion to dismiss, claiming that no breach of contract has occurred because the features at issue are non-copyrightable and thus not covered by the contract.  In addition, EA claims that the statute of limitations has already run.  In addition, in response to Antonick's original demand for royalties, EA provided Antonick with the source code for its version of the game to prove that his code was not used.  EA also has submitted five declarations saying the new version of the game was developed without using any of Antonick’s work. 

Gamasutra concludes that, "[i]n order for Antonick to have a case, he will have to convince the court that his work amounted to original expression, rather than computer algorithms, which would make it copyright-protectable work."

[JT and Jared Vasiliauskas]  

 

 

June 15, 2011 in Games, Recent Cases, Sports | Permalink | Comments (0) | TrackBack (0)

Tuesday, February 22, 2011

How To eBay Your Children's Offending Toys (Moms: Do Not Try This At Home).

EBayed Bayblades 

As the mother of two preteen children this story hit a little too close to home.  In short, kids insist on playing with Beyblades in the bathtub, said tub is chipped and soap holder is broken by the rough play, frustrated Mom seizes toys, and presumably, after reducing the kids to tears by threatening to get rid of the toys, takes a snapshot of the tearful kids holding the offending toys in a ziplock bag; frustrated Mom makes good on her threat by actually auctioning toys of traumatized kids on eBay. 

Now here's the thing: there was keen bidding for the toys (estimated retail price $69) - the bids skyrocketed to $999,999!   So, what's wrong with this picture? I'll tell you what's wrong - like a virtual Hydra, an online community known for rapidly rallying behind the causes of its members became indignant at the 'heartless' Mom.  Members waded in, sparing no expense, to bid the auction to ridiculous heights.  

The last auction bid was for $999,999.  As we know, an auction sets up a contractual sale - in ordinary circumstances notice of the sale is an invitation to make offers, bids are offers, and the bang of the auctioneer's gavel (or in these circumstances, expiry of the fixed time predetermined for auction of the particular item) signifies acceptance of the highest bid.  Are you serious???  Surely not $999,999 for a Ziploc bag of silly used toys (plus the guilt of being an accomplice to the trauma of two kids).  Is there a law against this?  There may be.

The first rule is READ THE CONTRACT.  eBay's terms provide:

As an auction-style listing proceeds, we’ll automatically increase your bid on your behalf, up to your maximum bid, to maintain your position as the high bidder or to meet the item’s reserve price. The bid increment is the minimum amount by which your bid will be raised.

So, there may be automatic bidding.  Okay.  But you may pay less than your bid if you win:

When you win an auction you always actually pay only a small amount more than the next highest bid-even if your bid was thousands of dollars more.  If your bid wins, you must buy. Your bid on an auction is a legally binding contract. If when time runs out your bid is the highest, you have purchased the item and must pay the seller for it.

So what happened here?  Was the last bid $999,999, or was it in reality say (I'm picking a number out of thin air here) $73.01?  Clearly this would be less cause for excitement/incredulity (take your pick).  And that brings me to my next point: what was said frustrated Mom supposed to make of the bids?  Was she expected to take it all seriously?  Was she one of those rare creatures that actually read the fine print, and knew that $999,999 meant squat? 

These are not merely rhetorical questions.  If she had reason to believe the bids were in jest, would that negate the intention of the vengeful Hydra to enter into a legally binding agreement?  Do eBay's terms permit this - can any random group decide to use eBay as a means of punishing (whom in its opinion is) a bad mom by frustrating her lesson-in-financial-responsibility punishment?  Maybe not - eBay's terms state further:

Bidding is meant to be fun, but remember that each bid you place enters you into a binding contract. The only bids that are non-binding are those placed in the Real Estate category and for vehicles on eBay Motors. All bids are active until the listing ends. If you win an item, you’re obligated to purchase it. 

But was this auction binding?  Let's think this through: 

  • if you bid in malice believing that your bid is patently ridiculous and obviously not to be taken seriously = no intention [read: not binding],
  • but the terms say a bid is binding, period, and you are presumed to read the terms = intention [read: binding],
  • but the size of the bid may not be what it seems [read: binding. Caveat: for a lesser price unknown to all except eBay during bidding],
  • but bids may be withdrawn in some circumstances = possibly not binding [read: not binding],

So, what's a mom to do: exasperated, ask eBay to cancel the auction? Can this be done without a reserve price?  Can eBay do whatever its adhesion contracts say it can?  Apparently, yes, and in this case, that is what happened.  eBay cancelled the auction (presumably at the request of the humiliated Mom) and that was that.

Well I say there ought to be a law.  Not necessarily against on-again-off-again auctions (if there can be such a thing - you either bid or you don't, you either accept the bid or you don't?), but against the unsympathetic hounding of frustrated mommies.  You see, I know all too well how hard it is to balance lessons in obedience, responsibility and (dollars &) 'sence' with warm hugginess, patience and forgiveness.  As the mother of two children, I know that sometimes, you need to just let it lie.   But there are those moments when you've simply had it - when you've heard 'let 'er rip"a hundred million times, and that irritating rattle and roll in the beyblade arena (yes, one of my kids looooooves beyblades too) is ringing in your ears, for example. 

Imagine another scenario: You've had a long day teaching, you are starving because all you had to eat all day was that granola bar snatched between classes.  You're finally home juggling cooking dinner, supervising homework and checking voicemail messages.  The fact that someone has contributed to the daunting mess in the family room by leaving beyblade paraphernalia scattered all over the place is ticking like a timebomb, at the back of your brain, setting up a 'Mommy moment'.  Must you not only patiently endure your hunger, your exhaustion and your frustration, but fight the temptation of eBaying the offending toys too?

I've tried the maligned discipline tactic before, you see.  Someone who will remain nameless once shattered my car windscreen during a tantrum.  Exactly $173.16 of the $1000+ it cost to replace the windscreen emptied the culprit's piggy bank.  Admittedly I didn't take a picture of the culprit, post it on eBay, round up all the beyblades I could find, and attempt to raise the $826.84 balance by auctioning them on eBay.  I'm not even sure the lesson had the desired effect because from time to time, I'm reproachfully reminded by a certain someone (who's saving up for the latest computer-game-thingy), that s/he would have $173.16 more by now if I hadn't raided his/her piggybank.  Hercules Slaying the Hydra But what's a mom to do? 

Its a sometimes thankless job, being a Mom, but really, what has this world come to when a random Hydra can rear up to (caution: link contains coarse language) frustrate your non-spanking discipline attempts , and you earn yourself a place in the Mommies Hall Of Shame for even trying the discipline attempt?  With a chipped bathtub and broken soap dish on top, to add insult to injury?

So now I have a hilarious intended-in-jest-or-serious-contractual-offer teaching hypo for my contracts students.  And, the urge to check that I have not been outed in the Mommy's Hall of Shame as a bad mom everytime I cringe at hearing 'let er rip!"

 

[Eniola O Akindemowo]

 

 

February 22, 2011 in Commentary, E-commerce, Games, In the News, Teaching | Permalink | Comments (2) | TrackBack (0)