ContractsProf Blog

Editor: D. A. Jeremy Telman
Valparaiso Univ. Law School

A Member of the Law Professor Blogs Network

Monday, April 27, 2015

Weekly News Roundup

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

Las_Vegas_slot_machines
Photo by Yamaguchi先生

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

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

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

Contractual Issues and the Chicago Cubs' Kris Bryant

April is the finest month for a Chicago Cubs fan, because even the Cubs are within a few games of first place in April.  

CubsAnd hope springs anew with each Spring Training  This year Cubs fans have extra reason to hope because of young prospect, Kris Bryant.  There was only one catch.  Bryant did not start the year playing for the Cubs.  As reported here in Business Journalism, despite hitting nine home runs in 40 at bats and earning a .425 batting average, Bryant was demoted to the Cubs' Triple-A affiliate for the start of the season.  Cubs GM, Theo Epstein, gave Bryant's need to develop his defensive skills as the reason for the demotion, but many believe that the purpose is to delay Bryant's eligibility for arbitration and free-agency.  Bryant's ability to avail himself of these mechanisms would kick in 2017 and 2020 respectively  if Bryant was on the Cubs' roster to start the season, but they will kick in a year later if Bryant misses the season's first ten games.  

Thirteen days into the season, the Cubs brought Bryant up from the minors.  Mike Olt and his lifetime .158 batting average kept third base occupied while Bryant was improving his defensive skills.  

April 27, 2015 in Celebrity Contracts, In the News, Sports | Permalink | Comments (0) | TrackBack (0)

Thursday, April 23, 2015

On Issue-Spotting and Hiding the Ball

As for the series on law school instruction and law schools in general that Jeremy started here recently: count me in!

I agree with Jeremy’s views that issue-spotting is very important in helping students develop their “practical skills,” as the industry now so extensively calls for.  As Jeremy and Professor Bruckner do, I also never give up trying to have the students correctly issue spot, which in my book not only means spotting what the issues are, but also omitting from their tests and in-class analyses what I call “misfires” (non-issues).  In my opinion, the latter is very necessary not only for bar taking purposes, but also in “real life” where attorneys often face not only strict time limits, but also word limits.

But I’ll honestly admit that my students very often fail my expectation on final tests.  Some cannot correctly spot the issues at all.  Many have a hard time focusing on those aspects of the issues that are crucial and instead treat all issues and elements under a “checklist” approach overwriting the minor issues and treating major issues conclusorily.  Yet others seem to cram in as many issues as they can think of “just in case” they were on the test (yes, I have thought about imposing a word limit on the tests, but worry about doing so for fear of giving any misleading indication of how many words they “should” write, even if indirectly so on my part). 

Maybe all this is my fault … but maybe it isn’t (this too will hopefully add to Professor Bruckner’s probably rhetorical question on how to teach issue-spotting skills).  Every semester, I post approximately a dozen or so take-home problems with highly detailed answer rubrics.  I only use textbooks that have numerous practice problems long and short.  I review these in class.  I also review, in class, numerous other problems that I created myself.  I give the students numerous hints to use commercial essay and other test practice sources.  Yes, all this on top of teaching the doctrinal material.  All this is certainly not “hiding the ball.”  Frankly, I don’t really know what more a law professor can realistically do (other than, of course, trying different practice methods, where relevant, to challenge both oneself and the students and to see what may work better as expectations and the student body change).

So what seems to be the problem?  As I see it, it doesn’t help that at least private law schools at the bottom half of the ranking system have to accept students with lower indicia of success than earlier.  But even that hardly explains the problem (who knows what really does).  Some law schools have to offer remedial writing classes and various other types of extensive academic support to students in their first semesters and beyond.  Some of the problem, in my opinion, clearly stems from the undergraduate-level education our students receive.  In large part, this makes extensive use of multiple-choice questions for assessments and not, as future lawyers would benefit from, paper or essay-writing tests or exercises.  Thus, undergraduate-level schools neither teach students how to spot "issues" from "scratch" nor do they teach them how to write about these.  Numerous time have my students told me that they have not really written anything major before arriving in law school.

Why is that, then?  Isn’t that problem one of time and resources; in other words, the fact that not just law professors, but probably most university professors, are required to research and write extensively in addition to teaching and providing service to their institutions?  For example, see Jeremy’s comments on his busy work schedule here.  Something has to give in some contexts.  At the undergraduate level, maybe it’s creating and grading essays and instead resorting to machine-graded multiple-choice questions and not challenging students sufficiently to consider what the crux of a given academic problem is.  Just a thought.  I am, of course, not saying that we should not conduct research.  I am saying, though, that I find it frustrating that lower-level educations, even renowned ones, cannot seem to figure out how to use whatever resources they do, after all, have to train their students in something as seemingly simple as how to write and how to think critically.

At the law school level, some “handholding” and various types of practical assistance is, of course, acceptable.  But to me, the general trend in legal education seems to be moving towards a large extent of explaining, demonstrating, giving examples, setting forth goals, assessments, and so forth.  I agree with what Jeremy said in an earlier post that we should at some point worry about converting the law school education process into one that resembles undergraduate-style (or high school style!) education.

Recall that the United States is not an island unto itself.  Many studies show that our educational system is falling behind international trends.  Where in many other nations in the world (developed and developing), students are expected to come up with, for example, quite advanced research and writing projects for their degrees, we are - at least in some law schools - teaching students just how to write, and what to write about.  This is a sad slippery slope.  Until the American educational sector as such improves, I agree that we should do what we can to motivate and help our students.  But I also increasingly wish that our “millennial” students would take matters into their own hands more and take true ownership of learning what they need to learn for a given project or class with less handholding, albeit of course still some guidance.  Nothing less than that will be expected from them in practice. 

April 23, 2015 in Commentary, Contract Profs, Current Affairs, In the News, Law Schools, Teaching | Permalink | Comments (4) | TrackBack (0)

Wednesday, April 22, 2015

Tiered Water Pricing System Declared Unconstititional in California

On Monday, a California Appellate Court declared the tiered water payment system used by the city of San Juan Capistrano unconstitutional under Proposition 218 to the California Constitution.  The California Supreme Court had previously interpreted Prop. 218’s requirement that “no fees may be imposed for a service unless that service is actually used by, or immediately available to, the owner of the property in question” to mean that water rates must reflect the “cost of service attributable” to a particular parcel.

At least two-thirds of California water suppliers use some type of tiered structure depending on water usage.  For example, San Juan Capistrano had charged $2.47 per “unit” of water (748 gallons) for users in the first tier, but as much as $9.05 per unit in the fourth.  The Court did not declare tiered systems unconstitutional per se, but any tiering must be tied to the costs of providing the water.  Thus, water utilities do not have to discontinue all use of tiered systems, but they must at least do a better job of explaining just how such tiers correspond to the cost of providing the actual service at issue.  This could, for example, be done if heavy water users cause a water provider to incur additional costs, wrote the justices. 

The problem here is that at the same time, California Governor Jerry Brown has issued an executive order requiring urban communities to cut water use by 25% over the next year… that’s a lot, and soon!   Tiered systems are used as an incentive to save water much needed by, for example, farmers.  The California drought is getting increasingly severe, and with the above conflict between constitutional/contracting law and executive orders, it remains to be seen which other sticks and carrots such as education and tax benefits for lawn removals California cities can think of to meet the Governor’s order.  Happy Earth Day!

April 22, 2015 in Current Affairs, Famous Cases, Food and Drink, Government Contracting, In the News, Recent Cases | Permalink | Comments (0) | TrackBack (0)

Monday, April 20, 2015

Weekly News Roundup

DouglasMollThe Texas Lawyer reports that Texas has amended a statute that allows plaintiffs to recover attorneys' fees in breach of contract claims.  The statute originally allowed for recovery from an individual or a corporation.  The amendment permits recovery from any non-government entity.  As law Prof. Doug Moll (pictured) explains, the purpose of the policy is to encourage settlement and permit parties that could not pay their own attorneys' fees to sue for breach. "There is not a policy justification I can see for distinguishing between business forms in an attorney fee-shifting statute,"  Moll noted in defending the amendment.  The bill faced some opposition from groups that would not want to exempt state entities and from others who wanted the law to allow either side, not just plaintiffs, to collect attorneys' fees.  But lawmakers did not want to mess with Texas law.  

From the Philadelphia Business Journal, we get yet another classic municipal contracting case.  City meets company, city hires company to do some fancy, technical thing it can't do itself, city and company exchange allegations of breach of contract, and the parties settled for $4.8 million.  In this case, the city is Baltimore and the company is Unisys.  

As reported here in USA Today, one bi-product of the new nuclear deal with Iran is that Russia now feels free to send Iran S-300 missiles for use in its air-defense system.  The missile deal has been suspended since 2010, and Iran had sued Russia in Geneva, alleging breach of contract and seeking $4 billion in damages.  Iran now says that it will drop the case if Russia delivers the missiles.

April 20, 2015 in In the News, Legislation | Permalink | Comments (0) | TrackBack (0)

Thursday, April 16, 2015

SeaWorld in a World of Trouble

A potential class-action lawsuit against SeaWorld was filed in Florida on April 8 just two weeks after the company was sued over its killer whale care in San Diego in another purported class action suit.    The Florida lawsuit alleges unjust enrichment and fraud, among other issues.  The lawsuit claims that if members of the public knew about SeaWorld’s mistreatment of the orcas, they would not visit the theme parks.  Plaintiffs asks the court to require SeaWorld to reimburse ticket prices to all the people who purchased tickets to the Orlando park in the past four years.  Visitors to the park pay much as $235 per person.  The complaint states that more than five million people attended the Florida theme park in the years 2010 through 2012. 

SeaWorld finds itself in a lot of trouble these days over its treatment of its killer whales.  The park was, for example, subjected to heavy criticism in the CNN documentary “Blackfish” and in a book written by one of its former orca trainers.  Perhaps as a result, its shares have been tanking recently…

SeaWorld, in turn, claims that the criticism and in particular the most recent lawsuit “appears to be an attempt by animal [rights] extremists to use the courts to advance an anti-zoo agenda. The suit is baseless, filled with inaccuracies, and SeaWorld intends to defend itself against these inaccurate claims.”  It also claims that it is a leader in orca care.  SeaWorld’s parks are regularly inspected by the U.S. government and two organizations.  The accreditations of the California and Florida parks expire in 2020.

As part of the experience park visitors purchase, they unquestionably expect to see relatively healthy and happy whales kept under standards of good animal husbandry.  But in reality, according to the lawsuits and other statements about the park, SeaWorld does not live up to this end of the bargain.  Frequent allegations have been made that SeaWorld’s orcas have a shorter lifespan than wild orcas (usually, animals in captivity live longer than their wild counterparts), are kept in chemical-filled and way too small pools, are drugged with antipsychotic medicines, are not provided with sufficient shade, and are subjected to forced breeding.

Either somebody is not telling the truth here or people’s expectations of what constitutes good ethics in relation to keeping and displaying orcas as well as other show and zoo animals, for that matter.  Does this matter under the law?  Of course, the general public has a purely legal right to buy tickets to see various performance and exhibit animals as long as no state or federal law is violated as regards how the animals are treated.  Ethics are a different story.  But misrepresentation is actionable under contracts law.  If the above allegations made by TV producers, former trainers, and numerous consumers are correct, SeaWorld has indeed not lived up to the wholesome, animal-friendly image it portrays of itself in order to sell tickets.  Its alleged questionable conduct has been going on for years.  It’s been almost twenty since a friend of mine (otherwise not very interested in animals) visited SeaWorld San Diego and went on a backstage tour.  He told me about the deplorably small pools in which the animals were kept after their performances.  In this area, ethics and contracts law interface and have finally come head-to-head.  The eventual outcome may be that SeaWorld will not be able to continue making money off its orca shows as it has in the past.  Ringling Bros. is voluntarily phasing out its use of elephants after similar protests about their treatment.   This may not be a bad thing from a public policy point of view.   Time has come to consider how we treat animals in many contexts, and certainly so for mere entertainment and profit-making motives. 

See the Florida complaint here: http://ia902707.us.archive.org/24/items/gov.uscourts.flmd.309289/gov.uscourts.flmd.309289.1.0.pdf

April 16, 2015 in Current Affairs, Famous Cases, In the News, Travel | Permalink | Comments (0) | TrackBack (0)

Monday, April 13, 2015

Rejecting a Rejection Letter

A few weeks ago, 17-year old Siobhan O’Dell became known online for her bold and unusual rejection of Duke University’s rejection of her college application.  She wrote:

"Thank you for your rejection letter of March 26, 2015.  After careful consideration, I regret to inform you that I am unable to accept your refusal to offer me admission into the Fall 2015 freshman class at Duke.  This year I have been fortunate enough to receive rejection letters from the best and brightest universities in the country.  With a pool of letters so diverse and accomplished I was unable to accept reject letters I would have been able to only several years ago."

Alas, applying for college does not work like that.  Accordingly, Duke’s response was simply that Ms. O’Dell’s only option is to appeal the decision, but that her chances of a reversal are not good: “If you choose to appeal, we welcome your request, but I do not wish to raise unreasonable expectations on your part," the university representative writes.

Nice try, though!  It sounds like Ms. O’Dell would do well in a Contracts Law class.

April 13, 2015 in Current Affairs, In the News | Permalink | Comments (0) | TrackBack (0)

Monday, April 6, 2015

Law Professors Sue Law School for Breach of Contract

We saw this report over on the Faculty Lounge.  This is fallout from the proposed merger of Hamline University School of Law and the William Mitchell College of Law (William Mitchell).  Two William Mitchell faculty members are claiming that the merger, which will necessitate the elimination of two tenured faculty lines, is a a breach of contract.  

William Mitchell
The Complaint alleges that law schools must comply with ABA Standard 405(b) by maintaining policies for academic freedom and tenure.  William Mitchell has a faculty handbook that incorporates the AAUP's 1940 Statement on Academic Freedom, which regards tenure as indispensable to such freedom.  Under William Mitchell's Tenure Code, tenured professors may only be dismissed for adequate cause or in cases of "bona fide financial exigency."  

In February, when the merger of the two law schools was proposed, William Mitchell announced that is was considering amendments to its Tenure Code to permit termination of tenure based on a merger.  Plaintiffs allege that William Mitchell now intends to amend its Tenure Code to permit termination of tenure even if the merger does not go through, to permit termination of tenure without cause and without declaring the existence of a financial exigency.  

Plaintiffs seek a judgment declaring that the proposed amendment to William Mitchell's Tenure Code would constitute a breach of contract.

April 6, 2015 in In the News, Recent Cases | Permalink | Comments (0) | TrackBack (0)

Wednesday, April 1, 2015

Mike Pence and Lambda Legal Reach Agreement

PenceIndiana Governor Mike Pence (pictured) is in a tough spot.  As reported here, Indiana is facing protests, threats of boycotts and possible losses of business opportunities as a result of its version of the state Religious Freedom Restoration Act.  As illustrated in the Indy Star here, Indiana's law makes it easier for individuals and business entities to rely on the statute as a defense to allegations of discriminatory treatment.  Even Pence's predecessor, Mitch Daniels, in his current capacity as a university president, has distanced himself from the law.  

Pence is in a tough spot because he signed the law to show his conservative bona fides, perhaps because he has aspirations to national executive office.  But he may have overreached, as the backlash against the new law may hurt his chances to appeal to a national electorate.  Pence's position is made more difficult by the fact that he now wants the Indiana legislature to "clarify" the law so that it doesn't look like it was designed to discriminate.  But the Indiana legislators may well have exactly the clarity they wanted, and they do not share Pence's national aspirations. 

Lambda Legal is among the many organizations that have objected to the law as a license to discriminate against LGBT groups, especially in the context of same-sex marriages.  Now Lambba is offering Pence a way out. In a draft contract that the parties have shared with this blog (and only with this blog as far as we know), Pence and Lambda have agreed that Pence will hire LGBT applicants for at least 30% of staff associated with his current position as Governor of Indiana and as part of his election staff leadership for all political campaigns through 2020.  "I may lead a red state," Pence told our correspondent, "but I expect to be flying the rainbow flag over the White House in a few years."  A Lambda spokesperson said that details of the agreement are still being negotiated but that "all us us are Lambda are looking forward to a faaabulous Inaugural Ball."

Clearly this a win-win.

April 1, 2015 in Government Contracting, In the News | Permalink | Comments (0) | TrackBack (0)

Tuesday, March 31, 2015

Physicist Publishes Autobiography, Defying the Department of Energy: A Contracts Take

Building the H-BombMy friend Ken Ford is enjoying his fifteen minutes of fame, courtesy of the Department of Energy (D0E), which is displeased with his memoir, Building the H-Bomb: A Personal History.  According to this report in the New York Times, DoE officials told Dr. Ford to make cuts to his book that would have eliminated 10% of the text.  DoE personnel flagged 60 separate passages in the book for editing.

This demand (and the DoE made clear that it was making demands not requests) came as a surprise to Dr. Ford, who had submitted the book for DoE review expecting the process to be a mere formality.  In Dr. Ford's view, the book contains no secrets, as the information that he included in his book relating to the history of the hydrogen bomb either had been previously disclosed or was released to him through FOIA requests.  The DoE sees things differently, but the agency is unlikely to respond to the publication of Dr. Ford's book, in large part because any action it takes would only draw attention to the information whose disclosure it regards as improper.  

The Times articles covers the story well and provides some examples of material that the DoE regards as classified but Dr. Ford regards as public.  We would like to focus on a couple of contractual issues.  First, the Times references Ken's alleged contractual obligation arising from a non-disclosure agreement he signed in the 50s.  Dr. Ford does not recall what that agreement said, but he provided this blog with a copy of a similar agreement dated from September 2014.  The DoE asked Dr. Ford to sign this new non-disclosure agreement  in connection with its review of his manuscript.   That document provides the government with multiple remedies should Dr. Ford reveal any classified information, including:

  • termination of security clearances and government employment;
  • recovery of royalties and other benefits that might result from any sort of disclosure of classified information; and 
  • criminal prosecution under Titles 18 and 50 of the U.S. Code and the Intelligence Identities Protection Act of 1982.

Given this non-disclosure agreement, one would expect that Dr. Ford's publisher would be reluctant to publish the book, fearing that it too might become a target of government scrutiny.  In order to protect his publisher against liability, Dr. Ford agreed to amend his publication agreement to expand the usual indemnification clause.  The additional language in the contract provides that Dr. Ford will indemnify his publisher "against any suit, demand, claim or recovery, finally sustained, by reason of . . . any material whose dissemination is judged by the United States Government to have violated the Author's obligations regarding the handling of sensitive information."  

Steven Aftergood provides further information on the Federation of American Science Secrecy blog here.  

Dr. Ford provides an overview of the story that his book tells, as well as links to about a score of documents, eight of which are annotated with Dr. Ford's comments, on George Washington University's National Security Archives.

March 31, 2015 in Books, Government Contracting, In the News, Science | Permalink | Comments (0) | TrackBack (0)

Monday, March 30, 2015

On a Lighter Note: Valet Service Companies Needing to Take Crash Course on Contracts

Earlier this month, Los Angeles-area media reported a somewhat humorous of a valet service that gave away a relatively expensive new car to a random guy claiming that he had "lost the [valet] ticket."  Yup, the valet service actually just gave the car to the man who was sporting an Ohio state tattoo.  (Of course, this story is not funny for the frustrated car owner).

But wait, the story gets weirder than that (it is, after all, LA, where we worry a lot about our cars...): the valet service sent the responsible employee home and referred the customer to his insurance company.  Initial reports indicated that the insurance company did not want to pay for this loss as no theft had occurred... as is always the case, however, the media did not follow up on the end of this story, to the best of my knowledge.

Another valet contract that you must read and that was shared today on the AALS listserv for Contract Professors reminded me of this story.  Hat tip to Professor Davis!

Contract

Valet companies may have to brush up on their contract writing skills soon...

March 30, 2015 in Commentary, Contract Profs, Current Affairs, Famous Cases, In the News, True Contracts | Permalink | Comments (0) | TrackBack (0)

Eric Goldman on Consumer Review Bans

Eric GoldmanWriting for Forbes.com, Santa Clara Law Prof Eric Goldman (pictured) reports on a recent SDNY case, Galland v. Johnston The case is similar to others about which we have blogged recently.  Plaintiffs rent out their apartment in Paris through a website.  The rental agreement associated with the property provides that defendants would “not to use blogs or websites for complaints, anonymously or not."  Notwithstanding this clause, defendants posted reviews of the apartment that were not entirely positive.  In one case, plaintiffs offered a defendant $300 to remove a three-star review from a website.  The defendant refused and complained to the website.  Plaintiff then sued defendants for, among other things, breach of contract, extortion and defamation.

The magistrate judge dismissed all of the claims except the breach of contract claim.  Plaintiffs objected to this disposition.  Defendants did not, which may be a good reason why the District Court let the breach of contract claim stand while upholding the Magistrate's dismissal of the remaining claims.  Indeed, the District Court's opinion did not address the breach of contract claim.  

Professor Goldman expresses surprise that the Magistrate allowed the breach of contract claim to stand.  Other New York courts have found that contracts clauses that prohibit customer reviews are a deceptive business violate New York's consumer protection laws.  Professor Goldman also points out that they violate public policy regardless of New York law.

March 30, 2015 in In the News, Recent Cases, True Contracts | Permalink | Comments (0) | TrackBack (0)

Thursday, March 26, 2015

Where Congress Won't Act, Private Ordering Fills a Gap

ThermometerToday's New York Times reports that Microsoft will require the companies with which it partners, its contractors and vendors who employ more than 50 workers, to provide their employees who do work for Microsoft with 15 days of annual paid sick leave and vacation time.  Microsoft expects that it will have to increase its pay to these partners to help them with the added expense of the policy.  

As the Times points out, it is a very American approach to the protection of workers' rights.   Congress will not act and only a few state legislatures have done so.  Microsoft, like other large technology companies, can afford to provide decent wages and benefits to its workers.  However, companies increasingly prefer to contract work out to small companies that do not treat their workers nearly as well.  

The Times notes that the gap is not only between skilled computer programmers and unskilled or semi-skilled janitors or groundskeepers but also between whites and African Americans and Latinos.  While the latter, traditionally-underrepresented minorities account for our 3-4% of tech workers, they account for 75% of janitorial and maintenance workers.  Eschewing Google's and Facebook's approaches of replacing contract workers with its own employees, entitled to company benefits, Microsoft has explained its move in a manner also consistent with the great American tradition of enlightened self interest.  Microsoft general counsel explained that: 1) happy workers are more productive; and 2) sick workers who come to work can infect others.  

This move can have a big impact, especially if other major companies follow Microsoft's lead, but I'm not sure that the effects will all be good for workers.  If a contractor has some workers that work for Microsoft and some that don't, the Microsoft jobs suddenly become highly sought-after.  A company may try to stay below the 50-employee threshold to avoid the private regulation.  Or it may divide Microsoft work among its staff (in the interests of internal morale), which might dilute the effects of the regulation.  If you do only 20% of your work for Microsoft, do you only qualify for three days of vacation/sick leave?  It may take a few years (and a few contracts disputes) to work out the kinks.

March 26, 2015 in Commentary, In the News, True Contracts | Permalink | Comments (0) | TrackBack (0)

Monday, March 23, 2015

Weekly News Roundup

Graham_SpanierAs reported here in Onward State, Former Penn State University President Graham Spanier (left) is now suing his former employer for breach of contract, while also naming the University and former FBI Director Louis Freeh in a defamation claim.  The allegations stem from the Freeh Report, which Mr. Freeh undertook as a private consultant hired to look into allegations of sexual misconduct within the Penn State athletics program.  The complaint alleges that the University breached its separation agreement with him by publicizing the Freeh Report and through other statements.  Mr. Spanier has set up a website purporting to refute the findings of the Freeh Report.

In a potentially very interesting, bizarre and short(!) opinion, the Delaware Supreme Court weighed in  on a hypothetical case not before it in Friedman v. Khosrowshahi, No. 442,2014 (March 6, 2015).  The Court said that if a stockholder brings suit alleging breach of a stockholder approved plan as a contract, and she seeks recovery under contract law, such a plaintiff would not have to make demand on the board before proceeding in a derivative action because "directors arguably have no discretion to violate the terms of a stockholder adopted compensation plan whose terms cannot be amended without the stockholders’ approval."

MarketWired.com reports that Canadian purchasers of Lenovo computers are seeking $10 million in breach of contract damages for Lenovo's violation of their privacy rights by installing Superfish on their personal computers.  Superfish allegedly makes it possible for third parties to use wireless networks to steal private information off of Lenovo computers.  The Statement of Claim (Canadian, we assume for Complaint) can be found here.

CubsAnd, as Spring training is underway and Opening Day is only a fortnight away, we should mention the ongoing contract dispute between the Chicago Cubs and the parties with whom the team entered into a revenue-sharing agreement relating to rooftop seating across the street from Wrigley Field.  The Cubs want to put up a video board that the Sheffield Avenue property owners claim will block views in violation of the terms of the revenue-sharing agreement.  The latest news on the subject matter can be found on Crain's Chicago Business here.  The Cubs' opposition to plaintiffs' motion for an injunction is here.  As a life-long Cubs fan, I stand by my view that not having to watch the Cubs play actually enhances the value of the seats, but hope springs eternal.

As reported here in the Cranston Patch, a teachers' union is suing a school district for breach of contract and violations of civil and religious rights.  The school district decided to hold classes on religious holidays, including Good Friday, but to permit teachers two days of religious leave each year.  The school district then denied leave to teachers who sought to use their leave on Good Friday.   The community is predominantly Catholic, and it is likely that the school district had not plan for replacing the 200 teachers who applied for leave on Good Friday.  Heavy snows and the large number of snow days this year might also have played a role.

March 23, 2015 in In the News, Recent Cases, Sports | Permalink | Comments (0) | TrackBack (0)

Monday, March 16, 2015

Facebook Cares about Privacy (for Facebook Executives)

The New York Times reported yesterday on the rise of a new type of non-disclosure agreement in connection with home construction.  Basically, rich people associated with the tech industry are making everyone who works on their homes sign sweeping non-disclosure agreements.  

Times reporter Matt Richtel posed a number of questions to workers outside a home that, court documents from a different case reveal, is being renovated for an undisclosed Facebook executive (pictured).  He was able to extract only answers like, "I'm an electrician working on a house."  As to which house, workers would gesture towards a neighborhood and say "one of the ones over there."  But the mystery was not too difficult to solve, as workers swarmed "like ants" on the home, and they have been working on it for two years.  

Matt Richtel does a great job highlighting the irony of the situation.  He quotes Facebook founder Mark Zuckerberg, commenting on Facebook's privacy policies, as follows:  “People have really gotten comfortable not only sharing more information and different kinds, but more openly and with more people.”  And yet, in correspondence disclosed in the other case referenced above, Mr. Zuckerberg's attorney wrote, "Mr. Zuckerberg goes to great lengths to protect the privacy of his personal life.”

There is no necessary contradiction between Mr. Zuckerberg's desire to maintain his own privacy and his belief that other people choose not to protect their own.  But Facebook has been pretty aggressive in eroding privacy, in part through a libertarian paternalism in which all the default choices lead to a surrender of privacy, or through extracting waivers of privacy rights by contractual means that do not rise to the level of meaningful, knowing consent.

So yeah.  This is ironic.

March 16, 2015 in Commentary, In the News | Permalink | Comments (0) | TrackBack (0)

Court Orders German Biologist to Make Good on His 100,000 Euro Challenge

Vaccination_of_girlThe BBC reports that a German biologist, Stefan Lanka, offered 100,000 Euros to anyone who could prove that measles is a virus.  A German doctor, David Barden, gathered evidence from medical studies an claimed his reward.  A court found in Dr. Barden's favor.  Lanka, who is committed to the view that measles is a psychosomatic response to traumatic separations, has vowed to appeal.  It's not clear what Lanka was thinking. He may believe that no proof exists; or he may have believed that no court would be willing to conclude, as a matter of law, that the proof was adequate, and then he could shout to the rooftops that he has not been refuted.

If you would like to learn more about why Mr. Lanka does not believe in viruses, you might find this 20-year-old article on HIV of interest.

March 16, 2015 in In the News | Permalink | Comments (0) | TrackBack (0)

Saturday, March 14, 2015

International Price Fixing Scheme

Secret backroom deals conducted in hotels and private apartments.  Dedicated phone lines.  Market-sharing agreements and price fixing activities.  Million-dollar deals.  Thinking oil, diamonds, shares or foreign exchange?  Think again!  Eleven of the top … yoghurt makers in France, including American-owned Yoplait, were recently fined approx. $200 million for the above activities, which affected about 90% of the French yoghurt market and thus “seriously disturbed” it.  

Yoplait, the majority of which is owned by U.S.-based General Mills, Inc., actually revealed the cartel under a French law that allows companies to self-report their price fixing activities in exchanged for reduced punishment.  So far, the company has received no fines.

Apparently, the French competition authorities are cracking down on deals such as the above.  The French government has also recently started cleaning out, so to speak, the ranks among shampoo, toothpaste and various cleaning product manufacturers.

Price fixing does, of course, disturb the free market forces.  When shopping in this country, it is remarkable how close prices for various everyday items are.  However, that does not mean that prices have been set in any illegal way.  Retailers such as gas stations, which are well-known at least in the Los Angeles area to have almost the same prices all the time, could just stick the head out the window to see how the competitors price their products.  But if mere yoghurt is worth the above risk, one wonders what else may be going on behind the scenes in the global corporate world.  Perhaps it’s better not to know.

March 14, 2015 in Current Affairs, Food and Drink, In the News, Miscellaneous | Permalink | Comments (0) | TrackBack (0)

Thursday, March 5, 2015

Artistic license

Artistic License

The official portrait of former President Bill Clinton has been completed.  See it here.   It was painted in the “conservative realistic style” … maybe a little too realistic and not sufficiently conservative?

According to the artist, Nelson Shanks, the bluish shadow of a person that you see on the mantelpiece next to Clinton is that of Monica Lewinski in her infamous blue dress.  You got that right: the artist himself has admitted that he purposefully scarred the picture just as the Lewinsky scandal scarred Clinton’s second term.  The artist has apparently caught quite some flak for having done this.  Regardless of artistic freedom and setting aside all thoughts about the scandal per se, what is, after all, at issue here is a contract for artwork depicting a former President of the United States of America.  A bit more respect may have been in order.  This was not any regular client having a portrait done; it’s in effect the entire nation that commissioned this work.  Perhaps a subjective satisfaction clause would have been in order here.  Even if it had been any “regular” client, deliberately depicting one’s paying client in a highly controversial light seems to me to be in questionable taste. 

On the other hand, the argument has been made that if the artist had been held to certain contractual stipulations, the portrait of the 42nd President would have been “stiff and untrue.”  

That’s not the case?  Take a look and judge for yourself.  While much has been made of Clinton holding an actual, gash, newspaper – so retro – the strange positioning of his fingers on his hip looks more bizarre to me.  An indication of his alleged two-sided look at what constituted “the truth” in certain contexts?  To me, it looks more like the V sign for, perhaps, Clinton’s ultimate victory over at least some of the political and other challenges he faced.  

 

 

 

March 5, 2015 in Commentary, Government Contracting, In the News, True Contracts | Permalink | Comments (0) | TrackBack (0)

Thursday, February 26, 2015

California Port and Freshwater Disputes – From Citrus Fruits to Water-Stealing Nudists

Two contracts issues have reappeared recently and both greatly affect the earning abilities of California citrus farmers, among others: the ability to ship products and the ability to grow them in the first place.

The shipping situation was - and still is - affected greatly by the recent employment contract dispute between shipping companies and dockworkers.  Recently, the parties reached a tentative deal on a new five-year contract after months of discussions that ended with a roughly 3% wage increase each year, a hike in pensions and continued union jurisdiction over the maintenance of truck trailers.  While the dispute was going on, many oranges destined for Chinese New Year celebrations overseas rotted away as activities in and around the ports of Los Angeles and Long Beach were impacted.  The docks still aren’t expected to return to normal until well into the season for Valencia oranges and past the season for navel oranges.  Importers of cars, among other things, have also recently expressed their problems keeping up with the demand for imported cars (which is huge in California).

For citrus and other farmers, the shipping problem is exacerbated by the ongoing very severe drought that California is experiencing for the fourth year in a row and that so far has resulted in 41% of the state finding itself in the most severe category of water shortages. 

While farmers up and down California’s agricultural San Joaquin Valley vehemently protest  P1030121
regulations limiting their access to freshwater, others are taking matters into their own hands: they simply steal water.  From the apparently more and more typical situation of subcontractors using fire hydrants without permits to people driving away with water from fire hydrants in trucks, siphoning it off canals, or tinkering with the pipes of their neighbors or local water providers, farmers are not the only ones getting desperate for water. 

Since we are talking California, there has to be a “weird” twist to the story: in the Silicon Valley, a water district has removed irrigation pipes that rangers say allowed … a nudist colony to make unauthorized water diversions from a waterfall. 

There is even a phrase for thieves of this nature: “water bandits.”  This situation is only about to get worse as the drought is predicted at above 80% certainty to become the worst in 1,000 years.    Some cities such as Los Angeles are offering tax initiatives for removing residential lawns.  Nonetheless, Californians will still have to grapple with the contractual and other rights to access to water – saline or otherwise - for some time to come.

February 26, 2015 in Current Affairs, Food and Drink, In the News, Miscellaneous | Permalink | Comments (0) | TrackBack (0)

Monday, February 23, 2015

Contract Modifications – Differing Standards for Pop Stars?

2012 American Idol winner Phillip Phillips has lodged a “bombshell petition” with the California Labor Commissioner seeking to void contracts that Phillips now finds manipulative, oppressive, and “fatally conflicted.”  

Before winning season 11 of “American Idol,” Phillips signed a series of contracts with show producer “19 Entertainment” governing such issues as his management, recording and merchandising activities.  These contracts are allegedly very favorable to 19 Entertainment, for example allowing the company as much as a 40% share of any moneys made from endorsements, withholding information from Phillips about aspects of his contractual performance such as the name of his album before it was announced publicly, and  requiring Phillips to (once) perform a live show once without compensation.  19 Entertainment has also lined up such gigs for Phillips as performing at a World Series Game, appearing on “Ellen,” the “Today Show,” and “The View.”

It is apparently not unusual for those on successful TV reality shows to renegotiate deals at some point once their career gets underway.  Phillips claims that he too frequently requested this, but that 19 Entertainment turned his requests down.  Can he really expect them to agree to post-hoc contract modifications?

Very arguably not.  Under the notion of a pre-existing legal duty, a party simply cannot expect that the other party to a contract should have to or, much less, should be willing to change the contractually expected exchange of performances.  This seems to be especially so in relation to TV reality shows where the entire risk/benefit analysis to the producer is that the “stars” may or may not hit it big.  For hopeful stars, the same considerations apply: their contracts may lead them to fame and fortune… or not.  That’s the whole idea behind these types of contracts.  Of course, if industry practice is to change the contracts along the way and if both parties are willing to do so, they are free to do so.  Otherwise, the standards for contractual modifications are probably the same for entertainment stars as for “regular” contractual parties. 

Another issue in this case is whether an “agent” is a company or a physical person.  Under the California Talent Agencies Act (“TAA”), only licensed “talent agents” can procure employment for clients.   Phillips is attempting to apply the TAA to entertainment companies like 19 Entertainment.  If Phillips is successful, the ramifications may be significant for the entertainment industry in which companies very often negotiate deals with performers without taking the TAA into account.  In Citizens United v. Federal Election Commission, the United States Supreme Court famously gave personal rights to corporations, albeit only in the election context.   Time will tell how California looks at the issue of corporate personhood and responsibilities in the entertainment context.

Adjudications under the controversial TAA are notoriously slow and could leave contractual parites in “limbo” for a very long time.  Time and patience is not what Hollywood parties are known to have a lot of, so stay tuned for the outcome of this dispute.

February 23, 2015 in Celebrity Contracts, Current Affairs, In the News, Legislation, Television, True Contracts | Permalink | Comments (0) | TrackBack (0)