Friday, September 20, 2013
"By now, you’ve heard the stories of passengers urinating in bags, slipping on sewage, and eating stale cereal aboard the Carnival Cruise ship that was stranded in the Gulf of Mexico — not exactly the fun-filled cruise for which the passengers had signed up and paid." My post on "Carnival Cruise and the Contracting of Everything" is available here.
Friday, September 13, 2013
Last week, Facebook announced that it planned to enact changes to its privacy policies. Its announcement elicited the by now, all too-familiar flurry of protests from users and privacy advocacy groups. Six privacy groups wrote to the Federal Trade Commission (FTC) that the proposed changes violated the 2011 settlement that Facebook reached with the FTC over its Sponsored Stories advertising program.
The letter states that the proposed changes “will allow Facebook to routinely use the images and names of Facebook users for commercial advertising without consent.” While the current policy permits users to “use your privacy settings to limit how your name and profile picture may be associated with commercial, sponsored, or related content ,” the proposed policy brazenly states:
“(y)ou give us permission to use your name, profile, picture, content and information in connection with commercial, sponsored or related content…This means, for example, that you permit a business or other entity to pay us to display your name and/or profile picture with your content or information, without any compensation to you.”
As the letter points out, the images of Facebook’s users “could even be used by Facebook to endorse products that the user does not like or even use.”
Facebook’s proposed policy changes also contain this provision:
“If you are under the age of eighteen (18), or under any other applicable age of majority, you represent that at least one of your parents or legal guardians has also agreed to the terms of this section (and the use of your name, profile picture, content, and information) on your behalf.”
This week, the Federal Trade Commission announced that it would investigate whether Facebook's announced policy would violate a 2011 agreement that the company had reached with the agency. Facebook's position is that the proposed changes were prompted by its settlement in a case involving its Sponsored Stories advertising program.
Facebook’s proposed changes seemed eerily familiar and then I realized why –I’d already written about this issue back in December. Back in December, Instagram, a company acquired by Facebook, proposed changes to its terms of service that stated:
“you agree that a business or other entity may pay us to display your username, likeness, photos (along with any associated metadata), and/or actions you taken, in connection with paid or sponsored content or promotions, without any compensation to you. If you are under the age of eighteen (18), or under any other applicable age of majority, you represent that at least one of your parents or legal guardians has also agreed to this provision (and the use of your name, likeness, username, and/or photos (along with any associated metadata)) on your behalf.”
Do the terms sound familiar?
And now this, again. It's like the 1993 movie, Groundhog Day, starring Bill Murray and Andie MacDowell. In that film, Murray's character, a T.V. weatherman, is made to report on Groundhog Day activities. Murray's character, who doesn't like the assignment, finds that he keeps waking up to relive Feb. 2nd over and over again.
Facebook just doesn’t understand that no, means no. It pleads forgiveness, wants us back, and then the same behavior starts up all over again. We want to believe you. We really do.
We feel your pain, Huma Abedin.
There are long term consequences to what Facebook is doing. Each time it pushes, it pushes hard, and in
response to pushback from consumers, it appears to retreat – but not as far
back as it pushed. Then it does it again
and each time, Facebook manages to loosen our privacy norms just a bit more. It wins through increments, through
persistence. It didn’t get to a billion
users overnight and it isn’t going to strip us of all our privacy without a
good fight from us.
But big changes are made in increments. Policy changes that nobody reads because they are hidden in wrap contracts, slowly but surely, change our expectations of privacy. The erosion of consent, justifiable perhaps at one time to limit business risks, led us to where we are now –an online contract clause that purports to extract consent from someone who never even received notice of its existence. To make matters worse, the clause is directed at children who don’t even have legal capacity to contract.
Really, this time you’ve gone too far, Facebook. This time, let’s make it the last time, Facebook. Promise?
Of course you do.
Over the summer, hte UK's National Audit Office presented to the BBC Trust Finance Committee this Report on executive severance payments made to fromer BBC executives. The BBC has reduced its management staff signficantly since 2009. In so doing, it expects savings totalling £92 million. However, the BBC also has made severance payments to the 150 ousted executives totalling £25 million.
According to the Report, the BBC plans changes going forward. From now on severance pay will not exceed 12-months salary or £150,000, whichever is less.
The drama of Parliamentary hearings into the payments is well described here in the UK's The Guardian. The BBC's Director General at the time of the payments was Mark Thompson, who recently moved on to The New York Times, where he is Chief Executive. Thompson defended the payments before Parliament, although they exceeded by £1.4 million (£2 million in The Independent's account) the BBC's contractual obligations to its former executives. The largest single payment was just over £1 million, and it went to Thompson's deputy, Mark Byford. According to the BBC, the investigation into severance payments was triggered by a £450,000 payment to one BBC executive who resigned in connection with a scandal after just 54 days on the job.
From an American perspective, it is a bit hard to see what the fuss is all about. Sure, capping severance for executives at publicly-owned entities is certainly a reasonable policy, but even without the cap, exceeding contractual obligations by something less than 10% while achieving significant savings overall seems pretty tame on the overall scales of both wasteful public-sector spending and executive severance packages. As Brad Pitt's character puts it in Inglorious Bastards, that should just get you a chewing out. But perhaps we have been desensitized by the size of severance packets, even at public corporations, on this side of the pond.
1. It is perhaps telling that the Report begins with three blank pages (after the cover page) followed by two mostly blank pages. Apparently they don't audit their own use of paper.
2. UK usage seems to have completely abandoned the hyphenated compound adjective. Thus, after all the blank pages, the Report begins, "The BBC Trust receives value for money investigations into specific areas of BBC activity." I had to read this sentence three times before I could make any sense of it. That's because "value for money" is a compound adjective rather than two nouns separated by a preposition. To my eyes, the sentence would have been far more readable if it had been written: "The BBC Trust receives value-for-money investigations into specific areas of BBC activity. " Am I the only one? My inquiry also relates to changes going on in Law Review offices in the US, as I have tussled with student editors who have grown hostile to hyphens in recent years. I like the little fellas.
Thursday, September 12, 2013
In July, Centre College announced that the A. Eugene Brockman Charitable Trust had pledged the largest gift in the history of small, liberal arts colleges. The fund would be used to create 160 scholarships for students majoring in the natural sciences, computational sciences or dismal sciences (aka economics). Eugene Brockman died in 1986, but his son, Robert T. Brockman attended Centre College and is now a principal in Reynolds & Reynolds, a car dealership support company.
Earlier this week, Centre College announced that the gift had been withdrawn. The gift was contingent, as it turns out, on "a significant capital market event." The event was a $3.4 billion loan deal involving Reynolds & Reynolds. The proceeds from the deal would go to Reynolds & Reynolds shareholders, including the Brockman Trust. But the rating agencies did not like the deal and downgraded Reynolds & Reynolds. As a result, no deal, no proceeds, no revenues to the Brockman Trust and then none to the College.
For our purposes, there are two money quotes in the Times coverage from Centre College's President John Roush. First, “In retrospect, we might have put a big asterisk on this thing . . . ." And second “We had a lot of people who have poured mountains of time into this . . . ."
No doubt, Centre College would like to maintain its good relations with the Brockman Trust. It has received money from the Trust in the past; it would like to continue to do so in the future. But if there were a clean break, is the pledge enforceable?
The answer may turn on where that astserisk should be. Was there an asterisk attached to the gift or an asterisk attached to the announcement of the gift? If Brockman made clear that its gift was contingent on the significant capital market event, then its pledge is not binding. There was no promise. But if the condition was not clear, there may still be a representation that one would reasonably expect to induce reliance and that apparently induced actual reliance when the Centre College people "poured mountains of time" into the gift. Even the announcement of the gift, its purposes and its source, might be consideration, rendering the gift pledge enforceable (if there was indeed a promise), because the Trust got something of value (publicity) in exchange for its pledge.
One also wonders about other donors. If the Brockman Charitable Trust pledge was used to attract other donors, those donors might now be experiencing donor's remorse. If the other donors now renege on their pledges, might the College have a cause of action against the Trust?
The NYT reported that Victor Willis, who you may know as the policeman/naval officer from the Village People, will finally get control of copyright to certain songs that he wrote back in the day. Those songs include hits like "YMCA," "In the Navy" and "Go West." Yes, he also wrote "Macho Man," but unfortunately, he wrote tht one before the relevant law went into effect. That law was a provision in the 1978 Copyright Act that gave creators "termination rights" that permitted them to take back control of the copyright to their works after 35 years - even if they had originally signed away those rights. We've all heard the horror stories of our favorite musicians in their lean and/or naive years signing away rights in one-sided contracts that favor the labels. His is the first well-known case of an artist invoking those termination rights, which opens up a lot of possibilities for him. Mr. Willis is quoted in the NYT article as saying, "I've had lots of offers, from records and publishing companies" although he isn't sure what he'll do next. He does have these parting words of wisdom, "When you're young, you just want to get out there and aren't really paying attention to what's on paper. I never even read one contract they put in front of me, and that's a big mistake." It takes a real "macho man" to admit his mistakes.
Tuesday, September 10, 2013
According to Rolling Stone, Ohio resident Noam Lazebnik has sued Apple for breach of contract, claiming that "he and other Breaking Bad fans have been cheated by only receiving the first eight episodes of the show's final 16 episodes with their iTunes 'Season Pass.'" Rolling Stone explains:
The AMC drama's fifth season has aired in a split format of two eight-episode mini-runs. Lazebnik says he and other customers were promised "every episode in that season," which should include the final eight episodes (since those are technically still part of Season Five). According to the lawsuit, Apple owes fans either $14.99 (for the standard version) or $22.99 (for the high-def version).
Lazebnik is basing the suit on "breach of contract and violation of California's consumer protection laws."
"When a consumer buys a ticket to a football game, he does not have to leave at halftime," reads the claim. "When a consumer buys an opera ticket, he does not get kicked out at intermission." Apple representatives contacted by GigaOM did not immediately respond to a request for comment.
[Meredith R. Miller]
Wednesday, September 4, 2013
We are saddened by the death of Ronald Coase, whose work opened up a range of new prospectives on contractual (and other kinds of) relationships. That sadness is tempered by our knowledge that his life was well-lived and that he remained active and productive even as he surpassed the century mark. Remeberances abound and we have little to add, so we simply link below to what others have said:
Friday, August 30, 2013
BP is upset that bogus claims are being filed against it in connection with its settlement of claims relating to the Deepwater Horizon explosion (pictured) and oil spill. It has responded with a full-page ad in major newspapers (which you can view on Forbes's website). According to the ad, BP negotiated a settlement three years ago relating to claims arising out of the Deepwater Horizon incident. BP now claims that claims are being paid out to businesses that did not suffer damages relating to the incident.
Responses range from Forbes's allegations that BP is suffering "buyer's remorse" to Business Insider's suggestions that some parties (often identified as "plaintiffs' lawyers") are seeking to feed at the trough of a potentially large fund available to anyone with a colorable claim on it. The Wall Street Journal blog provides some insights here.
Tuesday, August 27, 2013
What at thrill to see a contracts story on the front page of the Saturday New York Times Arts Section above the fold! The occasion is a public exhibition by the Dvorak American Heritage Association, which will display the actual contract that brought Antonin Dvorak (pictured contemplating a move to America) to New York for three years beginning in 1892.
According to the Times, Jeanette Thurber, wealthy patron of the National Conservatory of Music of America, agreed to pay Dvorak $15,000 -- 25 times what he was getting in Prage -- in return for his agreement to keep regular hours (well, three hours a day), teaching six days a week at her school. She did give him summers off. He was also contractually obligated to give up to six concertns a year. It's not clear whether that means that he was himself to perform or if he was to conduct an orchestra or chamber music group composed of the Conservatory's students.
The Times reports that the panic of 1893 made it difficult for Mrs. Thurber to keep up with the payments she owed Dvorak. He may have gone back to Prague a few thousand dollars short.
Monday, August 26, 2013
Friday's New York Times included this story that might be of interest to Hurly v. Eddingfield fans. As readers of this blog should recall, Hurley is a case about a doctor who refused to see his deathly ill patient, giving no reason and despite a proffer of payment and having no excuse for his refusal. We have blogged about the case previously here and here. The point of the case is that the doctor is not contractually obligated to come to the aid of his patient, and the law will not impose on him an obligation to enter into such a contractual obligation unwillingly.
As many of my students find it a bad state of affairs if a doctor cannot be compelled to treat her patient, when she is the only doctor available and she has no reason for refusing to do so, I assure them that there are non-contractual mechanisms -- state or professional codes -- for that may address Hurley's facts. Friday's story in the Times illustrates how this can work.
Vanessa Willock (Willock) contacted Elane Photography, LLC (Elane), to determine whether Elane would be available to photograph her commitment ceremony/wedding to another woman. (New Mexico's Supreme Court explains that although Willock at first referred to the ceremony as a commitment ceremony, the parties also referred to the event as a wedding, and the court used the terms interchangeably.) Elane's lead photographer is opposed to same-sex marriage and will not photoraph events that violate her religious beliefs.
Represented by the Washington-based Alliance Defending Freedom, Willock sued, citing New Mexico's constitutional Human Rights Act, which was revised in 1972 to prohibit discrimination on the basis of sexual orientation. Elane claimed that forcing it to photograph Willock's commitment ceremony/wedding violated its First Amendment Rights. Eugene Volokh has blogged extensively on the case (e.g., here), and he filed an amicus brief in the case. Volokh characterized his position and that of his fellow amici as follows: "All the signers of the brief support same-sex marriage rights; our objection is not to same-sex marriages, but to compelling photographers and other speakers works that they don’t want to create."
New Mexico's Supreme Court (and all other courts that heard the case) ruled in favor of Willock. Willock sought only a declaratory judgment that Elane had violated New Mexico's Human Rights Act. Willock sought no other remedy. We leave the constitutional issues to Volokh and others with greater claims of expertise. We note, however, that the effect of the ruling is that New Mexico's constitutional interest in prohibiting discrimination trumps the common law contractual principle of freedom of contract. Unlike the doctor in Hurley, Elane's must contract with people with whom it does not want to contract, even though, also unlike doctor in Hurley, Elane's has grounds for its unwillingness to contract sounding in constitutional principles of freedom of speech and freedom of religion.
The Times provides the full text of the case, Elane Photograhpy, LLC v. Willock.
Tuesday, August 13, 2013
After an ugly three-car accident, plaintiffs sued the other drivers, one driver’s employer (Xerox) and a corporation that owned one of the cars (Gelco). Gelco moved for summary judgment dismissing the complaint. That same day, the parties held a mediation that did not resolve the lawsuit. Thereafter, Brenda Greene, the adjuster for Gelco’s insurer called plaintiffs’ counsel to revive settlement negotiations. After a few days of negotiating, plaintiffs’ counsel orally agreed to settle the case. Greene sent a confirmation email message to plaintiffs’ counsel, it read:
Per our phone conversation today, May 3, 2011, you accepted my offer of $230,000 to settle this case. Please have your client executed [sic] the attached Medicare form as no settlement check can be issued without this form.
You also agreed to prepare the release, please included [sic] the following names: Xerox Corporation, Gelco Corporation, Mitchell G. Maller and Sedgwick CMS. Please forward the release and dismissal for my review. Thanks Brenda Greene.
Plaintiffs signed a release on May 4. On May 10, plaintiffs’ counsel sent that release and a stipulation of discontinuance to Gelco. That same day, Gelco’s attorney received an email alert that the court granted Gelco’s motion for summary judgment dismissing the complaint. Gelco’s counsel faxed and mailed a letter to plaintiffs’ counsel "rejecting" the release and stipulation. Gelco’s attorney stated: "there was no settlement consummated under New York CPLR 2104 between the parties, we considered this matter dismissed by the court's decision…dated May 10..."
The issue before the appellate court was whether the email message satisfied the criteria of CPLR 2104 so as to constitute a binding and enforceable stipulation of settlement. Where a settlement is not made in open court, CPLR 2104 provides: "An agreement between parties or their attorneys relating to any matter in an action…is not binding upon a party unless it is in a writing subscribed by him or his attorney."
The appellate court held that the email counted as a writing and a subscription by Gelco’s representative, binding the parties to the settlement. After holding that Greene had apparent authority to bind Gelco to the settlement, the court reasoned:
It is, of course, axiomatic that a letter can be considered "subscribed," since letters are usually signed at the end by the author thereof. However, email messages cannot be signed in the traditional sense. Nevertheless, this lack of "subscription" in the form of a handwritten signature has not prevented other courts from concluding that an email message, which is otherwise valid as a stipulation between parties, can be enforced pursuant to CPLR 2104. * * *
Morever, given the now widespread use of email as a form of written communication in both personal and business affairs, it would be unreasonable to conclude that email messages are incapable of conforming to the criteria of CPLR 2104 simply because they cannot be physically signed in a traditional fashion (see Newmark & Co. Real Estate Inc. v. 2615 E. 17th St. Realty LLC, 80 AD3d 476, 477-478 ["e-mail agreement set forth all relevant terms of the agreement…and thus, constituted a meeting of the minds"]). Indeed, such a conclusion is buttressed by reference to the New York State Technology Law, former article 1, "Electronic Signatures and Records Act," which was enacted by the Legislature in 2002. In the accompanying statement of legislative intent, the Legislature stated in part:
"[This act] is intended to support and encourage electronic commerce and electronic government by allowing people to use electronic signatures and electronic records in lieu of handwritten signatures and paper documents" (L 2002, ch 314, §1).
Section 302(3) of this statute states that an "'[e]lectronic signature' shall mean an electronic sound, symbol, or process, attached to or logically associated with an electronic record and executed or adopted by a person with the intent to sign the record." Section 304(2) of the statute states that "an electronic signature may be used by a person in lieu of a signature affixed by hand [and] [t]he use of an electronic signature shall have the same validity and effect as the use of a signature affixed by hand."
In the case at bar, Greene's email message contained her printed name at the end thereof, as opposed to an "electronic signature" as defined by the Electronic Signatures and Records Act. Nevertheless, the record supports the conclusion that Greene, in effect, signed the email message. In particular, we note that the subject email message ended with the simple expression, "Thanks Brenda Greene," which appears at the end of the email text. This indicates that the author purposefully added her name to this particular email message, rather than a situation where the sender's email software has been programmed to automatically generate the name of the email sender, along with other identifying information, every time an email message is sent (cf. DeVita v. Macy's E., Inc., 36 AD3d 751). In addition, the circumstances which preceded Greene's email message, and in particular, the face-to-face mediation at which settlement was attempted and the subsequent follow-up telephone calls between Greene and the plaintiff's counsel, support the conclusion that Greene intended to "subscribe" the email settlement for purposes of CPLR 2104 (see Newmark & Co. Real Estate Inc. v. 2615 E. 17th St. Realty LLC, 80 AD3d at 477 ["e-mail sent by a party, under which the sending party's name is typed, can constitute a writing for purposes of the statute of frauds"]; see also Naldi v. Grunberg, 80 AD3d 1, 6-13).
Accordingly, we hold that where, as here, an email message contains all material terms of a settlement and a manifestation of mutual accord, and the party to be charged, or his or her agent, types his or her name under circumstances manifesting an intent that the name be treated as a signature, such an email message may be deemed a subscribed writing within the meaning of CPLR 2104 so as to constitute an enforceable agreement.
Forcelli v. Gelco Corp., 27584/08, NYLJ 1202612381868, at *1 (App. Div., 2d, Decided July 24, 2013)
[Meredith R. Miller]
The ever-vigilant Miriam Cherry has turned up another news item for our amusement. We have had reason to comment previously on the Seinfeld episode in which the character "Jerry Seinfeld," played by Jerry Seinfeld (pictured), tries to return a jacket "for spite," explaining that he didn't care for the salesman who sold it to him. But our previous post was a stretch compared to this story from Slate, which is spot on.
According to the report, Patricia Walker sought to return $1.4 million worth of merchandise allegedly purchased at the store by Ms. Walker's now-ex-husband. She alleged that her ex was having an affair with the Neiman Marcus salesperson who sold him the mercandise and that this other woman earned significant commissions from the sales. In seeking to return the goods, Ms. Walker cited spite and Neiman Marcus's generous return policy. When the company balked, she sued and won a settlement, according to Slate.
A gloriously detailed account of the litigation can be found on the Dallas News website here.
Monday, August 12, 2013
Miriam Cherry shared with the Contracts Prof world this story from the UK's The Telegraph about a man who got sweet, sweet, SWEET revenge on a credit card company. According to The Telegraph, Dimitry Argakov received a credit card offer from Tinkoff Credit Systems (Tinkoff). He scanned the offer, changed some of the terms to elimnate all fees, interest and credit limits. According to the new terms. Tinkoff would be fined 3 million rubles each time it violated the terms and 6 millio rubles for any attempt to terminate the agreement.
Tinkoff seems to have approved the credit card without reading the altered agreement, and a court has held that the company is bound by the terms of the altered agreement. The issue came before a court when Tinkoff sued Mr. Argakov for 45,000 rubles worth of fees and fines not altered in the agreement. A Russian judge found Mr. Argakov liable for 19,000 rubles but upheld the altered agreement. But now Mr. Argakov is bringing his own suit seeking 24 million rubles in damages because Tinkoff has not hornored the terms of the agreement. Tinkoff is planning to counterclaim for fraud.
Pace University School of Law's James Fishman suggests that Mr Argakov ought to be careful about overplaying his hand. He cites Hand v. Dayton-Hudson, 775 F.wd 757 (6th Cir. 1985). In that case, Mr. Hand, an attorney due to be terminated by his employer, was asked to sign a release in which he promised not to sue his employer in return for a payment of $38,000. Hand objected on the ground that he was entitled to that sum in any case. When Dayton-Hudson nonetheless proferred the release, Hand altered it to except from the release claims relating to age discriminatino and breach of contract. Hand did so extremely cleverly, making the altered release look identical to the original.
When Hand sued base on the claims excepted from the release, Dayton-Hudson alleged fraud. The District Court agreed with Dayton-Hudson, reformed the release to return it to its original form and dismissed Hand's complaint. The Sixth Circuit affirmed, reasoning as follows:
The defendant was excused from not having read the new document because the general rule of being held responsible for contracts one signs, even if one has not read them, "is not applicable when the neglect to read is not due to carelessness alone, but was induced by some stratagem, trick, or artifice on the part of the one seeking to enforce the contract." Komraus Plumbing & Heating, Inc. v. Cadillac Sands Motel, Inc., 387 Mich. 285, 290, 195 N.W.2d 865 (1972) (citing International Transportation Ass'n v. Bylenga, 254 Mich. 236, 239, 236 N.W. 771 (1931)). Hand carefully retyped the release in such a way that Dayton-Hudson's agent Harms would never expect that changes were made. The failure to read most definitely resulted from Hands' clever scheme, and, accordingly, does not bar Dayton-Hudson from challenging the validity of the fraudulent release.
The reformation remedy was available under Michigan law because Dayton-Hudson's mistake was caused by Hand's conduct.
Mr. Argakov had better hope that Tinkoff does not seek a change of venue to Michigan.
Monday, August 5, 2013
Ars Technica provides a nice summary of the state of affairs in the case of the New York City dentist who attempted to contract around the criticism of her patients. It even includes a shout out to law profs Eric Goldman (Santa Clara) and Jason Schultz (Berkeley). Open wide, here's a taste:
A lawsuit regarding a dentist and her ticked-off patient was meant to be a test of a controversial copyright contract created by a company called Medical Justice. Just a day after the lawsuit was filed, though, Medical Justice backed down, saying it was “retiring” that contract.
Now, more than a year after the lawsuit was filed, the case against Dr. Stacy Makhnevich seems to have turned into a case about a fugitive dentist. Makhnevich is nowhere to be found, won’t defend the lawsuit, and her lawyers have asked to withdraw from the case.
In 2010, Robert Lee was experiencing serious dental pain. He went to see Dr. Stacy Makhnevich, the “Classical Singer Dentist of New York,” in part because she was a preferred provider for his dental insurance company. Before Makhnevich treated him, she asked him to sign a contract titled “Mutual Agreement to Maintain Privacy.”
The contract worked like this: in return for closing “loopholes” in HIPAA privacy law, Lee promised to refrain from publishing any “commentary” of Makhnevich, online or elsewhere. The contract specified that Lee should “not denigrate, defame, disparage, or cast aspersions upon the Dentist.”
And the kicker: if he did write such reviews, the copyright would be assigned to the dentist. She’d own it.
This “I own your criticism” contract would soon be put to the test, because Lee was an extremely unhappy customer. “Avoid at all cost!” he wrote in a one-star Yelp review. “Scamming their customers! Overcharged me by about $4000 for what should have been only a couple-hundred dollar procedure.”
The forms Makhnevich was using, provided to her by a company called Medical Justice, were already the subject of considerable controversy. Two tech-savvy law professors, Eric Goldman of Santa Clara University and Jason Schultz of UC Berkeley, launched a website to fight the contracts, which garnered considerable press. Former Ars Technica writer Tim Lee chronicled his own experience with a Philadelphia dentist who was using the contract.
The “Mutual Agreement” was essentially a work-around to try to stifle patient reviews. Doctors, or any other business, who believe that an online review is, say, defamatory, can go ahead and sue a reviewer—but they don’t have an easy way to get the review down. Review sites like Yelp are protected by Section 230 of the Communications Decency Act, which immunizes the platforms hosting such user-generated content, as long as they don’t edit it heavily. Review sites in the US don’t typically remove posts when a business claims defamation.
Copyright, however, is a different story. Section 230 doesn’t cover intellectual property laws, and Yelp has to react quickly to claims that a user has violated copyright law.
Users of the Medical Justice form were counting on that, and it worked. In September 2011, staff members of Dr. Makhnevich sent DMCA takedown notices to Yelp and DoctorBase. That was followed up with invoices sent to Robert Lee, saying he owed $100 per day for copyright infringement. Accompanying letters threatened to pursue “all legal actions” against him.
Of course, the dentist's disappearance and considerable negative press leads Paul Levy of Public Citizen to remark:
“It’s quite possible that the consequence of her having this contract is that she had to give up her dental practice,” said Levy. “It’s the Streisand effect gone bonkers.”
Yes, indeed. More from Ars Technica here.
[Meredith R. Miller]
Wednesday, July 31, 2013
Today's New York Times features an article on a relatively recent sports phenomenon -- the one-day contract. In a nutshell, the one-days permit a retired player to re-sign with the team he played for in his prime, so that he can retire as a member of that team. The player then shows up at the stadium and the fans can cheer him one last time (until the next opportunity comes around). The team may benefit from the one-day contract in that fans may show up to cheer a retired star and re-experience a team's glory days. The Times charaterizes these contracts as effecting for the players "a meaningless return to a team so they can reflect on how meaningful that team was to them."
This characterization strikes me as unfortunate. The return is far from meaningless. In fact, the contract is all about meaning and not at all about playing a particular sport or even about money for the athlete. San Francisco 49er star Jerry Rice (pictured) was given a one-day contract that actually specified an amount, consisting of his rookie year (1985), his number (80), his retirement year ('06) and then 49, totaling $1,985,806.49. But according to the Times (and Wikipedia), the amount was ceremonial. Rice was not actually paid anything when he re-signed with the 49ers. In baseball, the actual contracts are with farm teams, as teams cannot afford to give up a roster spot during the season -- even for one day. This too is evidence that the contracts are not meaningless.
One blogger thinks the one-day contract phenomenon has gone too far, arguing both that it is meaningless and trivial and that it is an attempt at revisionist history. These players did not actually end their careers with the teams that meant the most to those careers, and so the one-day contracts perpetrate a fraud.
Another way to look at it is that sports is imitating art, at least if the television series Lost is art. Like the characters on Lost, these players get to return to a virtual reality in which they share experiences with the people who meant the most to them at the time in their lives when they had their biggest impact.
Tuesday, July 30, 2013
Today's New York Times features a lengthy article about the Los Angeles Angels' contract with Albert Pujols, the once-mighty St. Louis Cardinals slugger to whom the Times now refers as a faded star. Between now and 2021, the Angels are contractually obligated to Pujols to the tune of $212 million. In the last year of his contract, when Pujols will be 41, he is scheduled to earn $30 million. The article explores the reasoning behind these contracts to some extent. The Angels found that they could not compete with teams like the Yankees in the post-season without the marquee players whom one could only attract with hefty long-term contracts.
But the Yankees' model of buying up the top players in the league does not look so effective right now. They won the World Series in 2009, and they have been contenders most years, but the 1996-2000 glory days are long behind them. The Times article on Pujols notes that the Yankees may well be secretly hoping to get out of their comparable contract with Alex Rodriguez through the deus ex machina of a life-time ban due to Rodriguez alleged involvement in the Biogenesis doping scandal.
The Times implies that the Yankees at least got their money's worth out of Rodriguez, whom the Times credits with "leading" the Yankees to a championship in 2009. But baseball doesn't work that way. Rodriguez was a part of an extremely strong team. Just on the offensive side, arguably, Rodriguez was about the middle of the pack among the Yankees' starters that year, who included: Derek Jeter, who hit .334 and had 30 stolen bases; Robinson Cano, who hit .320, with 25 home runs; and Mark Teixeira, who hit 39 home runs, drove in 122 and batted .292. Johnny Damon, Hideki Matsui and Jorge Posada all posted offensive numbers not too different from Rodriguez's highly respectable ones. Given their offense, the Yankee' didn't really need great pitching, but C.C. Sabathia won 19 games, and Mariano Rivera saved 44, while posting an E.R.A. of 1.76. The only category in which Rodriguez led the Yankees that year was salary.
Pujols career is far from over. He is suffering from a foot injury that has hampered his performance this year. But has there ever been a Pujols-like power hitter (other than the tainted Barry Bonds) who continued to perform at All-Star levels after age 35? Does it make sense to pay a designated hitter a top salary?
As we have argued over and over again, to no avail, the solution is to design contracts that pay players for performance (rather than rewarding them for past performance). Alfonso Soriano got hot at just the right point in the season, and now he is wearing the Yankee pinstripes again. But Cubs fans should just be overjoyed to have been relieved of about $7 million of the psychotic $24.5 million the Cubs would otherwise have had to pay a guy who will struggle to hit .250 for the rest of the year. I would love to like Soriano, but his salary has hurt his team more than he can help it.
Wednesday, July 24, 2013
The Ninth Circuit recently decided an interesting case involving video on demand – or is the Hopper a DVR? That was one of the questions at the heart of Fox Broadcasting Company v. Dish Network. (Jeremy Telman had previously blogged about the case when the complaint was first filed a year ago). At issue was the Dish Network’s PrimeTime Anytime service which only works with the Hopper, a set top box with digital video recorder and video on demand functionalities. PrimeTime Anytime records Fox (and other) network shows and stores the recordings for a certain number of days (typically eight) on the Dish customer’s Hopper. Dish does not offer video on demand from Fox (but see discussion below). Dish started to offer a new feature called “AutoHop” that allows users to skip commercials on shows recorded on PrimeTime Anytime (although it doesn’t delete the commercials, the user can press a button to skip them). Fox sued Dish for copyright infringement and breach of contract and sought a preliminary injunction. The Ninth Circuit upheld the district court’s denial of the motion. The copyright issues are interesting, but I’m going to skip over them using this blog’s virtual AutoHop feature and get right to the contract issues, which are much more interesting to readers of this blog.
There were two agreements at issue here. There was a 2002 license agreement and a subsequent 2010 letter agreement (there were others but these were the two relevant ones). Pursuant to the 2002
agreement, Fox granted Dish a limited right to retransmit Fox’s broadcast signal to Dish’s subscribers. It also contained several restrictions and conditions and prohibited video on demand. A 2010 letter agreement, however, agreed to video on demand provided that Dish agreed to certain conditions, the primary one being that it couldn’t show the content without commercials.
So the basic questions (overly simplified for blog purposes) were – did Dish distribute Fox video on demand content? If so, did it comply with the terms of the 2010 letter? (Okay, that’s not exactly how the court or the parties put it, but those were the issues stripped down to their essence).
Fox argued that Dish breached this provision of the 2002 contract:
“EchoStar acknowledges andagrees that it shall have no right to distribute all or any portion of the
programming contained in any Analog Signal on an interactive, time-delayed, video-on-demand
or similar basis; provided that Fox acknowledges that the foregoing shall not restrict EchoStar’s practice of connecting its Subscribers’ video replay equipment.”
The district court construed the word “distribute” as requiring a copyright work to “change hands” (analogous to under the Copyright Act). Because the copies remained in users’ homes,they did not change hands and there was no distribution. Fox challenged this construction and argued that the prohibition against distribution meant that Dish would not make Fox programming available to its subscribers on the aforementioned basis. The Ninth Circuit found both Fox’s and the district court’s constructions plausible (yes I realize there’s a distinction between interpretation and construction but I don’t want to go there right now, although you may).
The Ninth Circuit withheld judgment on which construction was better but stated that “in the proceedings below, the parties did not argue about the meaning of ‘distribute.’ We express no view on whether, after a fully developed record and arguments, the district court’s construction of ‘distribute’ will prove to be the correct one.”
The court did, however, express skepticism that PrimeTime Anytime was not “similar” to video-on- demand (remember, the 2002 contract prohibited “video-on-demand or similar basis”)(emphasis added by yours truly). The “distribution” of that, therefore, would violate the 2002 contract. Dish argued that its service was not “identical” to VOD but, as the Ninth Circuit noted, did not explain why it was not “similar.” (Note: I hope all you contracts profs are feeling ever more relevant! And our students thought we were just making mountains out of molehills when we focused on the importance of contract language). The addition of that word “similar” might just save Fox when the case goes to trial. Especially since, as even the district court held, if PrimeTime Anytime is VOD, then Dish clearly breached the contract which prohibited skipping commercials. The district court, however, wasn’t convinced that it was VOD. Rather, the district court concluded that it was a hybrid of DVR and VOD and “more akin” to DVR than VOD.
In other words, the district court’s analysis went along these lines – the 2002 contract was not breached because there was no distribution of VOD (or similar) content. The 2010 contract was not breached because this was not VOD but DVR. In short, this was not VOD and there was no distribution of a VOD-like service.
Query if the 2010 amendment had adopted the “VOD or similar” language instead of just “VOD”; in other words, what if it permitted Dish to offer Fox’s programming as VOD or “similar” service? My guess is that they specifically drafted it narrowly to include just “VOD” to limit the scope of the license – but that it ended up backfiring to exclude the conditions on “similar” services. Funny how drafting rules of thumb can sometimes come back to bite you. Note the problem was created because the definitions were not consistent in the 2002 and 2010 agreements – it created a gap regarding a service (a “VOD similar service”) which required judicial construction. Distribution of VOD or similar services was prohibited under the 2002 contract but VOD was permitted under the 2010 provided commercials were not skipped. And what happens to showing (not distributing) "similar services to VOD"? Mind the gap!
There was a final issue regarding a “good faith” in performance type clause. The Ninth Circuit concluded that there was no evidence that Dish launched PrimeTime Anytime “because it was unwilling to comply with the requirements to offer Fox’s licensed video on demand service, rather than because Dish lacked the technological capability to do so.” Frankly, I’m not sure why this was not a bigger issue since it seems, at least to me, that Dish is trying to get around the “no commercial skipping” restriction in the 2010 agreement by using the Hopper.
The Ninth Circuit noted a few times that it was applying a “deferential standard of review” given the request for a preliminary injunction so I don’t think Dish can rest easy just yet. I think Fox’s case will eventually hinge upon how the contract issues are resolved. What is the meaning of “distribute”? (I don’t know enough about how Dish technology works to determine whether distribution occurred. Even under the district court’s definition, could it have occurred? Does rebeaming signals constitute distribution? Is the service analogous to a lease? I think there’s room here). Is the PrimeTime Anytime service VOD or not? And isn’t that 2002 agreement relevant in determining what the meaning of VOD is under the 2010 amendment? Finally, why did the court give the “good faith in performance of contract” such short shrift?
I didn't get to review the actual agreements, but I would look at what exactly is being licensed under the 2002 agreement. Does it exclude the VOD-like service or include it? The gap seems odd to me - it must be addressed in one of the agreements. What exactly does Dish have the right to do? That seems to me one of the keys to unlocking the "correct" interpretation of the contract - and help determine whether the obligation of good faith is being fulfilled.
The real hammer here is going to be contract renewal - if Dish pisses off Fox and the other networks then it may kiss its business goodbye if they don't renew their contracts. (As I mentioned, I haven't seen the contracts so don't know what the terms are).
As the court notes, the parties probably didn’t contemplate a hybrid DVR and VOD (this is the old “anticipating the future and new technologies” problem that contract drafters have to which I’ve previously referred) I think the copyright issues weigh more heavily in favor of Dish whereas Fox has the better argument re the contract issues. Of course, the much larger policy issue is how to strike the balance between contract and copyright – a recurring issue since the late eighties…Generally, it's been advantage contracts.
Friday, July 19, 2013
Apple had a MFN clause in its contracts with five major book publishers. Last week, Judge Denise Cote (SDNY) held that this clause was part of a conspiracy to fix e-book prices. The contracts required the publishers to give Apple’s iTunes store the best deal in the marketplace on e-books.
What does this decision mean for MFN clauses, which are used in a number of industry contracts? The WSJ took up this topic in a recent article:
Defendants in antitrust cases have liked to have the sound bite that no court has found an MFN to be anticompetitive," said Mark Botti, a former Justice Department antitrust lawyer now in private practice. "They can no longer say that."
Apple, meanwhile, has strongly denied that it conspired to fix prices, and has said it will appeal the decision.
Judge Cote avoided a broad denunciation of MFN clauses, but her decision could haunt contract negotiations in industries as diverse as entertainment and health care, legal experts said. In recent years, the Justice Department has sued a few companies over the use of MFN clauses and is investigating others.
"While most favored-nation clauses can be competitively benign, when they are used as a tool to engage in anticompetitive conduct that harms consumers, the Antitrust Division will take enforcement action," said Assistant Attorney General Bill Baer, who oversees the division at the Justice Department.
MFN clauses guarantee the recipient the lowest prices or rates charged to any buyer. While in theory that could encourage competition and lower prices for consumers, in practice such agreements sometimes end up establishing a minimum price, according to antitrust lawyers and government officials.
Apple said the provisions guaranteed its customers would get the lowest price for new and popular e-books. But Judge Cote offered a less-flattering interpretation.
"[The MFN] eliminated any risk that Apple would ever have to compete on price when selling e-books, while as a practical matter forcing the publishers to adopt the agency model across the board," she wrote in her 160-page ruling.
The article reports that the Justice Department is expected to request that the court “impose a variety of conditions on Apple's business, including barring the company from using MFN clauses,” sending the viability of MFN clauses into doubt.
More of the article here on the WSJ site (subscription required).
[Meredith R. Miller]
Thursday, July 18, 2013
We reported in May here about Northwest Inc. v. Ginsberg, a case on which the U.S. Supreme Court granted cert. so that it can decide "Whether the court of appeals erred in holding, in contrast with the decisions of other circuits, that respondent’s implied covenant of good faith and fair dealing was not preempted under the Airline Deregulation Act because such claims are categorically unrelated to a price, route, or service, notwithstanding that respondent’s claim arises out of a frequent-flyer program (the precise context of American Airlines, Inc. v. Wolens ) and manifestly enlarged the terms of the parties’ undertakings, which allowed termination in Northwest’s sole discretion."
Stephen Colbert reports on another tragic case of lost air miles, this time involving a frequent-flying cello. The report is provided below:
Monday, July 15, 2013
As Jeremy Telman noted in his post, the OUP website which sells my forthcoming book on wrap contracts contains a wrap contract that requires users to the site to accept cookies. This type of wrap is what I refer to as "contract as notice", and much better than what most websites do, which is implement a "notice as contract". The OUP website requires specific assent to a particular term which raises the salience of the term. My guess is that OUP provides this because its parents company is based in the U.K. which has better laws about this kind of stuff. Most US corporate websites throw a bunch of terms into a browse wrap to which the user is deemed to have given blanket assent. Visitors to OUP's website -- which requires specific assent -- are made aware of the cookies, whereas most visitors to other sites aren't even aware that a contract governs. This is the difference between effective notice and ineffective notice, aka contracts that nobody reads but that courts deem are still enforceable via constructive assent.
The real problem with not reading is the nature of the terms that go unread--if you don't read terms, what's to stop a company from piling them on, adding more intrusive privacy stripping terms and rights deleting provisions ( to use a Radin-esque term). According to case law, not much.
I set my browser to alert me when I visit a website with cookies and I just couldn't visit any site without having to press the "allow" icon several times. Now I allow first party cookies, and ask for a "prompt" from third parties. I wouldn't be able to use my computer otherwise.
And now, we have the pleasure of being tracked in person. This morning, the NYT reported that some physical stores have started testing technology that allows tracking of customers' movements by using their smart phone signals. Nordstrom tried the old "Notice as Contract" method, by posting a sign telling customers they were being tracked. Those customers who saw the sign were creeped out. How long before we get used to these notices - and start to ignore them? How long before they are so ubiquitous that we have as little choice as we do online to stop a company from tracking and collecting information about us?
BTW, you can't read the NYT article unless your browser is set to allow cookies.....