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.....
Thursday, July 11, 2013
I cover all of this ground (and more) in my forthcoming book but more on that later....
Tuesday, July 9, 2013
Over at Balkinization, University of Maryland Law Prof Frank Pasquale (pictured) has a post about a recent article by Alana Samuels in the L.A. Times. Samuels' article begins with the now-familiar story of a janitor owed back wages who was forced into an arbitral forum that favored employers. His arbitration agreement, which was among the papers he signed without reading (and likely without being given the opportunity to read) on the first day of work, also included a class action waiver. Employers are also emboldened by the pro-business climate engendered by recent SCOTUS decisions to throw in attorneys' fees provisions, thus increasing the risks to employees who seek redress.
The story then proceeds to detail the plight of relatively low-wage workers, such as limo drivers and hair stylists, whose employers force them to sign non-compete clauses, even if they are part-time, meaning that they cannot find work with other businesses, even if they are not getting enough hours from their current employers. Pasquale reports that non-competes are now starting to kick in at the job application stage. He reports that at some job fairs, employers will not look at your application unless you sign a "letter of intent," which prevents the applicant from applying elsewhere whie the current application is pending.
It is not clear to me that such a letter would be or could be enforceable. What is the company's remedy if a potential employee violates the letter of intent? Presumably, the only remedy would be to refuse to hire, but if the employer is otherwise inclined to hire someone, would that person's failure to abide by the company's b.s. letter of intent really deter the company from hiring? And if the company does not decide to hire the person, there is obviously no harm to the company and so no way to enfore the letter of intent. The issue could arise, perhaps, if the company hired someone and then learned that the employee had violated the letter of intent. But since the employment is almost certainly at-will, what difference does the letter of intent issue make? The employer still is free to fire or not fire.
Monday, July 8, 2013
My colleague, David Herzig, called my attention to this weekend's New York Times Magazine, which featured an article about Jason Everman, who was briefly a member of two very successful bands, Nirvana (pictured) and Soundgarden. According to the article, Everman was too introverted to make it on tour, and he was fired from both bands for being moody. He bounced around with other bands for a while and eventually enlisted with the armed forces. He is now a decorated war hero and veteran of the Special Forces, where, according to the article, moodiness is not a big problem.
The part that piqued David's interest was early on, when Everman first joined Nirvana. According to the Times, Nirvana had just recorded its first album, Bleach, but they owed their producer money. Everman paid $606.17 to cover the debt, and the record eventually sold over 2 million copies. Kurt Cobain bragged that the band never even reimbursed Everman his $600. David thought maybe there would be some contractual angle that would lead to a recovery for Everman. The article suggests that Everman has moved on, and that's probably the right move both for the sake peace of mind and from the legal perspective, at least based on the facts as reported in the Times.
There is no suggestion in the article of a contract. It seems like Everman was just being a good guy and giving his friends some money. At best, he might have expected to be paid back, so a legal case would entitle him to $606.17 plus interest. Or he might have just been helping his bandmates in the expectation that the record's success would enable them to tour and to profit from being Nirvana, a privilege that Everman enjoyed for a while, before his bandmates discovered that he wasn't the person with whom they wanted to be stuck in a tour van.
Thursday, July 4, 2013
There have been a few articles over the past few days about Bobby Bonilla's contract with the New York Mets. Bonilla played for the Mets until he retired in 2001. At that point, he still had $5.9 million outstanding on his contract. Rather than giving Bonilla a lump sum payment, the Mets opted to pay him start paying him in 2011. The Mets are to pay Bonilla a total of $29.8 million over 25 years.
Cork Gaines of the Business Insider explains that this was a good deal for the Mets in terms of their bottom line on the Bonilla contract. Assuming an 8% rate of return, the long-term payout deal is worth $10 million less over time to Bonilla than would a one-time payout. And, because the Mets had the use for teny years of the $5.9 million that they owed Bonilla until the payouts began in 2011, they were able to invest that money, and the come out at the other end looking pretty good, assuming an 8% annual return on investment and ignoring all other issues, like the tax consequences of the transaction.
In the New York Times, Jeff Z. Klein and Mary Pilon are decidedly less positive about the Bonilla contract, but they dutifully report that all parties involved stil believe they acted in their own best interest. The Times provides some details missing from the Buinsss Insider report. The Mets needed to get Bonilla off their books and out of their clubhouse so that they could free up space under the MLB salary cap and free themselves from an underperforming player who had become a distraction.
We have expressed our view before that multi-million dollar, multi-year deals for veteran ballplayers are irrational. With baseball mania for statistics, it ought to be possible to fine-tune baseball contracts with incentives so that players actually get paid for performance (you know, like CEOs) rather than getting paid for hitting .250 when they are 35 because they hit .320 when they were 29.
Tuesday, July 2, 2013
Erwin Chemerinsky has an op-ed in today's New York Times about three pro-business decisions from the recently-concluded Supreme Court term. He devotes a couple of paragraphs to Concepcion and then talks a little bit at the end about Italian Colors.
The article draws on these three opinions as examples of the pro-business bent of the current Supreme Court. The cases are in the areas of employment discrimination, product liability and arbitration. In all three areas, the Court made it harder this term for plaintiffs who are trying to sue commercial enterprises to get past a motion to dismiss.
Chemerinsky picks up on Justice Ginsburg's call for a legislative solution, but very few people believe our elected representatives are capable of (or interested in) addressing these issues.
Monday, June 17, 2013
I don't know if this recent case will help Hall's Mentho-Lyptus with the Triple-Colling Action Presents Jay the Intern, but it might help some of our law students.
As The Atlantic reports here, Federal District Judge William H. Pauley III ruled on June 11th in favor of two interns who sued Fox Searchlight studios for breaching New York and federal minumum wage laws in failing to pay them for their work on the studio's academy award winning film, "Black Swan." The Atlantic helpfully links to this page from the U.S. Department of Labor that establishes a six-part test for when interns can go unpaid. Here are the six criteria:The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
- The internship experience is for the benefit of the intern;
- The intern does not displace regular employees, but works under close supervision of existing staff;
- The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
- The intern is not necessarily entitled to a job at the conclusion of the internship; and
- The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
- The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
Considering the totality of the circumstances, Judge Pauley concluded that the plaintiffs were employees and that Fox Searchlight had violated the Fair Labor Standards Act as well as New York law by not paying them minimum wage. The court also allowed certification of a class of unpaid interns who worked for various Fox affiliates between 2005 and 2010.
Fox Searchlight plans to appeal to the Second Circuit.
Judge Pauley's 36-page opinion can be found here.
Friday, June 14, 2013
I just finished reading contracts prof Amy J. Schmitz's article, Sex Matters: Considering Gender in Consumer Contracting, 19 CARDOZO J. LAW & GENDER 437 (2013) which I thought was particularly timely given all the interest in consumer contracts. As Schmitz points out, too often discussions about "context" are left out of discussions about consumer contracts, especially from efficiency theorists who "mistakenly assume that market competition and antidiscrimination legislation address any improper biases in contracting." Schmitz's article is a thoughtful and comprehensive work that canvasses and synthesizes existing research, including behavioral economics and consumer legislation, in this area. She does a great job of highlighting ways in which existing legislation falls short of protecting against gender discrimination and incorporates a great deal of empirical and cognitive research regarding how gender affects both parties in consumer contracting scenarios. She notes that the available data suggests that women receive "less financially attractive sales and loan contracts, which may lead to higher debt loads for women." (at 447) Schmitz also conducted her own survey and shares the results which indicated gender disparities in areas such as confidence in ability to negotiate terms and ability to get companies to change terms. She argues in this article (as she has elsewhere) that context and "contracting culture" matters, and argues that gender be considered among the factors contributing to a contracting culture. For those who think that the free market is a fair market, Schmitz's paper should provide food for thought (as should this article that discrimination in housing persists against non-whites).
*Yes, I knew that putting "sex" in the title would increase traffic.
Friday, June 7, 2013
Ajit Pai, a commissioner of the Federal Communications Commission,wrote an interesting op-ed in yesterday's NYT. He argues that consumers should be allowed to unlock their phone when they permissibly (i.e. not in breach of any contract) switch carriers. Some of you might be wondering - Huh? Is that even illegal? Don't I own my phone? You're probably not alone. As Pai notes, the Library of Congress decided that unlocking your phone violates the Digital Millenium Copyright Act of 1998. (They basically removed an exception to the Act that permitted unlocking, as this article in the San Francisco Chronicle explains). But, you might wonder, what does copyright have to do with what you can do with your cell phone? A lot of people are wondering the same thing, but basically, software locks the cellphone to a specific network and the cell phone owner is a licensee of that software (and software is copyrightable). Okay, now you understand what this has to do with copyright but what does this post have to do with contract? Glad you asked. Pai's op-ed argues, "Let's go back to the free market. Let's allow contract law - not copyright or criminal law - to govern the relationship between consumers and wireless carriers." It's interesting given that this blog has spent the last couple of weeks discussing the need for government intervention due to boilerplate - and yet, here's an example of government intervention into boilerplate that is not actually helpful to consumers. Don't get me wrong - I'm not saying government intervention into boilerplate isn't a good thing sometimes (depends on what it is and how and why) - I just find it interesting that this example of government intervention is on an issue that protects businesses and hurts consumers. Of course it shouldn't be surprising since lobbyists for carriers are way better organized and have more money and influence than consumer advocacy groups. And that gets to the heart of what's the matter with using contracts as the solution since the same dynamic is at play in the world of private ordering (see symposium on Boilerplate and the book itself, for more details). Who knows what carriers might come up with in their contracts. Would they try to "license" instead of sell their phones? In a perfect world, the free market might function, well, perfectly and private ordering would be the order of the day. But we don't live in that world so an absolutist "no government intervention v. more government intervention" position doesn't work.
Friday, May 24, 2013
A (presumably U.S.) buyer (identified on the web only as "b-thumper") ordered a BMW M3 in "Atlantis Blue with Blue deviated stitching and the Individual Piano trim" and paid for European delivery. "European delivery" allows the buyer to pick up the car at the BMW Museum in Germany and take it for a lap around the Nürburgring.
As recounted over at Jalopnik, the Internets displayed divided sympathy for b-thumper, who, upon arriving in Germany, discovered that the car BMW delivered was Atlantic blue and not Atlantis blue. Seller offered to repaint but buyer wanted a substitute car in Atlantis blue with the customized interior.
Sorry b-thumper, but these are the type of fun facts contracts profs dream about! Assuming we are applying the UCC, does the Atlantis shade of blue substantially impair the value of the BMW? My colleague Jack Graves reminds me that the CISG doesn't apply unless the buyer was purchasing the car for a business purpose. What remedy would German law provide the buyer?
[Meredith R. Miller h/t Shawn Crincoli]
Wednesday, May 22, 2013
We interrrupt the highbrow discussion of boilerplate and SCOTUS cases to bring you this breaking news from news.com.au that falls right within the utterly sweet spot of contracts and pop culture:
YOU party at Justin Bieber's house? You tell no one - or it'll cost you $5 million.
After a string of bad press in recent months, the 19-year-old has taken the extreme measure of asking guests to sign a confidentiality agreement before they enter his property.
TMZ claims to have obtained a document that everyone must sign before entering his property for one of the infamous get-togethers.
Entitled a Liability Waiver and Release, the website says the paper states that guests must not make comments or post anything on social media about what happened inside the house.
This reportedly includes the "physical health, or the philosophical, spiritual or other views or characteristics" of Justin and other partygoers.
Anyone in breach of the waiver can be sued for an enormous amount of money.
You blog? $5 million. You tweet? $5 million. You Instagram? $5 million.
While no one knows exactly what goes on inside these parties, the document also warns the get-togethers may include activities that are "potentially hazardous and you should not participate unless you are medically able and properly trained".
The risks involved apparently include "minor injuries to catastrophic injuries, including death".
Justin may be eager to change public perception after hitting headlines for a number of controversial reasons lately.
As well as turning up late for a UK gig and being accused of assaulting a neighbour, the star has now come under fire for "abandoning" his pet monkey.
Here's a copy of the document that TMZ claims is the NDA.
Where exactly was this news story when I needed an exam question? And is this liquidated damages clause a penalty?
[Meredith R. Miller]
Thursday, May 9, 2013
Duke Ellington’s grandson brought a breach of contract action against a group of music publishers; he sought to recover royalties allegedly due under a 1961 contract. Under that contract, Ellington and his heirs are described as the “First Party” and several music publishers, including EMI Mills, are referred to as the “Second Party.” On appeal from the dismissal of the case, Ellington’s grandson pointed to paragraph 3(a) of the contract which required the Second Party to pay Ellington "a sum equal to fifty (50 percent) percent of the net revenue actually received by the Second Party from…foreign publication" of Ellington's compositions. Ellington’s grandson argued that the music publishers had since acquired ownership of the foreign subpublishers, thereby skimming net revenue actually received in the form of fees and, in turn, payment due to Ellington’s heirs.
The appellate court explained the contract and the grandson’s argument:
This is known in the music publishing industry as a "net receipts" arrangement by which a composer, such as Ellington, would collect royalties based on income received by a publisher after the deduction of fees charged by foreign subpublishers. As stated in plaintiff's brief, "net receipts" arrangements were standard when the agreement was executed in 1961. Plaintiff also notes that at that time foreign subpublishers were typically unaffiliated with domestic publishers such as Mills Music. Over time, however, EMI Mills, like other publishers, acquired ownership of the foreign subpublishers through which revenues derived from foreign subpublications were generated. Accordingly, in this case, fees that previously had been charged by independent foreign subpublishers under the instant net receipts agreement are now being charged by subpublishers owned by EMI Mills. Plaintiff asserts that EMI Mills has enabled itself to skim his claimed share of royalties from the Duke Ellington compositions by paying commissions to its affiliated foreign subpublishers before remitting the bargained-for royalty payments to Duke Ellington's heirs.
Ellington’s grandson asserted on appeal that the agreement is ambiguous as to whether "net revenue actually received by the Second Party" entails revenue received from EMI Mills's foreign subpublisher affiliates. The appellate court found no ambiguity in the agreement; the court stated that the agreement “by its terms, requires EMI Mills to pay Ellington’s heirs 50 percent of the net revenue actually received from foreign publication of Ellington’s compositions.” It reasoned:
"Foreign publication" has one unmistakable meaning regardless of whether it is performed by independent or affiliated subpublishers. Given the plain meaning of the agreement's language, plaintiff's argument that foreign subpublishers were generally unaffiliated in 1961, when the agreement was executed, is immaterial.
The court continued by stating that “the complaint sets forth no basis for plaintiff's apparent premise that subpublishers owned by EMI Mills should render their services for free although independent subpublishers were presumably compensated for rendering identical services.” Thus, dismissal of the suit was affirmed.
Ellington v. EMI Music, 651558/10, NYLJ 1202598616249, at *1 (App. Div., 1st, Decided May 2, 2013).
[Meredith R. Miller]
For many lawyers, To Kill a Mockingbird (TKAM) is at the top of their list of "favorite books/movies about a lawyer." TKAM is about more than lawyering, of course. It's about racism, family, class and much more. This week, TKAM also is about "fraudulent inducement," "consideration" (a lack thereof) and "fiduciary duty." All of those subjects are in the complaint filed by TKAM author, (Nelle) Harper Lee, against her purported literary agent.
In the suit, Lee alleges that Samuel L. Pinkus (and a few other defendants) fraudulently induced her to sign her TKAM rights over to one of Pinkus's companies in 2007 and again in 2011. According to Lee, Pinkus, the son-in-law of Lee's longtime agent, Eugene Winick, transferred many of Winick's clients to himself when Winick fell ill in 2006. Pinkus then allegedly misappropriated royalties and failed to promote Lee's copyright in the U.S. and abroad.
For Contracts professors, the Lee v. Pinkus suit provides some interesting hypos to discuss when teaching fraud, consideration, and assignments of rights. Regarding fraud, Lee alleges that Pinkus lied to her about what she was signing at a time when she was particularly vulnerable due to a recent stroke and declining eyesight. Consideration is in play because there allegedly was no consideration from Pinkus to Lee in exchange for Lee's transfer of rights to Pinkus. Assignment issues arose because the many companies who owed Lee royalties reportedly struggled to figure out which company or companies they should pay given Pinkus's many shell companies. Overall, it's a sad story for Ms. Lee but one that students may find particularly engaging.
[Heidi R. Anderson]
p.s. Although there are many quote-worthy passages in TKAM, a favorite of mine (useful when advising students about their writing) is: “Atticus told me to delete the adjectives and I'd have the facts.” Please feel free to share your favorites in the comments.
Tuesday, May 7, 2013
Lil Wayne Loses Endorsement Over Emmett Till Lyrics, But Don't Worry, Celebrating Violence Against Women Is Still Fine
As reported here in Rolling Stone, Mountain Dew has terminated its endorsement deal with Lil Wayne because of offensive lyrics in an unauthorized leak of a remix of Future's "Karate Chop." The offensive lyrics can be found here, except that the online version omits the reference to Emmett Till, a fourteen year old African-American boy who was tortured and killed in Mississippi in 1955, after allegedly having whistled at a white woman. Lil Wayne's lyrics brag that he will do to a woman's vagina what was done to Emmett Till.
Emmett Till's family was outraged by the reference. As noted in the New York Times, although Rolling Stone and others have characterized Lil Wayne's response as an apology, the family recognized that it was not an apology. Lil Wayne "acknolwedged" the family's hurt and pledged not to reference Emmett Till in his lyrics in the future.
What is really striking is the utter lack of comment on the rest of the lyrics. The reference to Emmett Till imay only be the most offensive thing about the song, but all of the lyrics in Lil Wayne's verse are absolutely vile. The Times reports that Al Sharpton has been called in to take advantage of this "teaching moment" to help young artists like Lil Wayne understand more about the civil rights movement.
Violence against women is also a civil rights issue.
Monday, May 6, 2013
Interesting story here on the Wall Street Journal's Market Watch blog. Interesting because it seems like the case will be very difficult for plaintiff to prove and its damages will be a challenge to calculate with requisite specificity.
The facts, as also reported here on Food Navigator-USA are as follows:
In 2012, Tula Foods introduced its Better Whey of Life premium Greek yogurt line, which is now sold in over 400 stores. Tula contracted with the Kroger Co., which in addition to its retail stores owns and operate 37 manufacturing plants at which it produced, among other things, Tula's Better Whey of Life yogurts. According to the complaint, as summarized on the Market Watch blog, becasue Kroger did not produce the yogurt according to Tula's specification (and it allegedly did so knowlingly). Tula also brings claims against Weber Flavors, which Tula claims failed to properly "treat and process the vanilla bean base" in Tula's yogurt. As a result, Kroger released "poor-quality unappetizing yogurt on the market." If that isn't not specific enough for you, the complaint specifies that, as a result of the improperly processed vanilla bean base, Tula found mold growing in its finished yogurt, resulting in a recall.
Just an aside here, for fans of Slings and Arrows, doesn't that slogan (something like, "Tula provides only poor-quality unappetizing yogurt laced with mold") strike you as precisely the sort of ad campaign that Froghammer would have come up with if they were hired to market Better Whey of Life yogurts?
There is also a misappropriation claim, since Kroger allegedly used Tula's trade secrets to make a competing store brank of Greek yogurt -- but was it of equally poor quality and equally unappetizing? Surely a jury question there.
The theory of contract damages will be a challenge, because Tula will have to show that its product would have taken off were it not for the devastating effects on its reputation caused by the alleged breaches and resulting product recalls. Demonstrating defendants' failure (perhaps intentional failure) to adhere to Tula's specifications will also be a lot of work. But those allegations will also be very difficult to dismiss without a lot of discovery and perhaps a trial, so the settlement price should be high if the complaint adequately states a cause of action. Moreover, as Tula is also bringing claims for breach of express and implied warranties, a record of moldy yogurt ought to do the trick.
Wednesday, May 1, 2013
We previously blogged about high-profile reward offers by Donald Trump, Bill Maher, a laptop-seeking music producer, and a Hong Kong businessman. Only one of those (the producer) led to an actual lawsuit. The latest reward offer in the news involves murder.
In February of this year, the City of Los Angeles and other entities collectively offered a $1 million reward for information regarding Chris Dorner. Dorner was the former policeman and Navy officer who (allegedly) killed four people, including two policemen. The manhunt for Dorner, labeled the "Cop Killer," reportedly was one of the largest in LA County's history.
One of the people claiming the reward, Rick Heltebrake, has filed a breach of contract suit in LA Superior Court (the complaint can be obtained here but only for a fee). Heltebrake is suing the City of Los Angeles, and supporting entities for $1 million and is suing three cities that offered separate $100,000 rewards related to Dorner. Heltebrake was a carjacking victim of Dorner's. After he escaped, Heltebrake called the police and told them where they could find Dorner. Because Dorner was found at the location Heltebrake identified, he is seeking the rewards.
The contract controversy is one of interpretation. The rewards reportedly were available for "information leading to the apprehension and capture of" Dorner, for the "identification and apprehension" of Dorner, for the "capture and conviction" of Dorner, and for "information leading to the arrest and conviction of" Dorner (I do not have the complaint so these excerpts are cobbled together from TMZ, Courthouse News Service, ABC and other sources). Police charged Dorner on February 11, 2013. Heltebrake called police on February 12. On February 25, after a shootout with police and structure fire, Dorner was found dead from an apparently self-inflicted gunshot wound.
Given the above facts, some of the intepretations questions are: (i) whether the authorities' shootout and recovery of Dorner's body qualifies as "apprehension" or "arrest," (ii) whether the "and" between "identification and arrest" or between "capture and conviction" means that both are required in order to collect, and many, many more. A complicating factor is that the $1 million reward was merely announced on TV; no written record was made. At least one reward offeror, the City of Riverside, has stated that the lack of a "conviction" means that it won't pay. Although this is a tragic story, I may mention it the next time I teach the Carbolic Smoke Ball case.
If anyone is able to find the complaint for free, please post a link in the comments.
[Heidi R. Anderson]