Monday, February 9, 2015
According to Randall Roberts in the L.A. Times, a Los Angeles Superior Court jury ruled for the Sylvester Stewart (aka funk legend Sly Stone, at left) in his action against his ex-manager Gerald Goldstein, attorney Glenn Stone and Even St. Productions Ltd. It's the usual story. Sly Stone suffered from drug addiction and ran into hard times when defendants proposed a commercial association in 1989. Stone successfully alleged unjust enrichment and breach of contract, claiming that he never saw the money that the enterprise earned through his music. A jury awarded Stone $5 million. Even St. Productions filed for bankruptcy in 2013, and the other defendants say that they plan to appeal.
According to Fox Connecticut, a fraternity member who was suspended from Quinnipiac University in a hazing incident is suing the university and four of its officers for breach of contract. He alleges that his tuition payment entailed a contractual commitment and that the university did not live up to its end of the bargain because he was not fairly treated. He has other claims against the university sounding in Connecticut's Unfair Trade Practices Statute and in the implied duty of good faith and fair dealing.
And . . . at long last, the Steven Salaita saga has made its way into a complaint. We blogged about this story before here and here and here. His 39-page complaint alleges statutory violations under 42 USC §§ 1983 and 1985, as well as promissory estoppel, breach of contract, tortious interference, and spoilation of evidence.
Monday, February 2, 2015
In Benz-Elliott v. Barrett Enterp., LP, the Tennessee Supreme Court clarified the method for determining the statute of limitations when a case raises multiple claims. In such cases, the court must determine the gravamen of each claim and the nature of damages sought. In this case, which involved a sale of property, plaintiff alleged breach of contract and sought contractual damages. The Supreme Court reversed the Court of Appeals, which had dismissed plaintiff's claim based on a three-year statute of limitations relating to property claims. The six-year statute of limitations for breach of contracts should apply to plaintiff's claims, which were reinstated.
Eric Macramalla reports in Forbes that a Jets fan attempted to sue Bill Belichick, the New England Patriots and the NFL on behalf of a class of season ticket holders for having secretly recorded and then destroyed videotapes revealing signals given by New York Jets coaches (which players variously interpreted as "fumble," "drop the pass" and "miss your defensive assignment," inter alia). The suit was dismissed because the their seasons' tickets only permitted them to watch the game, which they did. Macramalla predicts similar suits may follow the great under-inflated ball scandal, which, lets face it, is a great distraction from all the other scandals facing the NFL these days.
We have had quite a few posts about Uber, Lyft and other ride-sharing services, but they just keep popping up in the news, and the wrinkles are always unexpected and fascinating. Saturday's New York Times reported that the companies allow drivers to rate their passengers. If you get a bad rating, you'd better hail a cab or [shudder] take public transportation. It's not such a strange thing to be rated by a service-provider you pay, the Times point out. After all, students pay tuition to attend law school, and yet we grade them. But of course, students know that going in. Probably most passengers don't expect to be rated. What a wonderful century we inhabit -- so many opportunities to pass judgment on perfect strangers!
And what sort of behavior will get you a bad rating? It may be simple things like asking the driver to turn the heat/air conditioning/radio up or down. One rider expressed her angst about being thought insensitive or lacking in interpersonal skills if she took a call or did work while riding. Even Uber's CEO, one of the few riders with access to his own rating, was downgraded from five stars as a passenger to four. He attributes the lackluster reviews to work stress. He blames himself. "I was not as courteous as I should have been.” He should watch out. You can be banned from Uber, which siad in a blog post that it only wants to serve "the most respectful riders."
The article suggests that two-way review systems are inevitable, even though they may be inaccurate. A comparison of a site that allowed two-way reviews with one that allowed only one-way review found that the two-way system leads to far more positive reviews.
What goes around comes around. I would not put it past these companies to monitor their drivers' ratings of passengers. The company may find its own ways to retaliate against drivers who complain about passengers who do nothing more offensive than behaving like busy people who are getting a ride from a stranger as part of a commercial transaction.
Tuesday, January 27, 2015
A young Norwegian man has been fined $1,300 for accepting a contract to kill without the intent to follow up on it. Yes, you read that right: all the authorities could charge this man with was contractual fraud. Another 21-year old man ordered the killing of a teenage girl who had rejected the man’s romantic advances. The punishment for the “offeror”? Two years in prison with most of the sentence suspended because the suspect confessed.
Good thing that these men were caught and convicted of something… sort of a gruesome twist on the old, classic Al Capone story (of course, Capone only pled guilty to tax evasion and prohibition charges). I know that the Scandinavian countries do not believe in the rehabilitative effects of relatively severe sentences such as those often dished out in the USA, but still... Two years and $1,300 for an attempted contract on a teenage girl’s head? That seems too lenient to me.
Sunday, January 25, 2015
An Ohio appellate court upheld a $1.2 million breach of contract judgment against Kent State's men's basketball coach, Geno Ford. The judgment enforced a liquidated damages clause entitling Kent State to damages equal to Ford's annual salary ($300,000) multipled by the number of years remaining on his contract at the point of breach. In Kent State University v. Ford, Coach Ford tried to characterize the liquidated damages clause as a penalty. The court applied Ohio law to determine whether at the time the contract was entered into: 1) damages were uncertain; 2) the damages provided for in the contract were not unconscionable; and 3) the parties intended for damages to follow a breach. The court upheld the trial court's determination that the standard was satisfied in this case. Coach Ford can take consolation in the fact that his salary is short of Jim Harbaugh's by an order of magnitude.
PetaPixel.com reports on a wedding photographer who, after charging a couple $6000 to shoot a wedding album, sought an additional $150 for the album cover. The couple balked, so the photographer is refusing to hand over the photographs and is threatening to charge them an additional $250 "archive fee" if they do not pay up in a month. PetaPixel draws the following lesson from the story:
This all goes to show that as a photographer, you should never rely on verbal agreements when it comes to conditions and charges. Always get everything in writing.
Maybe. The photographer herself has an extremely lengthy blog post about the entire affair in which she claims that everything should have been clear from the written contract. PetaPixel's story makes it seem like an additional charge was added after the contract had been entered into, and if that's the case, the couple might well have balked whether or not the new terms were in writing.
Contracts Prof/Con Law Prof Randy Barnett, writing at the Volokh Conspiracy picked up by the Washington Post, muses interestingly on the applicability of the contractual duty of good faith to the President's duty to faithfully execute the laws in the Constitution's Take Care clause. This helps Barnett reconcile his empathy for the President's refusal to enforce federal drug laws in the face of permissive state laws permitting use of marijuana with his opposition to the President's new initiative on immigration. I've never been persuaded that the contractual analogy is particularly useful in Constitutional interpretation. Suggesting that the contracts doctrine of "good faith" provides a useful gloss on the Take Care clause strikes me as a stretch, but Professor Barnett is always stimulating.
Thursday, January 15, 2015
Speaking of auctions (see Jeremy's blog below), how about a rug reading "In Dog We Trust" instead of the official motto of both the United States and Florida?
A sheriff's office in Florida has removed a mat featuring the miswoven lettering. There have reportedly been several offers to buy the misprinted rug after the error was discovered two months after having been placed at the entrance to the sheriff's office.
Spelling in this country is truly going to the dogs.
Wednesday, January 14, 2015
According to The Telegraph, a letter from Lucy, Lady Duff-Gordon (pictured at right) written shortly after her survival of the sinking of the Titanic is going up for auction in Boston on January 22nd. It is expected to fetch as much as $6000 (but they don't know that we are considering putting the vast resources of the ContractsProf Blog in play).
The letter reads:
How kind of you to send me a cable of sympathy from New York on our safety. According to the way we've been treated by England on our return we didn't seem to have done the right thing in being saved at all!!!! Isn't it disgraceful.
Alas, Lady Duff is not referring to the less-than-respectful treatment she received from Judge Cardozo in the case that keeps the Duff name alive, nor is she referring to bad reviews for her 1912 prêt-à-porter show.
She is referring to allegations that her husband, Cosmo, paid crew members extra to row away from survivors in Lifeboat #1, which held 12 people, although it was designed to hold 40. An inquiry found no support for the allegations and cleared the Duff-Gordons. Recently, as reported here in The Telegraph, more letters from the Duff-Gordons were discovered that tell their side of the story.
Monday, January 12, 2015
A misplaced comma (or something) cost an Oregon Ducks fan his premium seats to the college football championship game. According to this report from The Oregonian, a University of Oregon alumnus found premium tickets to the game (which he knew were selling for $4000) for $400 on StubHub. When, he placed his order, StubHub indicated that he would be charged $16,59.36, but his credit card was charged $16,059.36. He protested, and StubHub refused to honor the purchase, removing the charge and offering $1600 in StubHub vouchers, which the angry Duck says he will not use. He blows off some steam in a blog post, with observations about obnoxious terms and conditions.
In a sign of the times, MasterCard has filed suit in the Southern Distroct of New York against Nike, according to this report from Bloomberg.and Oregon Live (you have to go through a short survey to read it), for having poached a few of its cyber-security experts. MasterCard is suing the employees for breach of contract and Nike for tortious interference. Nike denies all wrongdoing.
We could not have made this up: The St. Louis Post-Dispatch reports that the Devin James Group (DLG), a public relations firm, is suing another public relations firm, Elasticity. Apparently, Elasticity hired DLG to help represent the City of Ferguson in the aftermath of the shooting of Michael Brown. Elasticity fired DLG when it discovered that DLG's owner had a criminal record. Mr. James was convicted in 2006 for having shot an unarmed man. He claims he did $50,000 of work for which he has not been paid.
In another chapter in the dangers of state governments hiring private companies to handle public services, NJ.com reports that Hewlett Packard will refund New Jersey $7.5 million to get out of its contract to deliver a unifed system to administers the state's public assistance program. The Christie administration and HP agreed last year to suspend work on the project and they entered into a separation agreement in which each side agreed not to sue the other for breach of contract. The state is now looking for a new partner. In the meantime, it "continues to hobble along on its 1980s-era mainframe system," according to NJ.com.
Finally, an interesting conflict between a franchise and a large franchisee. Wendy's is requiring its franchisees to make technology upgrades and renovate stotes. DavCo, which operates 152 Wendy's restaurants is refusing to do so, claiming that Wendy's lacks the authority to require the changes. According to the Baltimore Sun, Wendy's has filed suit to terminate DavCo's franchises.
Thursday, January 8, 2015
On January 7th, a federal judge struck down a ban on foie gras that had been in effect since 2012. The judge was of the opinion that the federal Poultry Products Inspection Act preempts the California ban. This Act gives the U.S. Department of Agriculture the sole jurisdiction over the “ingredients requirements” of poultry products.
The judge seems to have forgotten about the federal Animal Welfare Act’s requirements for the humane treatment of farm animals as well as states’ ability to ban the sale of the products of animal cruelty. The California Attorney General’s office is reviewing the decision for a possible appeal of the law, which was upheld in previous litigation.
Foie gras is, without a doubt, cruel to animals. To produce the alleged delicacy, geese and ducks are “force-fed a corn mash through a metal tube several times a day so that they gain weight and their livers become 10 times their natural size. Force-feeding sometime injures the esophagus of the bird, which may lead to death. Additionally, the fattened ducks and geese may have difficulty walking, vomit undigested food, and/or suffer in extreme confinement." Do we as consumers still have a right to buy such a product even if it tastes very good? No, according to at least California state law.
How anyone could make themselves eat this product is beyond my comprehension. I confess that I am an animal lover and environmentalist. I do personally believe in those core values. However, I am quite far from an extremist and respect, to a very, very far extent, the opinions of the vast majority of other people. Heck, I am not even a vegetarian (I try to at least buy free-range products). But under notions of both positive law – state and/or federal – and natural law, this is where the buck must stop. There must be limits to what we can do in the name of obtaining a gourmet experience, especially when it comes at such a high price of extreme suffering by our living, sentient creatures. And if consumers cannot draw such lines themselves, courts and legislatures must. In the words of Mahatma Gandhi, “the greatness of a nation and its moral progress can be judged by the way its animals are treated.” More than a dozen countries around the world have outlawed the production of foie gras. In this respect, the United States is not great. This case leaves a bad taste in my mouth and, I hope, in yours as well.
Monday, January 5, 2015
Thanks to the Hattiesburg Patriot, we have a pdf of a decision from the Mississippi Chancery Court striking down a public contract as unconstitutional. In January 2014, the City of Hattiesburg (the City) entered into a $137 million contract with Groundworx, LLC (Groundworx) for a wastewater treatment system. In August, the City terminated the contract due to Groundworx's alleged failure to secure financing for the project. Thomas Blanton intervened, alleging that the contract violates Article VII, Section 183 of Mississippi's constitution, which prohibits the government from lending credit in aid of a private business, and the Due Process clauses of both the Mississippi constitution and the U.S. Constitution's 14th Amendment. The Chancellor held that the contract was tantamont to the City
lending its credit to Groundworx for a public project over which it had no effective control. It thus violated the Section 183 and both due process clauses and was void ab initio.
As if Alex Rodriguez (pictured at right) did not have enough troubles already, the New York Daily News is wishing him a "Happy Sue Year" and reporting that A-Rod's ex-wife's brother is suing A-Rod for breach of a partnership agreement relating to the sale of Miami real estate.
Our Uber-lawsuit coverage continues this week with this story from the St. Louis Post Dispatch. The story reports on a planned class action alleging that Uber breached a contract with consumers by advertising that it shares 20% of fares with drivers as tips when in fact Uber keeps far more than that for itself. The latest development is just a discovery battle that Uber lost. It will have to provide relevant e-mails from Uber's CEO, Travis Kalanick.
Friday, January 2, 2015
A few days ago, I blogged on the recent lawsuit by United Airlines and Orbitz against the developer of Skiplagged. One of the causes of action alleged is breach of contract for encouraging the purchase of a ticket to certain destinations only to get off at an interim point to save money.
The airlines themselves may be breaching their contracts with flyers. For example, when we buy tickets to be flown from point A to point B, that arguably implies being done so without undue delays and, in particular, possibly having to spend the night at your own cost and without your personal belongings in random cities around the world if connections are missed because of flight delays (unless, of course, you choose to spend the night sitting upright in the airport). Needless to say, if you seek to change your ticket, airlines will either charge extreme high fees and the “difference in price” for doing so or outright prohibit this practice. I’ve had to change tickets many times in the past, and it has typically only taken an agent about five minutes to do so. Unconscionabiliy, anyone?
Here’s what happened to me one cold winter night a few years back: On my way to Denmark from St. Croix, the airline was late taking off and got even more delayed when it “had to” make an unplanned “quick landing” for gas, which was cheaper at the interim airport than at the end destination, and… ice cubes for people’s drinks! I wish I was kidding, but I’m not. I missed the once-daily connection out of Atlanta to Copenhagen and had to spend the night in Atlanta in December. As I was living in tropical St. Croix at the time, I had some warm clothes with me on board the airplane to stay warm there, but had packed my winter gear in my suitcase. The airline paid for my hotel, but would, in spite of my desperate pleas, not let me have my suitcase back for the night. Result: I had to travel to and from the hotel, etc., in indoor clothes on what turned out to be an unseasonably cold winter day in Atlanta (yes, I should have brought a warmer jacket on board the plane, but planes to and from the Caribbean are often very small and I always try not to bring too much carry-on items).
Before 1978, U.S. airlines were required under “Rule 240” to offer seats on a competitor’s next flight if that would be the fastest way of getting the traveler to his or her destination. Airlines created after deregulation were never required to follow that rule, but older airlines such as Delta, United and Continental apparently still adhere to the rule. Funny that they never seem to mention that when they delay you significantly. Next time you fly, it may pay to scrutinize your contract of carriage more carefully to ascertain your rights in case of a delay.
It may be time for Congress to reintroduce a Rule 240-type requirement on airlines, especially as these have become extremely good at flying full – even at overcapacity - and thus often do not have extra space for passengers that have missed their flights. Good customer service often seems to have given way to airlines’ “me first” attitude in the name of hearing the highest profits possible by nickel-and-diming most aspects of airline travel on, at least, economy class.
Feeling empathetic towards the airlines? Don’t. Full or nearly full flights in conjunction with declining gas prices have enabled U.S.-based airlines to earn the highest profit margins in decades. One trade group estimates that airline made 6% profit margins in 2014, higher than the highest rates in the 1990s. Of course, the task of businesses is to make as much money as they can. But at least they should live up to their own contracts of carriage and other contracts principles just as they claim passengers and website developers should.
Here’s a hat tip to Professor Miriam Cherry and other contracts professors on a well-known industry list serve for news about this story. All opinion and thoughts above are my own.
Monday, December 29, 2014
On December 18th, the District Court for the District of Minnesota ruled on defendant's motion to dismiss in In re: Target Corporation Customer Data Security Breach Litigation. The case relates to the hacking of 110 million Target customers last December. Plaintiffs allege violations of state consumer protection laws, negligence and breach of contracts, both express and implied, among other things. The court dismissed most claims with prejudice. The breach of an implied contract claim survived, as a jury will have to determine whether plaintiffs can establish the terms of an implied contract. The court dismissed the breach of an express contract claim without prejudice. Plaintiffs will be given an opportunity to specify what federal laws Target allegedly breach through its allegedly inadquate measures for safeguarding its customers' data.
And if you are looking for evidence that airlines really don't care what we think of them, look no further than United's motion to dismiss in Mamakos v. United Airlines, Inc. In the case, plaintiff alleges the following:
- She moved into that seat;
- Stewardesses informed her that she would have to pay a $109 premium for the seat;
- She did not want to pay and so moved back to her original seat;
- United then removed her from the aircraft and, when she resisted had her arrested; and
- United then cancelled her ticket and her return ticket.
United accepts the truth of these allegations for the purposes of its motion but maintains that it still did not breach its contract with plaintiff because of Rule 5(B) of United's Contract of Carriage (incorporated by reference into plaintiff's ticket), which permits United to cancel a reservation if the passenger refuses to pay for the applicable Ticket. Apparently, once plaintiff's behind made contact with a premium seat, she was bound to pay or be forcibly ejected form the aircraft. Sheesh.
Really United? Worth litigating?
Thursday, December 18, 2014
This case arises out of a fact pattern with which many contracts profs may already be familiar. It's a new twist on Leonard v. PepsiCo., alas with the same result.
James Cheney Mason (Mason) represented defendant Nelson Serrano in a capital murder trial. Mason gave an interview on NBC news in which he pointed out that his client could not have committed murders in Bartow, Florida on the same day that he was on a business trip in Atlanta Georgia. Surveillance cameras from the La Quinta Inn in Atlanta established Serrano's presence at the hotel both before and after the murders. The prosecution claimed that Serrano flew to Orlando, drove to Bartow, committed the murders, drove to Tampa, and flew back to Atlanta in time to show up on the surveillance tapes once again. Serrano was convicted and sentenced to death.
Law student Dustin Kolodziej (Kolodziej) watched Mason's interview with NBC after it was edited for broadcast. In the edited version that Kolodziej saw, Mason seemed to be offering a million dollars to anyone who could get off a plane in Atlanta and make it back to the La Quinta Inn in 28 minutes. Kolodziej took this as a challenge and as a unilateral offer that he could accept by making the trip in 28 minutes or less. Kolodziej recorded himself making the trip and sent the recording to Mason with a demand for payment. Mason refused.
In Kolodziej v. Mason, the Eleventh Circuit upheld the grant of summary judgment to Mason. In the unedited version of Mason's interview, it is clear that his challenge was directed at the prosecution and not erga omnes. Moreover, the Eleventh Circuit found, no reasonable person could construe any statement that Mason made in either the edited or the unedited version of the interview as a serious offer to pay a million dollars to anybody who could travel from the airport to the hotel in 28 minutes. According to the Court, the context in which the words were uttered (an attempt to poke holes in the prosecution's theory) and the hyperbolic nature of the alleged offer, with its familiar overtones of schoolyard braggadocio, were insufficient to establish Mason's willingness to enter into a contract.
The Court distinguished this case from the classics, Lucy v. Zehmer and Carbolic Smoke Ball and other, equally entertaining cases. The Court was no more inclined to entertain Kolodziej's claim than it would be to declare Mason a monkey's uncle, if he had chosen that turn of phrase when attempting to illustrate the implausibility of the prosecution's timeline.
The Court suggested that the entire suit was a result of Kolodziej's inadequate understanding of contracts doctrine (hence the duncecap image above, which by the way, does not represent Kolodziej). The Court paraphrased Pope and suggested that a little legal knowledge is a very dangerous thing indeed. As the Court explained,
Kolodziej may have learned in his contracts class that acceptance by performance results in an immediate, binding contract and that notice may not be necessary, but he apparently did not consider the absolute necessity of first having a specific, definite offer and the basic requirement of mutual assent.
This seems more than a bit unfair. Kolodziej was wrong, but he may have thought it worth the gamble. He lost his case, but he had quite an experience. In any case, Judge Cardozo's remark in Allegheny College about how half-truths are sometimes mistaken for the whole truth seems more apposite.
A classic form of statement identifies consideration with detriment to the promisee sustained by virtue of the promise. Hamer v. Sidway, 124 N. Y. 538, 27 N. E. 256, . . . . So compendious a formula is little more than a half truth. There is need of many a supplementary gloss before the outline can be so filled in as to depict the classic doctrine.
Mistakes of law such as Kolodziej's are common, and learned judges (and even law professors) as well as law students can make them.
Saturday, December 13, 2014
In the UK, two sections of the Statute of Marlborough are facing repeal after being in force for 747 years. That’s right: the Statute was passed in 1267 and is thus older than the Magna Carta, which – although having been drafted in 1215 – was not copied into the statute rolls to officially become law until 1297. Two sections, however, still remain good law.
Why the suggested repeal? The two potentially obsolete sections address the ancient British power of “distress,” which allowed landlords to enter a debtor’s property and seize his/her goods. However, distress was abolished by new legislation this past March.
But don’t worry, our British colleagues are not about to do anything rash or unpopular. Although the Law Commission has proposed the repeal, a public consultation has been initiated to make sure that no one actually uses the two sections anymore.
Other newer, but nonetheless obsolete, laws are also being earmarked for removal. One is from the 1990s and was drafted to regulate the “increasing popularity of acid house parties.” Apparently, acid house parties are not in anymore and thus, the law is no longer needed.
In spite of the above, two sections of the Statute of Marlborough still remain in effect. One forbids individuals from seeking revenge for debt non-payment without being sanctioned to do so by the court (you gotta love the fact that in the UK, one can apparently get courts to approve one seeking revenge against one’s debtors). Another prevents tenants from ruining or selling off the landlord’s land. Fair enough…
Friday, December 12, 2014
Sick of reading our posts (and other news reports) about Uber and Lyft?
I am compelled to add that while the concept is brilliant and the execution quite fine, the script missed some low-hanging fruit suggested by the "Jewish geography navigation system" at the opening. I humbly offer the following potential dialogues:
Driver: Where are you going in such a hurry?
Passenger: Elm and 17th.
D: Elm and 17th? The Weinsteins live right around the corner! Do you know them?
P: I don't think so . . .
D: Such a nice couple. Are you sure you don't know them? I think they had a daughter around your age. How old are you? Where did you go to school? And the Goldbergs live near there too -- surely you know them!
P: I'm just going to a dental appointment. I don't live around there.
D: Well, you should, it's a lovely neighborhood. Where do you live? I know a realtor who could find you a nice apartment. . .
Passenger: Excuse me, I was actually heading in the other direction . . .
Driver: Oh, I know, hon, but I can only find my way there from the JCC, so I thought we'd go there first. It's not far.
D: Or Solomon Schechter, is that closer? I know how to get places from there or from the Temple . . .
P: I can direct you if you want.
D: Relax! Enjoy the ride! You young people are always in such a hurry these days. Do you ever take the time to talk with your parents, I wonder? We can just chat and catch up -- the time will pass quickly
P: Catch up? But I don't even know you.
D: You're about my son's age. He just gave me my third grandchild. [Passing pictures back] Here, aren't they a lovely family?
I'm just sayin . . .
Wednesday, December 10, 2014
Myanna posted yesterday about an L.A. Times story about Uber. Today's New York Times has more news about attempts to regulate companies like Uber and Lyft. The issue is the quality of the companies' background checks on their drivers. In a sidebar, the Times notes that three states and seven foreign jursdictions have taken legal action against Uber. But the ride sharing companies are energetic lobbyists and often have been successful in blocking regulation.
In a related story, the Times reports that an Uber driver in India is facing allegations that he raped a passanger. Today's Times reports that the driver was wanted on other crimes as well.
Tuesday, December 9, 2014
In what seemed an inevitable turn of events, the Los Angeles and San Francisco district attorneys filed a consumer protection lawsuit on 12/9/2010 against Uber for making false and misleading statements about Uber’s background checks of its drivers. George Gascon, the district attorney for San Francisco, calls these checks “completely worthless” because Uber does not fingerprint its drivers. Uber successfully fought state legislation that would have subjected the company’s drivers to the same rules as those required of taxi drivers. Allegedly, Uber has also defrauded its customers for charging its passengers an “airport fee toll” even though no tolls were paid for rides to and from SFO, and charging a “$1 safe ride fee” for Uber’s background check process. California laws up to $2,500 per violation. There are “tens of thousands” of alleged violations by Uber. However, even that will likely put only a small dent in Uber’s economy as it is now valued at $40 billion (yes, with a “b”).
Lyft has settled in relation to similar charges and has agreed to submit information to the state to verify the accuracy of its fares (although not its background checks). It has also agreed to stop picking up passengers at airports until it has obtained necessary permits. Prosecutors are continuing talks with Sidecar.
Time will tell what prosecutors around the nation decide to do against these and similar start-ups such as airbnb and vrbo.com, which are also said to bend or outright ignore existing rules.
The Los Angeles Times comments that the so-called “sharing economy” companies face growing pains that “start-ups in the past didn’t – dealing with municipalities around the world, each with their own local, regional and countrywide laws.” It is hard to feel too sorry for the start-ups on this account. First, all companies obviously have to observe the law, whether a start-up or not. Today’s regulations may or may not be more complex than what start-ups have had to deal with before. However, these companies should not be unfamiliar with complex modern-day challenges as that is precisely what they benefit from themselves, albeit in a more technological way. Finally, there is something these companies can do about the legal complexity they face: hire savvy attorneys! There are enough of them out there who can help out. But perhaps these companies don’t care to “share” their profits all that much? One has to wonder. Sometimes, it seems that technological innovation and building up companies as fast as possible takes priority over observing the law.
As indicated in this story,* CNN.com is greatly invested in the story of Morten Storm, who claims that he is a Danish double-agent who infiltrated Al Qaeda in the Arabian Penninsula (AQAP) and thus helped the U.S. target and kill AQAP operative and U.S. citizen Anwar al-Awlaki.
Storm (and his CNN co-authors) have quite a story to tell. Among other things, he claims that the United States promised him $5 million for helping the U.S. in its al-Awlaki operation. Although Storm is clearly an international man of mystery, there is little mystery on the question of whether he would have any luck on a claim against the U.S. for breach of a promise to pay $5 million. The U.S. would undoubtdedly point to the Totten case, as updated in Tenet v. Doe, and courts will find the claim non-justiciable.
NB: When you click on this site, you will see the following browsewrap banner across the top:
If you do not want to spend an hour or two parsing CNN's terms and don't want to be bound to terms that you have not read or cannot understand, do not "continue to use" CNN's site (whatever that means).
Hat tip to my student, Brandon Carter.
Monday, December 8, 2014
Yet another non-disparagement case, this time for WTOC.com. This time, it was a woman who cancelled an agreement with a wedding photographer within the contractually created cancellation period, and then went online to explain why she had done so. The photographer threatened legal action claiming that she had violated a non-disparagement clause in the now-cancelled contract.
There was an interesting story last week on the International Business Times about Yo-Yo car sales. Apparently, there are many variations to the practice, but the basic scheme runs as follows: car dealer sells a car to person with bad credit, who is happy to be able to buy a car on any terms. Then, the dealer tries to sell the loan to a third party. If it cannot do so, it calls the buyer back in and demands either a change in the loan terms or the return of the car. The IBT story focuses on a buyer whom the dealer claimed committed felony auto theft and fraud. The buyer filed a civil suit against the dealer, with claims ranging from violations of the Truth in Lending Act to defamation and deceptive trade practices. The dealer has counterclaimed for fraud and breach of contract.
According to an AP story posted here in the UK's Daily Mail, California is wrangling with investors in a $2.3 billion deal for the sale and lease back of state properties. The deal was conceived in the Schwarzenegger administration, but Governor Brown has determined that the deal will cost the state $1.5 billion. California alleges that the investors failed to make an initial $50 million payment, triggering the State's rights to terminate the contract. The investors are seeking a forced sale of the properties. My students have their exam this week, so they might want to think about what we have here: partial breach? material breach? total breach? failure of a condition? did California seek adequate written assurances? The AP story does not clarify these highly testable issues.
Finally, we are happy to report that the law has saved hockey! At least in Erie, Pennsylvania, according to this story on GoErie.com (Warning! This site has lots of annoying popups!). Apparently, the Edmonton Oilers sought to enforce a judgment against the Otters' General Manager Sherry Bassin through a forced sale of the team. The Oilers' scheme then involved buying the Otters through a subsidiary and moving them to Hamilton, Ontario. But U.S. District Court Judge David Cercone blew the whistle and checked the Oilers when he set aside a judgment against Bassin The Oilers would have to proceed through a breach of contract claim if they want to penalize Bassin for misconduct. In the meantime, the good people of Erie can enjoy their Otters.
Following up on Myanna Dellinger's post from last week, we noticed this story about Airbnb and Uber. Both companies are leaders of the so-called new sharing economy, but what they really love to share (unequally) is risk. The article explains how insurance works for both companies, and the clear message is: it isn't clear that it will, at least not for the Uber drivers or people who use Airbnb to rent out their homes or apartments for days or weeks at a time. Actually, the article has very little to say about Uber, which doesn't really share risk at all -- it tells its drivers to self-insure, and then the drivers run into trouble (if they run into things) because their insurance does not cover commercial activities.
According to the Times article, regular homeowners' insureance will not cover Airbnb renters because most standard homeowners' insurance policies do not cover harms caused by commercial activities. Airbnb thus has taken out a secondary insurance policy that will cover up to $1 million in liability for the renters who use its site, and Airbnb is offering this policy to its users for free. For reasons that are not really clear in the article, its author Ron Lieber suggests that Airbnb might not really provide insurance to its renters. He points to Airbnb's checkered history of encouraging renters to ignore local ordinances and not being there for its renters who then ran afoul of the law. He suggests that Airbnb's secondary insruance scheme might not cover the sorts of liabilities that renters might face, and it is clear that some primary homeowners' policies would also exclude liabilities arising out of commercial activiities.
And, as long as we are piling on Uber, Saturday's New York Times also featured an opinion piece by Joe Nocera. According to Nocera, it is impossible to reach Uber by phone because, according to Nocera, Uber says having a phone center or customer service line is not in Uber's business model. If you try to call the listing for Uber in New York City, you get another company, über, a New York design firm. The owner of über claims that she fields between 1 and 10 calls a day from Uber customers seeking assistance. She has even had to go to court to explain to the judge that the plaintiff sued the wrong Uber, or the wrong über.