Thursday, July 23, 2015
You cannot say that we are boring you this week. Our blogs have included considerations on advertising on porn sites and having one’s illicit affairs forgotten contractually. Add to that the news that this week, Roman Catholic nuns, the archdiocese of Los Angeles, the formerly Jesuit student turned California Governor Brown and Pope Francis all had something to say about contracting about major and, admittedly, some minor issues.
To start with the important: Pope Francis famously issued his Encyclical Letter Laudato Si’ “On Care for our Common Home.” In it, he critiques “cap and trade agreements,” which by some are considered to be a mere euphemism for contractual permits to pollute and not the required ultimate solution to CO2 emissions. In the Pope’s opinion, “The strategy of buying and selling carbon credits can lead to a new form of speculation which would not help reduce the emission of polluting gases worldwide. This system seems to provide a quick and easy solution under the guise of a certain commitment to the environment, but in no way does it allow for the radical change which present circumstances require. Rather, it may simply become a ploy which permits maintaining the excessive consumption of some countries and sectors.” Well said.
Governor Brown, however, disagrees: Brown shrugged off Francis' comments. "There's a lot of different ways," he told reporters, "that cap and trade can be part of a very imaginative and aggressive program." Brown, however, does agree with the Pope that we are “dealing with the biggest threat of our time. If you discount nuclear annihilation, this is the next one. If we don’t annihilate ourselves with nuclear bombs then it's climate change. It’s a big deal and he’s on it.”
In less significant contractual news, Roar, Firework, and I Kissed a Girl and I Liked It singer Katy Perry is interested in buying a convent owned by two Sisters of the Most Holy and Immaculate Heart of the Blessed Virgin. Why? Take a look at these pictures. The only problem is who actually has the right to sell the convent to begin with: the Sisters or the archdiocese. When two of the sisters found out the identity of the potential buyer (Perry), they became uninterested in selling to her because of her “public image.” They now prefer selling to a local restaurateur whereas the archdiocese prefers to complete the sale to Perry, although she bid less ($14.5 million) on the property than the restaurateur ($15.5 million). Perry may be about to learn that image is indeed everything in California, even when it comes to the Divine. Perry is no stranger to religion herself as she was, ironically, raised in a Christian home by two pastor parents.
Monday, July 20, 2015
In 2014, the Court of Justice of the European Union famously held that “[i]ndividuals have the right - under certain conditions - to ask search engines to remove links with personal information about them. This applies where “the information is inaccurate, inadequate, irrelevant or excessive” for the purpose of otherwise legitimate data collection. “A case-by-case assessment is needed considering the type of information in question, its sensitivity for the individual’s private life and the interest of the public in having access to that information.”
A few days ago, infamous adultery-enabling website Ashley Madison and “sister” site (no pun intended) EstablishedMen.com, which “connects ambitious and attractive young women with successful and generous benefactors to fulfill their lifestyle needs,” was hacked into by “The Impact Team,” a group of apparently offended hackers who threatened to release “all customer records, including profiles with all the customers’ secret sexual fantasies and matching credit card transactions, real names and addresses, and employee documents and emails” unless the owner of the sites, Avid Life Media, removes the controversial websites from the Internet permanently.
Notwithstanding legal issues regarding, perhaps, prostitution, do customers have a right to be forgotten? Not in general in the USA so far. Even if a provision similar to the EU law applied here, it would only govern search engines. Ashley Madison had, however, contractually promised its paying users a “full delete” in return for a fee of $19. The problem? Apparently that the site(s) still kept purchase details with names. Further, of course, that the company promised and still promises “100% discreet service.” Both seemingly clear contractual promises.
Although the above example may, for perhaps good reason, simply cause you to think that the so-called “clients” above have only gotten what they asked for, the underlying bigger issues remain: why in the world, after first Target, then HomeDepot and others, can companies not find out how to securely protect their customers’ data “100%”? And why should we, in the United States, not have a general right to be deleted not only from companies’ records, but from search engines, if we want to? I admittedly live a very boring life. I don’t have anything to hide. But if I once in a blue moon sign up for something as simple as Meetup.com to go hiking with others, my name and/or image is almost certain to appear within a few days online. I find that annoying. I don’t want my students, for example, to know where I occasionally may meet friends for happy hour. But unless I invest relatively large amount of time in figuring out how to use and not use new technology (which I see that I have to, given the popularity of LinkedIn and the like), I may end up online anyway. That’s not what I signed up for.
As for Ashley Madison, the company has apparently been adding users so rapidly that it has been considering an initial public offering. You can truly get everything on the Internet these days, perhaps apart from data security.
On July 14th, American Honda Finance Corporation (Honda) and the Consumer Financial Protection Bureau (CFPB) entered into a consent order (the Order). The CFPB and the Civil Rights Division of the Department of Justice (DOJ) alleged that Honda had violated the Equal Credit Opportunity Act (ECOA) and its implementing legislation by permitting dealers to charge higher interest rates on auto loans on the basis of race and national origin.
According to the Order, after a joint investigation, the DOJ and the CFPB made found that, during the time period covered, on average, African-American borrowers were issued loans that resulted in an extra $250 in interest payments over the course of the loan compared to loans issued to non-Hispanic whites. Hispanics paid an extra $200 and Asians and Pacific Islanders paid an extra $150. This result was the product of Honda's specific policy and practice.
The Order gives Honda three options that it can pursue in order to prevent future violations of the ECOA in the future. Honda will also pay $24 million into an escrow account. The funds will be used to compensate borrowers for the excessive interest payments they were required to make.
As the CFPB notes on its website:
Today’s action is part of a larger joint effort between the CFPB and DOJ to address discrimination in the indirect auto lending market. In December 2013, the CFPB and DOJ took an action against Ally Financial Inc. and Ally Bank that ordered Ally to pay $80 million in consumer restitution and an $18 million civil penalty.
Monday, July 13, 2015
Today's New York Times has an article about how Uber and Lyft are merely the latest incarnation of a decades-long trend towards replacing (or attempting to replace) employees with independent contractors. According to the Times, Uber is a rather extreme version, officially employing only 4000 people, while 160,000 people make their living through Uber. The Times attributes stagnating wages to this "gig economy," acknowledging that other forces, including the decline of unions and globalization, are also contributing factors. As of 2014, 18% of all jobs held in the United States are occupied by independent contractors.
But the process has its roots in older trends, such as the move towards franchises that got going in the 1960s and has continued its steady expansion. In the hospitality industry, hotel chains enter into franchise agreements with hotel operators, who in turn now increasingly turn to independent contractors to provide services within their hotels. The results has been a decline in wages in the industry in the 21st century.
As usual in Times articles these days, if you read on below the fold, you will learn the upside to the "gig economy." Some people choose to be self-employed consultants to that they can work flexible hours and work from home. But it's hard to find a silver lining here for ordinary workers. Some can succeed as independent contractors, but their wages tend to be low, they have no job security, and the work may come in uncontrollable bursts followed by long, anxiety-producing lulls.
We have some news from the world of hockey, that is, the sport of the 2015 Stanley Cup Champion Chicago Blackhawks (logo pictured). While elite teams (like the Blackhawks) struggle to keep their rosters under the salary camp (Goodbye Patrick Sharp; Goodbye Brandon Saad -- thanks for the memories and the Cups!), as reported on ESPN.com, the L.A. Kings used an alleged "material" breach of contract to terminate center Mike Richards rather than buying him out to evade the cap. The alleged material breach was at first mysterious, but it has now bee reported, e.g., here on Forbes.com, that Richards was detained at the Canadian border in illegal possession of OxyContin. But the Forbes report also indicates that Richards' mere arrest is not grounds for termination, and even if he is convicted, the NHL's drug policy does not call for termination. It calls for substance abuse treatment. Go Blackhawks!
The Bangor Daily News reports that author Tess Gerritsen has dropped her $10 million law suit against Warner Bros. for breach of contract in connection with the film "Gravity." As we reported previously, a District Court in California dismissed her complaint but allowed her twenty days to amend and refile. The complaint is based on a $1 million contract Gerritsen signed in 1999 to sell the book’s feature film rights to a company that was eventually purchased by Warner Bros. Gerritsen has admitted that the film "is not based on" her book, but she asserts that the book clearly inspired the film.
Wednesday, July 8, 2015
There but for fortune . . . . I spent three happy years teaching in the history department at the College of Charleston. Having studied in New York for nearly ten years, I never imagined myself living in the South, but Charleston is a charming city, and the College of Charleston was a gem when I was there, with a dedicated faculty of scholars and teachers and an unbelievably beautiful campus. When I learned that Charleston was opening a law school, I was very tempted to apply for a position.
Charleston's Post & Courier reported on Monday that Charleston Law School (CLS) has terminated seven faculty members, including two tenured faculty members. The two filed lawsuits in late June alleging breach of contract. They are seeking an injunction that would allow them to retain their status as tenured professors while also enjoining the CLS's owners from making expenditures that might otherwise be used to pay them their salary. The two fired professors were signatories of a letter published by 17 CLS faculty members in the Post & Courier in mid May. I assume that they are alleging retaliatory firing in violation of the very thing tenure is designed to protect. Certainly, the optics are bad. A preliminary injunction hearing is scheduled for the end of the month.
I have no doubt that, if I had decided to apply for a faculty position at Charleston and been hired there, I would have signed that letter. And then I too might be experiencing the joy of having to file a lawsuit in order to keep my tenured position. I do not know enough of the details to speak to the merits of the professors' claims, but my inclination it to root for them.
Friday, July 3, 2015
Late night comedians everywhere celebrated when Donald Trump (pictured) announced his candidacy for President. We too are grateful for the blog fodder. Politico reports that the Donald is suing Univision over its decision to withdraw from a five-year $13.5 contract to broadcast the Miss USA and Miss Universe Pageants, which Trump co-owns. As Time Magazine reports here, NBC has also backed out of airing the Miss USA Pageant, and several people involved have also given the Donald their notice. Trump's partners were upset by statements he made as part of his Presidential campaign that disparaged Mexico and Mexicans. Never fear, the pageant will still be broadcast on Reelz (whatever that is).
Meanwhile, London's The Guardian reports that Harvey Keitel is suing E*Trade for withdrawing from a commitment with Keitel to feature him in a series of three commercials for $1.5 million. According to The Guardian, E*Trade really wanted Christopher Walken for the spots. It was willing to settle for Keitel, until Kevin Spacey became available. E*Trade offered Keitel a $150,000 termination fee, but Keitel says that's not enough.
Students are often astonished that major corporations sometimes operate through informal arrangements such as letters of intent. The fact that they do -- and that they can get in trouble by doing so -- is illustrated in Belfast International Airport's (BIA) attempt to enforce a letter agreement with Aer Lingus. As reported by the BBC, BIA read the letter as embodying a ten-year commitment from Aer Lingus to fly out of BIA. The court found that the agreement merely covered pricing should Aer Lingus continue to fly out of BIA for ten years. Aer Lingus decided to switch to Belfast City Airport, claiming that its arrangement with BIA was no longer financially viable.
Monday, June 29, 2015
Given the major U.S. Supreme Court opinions that were released last week, it's no surprise that the one involving contracts, Kimble v. Marvel Entertainment, LLC, didn't make the headlines. The case involved an agreement for the sale of a patent to a toy glove which allowed Spidey-wannabes to role play by shooting webs (pressurized foam) from the palm of their hands. Kimble had a patent on the invention and met with an affiliate of Marvel Entertainment to discuss his idea --in Justice Elena Kagan's words--for "web-slinging fun." Marvel rebuffed him but then later, started to sell its own toy called the "Web Blaster" which, as the name suggests, was similar to Kimble's. Kimble sued and the parties settled. As part of the settlement, the parties entered into an agreement that required Marvel to pay Mr. Kimble a lump sum and a 3% royalty from sales of the toy. As Justice Kagan notes:
"The parties set no end date for royalties, apparently contemplating that they would continue for as long as kids want to imitate Spider-Man (by doing whatever a spider can)*."
It wasn't until after the agreement was signed that Marvel discovered another Supreme Court case, Brulotte v. Thys Co. 379 U.S. 29 (1964) which held that a patent license agreement that charges royalties for the use of a patented invention after the expiration of its patent term is "unlawful per se." Neither party was aware of the case when it entered into the settlement agreement. Marvel, presumably gleeful with its discovery, sought a declaratory judgment to stop paying royalties when Kimble's patent term expired in 2010.
In a 6-to-3 opinion written by Justice Kagan (which Ronald Mann dubs the "funnest opinion" of the year), the Court declined to overrule Brulotte v. Thys, even though it acknowledged that there are several reasons to disagree with the case. Of interest to readers of this blog, the Court stated:
"The Brulotte rule, like others making contract provisions unenforceable, prevents some parties from entering into deals they desire."
In other words, the intent of the parties doesn't matter when it runs afoul of federal law. Yes, we already knew that, but in cases like this - where the little guy gets the short end - it might hurt just the same to hear it. In the end, the Court viewed the case as more about stare decisis than contract law and it was it's unwillingness to overrule precedent that resulted in the ruling.
Yet, I wonder whether this might not be a little more about contract law after all. The Court observed in a footnote that the patent holder in Brulotte retained ownership while Kimble sold his whole patent. In other words, Brulotte was a licensing agreement, while Kimble was a sale with part of the consideration made in royalties. This made me wonder whether another argument could have been made by Kimble. If Kimble sold his patent rights in exchange for royalty payments, and those royalty payments are unenforceable, could he rescind the agreement? If the consideration for the sale turns out to be void ("invalid per se"), was the agreement even valid? The question is probably moot now given the patent has expired....or is it? Although Kimble did receive royalty payments during the patent term, he presumably agreed to a smaller upfront payment and smaller royalty payments in exchange for the sale of the patent because he thought he would receive the royalty payment in perpetuity. So could a restitution argument be made given that he won't be receiving those royalty payments and the consideration for the sale of the patent has turned out to be invalid?
*Yes, I made an unnecessary reference to the Spiderman theme song so that it would run through your head as you read this - and maybe even throughout the day.
Jed Rubenfeld declared the end of privacy in an article that appeared in Stanford Law Review in 2008. Around the same time, Danial Solove explored the role of social media in eroding privacy in Scientific American. National Public Radio introduced a series on the end of privacy back in 2009. In January, Science Magazine devoted a special issue to the end of privacy.
But all is not lost! Contracts can protect our privacy, and corporations routinely agree to privacy policies that restrict their right to sell or otherwise transfer or share the private information they collect when their customers use their services.
Such contractual provisions can protect consumers . . . unless the company itself is sold or transferred to (merged into) another company. Then the private information that the company has collected just becomes another asset that can get sold off like any other asset. So says a report in today's New York Times. About 85% of the privacy policies of companies reviewed (including Amazon, Apple, Facebook, Google, LinkedIn and Hulu) provide that "the company might transfer users' information in case of a merger, acquisition, bankruptcy, asset sale or other transaction . . . "
Tuesday, June 23, 2015
Last week, the Federal Communications Commission acted to approve a number of proposals that update the TCPA (Telephone Consumer Protection Act), popularly known as the "Do Not Call" law that prohibits companies from interrupting consumers' dinner time conversations with pesky telemarketing calls. They closed a number of existing loopholes and clarified that phone companies can now block robocalls and robotexts to cell phones. The ruling also makes it easier for consumers who have previously consented to withdraw consent.
So what does this have to do with contracts? We all know how easy it is to consent to online terms. PayPal does, too. PayPal recently informed its customers that it was unilaterally amending its User Agreement. As anyone reading this blog knows, there are serious problems with unilateral modification clauses, especially in the context of wrap contracts that nobody reads. Yet, some courts have found that these clauses are enforceable (others have found they are not because they lack consideration and/or notice/assent). PayPal's recent announced modifications caught the attention of the Federal Communications Commission. The FCC Chief expressed concern that PayPal's prospective agreement may run afoul of federal law. The TCPA requires express written consent before any company can make annoying prerecorded telemarketing calls to consumers. The written consent, however, isn't the ridiculous version of consent that suffices as contractual consent in some courtrooms. There are certain requirements including that the agreement be "clear and conspicuous" and that the person is "not required to sign the agreement...as a condition of purchasing the property, goods, or services." In other words, it can't be a "take it or leave it" situation. Pay Pal's amended User Agreement, however, appears to contain "take-it-or-leave-it" language as it doesn't indicate how customers may refuse to consent to receive calls without having their account shut down. Furthermore, unlike contract law where blanket assent is okay, blanket consent is not okay under the FCC rules. (This blog post provides a nice overview of the issues and also notes that eBay (PayPal's soon-to-be former parent) encountered similar problems with the New York Attorney General).
PayPal's agreement is not the only reason the FCC acted last week, but as Bob Sullivan points out in this post here, it may have been the reason it acted so quickly. Expect to see an updated version of PayPal's agreement in the near future.
Thursday, June 18, 2015
We used to count on Britney Spears as the leading source for blog fodder. Move aside Britney. Uber just passed you by. We have two new Uber stories just in California alone.
First, last week the District Court for the Northern District of California issued its opinion in Mohamed v. Uber Technologies. Paul Mollica of the Employment Law Blog called that decision a "blockbuster," because it ruled Uber's arbitration agreement with its drivers unconscionable and therefore unenforceable. The opinion is very long, so we will simply bullet point the highlights. With respect to contracts entered into in 2013, the court found:
- Valid contracts were formed between plaintiffs and Uber, notwithstanding plaintiffs' claims that they never read the agreements and that doing so was "somewhat onerous";
- While Uber sought to delegate questions of enforceability to the arbiter, the court found that its attempt to do so was not "clear and unmistakable" as the contract included a provision that "any disputes, actions, claims or causes of action arising out of or in connection with this Agreement or the Uber Service or Software shall be subject to the exclusive jurisdiction of the state and federal courts located in the City and County of San Francisco, California";
- In the alternative, the agreement was unconscionable and therefore unenforceable;
- The procedural unconscionability standard of "oppression," generally assumed in form contracting, was not overcome in this instance by an opt-out clause; the opt-out was inconspicuous and perhaps illusory;
- The procedural unconscionability standard of "surprise" was also met because the arbitration provision was "hidden in [Uber's] prolix form" contract; and
- Uber's arbitration provisions are substantively unconscionable because the arbitration fees create for some plaintiffs an insuperable bar to the prosecution of their claims.
The court acknowledged that the unconscionability question was a closer question with respect of the 2014 contracts but still found them both procedurally and substantively unconscionable.
There is much more to the opinion, but that is the basic gist.
In other news, as reported in The New York Times here, the California Labor Commissioner's Office issued a ruling earlier this month in which it found that Uber drivers are employees, not independent contractors as the company claims. The (mercifully short!) ruling can be found here through the good offices of Santa Clara Law Prof, Eric Goldman (pictured).
The issue arose in the context of a driver seeking reimbursement for unpaid wages and expenses. The facts of the case are bizarre and don't seem all that crucial to the key finding of the hearing officer. Although plaintiff''s claim was dismissed on the merits, Uber has appealed, as it cannot let the finding that its drivers are employees stand.
But the finding is a real blockbuster, especially as Uber claims that similar proceedings in other states have resulted in a finding that Uber drivers are independent contractors. Here's the key language from the ruling:
Defendants hold themselves out to as nothing more than a neutral technological platform, designed simply to enable drivers and passengers to transact the business of transportation. The reality, however, is that Defendants are involved in every aspect of the operation. Defendants vet prospective drivers . . . Drivers cannot use Defendants' application unless they pass Defendants' background and DMV checks
Defendants control the tools the drivers use . . . Defendants monitor the Transportation Drivers' approval ratings and terminate their access to the application if the rating falls below a specific level (4.6 stars).
As the Times points out, few people would choose to be independent contractors if they had the option to be employees. Our former co-blogger Meredith Miller has written about similar issues involving freelancers, and we blogged about it here. So far, it appears that five states have declared that Uber drivers are independent contractors, while Florida has joined California in finding them to be employees. For more on the implications of this ruling, you can check out this story in Forbes, featuring insights from friend of the blog, Miriam Cherry.
Wednesday, June 17, 2015
The New York Times had an article in last weekend's Style section about the post-prom waiver. Apparently, in some suburbs, liability conscious parents and schools hosting a post-prom after party are asking teenagers and their parents to sign a waiver. My initial reaction was, Really? Has it come to this? But the more I thought about it, I could understand why some schools and parent- hosts might think it was a good idea. I did a quick search of "post prom waivers" and it seems that they serve several purposes.
First, they waive liability. The waiver would probably not be enforceable to stop lawsuits based upon negligence -- none of the ones I found even sought release for negligent acts on the part of the host - and certainly would not be effective to bar suits claiming gross negligence or recklessness on the part of the host. They generally did not overreach by which I mean they did not seek to waive liability for everything under the sun (like this Borat release).
Second, and related to the waiver, was an assumption of the risk clause. This requires the student and the student's parent to knowingly and voluntarily assume the risk of harm relating to the student's participation in post-prom activities. It seems as though post-prom activities have become much more active than when I was in high school - I found parties where there are extreme sports challenges and what looked like sumo wrestling!(?) The waivers also contained a medication release form, which given the laws in this area, is a prudent measure.
Third, and most useful, all the post-prom waivers I found established guidelines or rules of conduct. These clearly outline the school's (or host's) expectations for student behavior as well as parental responsibilities. They establish, for example, whether the event is a "lock-in" (meaning the students can't leave the premises) and the rules regarding pick-up times and who may attend the event. Given this is prom night, they also set out very clearly the expectations regarding drugs and alcohol - i.e. there will be NONE of that. Students and parents know that drugs and alcohol are not allowed, but putting this in the waiver allows the conversation to happen. More importantly, I think, it communicates to them that the school is not messing around. The language tends to be very express that illegal activity will not be tolerated and police will be called. Some people may think these types of reminders (and other disclosures) are not useful. I think it depends upon the disclosure. In a post-prom waiver, where the students and parents will be reading it for useful information, such as what to bring, etc, it reinforces expectations and allows parents to set up their own rules in the event the student breaks the school rules (i.e. no leaving the house all summer if I have to bail you out of jail at 3am...) All the waivers I read were also short and, for the most part, clearly written.
Finally, there are the indemnity type clauses. Unlike exculpatory clauses (which free the school/host from liability), an indemnity clause makes the student responsible for harm caused to others. Most of the ones I saw seemed fine - they required the students/parents to assume responsibility for any damages they caused. Again, I don't think this gives the host any more rights than they would otherwise have since you are generally liable for any property damage that you cause. It is useful, however, for setting expectations for conduct. Sure, you might have to check some of your wild physical activity - no whirling dervish dancing around the Ming vases - but from the host's point of view, understandable. It's also useful for setting expectations after you break the vase. You can't pretend it's unfair that you have to pay for it because you knew in advance. Kind of like those "You break it, you buy it," signs in stores.
I'm still not convinced that these waivers are a good idea although I don't think they are necessarily a bad idea as long as they are clearly written, short and, most of all, reasonable and limited in scope. It's unclear whether they will be enforceable, and again, I think it depends upon how reasonable they are in terms of scope and process (they are signed well in advance of the event and both the student and a parent/guardian must sign it). Given our litigious and form contracting society, I don't think they are going away.
Monday, June 15, 2015
Two years ago, the National Hockey League's Phoenix (Arizona) Coyotes signed a 15-year lease on a facility in Glendale, Arizona. Now, the city is claiming a right to terminate the lease because of an alleged conflict of interest that has arisen affecting the team's former legal counsel. ESPN has the story here. According to ESPN, the city does not really want the team to leave; it just wants to negotiate a more favorable deal.
Eric Wemple of The Washington Post reports here on the latest troubles experienced by Al Jazeera American (AJAM). Shannon High-Bassalik, who served as AJAM's Senior Vice President of Programming and Documentaries, is suing for breach of contract, discrimination and retaliation. She alleges that the network promotes proclaims neutrality but actually pushes a pro-Arab, anti-Israel perspective. High-Bassalik claims that she was terminated for objecting to AJAM's racist and misogynist practices.
We reported a couple of months ago about suits brought by students, parents and alumni challenging the closing of Sweet Briar College. Today, we note that according to this report in the Lynchburg, VA News & Advance, faculty are challenging the propriety of the closing as well. Plaintiff faculty members are seeking a declaratory judgment that there is no financial emergency justifying the closing of the college. They allege the the college would breach faculty contracts by closing. The seek monetary damages and orders requiring the reinstatement of the faculty plaintiffs.
Tuesday, May 26, 2015
We have previously blogged about “sharing economy” short-term rental company Airbnb at various times here. Time for an update: The City of Santa Monica, California, just passed an ordinance that prohibits property owners and residents from renting out their places unless they remain on the property themselves. This is estimated to prohibit no less than 80% of Airbnb’s Santa Monica listings (1,400 would be banned).
The city plans to spend $410,000 in the first year to enforce the rule using three new full-time employees. Violators may be fined by up to $500. However, because Airbnb does not list addresses, staff will have to look at photos of the properties and drive around the city streets to try to identify the violators. Doing so sounds awfully invasive and awkward, but that is nonetheless the plan. Adds Assistant Planning Director Salvador Valles: “We can issue citations just based on the advertisement alone when we're using our business regulations.” Other major cities are also trying to crack down on short-term rentals.
But why, you ask? Good question. In times when, as I have blogged about before and as is common knowledge, medium- and low-income earners are falling behind higher-income earners to a somewhat alarming extent, you would think the government could let people earn some additional money on what is, after all, their own property. Cities, however, claim that short-term rentals drive up the rental prices by cutting into the number of residences that are available for long-term rentals. “Even a study commissioned by Airbnb itself earlier this year found that Airbnb increases the price of a one-bedroom apartment in San Francisco by an average of $19 a month.” Traffic concerns are also often mentioned in this context as are potential tax avoidance issues, although Airbnb has now started to deduct taxes from rental fees before transferring these to the landlords.
Airbnb’s end goal? To go IPO. The goal for at least some landlords? Eighty-year-old Arlene Rosenblatt, for example, rents out her home in Santa Monica whenever she and her husband leave town to visit their seven grandchildren. She charges anywhere from $115 to $220 a night for her home, listing it on Airbnb and other sites and thus earning as much as $20,000 a year. "I'm a retired schoolteacher," Rosenblatt says. "We don't get a lot of retirement income. My husband, all he has is his Social Security."
Time will tell what happens in this latest clash between private property and contractual rights and government regulations.
Wednesday, May 20, 2015
Should salary levels be regulated or mainly left to individual contractual negotiations between the employee and his/her employer? The former, according to the Los Angeles City Council and governance entities in several other cities and states.
On Tuesday, Los Angeles decided to increase the minimum salary to $15 an hour by 2020. Other cities such as San Francisco, Chicago, New York, and Seattle have passed similar measures. Liberal strongholds, you say? Think again. Republican-leading states like Alaska and South Dakota have also raised their state-level minimum wages by ballot initiative. Some companies such as Walmart and Facebook have raised their wages voluntarily.
But the effect is likely to be particularly strong here in Los Angeles, where around 50% of the work force earn less than $15 an hour. That’s right: in an urban area with super-rich movie studios, high-tech companies, hotels, restaurants, health companies and much more, half of “regular” employees barely earn a living salary. In New York state, around one third of workers make less than $15 an hour. Take into consideration that the cost of living in some cities such as Los Angeles and maybe even more so San Francisco and New York is very high. In fact, studies show that every single part of Los Angeles is unaffordable on only $15 an hour if a person spends only the recommended one third on housing.
“Assuming a person earning $15 an hour is also working 40 a week, which is rare for a minimum wage employee, and that they're not taking any days off, they'd be earning $31,200 a year. An Economic Policy Institute study released in March found that a single, childless person living in Los Angeles has to make $34,324 a year just to live in decent conditions (and that was using data from 2013).”
Opponents, however, say that initiatives such as the above will make some cities into “wage islands” with businesses moving to places where they can pay employees less. Others call the initiative a “social experiment that they would never do on their own employees” (they just did...) But “even economists who support increasing the minimum wage say there is not enough historical data to predict the effect of a $15 minimum wage, an unprecedented increase. A wage increase to $12 an hour over the next few years would achieve about the same purchasing power as the minimum wage in the late 1960s, the most recent peak.”
Time will tell if the sky falls from the above initiative or if the system in a rich urban area such as Los Angeles can cope. Said Gil Cedillo, a councilman who represents some of the poorest sections of the city and worries that some small businesses will shut down, “I would prefer that the cost of this was really burdened by those at the highest income levels. Instead, it’s going to be coming from people who are just a rung or two up the ladder here.”
This is, of course, not only an issue of the value of low-wage work and fending for yourself to not end up at the bottom of the salary chain. It is a matter of alleviating urban poverty and improving the nation’s overall economy for a sufficient amount of people to better get the economy back on track for more than the few.
Monday, May 11, 2015
According to Philadelphia Magazine, two men who paid to watch the Mayweather-Paaquiano fight on pay-per-view are suing on behalf of a class of viewers who did not get their money's worth because Paquino had an undisclosed shoulder injury. The suit claims damages for breach of contract, fraud conspiracy and violation of consumer protection laws. Viewers paid between $89 and $100 to watch the fight. The suit alleges that the fight should have been cancelled or postponed.
The LA Times reports that a group of students who contracted Leishmaniasis, a parasitic disease that causes painful skin ulcers, while on a trip to Israel are suing the trip's organizers for failing to take adequate precautions to protect the students. The illness is allegedly caused by sand fly bites. The suit names the North American Federation of Temple Youth and the Union for Reform Judaism as defendants. It alleges that the organizations failed to take precautions such as providing the students with insecticides or insect netting and that the organizations provided the students with bug-infested bedding.
The LA Times also reports on a new trend on the hot, new social media: suing your co-founder. The report suggests that combining handshake deals undertaken in college dormitories, coupled with youthful hasted makes for a dangerous mix. We are all familiar with the strife among the founders of Facebook, but it turns out that Snapchat, Tinder, Maker Studios and Beats Electronics have all also experienced co-founder difficulties sounding in allegations of breaches of founders' agreements.
Wednesday, May 6, 2015
This week, Los Angeles City Attorney Mike Feuer famously filed suit against Wells Fargo claiming that the bank's high-pressure sales culture set unrealistic quotas, spurring employees to engage in fraudulent conduct to keep their jobs and boost the company's profits.
Allegedly (and in my personal experience as I bank with Wells Fargo), the bank would open various bank accounts against its customer’s wills, charge fees for the related “services,” and refuse to close the accounts again for various official-sounding reasons, making it very cumbersome to deal with the bank. The bank’s practices often hurt its customers' credit rankings.
Employees have described “how staffers, fearing disciplinary action from managers, begged friends and family members to open ghost accounts. The employees said they also opened accounts they knew customers didn't want, forged signatures on account paperwork and falsified phone numbers of angry customers so they couldn't be reached for customer satisfaction surveys.”
The city's lawsuit alleges that the root of the problem is an unrealistic sales quota system enforced by constant monitoring of each employee — as much as four times a day. "Managers constantly hound, berate, demean and threaten employees to meet these unreachable quotas," the lawsuit claims. Last year, 26% of the bank’s income came from fee income such as from fees from debit and credit cards accounts, trust and investment accounts. The banking industry is currently set up in such a way that around 85% of institutions would go bankrupt if they do not have fee income.
This comes only three years after Wells Fargo agreed to pay $175 million to settle accusations that its independent brokers discriminated against black and Hispanic borrowers during the housing boom and treated these borrowers in predatory ways.
All this in the name of “growth,” traditionally thought of as the sine qua non of industrialized economies, even in financially tough times where simply maintaining status quo – and not going out of business - would seem to be acceptable for now from at least a layman’s, logical standpoint.
In recent years, more and more economists have advanced the view that unbridled growth or even growth per se may simply not be attainable or desirable. After all, we live on a planet with limited resources – financial and environmental - and limited opportunities. This especially holds true in relation to the “1% problem.” Nonetheless, questioning growth has been said to be “like arguing against gasoline at a Formula One race.” So I’m making that argument here, although I acknowledge that I am not an economist: by setting our national (and personal) economies up for ever-continuing growth, we are playing with fire. There is only so much of a need for various things and services, as the above Wells Fargo suit so amply demonstrates. Granted, the global population is growing, but much of that growth is in developing nations where people frankly cannot afford to buy many of the products and services often so angrily pushed by modern companies worldwide. In the Global North, C-level managers are often rewarded via measurements of growth and if they cannot produce the expected growth results, they risk being fired. Sometimes, simply doing the right thing by customers and employees may actually be enough as long as the company would remain sound and in business. Of course, this requires a shift in thinking by shareholders who contribute greatly under our current investment models to the demand for never-ending growth. Overconsumption and waste is a vast ecological problem as well. It has been said that “we must reform economics to reflect ecological reality: nature is not, after all, just a pile of raw materials waiting to be transformed into products and then waste; rather, ecosystem integrity is a precondition for society's survival.”
Growth is, of course, good and desirable if possible. But if, as seems to be the case, it’s coming to a point where we destroy our own chances of healthy long-term survival and wreck the emotional and financial lives of employees and clients in the meantime, something is seriously wrong.
Friday, May 1, 2015
In March, while I was co-teaching a course called International Humanitarian Law in Israel and Palestine with Professor Yaël Ronen, I visited Bethlehem with my students. Among other things, we saw the image at left, attributed to Banksy, on a wall in Bethlehem.
So today's New York Times story about Banksy's other creations in Gaza caught my eye. The heart of the story, for the purposes of this blog, is that Banksy apparently painted an image of a weeping Greek goddess an the iron door of a destroyed home in Gaza. An enterprising Gazan artist bought the door for less than $200, saying he wanted to protect the goddess. The owner of the door was unaware that the painting could be worth hundreds of thousands of dollars.
According to the Times, the local authorities, Hamas, have confiscated the door, and its ownership and value are to be determined by a court. I'm not sure what law the courts in Gaza would apply to such a dispute. Does anybody think the buyer of the door has a duty to disclose its possible worth to the vendor?
Tuesday, April 28, 2015
I began this series with the question: Why Is the Legal Academy Incapable of Standing Up for Itself? Paul Campos thinks we are doing far too much of that, going so far as to compare those of us who think legal education is worth defending with Holocaust deniers. Fortunately for us, I suppose, this blog isn't on anybody's radar, but in any case I think it bears noting that I value the contributions of people who have shed critical light on legal education, although I don't agree that it is anything approaching a scam. I have gained valuable insights from the work of Law School Transparency, Brian Tamanaha, Deborah Merritt, and Bill Henderson on our sister blog, The Legal Whiteboard, among others.
That said, there is another side of the story. Legal education is constantly re-forming itself in fundamental ways. Clinical education has only been with us since the 70s; legal writing programs took off in a major way in the 80s and 90s. Both represent fundamental shifts in pedagogy in response to perceived deficits in the legal education model. Those programs continue to develop and expand, now supplemented with robust ASP programs. All of these things jack up the costs of legal education and all in the name of better preparing students for the profession. Nobody is fiddling while our students burn. In fact, at this point, it is clear that everybody in the debate passionately believes that they have the best interests of our students at heart, and I do not doubt their sincerity.
Meanwhile, just when you thought it was safe to read what the New York Times has to say about legal education, we get another one-sided piece based on a few anecdotes and one piece of scholarship. I thought I had a lot to say in response, but others have beaten me to it, so I will just provide the links:
Links to Related Posts:
The Current Series
VIII: Myanna Dellinger, Caveat Emptor and Law School Transparency
VII: Myanna Dellinger, On Issue-Spotting and Hiding the Ball
VI: Issue Spotting: A Response to a Comment
V: Did Legal Education Take a Wrong Turn in Separating Skills and Doctrine?
IV: What Is the Place of Core Doctrinal Teaching and Scholarship in the New Curriculum?
III: My Advice to Law School Transparency: Declare Victory and Move On
II: SLOs and Why I Hide the Ball (and Why You Don't Have To)
I: Why Is the Legal Academy Incapable of Standing Up for Itself?
Related Posts form 2012:
Thoughts on Curricular Reform VI: Preparing the Academically Adrift for Practice
Thoughts on Curricular Reform V: A Coordinated Curriculum and Academic Freedom
Thoughts on Curricular Reform IV: The Place of Scholarship in the 21st Century Legal Academy
Thoughts On Curricular Reform III: The Costs of Change
Thoughts on Curricular Reform II: Teaching Materials
Thoughts on Curricular Reform I: The Problem
Monday, April 27, 2015
In yet another government outsourcing scheme gone wrong, KOLO TV news is reporting that Nevada is alleging breach of contract against the companies it hired to administer Common Core testing in the state's schools. Apparently, when thousands of students attempted to log on so that they could take their exams, they received an error message and could not proceed. Educators across the state are aggrieved, but students across the state are generally fine with it.
Nonprofit Quarterly reports that three students, three parents and three alumnae are alleging breach of contract and seeking an injunction to keep open Sweet Briar College in Lynchburg, VA. They allege that they had entered into express and implied agreements with the College that they would not only have the benefit of a four-year degree from the College but would also enjoy the benefits of being alumnae or of having children who were alumnae.
According to the Des Moines Register, in 2011, an 87-year-old grandmother was playing the slots, when the screen told her that she had a "bonus award" of $41797550.16. Last week, Iowa's Supreme Court ruled unanimously that she had won $1.85. They rejected claims of breach of an implied contract and found that the "bonus award" was just the product of a computer glitch.