ContractsProf Blog

Kill Lancome!

Uma Thurman is mad.  In fact, I haven't seen her this mad since Michael Madsen shot her in the chest, took her samurai sword and buried her alive.  She is no longer mad at Bill.  No, no, that's all in the past.  Now, she is mad at Lancome, according to the Wall Street Journal, because she alleges that the French cosmetics corporation is continuing to use her image to promote its products after the expiration of a licensing agreement.  Fans of movie stars, cosmetics and litigation can find the complaint here. 

The WSJ notes that Lancome has filed its own suit against Thurman, apparently claiming that, under the licensing agreement, it is not subject to liability for third-party use of Thurman's image .  Lancome issued a statement on Friday in which it said that it would not comment on on-going litigation but claimed that "The use of Ms. Thurman's image after her contract expired, however minor, was neither deliberate nor intentional."  Uh huh.  Sounds like the pot was already broken when they borrowed it.

[Jeremy Telman]

Rumors from the Campaign Trail II

Here's another rumor that is circulating:  At the height of the Lewinsky scandal, Bill Clinton (pictured saying "I did not have sex with that woman . . . " -- well, no, not really) promised Hillary that if she stuck by him, he would help her become President.  Many people on the Internet openly avow belief in the rumor.  For example, here (comment by "Donald"), here (comment by "Janette"), here (comment by "transam76"), here (comment by "Cameron"), and a more obscure reference here ("You see, they really deserve a second eight years. Bill promised Hillary all those years ago.").

I also have intelligent friends who report on this rumor to me with the sort of wide-eyed insistence I usually associate with people recounting their abduction by aliens.  The alleged promise is supposed to explain why Bill Clinton has inexplicably been out campaigning for -- of all people -- his wife! 

But this is exam season, so who can come up with arguments for why such a promise would or would not be enforceable?

[Jeremy Telman]

Rumors from the Campaign Trail

I have heard many versions of a rumor of a contract between Barack Obama and Hillary Clinton.  The deal is that she will get out of the race if he will get her campaign out of its debt . . .  to her.  In other words, it's greenmail: Obama would be paying Clinton to go away.

Yesterday, "The Caucus," the New York Times politics blog reported that Obama "would not rule out the possibility of helping Senator Hillary Rodham Clinton retire her campaign debt to bring her into the fold and unify Democrats," although discussions have not yet taken place.  Various websites provide versions of the rumor and commentary.  For example, Ashish on  411mania.com notes the irony that "Obama would essentially be using money people donated to his campaign to BEAT Clinton to pay off the debts Clinton accumulated while trying to beat Obama."  Forbes characterized the plan as a "buyout."

Apparently, that notion had some Obama supporters up in arms, as they do not want their campaign donations to go to Hillary.  As "The Caucus" reports, Obama staffers are now saying that there would be a separate fundraising drive to raise money for Hillary's reimbursement. 

A scientific poll on Democratic Underground.com suggests that 58% of the people scientifically selected to participate in the poll would oppose any assumption by Obama's campaign of the Clinton debt.

[Jeremy Telman]

Congress May Close Loophole for Defense Contractors

According to the Associated Press, as reported in the Orlando Sentinel, Congress is moving to close a loophole that until now has permitted military contractors to avoid paying taxes and evade the strictures of U.S. employment law by setting up off-shore shell corporations. 

According to the report, U.S.-based military contractors have been setting up subsidiaries in places like the Cayman Islands.  These subsidiaries then employ U.S. citizens who provide support services for the U.S. military abroad.  As foreign corporations doing work abroad, these subsidiaries do not pay social security or medicare taxes for their workers and need not abide by federal labor and anti-discrimination laws.  The A.P.'s investigation suggests that the off-shore subsidiaries exist only on paper, without an address or phone number. 

The House passed tax legislation two weeks ago that would treat  foreign subsidiaries of U.S. government contractors as U.S. corporations.  The Senate is now considering the measure.  Today's New York Times features an editorial urging passage of the legislation. 

[Jeremy Telman]

People Is Stoopid: $5 Million Baby Pictures

Question: What kind of person would expose her children to ruthless paparazzi just in order to make a few bucks? 

Answer: The kind of person who doesn't need the money in the first place.

Today's New York Times reports that People Magazine paid $5 million for the first public pictures of J-Lo (pictured) and her newborn twins, so that you can see the same picture for free here.

One interesting thing about this agreement: In the New York Times article, it seems quite clear that the publishers cannot justify the prices they have been paying for baby pictures, which now frequently exceed $1 million. The Times quotes industry executives as saying that "the most important factors are impossible to measure: the value of being known as the place to go for those pictures, and of keeping them out of a competitor’s hands."  It gets clearer still:

Larry Hackett, People’s editor, said, “Last year, we lost a couple of weddings because OK! magazine was willing to spend more money than we thought made sense.” If that sort of thing becomes common, he said, “they’re going to get traction, and I don’t want any competitor to get traction where I can stop it.”

This kind of comment falls into a pattern of grossly inflated contracts that benefit the ultra-rich, something this blog has commented on before.  These contracts are not subject to rational defenses.  People is now pretty much admitting that it pays more for these photos than "makes sense."  The competition, OK!, has yet to make a profit.  The high prices are motivated by fear of the competition, which creates a feeding-frenzy dynamic in the bidding and defies conventional market logic.

[Jeremy Telman]

The General Services Administration: A Victim of "Terrorism"

According to the Wall Street Journal (see story "The Ousting of Lurita Doan"), Lurita Doan (pictured), as chief of the General Services Administration, oversaw "tens of billions of dollars in government contracts"  with the help of inspectors general.  In her two-year tenure as GSA chief, Doan generated a lot of controversy. 

In 2006, frustrated with oversight by those inspectors general, Doan proposed to cut the budget of the inspector general's office by $5 million.  Doan claimed that she was going after wasteful government spending, despite the fact that the office reported that its oversight had saved the government $1 billion over the previous two years through its watchdog efforts with respect to government contracts.  The Washington Post obtained a copy of notes from a GSA staff meeting in which she chided the inspectors general as terrorists: "There are two kinds of terrorism in the US: the external kind; and, internally, the IGs have terrorized the Regional Administrators,"

In January 2007, Doan admitted she made a "mistake" in awarding a no-bid contract to a friend.

In March, 2007, the House Committee on Oversight and Government Reform initiated investigations into Ms. Doan's conduct that may have violated the Hatch Act, which prohibits partisan campaign activities on federal property, when she allegedly directed GSA administrators to "help our [Republican] candidates" in a teleconference with one of Karl Rove's deputies on the line.

A full catalog of Washington Post stories covering Doan's career in public service is available here.

This week, Doan finally resigned from the GSA at the request of the White House.  Heckuva job, Doanie.

[Jeremy Telman]

WSJ: Meet the New Boss

When The News Corporation bought Dow Jones & Company, publisher of the Wall Street Journal, the Bancroft family, which held a controlling interest in Dow Jones, put up a fight in an attempt to protect the Journal's independence.  The News Corporation is controlled by Rupert Murdoch (pictured), who is reputed to have "a history of bending news coverage to suit his views," according to today's New York Times.  In order to protect the paper, the Bancrofts insisted upon the creation of a special oversight committee with the power to block the firing or hiring of the Journal's managing editor.

Last week, the Times reported that Marcus Brauchli, the Journal's managing editor, was resigning, just four months after Murdoch took control of the paper.  The special oversight committee has no jurisdiction over resignations, but it found that Brauchli had been effectively forced to resign and thus that Brauchli was removed from his position in violation of both "the letter and the spirit of the agreement." 

The committee recognizes that Mr Brauchli cannot be "unresigned," and is therefore simply stressing its intention to play a role in selecting his replacement.  According to the Times, the committee's chairman, Thomas J. Bray, said that Brauchli did not believe that the News Corporation had compromised the integrity or independence of the Journal.  Still, the Times reported that Brauchli was frustrated by the perception (at least) that he was not truly in control of the paper he ostensibly led.

[Jeremy Telman]

Girls Gone Litigious?!?

What do you get when you cross Ashley Alexandra Dupre, the woman with whom former New York Governor Elliot Spitzer allegedly had some very expensive private encounters, with the Girls Gone Wild franchise? 

a. A law suit.
b. A perfect storm for the blogarazzi.
c. A much-visited post on this blog.
d. All of the above.

If you guessed d, you may be right.  Time will tell if c is a winner. 

In any case, Comcast.net news reports that Ms. Dupre is seeking $10 million in damages from Girls Gone Wild and the mastermind behind it, Joe Francis, pictured above.  The ever-enterprising Mr. Francis reportedly offered Ms. Dupre $1 million to appear in one of his videos but then rescinded the offer when he learned that he already had footage of the pre-Spitzer Ms. Dupre.  Francis claims that Dupre spent a week on a Girls Gone Wild bus and made seven Girls Gone Wild videos.  The eleemosynary urge is strong in Mr. Francis: after their collaboration was at an end, he even bought her a bus ticket so that she could return to North Carolina.

Ms. Dupre's attorney contends that she was only 17 (and also drunk FWIW) when she signed releases permitting Mr. Francis to film her.  Her lawsuit thus challenges the validity of the releases and claims that defendants exploited her image without meaningful consent in order to promote their soft-porn products.

[Jeremy Telman]

Alamo and National Sue Orbitz

According to the St. Louis Business Journal, Alamo Rent-A-Car and National Car Rental are suing Orbitz Worldwide, Inc. for breach of contract, alleging that Orbitz has violated its online listing agreement with the two companies and has and improperly removed both Alamo and National from its main rental car matrix.

Both Alamo and National were acquired in 2007 by the Taylor family of St. Louis, which also owns Enterprise Rent-A-Car, when Enterprise acquired the parent company of Alamo and National, the Vanguard Car Rental Group.  The companies allege that Orbitz demanded an additional payment of $1.5 million in excess of what was required under the companies' agreement which runs through December 31, 2008.  Alamo and National allege that Orbitz removed them from its matrix when the Taylor family refused to pay.

Alamo and National are seeking a temporary restraining order, preliminary and permanent injunctive relief, and specific performance, punitive damages, and attorneys' fees.  Alamo contends that it stands to lose more than $27 million due to the alleged breach.  That being the case, I would pay the $1.5 million and sue later, but nobody asked my advice.

Orbitz maintains that the suit is without merit and that the two rental companies are making demands of it that are not required under the agreement.

[Jeremy Telman]

No Punitive Damages in Genentech Case

Last week, the California Supreme Court upheld a $300 million verdict on a breach of contract claim against the biotechnology company Genentech (HQ pictured) but struck the $200 million award of punitive damages, according to the San Francisco Chronicle.  The dispute relates to the discovery of a process for producing insulin made in the 1970s by two scientists working at the City of Hope National Medical Center, a cancer research center, City of Hope contracted with Genentech to patent and market products derived from the process in return for a 2 percent royalty.  Genentech paid City of Hope more than $300 million in royalties relating to the product the two scientists had synthesized but did not pay royalties relating to other products that were created using the engineering process that the two scientists had created. 

The jury had awarded punitive damages based on a finding that Genentech had breached a fiducity duty to City of Hope.  The Supreme Court refused to permit plaintiffs to get around the limitation on contractual damages by characterizing a breach of contract claim as one alleging a fiduciary breach.  Summarizing the opinion, the Chronicle reports:

The court said a company that markets another firm's scientific discoveries in exchange for royalties has no special obligation to protect the other's interests, apart from its duty to adhere to the contract. Without any such obligation, the justices said, punitive damages cannot be awarded for a breach of contract.

And there was much rejoicing among the amici.

[Jeremy Telman]

"Greed Is Good" Guy Sued

As TMZ.com puts it, "A guy that once starred in a movie with Michael Douglas, then became his business partner, is suing the Oscar winner, claiming he got screwed out of millions."  Now that's good reporting.  Want to know the details?  Well, TMZ says it's complicated but provides a link to the complaint, which alleges six causes of action including breach of contract and inducement to breach of contract, against Douglas and other individuals and business entities.

Plaintiff, Howard Zuker, aka Zack Norman, sues on his own behalf and derivatively on behalf of an LLC in which he has a 20% stake.  Plaintiff alleges that he managed the LLC while also active as a producer of Hollywood films.  The LLC's main asset seems to be a library of "owned or managed intellectual property rights."  Plainitff alleges that Michael Douglas prevented the LLC from advertising its existence, making it harder for the LLC to attract potential users of its assets.  Still, as of January 31, 2008, the complaint alleges that the LLC was involved in 31 active projects.

The complaint also relates the close personal relationship between plaintiff and Douglas.  According to TMZ, Douglas is plaintiff's former "BFF," but the complaint does not go that far.  It merely alleges that Douglas was kind to plaintiff and loaned him a lot of money.  The LLC was created to purchase a company that held the assets that are now the primary asset of the LLC.  According to the complaint, Douglas originally promised to put up half the capital necessary for that purchase but in the end put up much less, and the LLC was thus perpetually short of working capital.

Plaintiff alleges that he and Douglas created a joint venture agreement around January 2000 whereby the LLC would repay Douglas the loan he made at its founding plus 8% interest.  After that loan was repaid, the partners would share profits from the venture on a 50/50 basis.  But the complaint also alleges that Douglas made further loans to the LLC from 2001 to 2003 and that other parties who promised to provide capital did not perform.

Between 2002 and January 2006, plaintiff worked to created a new funding vehicle for the LLC, the AEHC Film Fund.  Plaintiff was supposed to receive a $1 million bonus for putting together the Film Fund, and he borrowed money from a banker (Baker) involved in the deal in order to tide him over until the work was completed.  In March 2006, according to the complaint, Douglas sent Plaintiff a new plan for the Film Fund, which was now renamed.  Under the new plan, the LLC's stake in the Film Fund would drop from 50% to 4%, with the remaining stakes going to film production companies controlled by Douglas and his wife. and the LLC would transfer its assets to a new entity, Granite-Glass, L.P. controlled by Douglas and Baker.  Recently, the LLC has stopped paying plaintiff his salary as manager and has refused to reimburse his business expenses.

Unfortunately, the complaint fails to allege that in pitching the new Film Fund to potential investors, Michael Douglas gave a rousing speech about the benefits of greed.

Plaintiff's main claim is for breach of fiduciary duty.  He seeks lost wages and the $1 million bonus he would have made for putting together the Film Fund.  He also seeks unspecified damages for harm done to the LLC.  Plaintiff's breach of contract claim is against the LLC, alleging that he is owed a part of his annual $192,000 salary as manager of the LLC.  Plaintiff names Baker as responsible for inducing the breach.

[Jeremy Telman]

"Family Guy" Writers Sue Fox

According to the Hollywood Reporter, Seth MacFarlane and 15 other writers of the animated sitcom "Family Guy" are suing 20th Century Fox TV,alleging breach of contract and other claims.  The writers allege that Fox has violated its contract with the writers by not paying them for 12 minutes of additional footage based on a script they wrote for a 2005 'Family Guy" DVD. They also allege that Fox failed to give them proper credit for the project. 

The Hollywood Reporter says that Fox would not comment on the law suit.  Not on record, perhaps.  Off the record, Fox's spokesperson said, "Twelve minutes of guys shaving off their strike beards is not remunerable.  Wait, wait.  'Remunerable' won't work as a laugh line.  How about this: Those guys probably couldn't even see through their strike beards to read the terms of the contract they signed.  They've got nothing!  Yeah, go with that, but off the record, okay?"

[Jeremy Telman]

Senate to Employees: You're on Your Own

In Ledbetter v. Goodyear Tire & Rubber Co., the Supreme Court ruled, in a 5-4 decision, that Title VII required that a plaintiff allege that defendant acted with discriminatory intent in making adverse pay decisions during the 180 days prior to the filling of a complaint with the Equal Employment Opportunity Commission (EEOC).

Lilly Ledbetter was employed as a manager by Goodyear from 1979-1998.  Initially she was paid the same as her male counterparts, but over time her pay slipped until she was paid significantly less than the lowest-paid male manager.  A jury rejected Goodyear's claim that it had non-discriminatory reasons for the pay disparity and awarded Ledbetter back pay.  The Eleventh Circuit reversed, finding that the allegedly discriminatory conduct had occurred prior to the 180-day window dating from the time of Ledbetter's complaint to the EEOC.  Justice Alito, writing for the majority, agreed, based on the statutory language and precedent.

Ledbetter and the dissent made policy arguments in favor of a more lenient rule.  Because employees are not entitled to know what their peers are being paid and because pay discrimination only occurs in slow imcrements that have a cumulative effect, Ledbetter argued that the 180 window should be expanded.  Justice Alito would not address those arguments, saying the court's role was simply to apply the statute as written.

The decision was thus, in effect, a remand back to Congress to clarify its legislative intent.  It attempted to do so through the Lilly Ledbetter Fair Pay Act of 2007, which effectively overrules Ledbetter and which passed the House by a vote of 225-199.  But the Act will not come to a vote in the Senate because it failed to win the 60 votes necessary to overcome Senate procedural rules.  Candidates Clinton and Obama returned to Washington to speak in favor of the Act and to cast their votes.  Candidate McCain remained on the campaign trail, but according to the New York Times, he said "he would have opposed the bill since it could contribute to frivolous lawsuits harmful to businesses."  Senator Hatch further explained the motives of the all but six Republican Senators who opposed the Act:  “The only ones who will see an increase in pay are some of the trial lawyers who bring the cases.”

So, employees who want to protect themselves against pay discrimination will have to negotiate harder during those oh-so-even-handed discussions they have with their employers when they take their positions.  Ms. Ledbetter, for example, after nearly 20 years in a supervisory position with Goodyear, was making nearly $45,000 a year.  With such princely resources at her disposal, imagine her bargaining power!

[Jeremy Telman]

Handwritten Letter of Intent Worth $10.5 Million

According to Newsday.com, a jury has awarded $10.5 million to internet executive Alfred West in his suit to enforce a handwritten agrement with IDT Corp.  According to the report, West met with IDT founder and chairman Howard S. Jonas on February 3, 2001.  The product of this meeting was two pages handwritten by Jonas which contained the terms of a deal in which West would develop a business within IDT.  The terms of the deal were as follows:

The deal called for an annual salary of $200,000 for five years, and an annual payment on Feb. 13 for the next five years of 70,000 shares and $1.5 million, which they estimated was worth "roughly" $14.3 million. The deal called for an annual salary of $200,000 for five years, and an annual payment on Feb. 13 for the next five years of 70,000 shares and $1.5 million, which they estimated was worth "roughly" $14.3 million.

Crucially, the handwritten agreement also contained the following langauge: "The parties will complete formal contracts as soon as possible but this is binding."

West was fired after six months at IDT.  His suit resulted in a 2005 jury verdict in his favor for $1.5 million.  The Third Circuit vacated that verdict and remanded, while reinstating West's breach of contract claim, which had been dismissed by the district court.  The second trial worked out even better for Mr. West, but IDT has promised a second appeal.

[Jeremy Telman]

Breaking 19th-Century News

National Public Radio reports that a 77-year-old Tampa woman is suing the city for its failure to repay a $300 loan made by her great-grandfather to the City of Tampa during the Civil War.  Assuming 147 years of interest at 8% per annum, the plaintiff figures she is owed $23 million. 

The past is passed, says Tampa (pictured), citing the statute of limitations, the demise of the currency in which plaintiff's great-grandfather was to be paid, and Section 4 of the 14th Amendment to the U.S. Constitution. Tampa also notes that the City of Tampa that incurred the debt dissolved in bankruptcy.  The current City of Tampa was founded years later.   

[Jeremy Telman]

There's No Crying in Baseball Contracting

Portfolio.com reports here on the death of mega-contracts in baseball.  Yes, we're thinking of you, Troy Tulowitzki (pictured), and also of Evan Longoria.  These are two young baseball players who signed rich but not jaw-dropping contracts with their teams either as rookies or after one year. 

This blog has suggested elsewhere that agreeing to pay any 42-year-old player nearly $30 million a year might be irrational.  Portfolio.com suggests the same, as the average player peaks at age 26.  Rational ball clubs thus offer reasonable multi-year contracts to very young players with huge potential, hoping to avoid having to pay them eye-popping contracts for post-prime years.

But nobody will walk away from the negotiating table crying.  Mr. Longoria negotiated a deal that will pay him $17.5 million over the next six years.  At the time he signed, he had played six games in the major leagues.  Tulowitzki will get over $5 million a year over a six-year period, but he had already proved himself last year as a rookie.  These contracts may seem rich, but with what you pay Tulowitzki to play every day for a full season you can barely get Roger Clemens to sit on the bench four games out of five for a month.

[Jeremy Telman]

Bear Market for Job Seekers

The New York Times reports that JP Morgan has notified new Bear Stearns hires that they will not be needed.  But the unemployed recruits can still keep what the Times calls a consolation prize -- they can keep their signing bonuses if they sign contracts in which they agree not to sue JP Morgan over their lost jobs.  The bonuses range from $10,000 for college seniors to $50,000 for newly-minted MBAs.  According to the Times, the students were paid these signing bonuses last fall, and JP Morgan is threatening to demand their return if the students refuse to sign the new contracts. 

[Jeremy Telman]

Class Action v. Southwest Airlines

The International Herald Tribune reports that four Southwest Airlines passengers are bringing a federal action alleging breach of contract and other causes of action relating to missed inspections of airplanes over a six-year period.  According to plaintiffs' lawyer Lew Garrison, as reported in the Charleston Gazette, plaintiffs seek reimbursement for tickets on the ground that the airline "did not comply with government regulations and did not honor its contract with its customers."  The suit also seeks punitive damages.  Mr Garrison's co-counsel, Mr. Mackey added, "The airline lied to us. Ahhh, you shouldn't lie.  Ahh, lying's bad mmkay?"

[Jeremy Telman]

A Contractual Right to Single-Sex Education?

According to the Associated Press, the Virginia Supreme Court heard on Monday from Wyatt B. Durrette, Jr., attorney for women students admitted to the Randolph Macon Women's College (now known as Randolph College) who have alleged that the college's governing board breached a contract with them by admitting men.  Mr. Durrette pointed to advertising materials and brochures that touted the school's single-sex approach to education. 

The suit was dismissed by a trial court last year.  The school argues that the case is now moot, as 60 men have already been admitted.  The case raised some interesting issues not only of contract but of education.  Mr. Durrette analogized his clients' situation to that of a person admitted to a dentistry school who learned only after enrollment that it was really a veterinary school.  The school countered that since students do not commit to staying at one school for all four years, enrollment in any particular school is really at most a one-semester contract.  Mr. Durrette countered that it is more like a lease with an option to renew.

In a related case, the Virginia Supreme Court also heard argument in a case involving college donors to Randolph College who do not want their charitable contributions expended on a co-educational institution.  As is common in such cases, the move to co-education is driven by low enrollments.  Randolph's board hoped opening the college's doors to men would increase enrollment.  So far, according to the AP, it has not had that effect.

[Jeremy Telman]

Trouble on the Treasure Coast

The Cyberknife Center of Florida's Treasure Coast is suing the St. Lucie Medical Center (SLMC) in a Marin County court for fraud and breach of contract.  Cyberknife opened a multimillion dollar cancer center last summer but closed it in January when, according to the complaint as reported on here, SLMC failed to get approval for medicare billing.  The suit alleges that, despite assurances that it had sought the necessary provider-based status before the cancer treatment center opened in June, SLMC did not apply for such status until after the treatment center opened.  In January, still not having obtained the necessary status, SLMC determined that it had no choice but to close the center.  It is not clear why SLMC was unable to obtain the necessary status for the treatment center, but as the above-referenced article suggests, confusion about effective ownership of the center may have been an issue.

[Jeremy Telman]

Twilight of the Ringnuts

His music has been praised in the most extravagant terms:

"He has his half hours."

"It's better than it sounds."

For fans of Richard Wagner (left), there is no better way to spend 15-16 hours than listening to his singular Gesamtkunstwerk, "Der Ring des Nibelungen."  That is why, as the New York Times reports, members of the Wagner Society of NewYork are hitting high C's in expressions of outrage over New York's Metropolitan Opera's decision to end its unofficial policy of giving Wagnerians the first pick of tickts for the Met's production of the Ring.  Instead, the Met's regular subscribers and patrons will be given preference.  As a consequence of this decision, Wagnerians contend that they may have to spend extra hundreds or even thousands of dollars to secure good seats for the last performance of Otto Schenk's classic production of the Ring in 2009. 

The Met's Peter Gelb is unrepentant:

“Wagnerians are very emotional,” he said. “But I have to look at the larger picture of the Met’s interests,” he said.

Limiting “Ring” priority to patrons and overall subscribers is another incentive to raise money and sell subscriptions, Mr. Gelb said. “We felt we needed to reward people who are patrons or subscribers,” he said. He provided his own baseball analogy: It is like buying season tickets for the Yankees, which includes the bonus of watching them play the Red Sox.

Mr. Gelb also pointed out that the earlier practice was not official policy, and that the Met was giving ample advance notice. “We don’t want to offend Wagner lovers, certainly, but hopefully they understand we are trying to maximize attendance and ticket revenues at the Met.”

So, here's the potential contract issue.  Is Mr. Gelb admitting too much when he acknowledges an earlier practice, even if that practice was not "official policy?"  Perhaps the prices that members of New York's Wagner Society were paying for their tickets included the consideration that those tickets assured them a place at the head of the line for future productions.

[Jeremy Telman]

The Future of CBS News: Lame Duck or Albatross?

All glory is fleeting.  When CBS News hired Katie Couric a year and a half ago, the move represented a clear break with its past. Couric was sure to bring CBS into the 21st century by completing the People Magazinfication of the evening news. And CBS paid big time, entering into a five-year $75 million contract with Couric. 

Now, as those clever headline writers at the New York Daily News report, CBS recognizes that the contract was a "Kat-astrophe."  CBS News is mired in third place, where it was before Couric arrived.  While all involved are denying rumors of Couric's imminent departure, the smart money indicates she will be gone before the next presidential inauguration.

The New York Times suggests that CBS's problems are broader than its ties with Kouric.  Given the rise of the 24-hour news networks, the traditional network news divisions may no longer be able to compete.  ABC News has clearly given up on breaking news.  Meanwhile, the Times reports that CBS is rumored to be talking of a partnership with CNN.

[Jeremy Telman]

CBS News Haunted by Its Past: The Dan Rather Suit

Dan Rather (pictured) sued his former employer last September.  Yesterday, most reports suggested that CBS won something of a victory, with headlines such as "Dan Rather's CBS Lawsuit Loses Some Steam,"  "Court Dismisses Majority Of Claims In Dan Rather's Lawsuit Against CBS" and "Judge Dismisses Bulk of Dan Rather's Suit vs. CBS." In its web edition the New York Times offered a more measured headline, "Parts of Rather's Suit Against CBS Dismissed," but in the print edition, schadenfreude apparently won the day, as the headline reads "CBS Is Denied a Move To Dismiss Rather's Suit."

As you may recall, the former CBS anchor was fired for attempting to engage in journalism.  Yesterday, New York State Supreme Court Justice, Ira Gammerman, set aside Mr. Rather's claims against individual defendants such as Sumner Redstone and Leslie Moonves, but left in tact Mr. Rather's breach of contract claim against CBS.  Mr. Rather alleges that CBS breached its contract with him by effectively marginalizing him for more than a year after he departed from the evening news.  Mr. Rather's fraud claim against CBS was dismissed.

I suspect that Justice Gammerman let Sumner Redstone off because of his competitive streak.  Gammerman has been around forever and doesn't like his longevity to be upstaged.  Gammerman well remembers the Roosevelt administration but Sumner Redstone well remembers the Lincoln administration.

[Jeremy Telman] 

Trek Sues to End Contract with Greg LeMond

At left is Greg LeMond (in the yellow jersey) poised to win his third Tour de France.  In 1986, LeMond became the first American to win cycling's most celebrated race.  In 1987, he was nearly killed in a hunting accident.  He and the 37 shotgun pellets still in his body, including two imbedding in the lining of his heart, returned to racing and won the Tour again in 1989 and 1990.  Needless to say, he is a great hero to American cycling fans, and unlike the strangely omnipotent Lance Armstrong, LeMond was appreciated by European fans as well. 

Greg LeMond was one of the first riders to speak out against doping in the sport.  You would think that any company associated with the sport would kill to have such a distinguished and squeaky clean spokesperson.  Yet, as the AP reports, bicycle-maker Trek is suing for permission to breach its endorsement contract with LeMond.  Apparently, the estrangement between LeMond and Trek is a product of his anti-doping comments, including comments directed at Armstrong, who is reported to have close ties to Trek.

According to the AP, Trek president John Burke accused LeMond of reneging on a promise to curb "his comments about doping in cycling to focus on the brand." Burke claims that LeMond continued to speak out against doping and that LeMond's comments resulted in a decline in sales in the brand.  Hmmm. I wonder what could have hurt the brand:

a. The fact that doping scandals have ruined the last two Tours and are threatening to keep the top team out of this year's race;

b. The entry of new manufacturers into the high-end bicycle market; or

c. Greg LeMond's principled stand against doping in competitive cycling.

[Jeremy Telman]

Hazardous Duty Pay for Bloggers

They work long hours, often around the clock.  It's a job that estranges them from family and loved ones -- not only becasue of the demands of their work but also because the experience so alters them that they can no longer relate to people who have not shared their trauma.  No, I'm not talking about military veterans.  I'm talking about America's other heroes -- bloggers.  Today's New York Times reports (on its front page!!) that bloggers are "toiling under great physical and emotional stress created by the around-the- clock Internet economy that demands a constant stream of news and comment."  According to the Times, "bloggers complain of weight loss or gain, sleep disorders, exhaustion and other maladies born of the nonstop strain of producing for a news and information cycle that is as always-on as the Internet." 

Consider my case.  The picture of me at the lop left was taken before I started blogging.  A bit nerdy, yes, but otherwise a fine physical specimen.  At left, we have a picture of me taken today, after only 18 months of blogging. The weight gain is palpable; the droopy eyes suggest severe sleep disorders and exhaustion.  Yup, all the symptoms of bloggerrhea are clearly visible.

As the Times notes, "[b]logging has been lucrative for some."  For example, Blog Emperor Paul Caron (left) seems fit as a fiddle.  But others toil away hoping to hit their bonus target of 100,000 page views a month.  Matt Buchanan, who works for Gizmodo, pretty much sums up my day.  According to the Times, "he sleeps about five hours a night and often does not have time to eat proper meals. But he does stay fueled — by regularly consuming a protein supplement mixed into coffee."  His editor shows the compassion behind the blogging industry: “If I don’t hear from him, I’ll think: Matt’s passed out again,” said Brian Lam, the editor of Gizmodo. “It’s happened four or five times.”

Why do we do it?  Because of the high we get when our efforts are appreciated by our viewers and by our colleagues.  As one of my senior colleagues put it, "What's the Internet?"

Now, if the caffeine will just kick in, I can crank out a few more stories before I crashshshzzzzzzzzzzzzzzzzz
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[Jeremy Telman]

Rhodes Says Air America is in F**n Breach of Contract

This blog has seen its share of radio hosts with contract issues.  Now, consider the predicament of liberal talk show host Randi Rhodes, who has a show on Air America. At a recent (off air) appearance on behalf of Air America, the radio host called Hillary Clinton and Geraldine Ferraro "f**n whores."  (Coincidently, Rhodes comment about Clinton uses contract as a metaphor: "Hillary is a big f**ing whore, too" ... "You know why she's a big f**ing whore? Because her deal is always, 'Read the fine print, a**hole!'). 

Without providing much explanation, Air America has temporarily suspended Rhodes' show from the air waves.  Rhodes told the Huffington Post: "They are in breach of my contract and have damaged my hard won excellent reputation in the broadcast industry..."

[Meredith R. Miller]

More from the Music Industry

No doubt influenced by yesterday's post on this blog about the ailing music industry, the New York Times today reports on what it calls "the ailing music industry," which has now teamed up with MySpace to start a new music site.  MySpace Music will now be a joint venture with Universal Music Group, Sony BMG Music Entertainment and Warner Music Group.  According to the Times, "The music companies are expected to make their entire digital music catalogs available for listening and downloading on the new site, which will be introduced later this year."

Once again picking up on a theme articulated in yesterday's blog post, the Times notes that "the industry is seeking revenue that does not come directly from its customers, like the ad-supported element of the MySpace service."  In other words, the ailing music industry is trying to make money through means other than music.

The article also reports that Apple, through its iTunes Store, has surpassed Wal-Mart as the nation's leading music retailer, which explains why Wal-Mart is pressuring the record labels to lower the prices of CDs.

By the way, don't be fooled by my Google Doppelgänger; I don't have a dog in the FaceBook/MySpace fight.

[Jeremy Telman]

Jay-Z in $150 Million Contract with Live Nation

As this blog has previously reported, the music industry is being forced to move away from its reliance on a revenue stream coming from the sale of records LPs CDs well, let's just say the music industry is moving away from reliance on a revenue stream coming from the sale of music.  What then will the future of the industry look like?  (Look to the left for a sneak peek.)

Today's New York Times reports that Rapper "Jay-Z plans to depart his longtime record label, Def Jam, for a roughly $150 million package with the concert giant Live Nation that includes financing for his own entertainment venture, in addition to recordings and tours for the next decade."

The Times provides the following details of the arrangement:

The overall package for Jay-Z also includes an upfront payment of $25 million, a general advance of $25 million that includes fees for his current tour, and advance payment of $10 million an album for a minimum of three albums during the deal’s 10-year term, these people said. A series of other payments adding up to about $20 million is included in exchange for certain publishing, licensing and other rights.

Given his earlier forays into clothing and nighclubs, Jay-Z is just the man to move the music industry beyond music.  But Live Nation also includes in its stable other pioneers of the music industry, such as Madonna and U-2, who recognized long ago that a multi-faceted resume is what separates them from, say, the Bay City Rollers.

[Jeremy Telman]

Blogger Wins Book Contract with Regnery Press

The New York Times recently reported that one benefit of blogging is the inevitable book deal that follows.  So, it was just a matter of time before this blog's Jeremy Telman (pictured) exploited the publicity for his verse generated in this forum to sign a book contract for his Limericks for Lawyers project. Although Telman would not disclose details, he described his advance as "in line with my talent and status." 

Regnery Press was apparently drawn to Telman's work due to his dutiful reporting on developments at the Press.  Asked how Telman's book would fit in with the Press's reputation as a publisher of right-wing diatribes, Regnery's spokesperson explained, "He writes metrical verse; he must be conservative."

[The Editors]

Bloggers Sued for Breach of Contract

The Law Professors Blog Network (LPBN) is suing bloggers Franklin G. Snyder (left, top) and Keith A. Rowley (left, bottom) for breach of contract in connection with their blogging activities on the Commercial Law blog, allegedly in breach of contractual provisions committing both contracts professors to devote "their full time and skill exclusively to the ContractsProfs Blog."  According to the complaint, although Snyder and Rowley are listed as Blog Editor and Contributing Editor respectively of the ContractsProfs Blog, they have joined "a ragtag crew of renegades seeking to undermine the LPBN's dominance in law prof blogging, promote communism and end civilization as we know it."  Rowley is listed as a "Contributor" on the Commercial Law Blog; Snyder is listed as a "Guest." 

Reached for comment at his vacation home on a private island, Professor Rowley argued that his agreement with LPBN came in the form of a click-wrap contract, the terms of which he never read.  "Who does?" he queried. 

Snyder, reached at his new offices in Texarkana, responded to the lawsuit as follows, "Look, just because I'm a guest, doesn't mean I'm a welcome one.  Besides, -- STRIKE?!? HOW CAN YOU CALL THAT A STRIKE?!?  IT WAS THREE FEET OVER HIS HEAD!"

[The Editors}

Contract Law: Fighting Threats to Artistic Integrity

While many contracts scholars were busy discussing Medellin and the CISG, the Smashing Pumpkins were busy suing their former record label Virgin Records for breach of contract. The band is apparently peeved that the label is using its name and music to market Pepsi Points (remember those, Leonard?) The band claims that the use of their likeness in the promotional campaign extends beyond Virgin's contractual rights and threatens its artistic integrity. That's right, you heard it here first, contract law is making the world safe for artistic integrity.

[Meredith R. Miller]

International Agreements: Once More

Apologies to those of you who are getting tired of the treaties-as-contracts theme,but once more unto the breach!  We have had a couple of recent posts, here and here, about the danger that its international partners will be less willing to enter into agreements with the United States because of recent trends in U.S. law, and today there are new developments on this topic, although this is hardly news.

Our friends over at the Consumer Law and Policy blog have a post today on a New York Times story about the refusal of an Italian court to enforce a judgment against an Italian motorcycle helmet manufacturer because "a peculiarity of American law — punitive damages — was so offensive to Italian notions of justice that it would not enforce the Alabama judgment." 

One might assume that some sort of international agreement would be in place that would reqiure foreign courts to enforce judgments of U.S. courts.  According to the U.S. Department of State, no such agreements are in place and here's why:

Although there are many reasons for the absence of such agreements, a principal stumbling block appears to be the perception of many foreign states that U.S. money judgments are excessive according to their notions of liability.

[Jeremy Telman]