ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Friday, November 20, 2015

The High Price of an Unenforceable Agreement to Agree

The law firm of Andrews Kurth was recently hit with a nearly $200million dollar judgment for malpractice.  Yes, that's right - nearly 200 MILLION dollars.  At the bottom of this - an agreement which was deemed unenforceable as an "agreement to agree."  As reported by Law 360 (which requires registration - apologies), the malpractice suit stemmed from representation in a dispute involving a family business, Martin Resource Management.  Two brothers, Scott and Ruben Martin, were fighting over  management issues until their mother stepped in to broker a deal.  Andrews Kurth represented Scott Martin and sought changes to the deal to ensure its enforceability.  Scott ended up suing Ruben to force him to comply with the terms of the settlement; however, the appeals court ruled that the settlement agreement revised by Andrews Kurth was unenforceable as an "agreement to agree."  Many lawsuits ensued resulting in this incredibly large jury award.

Unfortunately, I couldn't get a copy of the actual agreement that was at issue - I would really like to see what the language looked like...


November 20, 2015 in Commentary, In the News | Permalink | Comments (0)

Friday, November 13, 2015

University of Illinois Settles Its Case with Steven Salaita

We have reported on this case numerous times, and the ordeal is finally over.  Here is our overview of the dispute from last year:

The very short version of the story, as best I can cobble it together from blog posts, is that the University of Illinois offered a position in its American Indian Studies program to Steven Salaita, who had previously been teaching at Virginia Tech.  According to this article in the Chicago Tribune, the U of I sent Professor Salaita an offer letter, which he signed and returned in October 2013.  Professor Salaita was informed that his appointment was subject to approval by the U of I's Board of Trustees, but everyone understood that to be pro forma.  In August 2014, Salaita the U of I Chancellor notified Professor Salaita that his appointment would not be presented to the Board and that he was no longer a candidate for a position.  According to the Tribune, the Board next meets in September, after Professor Salaita's employment would have begun.  The Chancellor apparently decided not to present Professor Salaita's contract for approval because of his extensive tweets on the Isreali-Palestinian conflict, which may or may not be anti-Semitic, depending on how one reads them.  

As reported here in Inside Higher Ed, the University of Illinois has agreed to pay Steven Salaita $875,000.  The University has now severed all ties with Professor Salaita who will not teach there.

November 13, 2015 in In the News, True Contracts | Permalink | Comments (0)

Jessica Silver-Greenberg on NPR's Fresh Air

Last week, we noted a series of articles in The New York Times about mandatory arbitration and class action waivers in consumer and employment contracts.  The reporter behind those stories did an interview on NPR's Fresh Air.  You can listen and read it here.

Hat tip to my student Marla Gee.

November 13, 2015 in In the News | Permalink | Comments (0)

Monday, November 9, 2015

Is Steve Irwin Really Dead?

California takes its laws against minors contracting seriously.  Very seriously.  Dancing with the Stars favorite Bindi Irwin, daughter of “Crocodile Hunter” Steve Irwin, must prove that her father was really killed in 2006 in order for her to get the earnings from the popular dancing show.  So far, Bindi Irwin has allegedly presented “insufficient proof” that her father has waived those earnings.  This despite worldwide shock that the beloved wildlife TV show stars was killed in a freak accident by a stingray in 2006.

California law requires underage entertainers to get court approval of their contracts to avoid the rampant abuses of minors in the industry of yesteryear. Parents of minors must now sign a quitclaim waiving any rights to the child's earnings.  Bindi's mother, Teri, has already signed, but Steve has not, for obvious reasons. 

The show’s owners, BBC Worldwide, is working with the court to work out the situation. 

Under her contract with BBC, Bindi earns a guaranteed salary of $125,000 as well as weekly sweeteners for each week she stays on the show.  So far, Bindi has done very well, even earning top scores one week.  The shows airs on Monday nights on ABC.

November 9, 2015 in Celebrity Contracts, In the News, Labor Contracts, Television, True Contracts | Permalink | Comments (0)

Wednesday, November 4, 2015

National Public Radio Also Focuses on the Spread of Arbitration

Cfpb-consumer-financial-protection-bureauOnce something turns up on the mainstream media, it often goes viral.  Let's hope that's the case with The New York Times series on the dangers of the Supreme Court's recent jurisprudence on arbitration and class action waivers.  Part III, which focuses on religious arbitration, is here.

My student, Collin Johnson, called to my attention some reports on National Public Radio on the same subject.  You can read or listen here and here.  The second reports on efforts by the Federal Consumer Financial Protection Bureau to ban financial institutions from imposing mandatory arbitration and class action waivers.

November 4, 2015 in In the News | Permalink | Comments (0)

Monday, November 2, 2015

Lego Turns Down Order for Millions of Lego Bricks to be Used for "Political" Purposes

Danish toy building brick maker Lego recently turned down an order for several million lego bricks that were to have been used in an art exhibit by Chinese artist and human rights activist Ai Weiwei in Melbourne.   Why?  Because Lego refrains from “actively engaging in or endorsing the use of Lego bricks in projects or contexts of a political agenda.” 

The bricks would have been used for two projects, one of which would have consisted of mosaic portraits of twenty Australian advocates for human rights and for information and Internet freedom.  Prominent lawyers such as Michael Kirby and Geoffrey Robertson would have been depicted as would have WikiLeaks founder Julian Assange.

Last year, Mr. Ai used Legos to create mosaic portraits of 176 political exiles and prisoners of conscience in an exhibit on Alcatraz Island in San Francisco.  At that time, Mr. Weiwei bought the toys via a nonprofit helping him develop the Alcatraz exhibition.

This is apparently not the first time that the Lego Group is turning down otherwise valuable contracts for its popular bricks.  Just this year, Lego rejected a proposal to make Lego figures of the female United States Supreme Court justices, also because such use was considered “political.” (Huh?!)  Previously, Lego has tried to persuade a Polish artist to withdraw an installation that used Lego bricks to depict a Nazi concentration camp (Lego, in turn, withdrew that request after lawyers got involved.).

China’s reaction to the Ai Weiwei story? The state-run Chinese Global Times reported that “as China becomes more powerful, commercial organizations and national governments will become more well behaved and more scared to apply a double standard to China.” (Link to Global Times not available, but see here for coverage from NPR and the NY Times)  Surely, at least part of that statement must be a mistranslation.  If not, then let’s indeed hope that governments and corporations alike become better behaved (if not, could we give them time out?).

Does this case make sense from a business point of view?  Perhaps, if the company wants to err on the extremely cautious side of avoiding negative PR in general.  Or is this perhaps rather an issue of not risking to upset a very valuable and increasingly affluent country such as China?  Should it matter to a manufacturer what its products are sold for?  Said Weiwei: “A company that sells pens [also] cannot tell a writer that he or she can’t do political or romantic writing. It’s really none of their business.” 

Having been born and raised in Denmark, Lego’s attitude surprises me somewhat.  Danes – whether organizations or individuals – often weigh in on important social issues.  Danes are often not afraid to speak their minds on important social issues.  That is simply how “small talk” and opinion-making is formed in the nation.  As a nation, Denmark often touts itself as a world leader when it comes to other complex issues such as comprising the environment, energy and health care even though those could also be seen as “political” in nature.  On that backdrop, Lego’s attitude seems even more conservative from a PR point of view, but of course, it is a multi-million dollar company worried about the bottom line.  Fair enough, but in a way, it would be refreshing if companies would take more responsibility for the ultimate effects of their products.  Some are.  For example, some companies are voluntarily reducing the sugar content in their products or at least providing less sugary alternatives to traditional products.  Others are not (the gun industry, to mention one).  But where, such as in the Lego case, companies decide to be overly cautious in relation to issues that do not seem all that controversial and that are not even funded or otherwise supported by the vendor itself, it seems that we are risking censorship via corporatism. 

The future of Weiwei’s exhibits is unknown, but he is reported to be making use of Lego collection points after having received numerous offers of Lego donations on social media. 

November 2, 2015 in Commentary, Current Affairs, In the News, Miscellaneous, True Contracts | Permalink | Comments (0)

Loving the New York Times this Sunday

He_New_York_Times_newsroom_1942A lot of folks in legal education were pissed off at The New York Times last week. Some fine responses include Michael Simkovic's and Frank Pasquale's.  I would just like to draw attention to the last two paragraphs of the Times editorial, which strain to draw some connection between loans that go to law students and the decrease of funds available to pay for legal representation for the poor.  Rising student debt and decreased funding for legal services are two sides of the same coin, and it is really peculiar to blame law schools for politicians' failures to adequately fund education or legal services . . . but today we are here to praise The New York Times.

I'm not sure why this is news but yesterday's Sunday Times prominently featured an article that tells it like it is about arbitration clauses and class action waivers.  The title and sub-title tell it all: Arbitration Everywhere, Stacking Deck of Justice: Vast Trend Locks Americans Out of Court -- Rulings Greatly Favor Business.  This is the first in a series of stories called Beware the Fine Print.  Part II is called In Arbitration, "A Privatization of the Justice System.

Ah, the Old Grey Lady returns to form.

November 2, 2015 in In the News, Recent Scholarship | Permalink | Comments (0)

Wednesday, October 21, 2015

Online Reviews – Are You Hot or Not?

Amazon is suing approximately 1,000 individuals who are allegedly in breach of contract with the Seattle online retailer for violating its terms of service.  Amazon is also alleging breach of Washington consumer protection laws.  

In April, Amazon sued middlemen websites offering to produce positive reviews, but this time, Amazon is targeting the actual freelance writers of the reviews, who often merely offer to post various product sellers’ own “reviews” for as little as $5.  (You now ask yourself “$5? Really? That’s nothing!”  That’s right… to most people, but remember that some people don’t make that much money, so every little bit helps, and numerous of the freelancers are thought to be located outside the United States.)  The product sellers and freelancers are alleged to have found each other on, a marketplace for odd jobs and “gigs” of various types.

There are powerful incentives to plant fraudulent reviews online. About 45 percent of consumers consider product reviews when weighing an online purchase.  Two-thirds of shoppers trust consumer opinions online.  For small businesses, it can be more economical to pay for positive reviews than to buy advertising. For example, a half-star increase in a restaurant's online rating can increase the likelihood of securing, say, a 7 p.m. booking by 15 to 20 percent. “A restaurateur might be tempted to pay $250 for 50 positive reviews online in the hopes of raising that rating.”

As law professors, we are not beyond online reviews and thus potential abuses ourselves. See, for example,  There, anyone can claim that they have taken your course and rank you on your “Helpfulness,” “Clarity,” and “Easiness,” give you an overall grade as well as an indication of whether you are hot or not (clearly a crucial aspect of being a law professor…) To stay anonymous, people simply have to create a random anonymous sounding email address. Not even a user screen name appears to be required. Hopefully, that website does not have nearly as much credibility as, for example, Yelp or TripAdvisor, but the potential for abuse of online reviews is clear both within as well as beyond our own circles.

As shown, though, some companies are taking action.  TripAdvisor claims that it has a team of 300 people using fraud detection techniques to weed out fake reviews.  But fraudulent reviews aren't thought to be going away anytime soon. One source estimates that as many as 10-15% of online reviews are fake (to me, that seems a low estimate, but I may just be a bit too cynical when it comes to online reviews).

So, next time you are reading reviews of a restaurant online, I suppose the learning is that you should take the reviews with a grain of salt.

October 21, 2015 in Current Affairs, E-commerce, Food and Drink, In the News, Labor Contracts, True Contracts, Web/Tech | Permalink | Comments (0)

Tuesday, October 20, 2015

Death of a Defendant in a Unilateral Contracts Case

1040As reported in The New York Times here, Irwin Schiff, a famous opponent of federal taxation, passed away in prison at the age of 87.  He had been sentenced in 2005 for tax evasion.  He claimed that he was being truthful when he reported that he had "no income in the constitutional sense."

His life is of interest to contracts profs because of Newman v. Schiff.  In 1983, Schiff offered $100,000 to anyone who could cite a section from the Internal Revenue Code (Code) that required an individual to file a federal tax return.  Schiff issued this challenge on a CBS new show called "Nightwatch."  Mr. Newman heard the challenge on a rebroadcast of the show and responded the next day when he had a chance to look through the Code and identify the relevant sections.  Schiff refused to pay, informing Newman that his response was both procedurally and substantively flaws.  Newman sued.

The District Court agreed with Schiff that Newman response was procedurally flawed.  It construed the offer to be open only until the end of the Nightwatch broadcast.  Mr. Newman was late.  But he was not wrong.  The District Court characterized Schiff's position on taxes as "blatant nonsense."  As the Times obituary notes, his son writes on economic topics.  The son found his father's positions compelling but impractical.   Schiff remained committed to his beliefs right up to the end. 

Hat tip to Gonzaga Law's Scott Burnham.

October 20, 2015 in Famous Cases, In the News | Permalink | Comments (0)

Monday, October 12, 2015

Sears Makes a Mistake

Some shoppers on thought it was their lucky day when they saw expensive play sets and fancy toys available for the low price of $11.95.  Consumerist has the story here.  If you saw a storybook cottage that typically costs hundreds of dollars listed for sale at the low, low price of $11.95, what would you think?  That's right.  Unless it was advertised as a huge blowout sale, you would probably guess it was a mistake.  Apparently, Sears lists items sold by third parties and gets a cut - and this time, a third party had made a pricing error on its items.  Of course, some Sears sellers were upset - even though Sears refunded their money and gave them a $5 gift card.  So, for all those upset sellers, let's run through the mistake scenario to see whether the law would be on your side:

Was this a mistake of a basic assumption?  - Yes, it was a pricing error and pricing errors are generally considered basic assumption mistakes.

Was the mistake made by one or both parties (was it a mutual or unilateral mistake?) - Here, Sears mistakenly believed that the prices listed on its website were accurate (not all $11.95) while the customers saw what the prices were - $11.95 -  so it was a unilateral mistake made by Sears. 

Did it have a material effect?  Yes, there's a big difference between $11.95 and hundreds of dollars so Sears would make less money on the transaction.

Did the non-mistaken party (the Sears customers) know or should they have known of the mistake?  - Yes, because they should know that expensive playsets are typically not sold for such a low price unless it is part of a promotion or clearance sale.

Did the mistaken party bear the risk of the mistake?  You might think Sears would, since it is their website.  But based upon existing case law (i.e. Donovan v. RRL Corp), since there's no lack of good faith here and Sears presumably acted reasonably in managing its website - it does not constitute "neglect of a legal duty" and Sears likely doesn't bear the risk of the mistake.

So - there you have it.  Sorry kids - guess you'll just have to go outside and build your own play castles with branches and old bed sheets...


October 12, 2015 in Commentary, E-commerce, In the News, Web/Tech | Permalink | Comments (4)

Tuesday, October 6, 2015

Contractual Promise to Assist with Hobnobbing

In California (where else?), a state court judge has, for now, refused to dismiss a fraud claim against Mark Zuckerberg of Facebook fame.  A breach of contract claim is also still under consideration.

What is the latter all about?  As we wrote here earlier, one of Zuckerberg's former neighbors alleges that he promised to sell property adjoining Zuckerberg's at a discount in return for Zuckerberg's promise to provide the neighbor with "personal referrals and business promotion activities."  The property changed hands, but Zuckerberg allegedly failed to make good on his promises.

Is he contractually bound to do so?  I don't see why not.  The promise is not illusory, and although it is not directly monetary in nature, it does seem to constitute true consideration (Zuckerberg would give up time and effort to get the discount and run the risk of inconveniencing his connections).  

Of course, promises such as these are probably very hard to enforce via court action.  What would a court realistically do? Force Zuckerberg to help the former neighbor hobnob now that the parties undoubtedly dislike each other intensely?  Require him to host a certain number of cocktail parties and invite the ex-neigbor?  Such relief is unrealistic, just as it would likely be next to impossible to monetize the alleged loss here. 

The temptation to contract in part in return for return benefits from the rich and famous is continually present now as it has been for decades, if not centuries.  But numerous cases show how such deals are next to impossible to enforce, contracts law principles or not.  A higher sales price would undoubtedly have been smarter here.   

Making the case even weirder, the neighbor's attorney has petitioned the court to withdraw from the case for ethical reasons.  

October 6, 2015 in Celebrity Contracts, In the News, Web/Tech | Permalink | Comments (0)

Saturday, October 3, 2015

Gag Clauses in Consumer Contracts

They’re still doing it: companies not wanting negative online reviews of their products or services attempt to contractually prohibit unsatisfied customers from posting such feedback. Not only that, but some companies also seek to take legal and other retaliatory action against their customers if they defy such attempted clauses.

For example, the FTC recently instigated suit against weight-loss company Roca Labs for threatening legal action against customers writing negative comments about the company’s allegedly ineffective weight loss powder.  (H/t to my colleagues on the AALS Contracts listserv for mentioning this story).  When one of Roca Lab’s customers posted a comment on the Better Business Bureau website, the company cited to their contract with the client that stated, “You will not disparage RL and/or any of its employees, products or services... If you breach this agreement... we retain all legal rights and remedies against the breaching customer..."  The company also asked the customer for information about her contacts on Twitter and Facebook (she luckily declined…).

There is no federal law prohibiting companies from trying to suppress negative reviews, but the FTC alleged unfair practices, among other things because the clause in question was buried in fine print.  The issue may also be a First Amendment problem, according to an attorney for, a third-party website that, as the name indicates, allows negative reviews of companies.

I could not agree more that the voice of customers who have been disappointed for good reason should be heard. It is, frankly, ridiculous what some companies can get away with in this country in this day and age, in my opinion.  (In the EU, for example, much more consumer-friendly regulations exist. In the USA, the legislative balancing of consumers v. companies often, in my opinion, is more of a slant favoring businesses, but that’s a thought for another day).  But here’s the thing: what about the true risk of disgruntled customers posting reviews that don’t quite reflect what really happened, that exaggerate the situation, or that simply make things seem worse than what they really were?  Even with emoticons, things can seem very harsh once written down even if they were not necessarily meant to be. 

Take, for example, popular hosting website Airbnb.  My husband and I own a historically registered house that requires a lot of upkeep and fixing after 90 years of neglect, so we signed up as hosts to try it out and, of course, to make a little extra money.  We love it!  We meet the most interesting people that truly enjoy our house. But as one’s success on that and other websites is, in reality, often tied closely to having a large amount of very good reviews, we also live with the constant worry that one day, somebody could post a negative review about something that most people would probably consider seemingly minor (our house is almost 100 years old, and there are necessarily small kinks with a house like that).  See also Nancy Kim’s recent blog on our apparently increasing need to judge each other negatively. At least Airbnb allows its users to post comments to reviews, but not all websites follow such practice.

My point is simply this: it is, of course, to go overboard to require one’s paying customers to not post negative reviews via contractual clauses or other methods. But how do we balance the need for true and honest, productive reviews with the risk of disgruntled and perhaps even dishonest customers?  Comment below!

October 3, 2015 in Current Affairs, In the News, Legislation, True Contracts, Web/Tech | Permalink | Comments (2)

Monday, September 21, 2015

Weekly News Roundup

The Chicago Tribune reports here on a contracts mess at the College of DuPage.  The College's board voted 4-3 to void the contract of its president, Dr. Robert Breuder and to declare him an at-will employee.  The board claimed that the avoidance of the contract was appropriate, given that the prior board had inappropriately locked the College in to a long-term contract.  The current board also alleges that the prior board violated Illinois law in various ways relating to the hiring of Dr. Breuder  The move enables the board to cancel the $763,000 severance payment that Dr. Breuder had agreed to accept as a condition of his early retirement in 2016.  One dissenting board member characterized the decision as a breach of contract, and the County State's Attorney already had opined that the contract could not be nullified.  Meanwhile, Dr. Breuder continues to draw his $495,000 salary on paid leave from his position while the College searches for a new president.

Soccer BallIn continuing FIFA news, Reuters reports that FIFA entered into a profit-sharing agreement with the Caribbean Football Union (CFU) in 2005.  FIFA was to receive 50 percent of all revenue generated from the sale of broadcast sponsorship and TV commercials in part of the Caribbean for the 2010 and 2014 World Cup competitions.  To date, FIFA claims it has received no payments.  FIFA seems to be mad now and has sent a letter to the CFU terminating the contract.  One wonders what because of all those advertising revenues . . . .

TrumpFinally, in Trump news, all's well that ends well.  As you may recall, and as Variety reports here, things got a bit divisive in the partnership that owns the Miss Universe, Miss USA, and Miss Teen USA pageants when co-owner Donald Trump (pictured) made nasty comments about immigrants.  When Univision and NBC refused to carry broadcasts of one of the pageants, Trump sued for breach of contract.  That suit has now been settled.  Trump bought out his partners and then sold the pageant to WME/IMG, whatever that is.  It's a shame.  Beauty pageants are so tawdry and demeaning to women, Mr. Trump was the ideal person to perpetuate them.  WME/IMG, you've got big shoes to fill.

September 21, 2015 in In the News | Permalink | Comments (0)

Friday, September 11, 2015

Weekly News Roundup

Richard_III_earliest_surviving_portraitVery excited to be able to report on a UCC case from Indiana, JMB Manufacturing, Inc. v. Child Craft, LLC decided by the 7th Circuit.  The opinion is long, but Judge Hamilton's introduction captures its spirit.

This case presents a merchant’s creative effort to avoid the limited remedies that contract law provides for a seller’s delivery of non-conforming goods. After the seller delivered about $90,000 worth of nonconforming wood products, the buyer sought recovery from both the seller and its president personally for tort damages on a tort theory, that they negligently misrepresented the quality of the delivered goods.

The district court ruled in favor of the buyer and awarded damages of more than $2.7 million on the theory that the non-conforming goods caused the complete destruction of the buyer’s business. This damages theory echoed the proverb of Poor Richard’s Almanack (“A little neglect may breed mischief; for want of a nail, the shoe was lost; for want of a shoe the horse was lost; for want of a horse the rider was lost; for want a rider the battle was lost.”), and Shakespeare’s story of Richard III [pictured], where the loss of a horse led in turn to the loss of a battle, the death of a king, and the loss of a kingdom. Cf. Hadley v. Baxendale, 9 Exch. 341, 156 Eng. Rep. 145 (1854) (damages for breach of contract limited to consequences reasonably contemplated by both parties when they made contract).

We reverse the award of damages against the seller and the seller’s president, but for reasons that do not depend on the flawed “want of a nail” theory. Under Indiana law, a buyer who has received non-conforming goods cannot sue a seller for negligent misrepresentation to avoid the economic loss doctrine, which limits the buyer to contract remedies for purely economic losses. See Indianapolis-Marion County Public Library v. Charlier Clark & Linard, P.C., 929 N.E.2d 722 (Ind. 2010). Second, there is no basis for transforming the buyer’s breach of contract claim into a tort claim for negligent misrepresentation to hold the seller’s president personally liable. See Greg Allen Construction Co., Inc. v. Estelle, 798 N.E.2d 171 (Ind. 2003). In all other respects, we affirm the judgment of the district court. 

The opinion includes a lengthy discussion of Indiana's economic loss doctrine.   

The Complete Colorado provides this report about a court's grant of a preliminary injunction empowering a teachers' union to continue in its role as sole entity empowered to negotiate a new contract with the local school board.  The ruling keeps the union's existing contract in force until its breach of contract claim can be heard, but the grant of the P.I. suggests the likelihood that the union will succeed on the merits of its claim.  But the ultimate remedy remains unclear.

And in news that will make you say, "What the . . .???" we learn from this article from the Washington Times that Ashley Madison claims that its new users are flocking to its website after news of its massive security breach, about which Myanna Dellinger has written herehere and here.   Other than quoting a spokesperson for the company who blathered about happy return customers, he Times does not speculate on the relationship between the scandal and the increase in users.  Knock yourself out.


September 11, 2015 in About this Blog, In the News, Labor Contracts | Permalink | Comments (0)

Sunday, September 6, 2015

When Lust Leads to Espionage

The recent massive hack into married-but-dating website Ashley Madison’s files may not only have breached the customer’s reasonable contractual expectations, but is now also said to lead to serious counter-intelligence concerns.  

Both China and Russia are collecting personal and sensitive information about people who may be involved in American national security operations.  What better leverage to have against operatives than information about their most secret, erotic desires. The temptation to resist such information being shared with even more people may persuade some operatives to render otherwise secret information about United States national security issues.  Recall that quite a few affair seekers used their official government addresses to arrange their attempted or successful trysts.  In combination with another recent OPM hack, countries that are seen as adversaries have apparently also been able to obtain information about who has sought security clearances and can use this information for counter-intelligence purposes.

That seems to provide a good public policy argument for why courts should find against Ashley Madison if it came to a contractual lawsuit regarding the breach of “100% secrecy” and “full deletes” promised, but not delivered, by Ashley Madison.

September 6, 2015 in Celebrity Contracts, Current Affairs, In the News, Web/Tech | Permalink | Comments (0)

Friday, September 4, 2015

Uber's Employees: Employees or Independent Contractors?

Yesterday, we blogged here about important considerations regarding whether an employee will be seen as an employee or a contractor.

In O'Connor v. Uber Technologies, U.S. District Judge Edward Chen just ruled that Uber's drivers may  pursue their arguments that they were employees in the form of a class-action suit. One of the reasons was that Uber admitted that they treated a large amount of its drivers "the same."

Of course, millions of dollars may be at stake in this context.  Profit margins are much higher for companies such as Uber, Lyft, Airbnb and other so-called "on demand" or "sharing economy" companies. That is because the companies do not have to pay contractors for health insurance benefits, work-related expenses, certain taxes, and the like.  But seen from the driver/employee's point of view, getting such benefits if they are truly employees is equally important in a country such as the United States where great disparities exist between the wealthy (such as the owners of these start-up companies) and the not-so-wealthy, everyday workers.

Plaintiffs are represented by renowned employee-side attorney Shannon "Sledgehammer" Liss-Riordan who represented and won a major suit by skycaps against American Airlines some years ago, so sparks undoubtedly will fly in the substantive hearings on this issue.

September 4, 2015 in Current Affairs, E-commerce, Famous Cases, In the News, Labor Contracts, True Contracts, Web/Tech | Permalink | Comments (0)

Tuesday, September 1, 2015

Uber’s Safety Checks

Uber.  It just seems to always be in the news for one more lawsuit, doesn’t it.  In late August, the district attorneys for San Francisco and Los Angeles filed a civil complaint against the company alleging that it is making misrepresentations about its safety procedures.  The complaint, i.a., reads that Uber’s “false and misleading statements are so woven into the fabric of Uber’s safety narrative that they render Uber’s entire safety message misleading.” 

On its website, Uber promises that “from the moment you request a ride to the moment you arrive, the Uber experience has been designed from the ground up with your safety in mind” and that “Ridesharing and livery drivers in the U.S. are screened through a process that includes county, federal, and multi-state criminal background checks. Uber also reviews drivers’ motor vehicle records throughout their time driving with Uber.”

However, Uber does not use fingerprint identication technology, which means that the company cannot search state and federal databases, only commercial ones. 

The result? People with highly questionable backgrounds end up being on Uber’s payroll.  For example, one “Uber driver was convicted of second-degree murder in 1982. He spent 26 years in prison, was released in 2008 and applied to Uber. A background report turned up no records relating to his murder conviction. He gave rides to over 1,100 Uber customers.” Yikes.  Another “Another driver was convicted on felony charges for lewd acts with children. He gave over 5,600 rides to Uber customers.” 

Add this to the ongoing lawsuit about whether Uber’s drivers should be legally classified as “employees” or “contractors,” and Uber is in a mound of legal trouble.

Certainly, a misrepresentation seems to have been made if the company deliberately touts its safety and its “industry-leading background check process” yet only uses a commercial database that does not even necessarily ensure that its drivers are who they say they are.

Still, Uber remains one of the most valuable start-ups in the world.  It and similar “sharing economy” companies such as Airbnb have gained a good foothold on a market with a clear demand for new types of services.  So far, so good.  But initial success should not and does not equate with a “free-for all” situation just because these new companies are highly successful, at least initially.  It seems that they are learning that lesson.  Lyft, for example, already settled with prosecutors in regards to its safety.  Perhaps Uber will follow suit.

September 1, 2015 in Commentary, Current Affairs, E-commerce, In the News, Labor Contracts, Web/Tech | Permalink | Comments (0)

Monday, August 31, 2015

Washington Post Exposes Scam that Takes Advantage of Recipients of Structured Settlements

The article is here.

It speaks for itself.

There are a million reasons why these contracts, which offer pennies on the dollar on the present value of the settlement, should not be enforced.  Feel free to offer your legal theories in the comments!

August 31, 2015 in In the News, True Contracts | Permalink | Comments (0)

Friday, August 28, 2015

Weekly News Roundup

Justin_BieberIn breaking Bieber news, HuffPo reports that Justin Bieber (pictured, left) claimed breach of contract in canceling a scheduled appearance in Montreal.  The venue where Bieber was scheduled to perform seems to belieber the young artist, as it posted on its Facebook page a notice that neither it nor Mr. Bieber were liable for the cancellation.  Bieber himself tweeted the cancellation, specifically referring to the promoter's breach (and to lying, but we prefer the legal jargon).

In Presidential candidate news, the Wisconsin Gazette reported that Wisconsin GovernorScottWalkertaxpayers might have to pay $50 million in damages because Governor Scott Walker (pictured, right) breached a contract that his predecessor had entered into to modernize the states rail service.  According to the Gazette, Spanish train-maker Talgo sued the state for $66 million.  The case settled, with the state agreement to pay nearly $10 million on top of the $42 million it had already paid for trains that it never received. 

The Washington Post reports that a Maryland firm, CNSI, that lost a $200 million contract when its Senior Vice President blew the whistle on irregularities in the award of the contract.  CNSI won a contract to process medicaid claims for the state of Louisiana while one of its former executives was Louisiana's Secretary of the Department of Health and Hospitals.  The contract was cancelled in 2013 and the Secretary of the Department of Health and Hospitals has been indicted for perjury.  CNSI claims that the whistle blower was a disgruntled employee who breached his contract and tortiously interfered.  An investigation into possible wrongdoing by CNSI in connection with the contract is ongoing.

August 28, 2015 in Celebrity Contracts, Government Contracting, In the News | Permalink | Comments (0)

Monday, August 24, 2015

Contracting to Pollute

Hugely successful auto-maker Tesla is making very good money not only on its electric cars, but also on its contracts selling zero emission credits to rivaling automakers. New environmental standards in eleven states require that by 2025, 15% of a car company’s sold fleet must be so-called “zero emission” vehicles.  If a company cannot meet existing standards, they can purchase zero emissions credits from other companies that can. Tesla is one of those.

This year, Tesla has sold approximately $68 million worth of credits to competing automakers, which represents 12% of its overall revenue. Overall, Tesla is doing very well: its net profit for the first quarter of this year was more than $11 million and its shares have been reported to be up more than 165% so far this year.

This raises the question that I also raised here on this blog in another post earlier this summer: is the emissions trading scheme a good idea, or does it simply allow for glorified “contracts to pollute”? As with many other things in the law, both could be seen to be the case. See this report that casts doubt on whether carbon credits help or hurt the agenda. Some call them "hot air,"perhaps for good reason. But at least Tesla is, hopefully, challenging other automakers to innovate to pollute less.

Another question, though, is the use of the euphemism “zero emissions.” Electric vehicles are arguably better seen from an environmental point of view than traditional cars, but they are not “zero” emissions.  They could, instead, be called “emissions elsewhere” vehicles.  That, of course, does not sound nearly as good. However, the electricity used for electric cars is produced somewhere. The true question is: by what means? If the electricity stems from dirty coal-fired power plants, the solution is not as good as it sounds, although concentrating the pollution in one large plant may be better than having many individual cars produce power on the road. That is a question for another forum. Suffice it to say that choice is good, and if car buyers could also in all locales could always decide exactly how to source their electricity (from, for instance, solar power), the matter would be different. That is not (yet) the case. So for now, “zero emission” vehicles are actually not so.

August 24, 2015 in Current Affairs, In the News, Legislation, Travel, Web/Tech | Permalink | Comments (0)