Friday, March 4, 2016
I am pleased to be able to post the following from guest blogger Creola Johnson of the Ohio State University Moritz College of Law:
“His promises are as worthless as a degree from Trump University,” said Mitt Romney during a speech denouncing Donald Trump’s candidacy for the presidency. This statement has prompted additional inquiries into lawsuits filed against Trump University by New York Attorney General Eric Schneiderman and others. (See Petition from New York v. The Trump Entrepreneur Initiative LLC.)
In a class-action lawsuit, many attendees of Trump University alleged that they paid as much as $35,000 to be personally mentored in learning how to earn millions investing in real estate. Despite numerous attempts by lawyers for the Trump defendants to get these lawsuits to dismiss, courts have given the green light for the lawsuits to continue against the Trump defendants. See, e.g., Makaeff v. Trump Univ., LLC, No. 10-CV-940-IEG (WVG), 2010 WL 3988684 (S.D. Cal. Oct. 12, 2010) (refusing to dismiss claims against the for-profit Trump program on educational malpractice grounds because the court was not convinced “Trump University” was “an educational institution to which this doctrine applies.”). For the most recent decision permitting Mr. Schneiderman’s case to proceed, go to: http://www.courts.state.ny.us/courts/AD1/calendar/appsmots/2016/March/2016_03_01_dec.pdf.
What can we say for sure at this juncture about the lawsuits? First, “Trump University” was not a university. There are numerous educational standards and laws that must be complied with for an institution to legitimately claim to be a university. The question then becomes: did the people running Trump’s real estate program (the Trump Program) make promises that arose to level of being a contract. For example, the consumer-plaintiffs alleged that the Trump Program promised that the instructors and mentors running the program would be “hand-picked by Donald Trump.” However, this promise was allegedly breached because most of the instructors and mentors were unknown to Mr. Trump and that they didn’t actually teach any real estate techniques.
We’ll have to wait for a court or jury’s finding regarding what promises were actually made by Donald Trump and the people running the Trump Program. The good news for the plaintiffs and Mr. Schneidermann is that they do not have to prove the existence of a contract. New York, along with every state, has laws that prohibit businesses from engaging in deceptive and unfair business practices.
Consumers should be leery of any language that appears to promise an educational outcome—e.g., “you will earn a six-figure salary after graduation.” While a state’s attorney general, such as Mr. Schneiderman, has the authority to make businesses stop deceptive practices, the attorney general may not be able to get back the money consumers have lost. If it sounds too good to be true, it probably is! For an in-depth discussion of deceptive degrees, see my article, Degrees of Deception: Are Consumers and Employers Being Duped by Online Universities and Diploma Mills?
President’s Club Professor of Law,
The Ohio State University Moritz College of Law
Tuesday, February 23, 2016
American Airlines has nonsuited (i.e., dismissed without prejudice to refilling the lawsuit) its declaratory judgment claim against Gogo. American had recently asked a Texas state court to determine whether the provision of the availability of "better service" (or some similar term) in its 2012 contract had been triggered such that American could force Gogo to submit a competitive bid to retain its service.
As discussed in a previous post, American's negotiating leverage arose as much from the publicity surrounding it filing of a lawsuit as it did from the actual contract term. The term was apparently vague enough that Gogo could (and did) take the position that its rights as American's exclusive in-flight service provider had not been called into question by American's request for a new proposal. Upon American's filing of a declaratory judgment lawsuit in Texas state court, however, Gogo's stock price dropped 27 percent.
Today, the word is out that Gogo has changed its position and accepted American's interpretation of the contract. The Fort Worth Star-Telegram reports:
[American Airlines had said] that its contract with Gogo allowed it to renegotiate or terminate its agreement if another company offered a better service. Gogo had disputed that clause in the contract, but Friday agreed to the contract provision and said it would provide a competitive bid within 45 days.
“American is a valued customer of Gogo, and Gogo looks forward to presenting a proposal to install 2Ku, our latest satellite technology, on the aircraft that are the subject of the AA Letter,” Gogo said in a government filing Friday. “We acknowledge the adequacy of the AA Letter and that our receipt of the AA Letter triggered the 45 day deadline under the agreement for submission of our competitive proposal.”
* * *
Once American reviews Gogo’s proposal, if it does not beat out a competitor’s proposal, American can terminate Gogo’s contract with 60 days’ notice.
Shares of Gogo [ticker: GOGO] jumped on the news of the dropped lawsuit, up almost 10 percent....
The swift manner in which this episode had played out emphasizes the extent to which contract doctrine and interpretation it frequently not the principal driver of business relationships. Gogo could have marshalled a team of lawyers and stood on its interpretation of the contract up to final judgment--likely a summary judgment based on a question of law. But what would be the reputational and business cost? Eventually, the marketplace won't allow contract rights to serve as a substitute for proof of the quality of a product.
A challenge I find in teaching future transactional lawyers is to ensure that they do not become enamored with legal rights as being the be-all and end-all of deal making. Law is important, but a business lawyer must employ practical wisdom, as well. That wisdom includes the fact that law itself is only one part of practicing law... and it sometimes isn't even the most important part.
Saturday, February 20, 2016
Speaking of contract law and Bitcoin, my colleague William Byrnes over at our sister blog, International Financial Law Prof Blog, reports on recent activity by the Federal Trade Commission in this area:
Butterfly Labs and two of its operators have agreed to settle Federal Trade Commission charges that they deceived thousands of consumers about the availability, profitability, and newness of machines designed to mine the virtual currency known as Bitcoin, and that they unfairly kept consumers’ up-front payments despite failing to deliver the machines as promised.
* * *
“Even in the fast-moving world of virtual currencies like Bitcoin, companies can’t deceive people about their products,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “These settlements will prevent the defendants from misleading consumers.”
Read the entire post here. While the federal interest in regulating in the virtual currency space has most prominently been in the area of financial crimes, consumer protection is certainly not off the table as agencies like the FTC and (potentially more prominently) the Consumer Financial Protection Bureau explore their reach.
Wednesday, February 17, 2016
It's not a secret that some colleges and universities out there are really struggling. At Lake Superior State University in Michigan, where enrollment has been declining, two professors were recently denied tenure, as Josh Logue reported for InsideHigherEd. As required by the faculty association's agreement with the university, the denials set forth the reason tenure had been denied, and the reason given was the need for the university to reduce staffing in the face of the declining enrollment. The professors took issue with this reason for denial, however, because the agreement contained the following clause:
Recommendations for tenure shall be based on:
a) Careful review of the Tenure Application File [letters of support, CV, and evaluations].
b) Consideration of the faculty member’s collegiality in their relation to faculty, students, staff, and administration.
The professors are saying that that doesn't allow for denial of tenure based on another consideration, such as financial.
It's unclear whether there was a communication with the candidates beforehand that institutional need might impact the tenure decision. The contract doesn't seem to ever mention financial considerations impacting the faculty, or institutional need, or indeed any kind of catch-all, at first glance. It does, however, provide for an appeal of a tenure decision, so I'm curious if the denied candidates will take advantage of this, and what the eventual outcome will be.
Thursday, February 4, 2016
Although some things bear little direct relation to Contracts Law, they are still worth mentioning here for their inherent news value and for potential classroom use by creative law professors. Here’s one such story:
Both British and American studies show that women pay an average of… 48% more for items targeted for women compared to those for men. This “sexist pricing” pattern is reflected in, for example, razors costing 11% more for women than those for men, jeans allegedly 10% more (I would personally have thought more than that, but that’s another story), skin lotion around $15 for women, but similar lotion $10 for men.
A report by the New York City Department of Consumer Affairs, released in December, found similar patterns. It compared nearly 800 products with clear male and female versions from more than 90 brands sold in New York, both online and in stores. It found that women pay more in 42% of cases.
Similarly, a bill in California calling for lawmakers to exempt tampons and sanitary pads from the state sales tax got a big endorsement in January from the board that administers the state's sales taxes. A few other states such as Utah, Virginia and New York have introduced similar bills. Even President Obama seems to subscribe to the notion that women should not have to pay tax on products they simply have to have because of Mother Nature’s demands. When asked in a recent interview if he felt it was right that tampons are taxed, he said, “I have no idea why states would tax these as luxury items. I suspect it's because men were making the laws when these were passed.” Well, not quite: states typically just tax all goods and exempt some. But states such as California don’t tax foods, for example. Time truly seems to have come to exempt some other goods.
British Labor Party MP Paula Sheriff sums up the issue well “[w]omen are paid less and are expected to spend more on products and services ... they are charged more simply for being women.” The only thing that should also be mentioned, in all fairness, is the price of clothing and shoes. I personally find those items much cheaper than men’s clothes, but I’m also not a brand-conscious person. As long as it fits and looks good, I don’t care whether it’s called one thing or another, so my anecdote may not fit into the “pink tax” story and protests which are gaining momentum in several nations.
Sunday, January 31, 2016
Mobile carriers seem to have grown tired of, effectively, being in the loan business funding people’s new phones. American consumers were used to this model, which was a way for phone companies to hide the large price of a new phone into a monthly bill.
More recently, consumers want to change their phones more often than every two plus years, so many prefer paying up front for their phones to be able to change plans whenever they want to instead of having to wait out a long-term contract (or risk sanctions if breaching it).
All the major carriers – T-Mobile, Verizon, Spring and now AT&T – have now shifted away from two-year contracts. The question now is whether consumers will truly choose to pay for their phones in full at the point of purchase or, as has been mentioned, opt for installment plans that lets them upgrade more often than before remains to be seen. Given the price of phones, but also the seemingly insatiable need by many for new technology, installment contracts may be the likely end result. If so, it will be interesting to see how carriers will avoid tying people into long-term contracts, which has proved to be undesirable, but at the same time trying to do, at bottom, some of that via “installment contracts.”
Friday, January 29, 2016
The class action lawsuit against Uber for allegedly misclassifying its drivers as “independent contractors” instead of regular “employees” is growing in scope and importance. (O’Connor v. Uber Technologies Inc., 13-cv-03826, Northern District of California). It now covers more than 100,000 drivers. If Uber loses, the case could mean the end of the so far highly lucrative business ride share model that is currently valued at a whopping $60 b worldwide. http://www.bloomberg.com/news/articles/2015-12-18/uber-faulted-by-judge-for-confusing-drivers-with-new-contract
A recent contractual twist developed as follows: Judge Chen had previously found certain contractual language between Uber and its drivers to be unconscionable and unenforceable. Uber claims it tried to fix those issues in a new set of contracts prohibiting its drivers from “participating in or recovering relief under any current or future class action lawsuits against the company.” (Link behind a sign-in request). The drivers were, instead, required to resolve potential conflicts via arbitration. The new contract did, however, purport to give drivers 30 days to opt out of the arbitration provision.
Judge Edward Chen stated about this contractual language that “it is likely, frankly, to engender confusion.” The potential for confusion stems from the fact that numerous drivers have, obviously, already joined the class action lawsuit just as many still may want to do so. Hundreds of drivers are said to have called the plaintiffs’ lawyer, Shannon Liss-Riordan, to find out whether they have to opt out of the new contract to join the lawsuit. Ms. Liss-Riordan called the updated contract an attempt to “trick her clients into relinquishing their rights to participate in the class action.”
Uber, however, claimed that it was just trying to fix previous problematic contractual language and that it would “not apply the new arbitration provisions to any drivers covered by the class action.” The contractual language, though, does not say so.
Whether this is an example of deliberate strong-arming or intimidating the drivers into not joining the lawsuit or simply unusually poor contract drafting may never be known. Judge Chen did, however, order Uber to stop communicating with drivers covered by the class action suit and barred the company from imposing the new contract on those drivers.
The saga continues with trial set for June 30.
Meanwhile, Lyft settled a very similar lawsuit by its drivers in the amount of $12 million. Under that settlement, Lyft will still be able to classify its drivers “independent contractors.”
Thursday, January 7, 2016
Recently, Stacey blogged here about whether tenure is a contract. Yesterday, the news broke that a tenured associate political science professor at Wheaton College, a private Christian university, may soon get to test that theory.
Shortly after the San Bernadino, California, shooting massacre, Professor Larycia Hawkins stated on her Facebook account (which listed her profession and employer) that she “stand[s] in religious solidarity with Muslims because they, like me, a Christian, are people of the book. And as Pope Francis stated last week, we worship the same God." She elaborated that “we are formed of the same primordial clay, descendants of the same cradle of humankind--a cave in Sterkfontein, South Africa that I had the privilege to descend into to plumb the depths of our common humanity in 2014.” She also wore a hijab in “embodied solidarity” with Muslim women.
The response by the College is, for now, the equivalent of “You’re fired.” The College placed Professor Hawkins on administrative leave in December "to explore significant questions regarding the theological implications of her recent public statements, including but not limited to those indicating the relationship of Christianity to Islam." Further, "Wheaton College faculty and staff make a commitment to accept and model our institution's faith foundations with integrity, compassion and theological clarity. As they participate in various causes, it is essential that faculty and staff engage in and speak about public issues in ways that faithfully represent the college's evangelical Statement of Faith." According to Wheaton College President Ryken, however, the College also “support[s] the protection of all Americans including the right to the free exercise of religion, as guaranteed by the Constitution of the United States." Professor Hawkins’ legal team is, according to televised news statements on 1/6, exploring the possibility of a lawsuit should the professor’s preferred solution – mediation and an amicable solution – turn out to be impossible.
This case raises serious questions about the academic freedom of tenured professors – even untenured ones - with which we as law professors are also very familiar. This is perhaps even more so in the cases of private colleges. It seems to me that with a message along the lines of what even Pope Francis uttered along with a reasoned (meta)physical explanation of her views and the College’s self-professed acceptance of freedom of religion, Professor Hawkins did not act in a way that should, under notions of academic freedom, get her fired. If we as law professors do not agree with or wish to challenge certain traditional or even untraditional legal views, are we not allowed to do so because the institutions we work for or the majority of our colleagues hold another view? One would hope so. Most of us can probably agree that academic freedom is exactly all about being able to, within reason at least, provoke deeper thought in relation to what we teach. Note that Dr. Hawkins did not teach religious studies, but political science. With the current embittered debate about Muslims and terrorism around the world, Dr. Hawkins arguably raised some interesting points even if one does not agree with her statements from a Christian point of view.
Stay tuned for more news on this case!
Sunday, January 3, 2016
Exactly one year ago, I blogged here about United Airlines and Orbitz suing a 22-year old creator of a website that lets travelers find the cheapest airfare possible between two desired cities. Travelers would buy tickets to a cheaper end destination, but get off at stopover point to which a ticket would have been more expensive. For example, if you want to travel from New York to Chicago, it may be cheaper to buy one-way airfare all the way to San Francisco, not check any luggage, and simply get off in Chicago.
The problem with that, according to the airline industry: that is “unfair competition” and “deceptive behavior.” (Yes, the _airline industry_ truly alleged that.) Additionally, the plaintiffs claimed that the website promoted “strictly prohibited” travel; a breach of contracts cause of action under the airlines’ contract of carriage.
It seems that the United Airlines attorneys may not have remembered their 1L Contracts course well enough, for a contracts cause of action must, of course, be between the parties themselves or intended third party beneficiaries. The website in question was simply a third party with only incidental effects and benefits under the circumstances. Without more, such a party cannot be sued under contract law. (This may also be a free speech issue.)
Orbitz has since settled the suit. Recently, a federal lawsuit was dismissed for lack of personal jurisdiction over the now 23-year old website inventor. United Airlines has not indicated whether it plans further legal action.
Along these lines, cruise ship passengers are similarly not allowed to get off a cruise ship in a domestic port if embarking in another domestic port unless the cruise ship is built in the United States and owned by U.S. citizens. This is because the Passenger Vessel Services Act of 1866 – enacted to support American shipping – requires passengers sailing exclusively between U.S. ports to travel in ships built in this country and owned by American owners. Thus, cruise ships traveling from, for example, San Diego to Alaska and back will often stop in Canada in order not to break the law. But if the vessel also stops in, for example, San Francisco and you want to get off, you will be subject to a $300 fine which, under cruise ship contracts of carriages, will be passed on to the passenger. See 19 CFR 4.80A and a government handbook here.
Convoluted, right? Indeed. Necessary? In this day and age: not in my opinion. As I wrote in my initial blogs on the issue, if one has a contract for a given product or service, pays it in full, and does not do anything that will harm the seller’s business situation, there should be no contractual or regulatory prohibitions against simply deciding not to actually consume the product or use the service one has bought. Again: if you buy a loaf of bread, there is also nothing that says that you actually have to eat it. You don’t have to sit and watch all sorts of TV channels simply because you bought the channel line-up. In my opinion, United Airlines and Orbitz were trying to hinder healthy competition and understandable consumer conduct. What is still rather incomprehensible to me in this context is why in the world airlines would have anything against passengers getting off at a midway point. It’s less work for them to perform and it gives them a chance to, if they allowed the conduct openly, resell the same seat twice. A win-win-win situation, it seems, for the original passenger, the airline, and the passenger that might want to buy the second leg at a potentially later point in time at whatever price then would be applicable. The same goes for the typically unaffordable “change fees” applied by most airlines: if they charged less (a change can very easily be done by travelers on a website with no airline interaction) and the consumer was willing to pay the then-applicable rate for the new date (prices typically go up, not down, as the departure dates approach), the airlines might actually benefit from being able to sell the given-up seat. Of course, they don’t see it that way… yet.
In many ways, traveling in this country seems to be going full circle in that it is becoming an expensive luxury. Thankfully, new low-cost airlines also appear on the market to provide much needed competition in this close-knit industry that, in the United States, seems to be able to carefully skirt around anti-trust rules without too many legal allegations of wrongdoing. (See here for allegations against United, American, Delta and Southwest Airlines for controlling capacity in order to keep airline prices up).
Happy New Year and safe travels!
Monday, December 21, 2015
Shoplifting is a major problem to retailers. In 2014, for example, retailers lost $44 billion nationwide to theft by shoplifters, employees and vendors. But how about this for an apparently very popular “solution”: Retailers such as Bloomingdale’s, Wal-Mart, Burlington Coat Factory, DSW Inc. and even Goodwill Industries have signed up with CEC, a company that provides “restorative justice” for profit.
Here’s how it works: Retailers sign a contract with CEC under which CEC will provide “life skills” courses to shoplifters caught by the retailers. The retailers pay nothing for this “service.” Rather, shoplifters must pay the company $500 for a six-hour course and sign a confession. If they refuse to do so, they are threatened with criminal prosecution and allegedly intimidated in several other ways. According to CEC, “over 1 million individuals have gone through the core program.” Do the math (if you trust the company’s statement) and you’ll see that contracting to sell justice and self-help is apparently quite lucrative.
According to CEC, this is all a good thing. In a statement apparently now removed from the company’s website, but reported here, the company purports to give “low-level, first-time shoplifters a valuable opportunity to learn how to make better choices, while saving them a criminal record and sparing law enforcement resources.” According to CEC now [http://www.correctiveeducation.com/home/cec-restore]: “CEC’s Adult Educational Program focuses on developing practical skills that will help achieve social goals. The dual approach of addressing behavior while promoting provident living helps reinforce change.”
What’s the problem with this alleged win-win situation? According to at least the San Francisco city attorney, the conduct is a violation of the California Business and Professions Code. It also alleged to amount to extortion, false imprisonment, coercion and deception. The city attorney has filed suit. CEC defends, claiming that its “vision is to reinvent the way crimes are handled, starting with retail theft.” Indeed. Do we, however, trust companies to sell justice for us via private contracts? Comment below!
Monday, December 14, 2015
On Saturday, a new international treaty surplanting the expired Kyoto Protocol was finally reached by 195 nations. For business contracting and numerous, if not all, aspects of life now and in the future, the global climate will be key.
The main aim of the agreement is to keep temperature rise “well below” 2° C. The nations will additionally “pursue efforts” to limit the temperature increase to 1.5° C. Thousands of scientists have for a long time reiterated the belief that temperatures rising above 2° Celsius could be devastating, so the aspirational goal of 1.5° C is, of course, a positive sign that national leaders may finally be realizing the dire straits of the planet’s climate situation.
So, this is good news, right? To some extent, yes. “The Paris Agreement for the first time brings all nations into a common cause based on their historic, current and future responsibilities.” However, current national commitments still do not go far enough. As they currently stand, we are headed towards a warming of more than 3° C; much higher than the scientifically advisable goal. The national pledges must be increased over time. Starting in 2018, each country will have to submit new plans every five years to reach the 1.5/2° goal by 2100. The thought is that even though current coals do not suffice to keep climate warming to the agreed-upon limits, they will over time, starting soon.
History shows, though, that many nations have so far neither been ready nor politically able to make effective greenhouse gas reduction commitments. Previous aspirational goals have not been realized by the great majority of nations, although some not only met, but exceeded their commitments. It’s tempting to note that “time will tell if the situation changes this time,” but we simply don’t have much time to turn around the problem before it is too late for many regions, species and peoples around the world. For example, a temperature increase of 2° C will still be very problematic for low-lying nations such as many small island states, who seem to have been almost entirely forgotten about by many in this context. That, however, was considered one of the “prices” to be paid for reaching the deal. (A true contractual-like bargaining strategy.) Human rights are only mentioned in the preamble to the Agreement and not in the Agreement itself.
Nation themselves will determine their “intended nationally determined contributions,” which are not directly legally binding under notions of hard law as they are not mandatory with top-down enforcement if the nations fail to do so. Among other factors, the word "contribution" and not, for example, "commitments" demonstrate the legal cautiousness of the agreement. Nations must, of course, still strive to reach their goals under the UNFCCC and the notion of pacta sunt servanda, but these are not worded in a manner that gives them a firm, legally binding effect. The only directly legally binding parts of the Agreement are some procedural aspects such as the review procedures.
Of course, the reason why the Agreement was adopted by so many parties was precisely that no legal requirements were imposed on nations. Some, such as the United States, would not have accepted this. A senior Obama administration official notes that the Agreement "does not require submission to the Senate because of the way it is structured and because the pieces that are binding are already part of existing agreements.” A legally smart and pragmatic maneuver. But it still remains to be seen whether the United States and other nations act – and act quickly enough - to prevent the problem escalating in spite of good intentions. I may be one of the few in this context, but I’m still skeptical. The intended time frames still seem too long to me and the actual promised action too meager. I fear that these are simply the “Emperor’s New Clothes,” celebrated so much, perhaps, because of so many years of no action.
Nonetheless, it is certainly remarkable and a very good sign that the world community finally agreed on the dangers posed by climate change and thus a 2° C limit. That's a good start. In the words of Miguel Arias Cañete, the European Union’s commissioner for energy and climate action, “[t]oday, we celebrate, [t]omorrow, we have to act. This is what the world expects of us.” But if we have simply turned a corner back to where we came from, namely hoping that sufficient action will be taken soon and pointing out that the world expects that, we might have celebrated a bit too early. I hope I am wrong. Climate change is like a cancer: horrible, always inconvenient, and tough to deal with at many levels. But the longer one waits in tackling it, the worse it will get.
Monday, December 7, 2015
Commercial class-action practitioner Kevin M. McGinty here describes the final settlement of the infamous 2013 theft of credit and debit card data from retail giant Target's point-of sale terminals:
On Tuesday, December 1, Target entered into a settlement agreement with a class of banks and financial institutions that issued the credit and debit cards that were compromised in the 2013 event. The settlement was the result of negotiations following closely on the heels of an order by the court certifying a card issuer class. This last settlement resolves card issuers’ claims that were not previously resolved in Target's August 2015 settlement with Visa, which provided $67 million to resolve claims made by Visa card issuing banks under Visa’s fraud resolution process. Also separate from this settlement is the $10 million settlement of the claims of consumers whose cards were compromised by the data theft, which Target concluded with the consumer class in March 2015.
The current settlement provides for payment of an additional $39,357,939.38 for the benefit of class member banks. Of that amount, $19,107,939.38 will be used to fund settlements under MasterCard’s fraud resolution process....
The $10 million paid in the consumer settlement may seem at first blush to be grossly disproportionate to the roughly $107 million allocated to the card networks and their issuing banks. It actually isn't. The card payment system is built on private contracts that are themselves heavily impacted by federal consumer protection laws like the Truth-in-Lending Act and the Electronic-Funds-Transfer Act. Together, the contracts and federal law place liability for unauthorized purchases squarely on the issuer banks acting through the card networks. Thus, we should expect the consumer losses from Target's data breach to be minimal compared to those borne by the banks, who were obligated to fund the consumer losses pending recovery from Target as the ultimately responsible party for this particular data breach.
Sometimes the legal system works more-or-less how it is intended. The consumers actually were protected in this instance.
Friday, November 20, 2015
The law firm of Andrews Kurth was recently hit with a nearly $200million dollar judgment for malpractice. Yes, that's right - nearly 200 MILLION dollars. At the bottom of this - an agreement which was deemed unenforceable as an "agreement to agree." As reported by Law 360 (which requires registration - apologies), the malpractice suit stemmed from representation in a dispute involving a family business, Martin Resource Management. Two brothers, Scott and Ruben Martin, were fighting over management issues until their mother stepped in to broker a deal. Andrews Kurth represented Scott Martin and sought changes to the deal to ensure its enforceability. Scott ended up suing Ruben to force him to comply with the terms of the settlement; however, the appeals court ruled that the settlement agreement revised by Andrews Kurth was unenforceable as an "agreement to agree." Many lawsuits ensued resulting in this incredibly large jury award.
Unfortunately, I couldn't get a copy of the actual agreement that was at issue - I would really like to see what the language looked like...
Friday, November 13, 2015
We have reported on this case numerous times, and the ordeal is finally over. Here is our overview of the dispute from last year:
The very short version of the story, as best I can cobble it together from blog posts, is that the University of Illinois offered a position in its American Indian Studies program to Steven Salaita, who had previously been teaching at Virginia Tech. According to this article in the Chicago Tribune, the U of I sent Professor Salaita an offer letter, which he signed and returned in October 2013. Professor Salaita was informed that his appointment was subject to approval by the U of I's Board of Trustees, but everyone understood that to be pro forma. In August 2014, Salaita the U of I Chancellor notified Professor Salaita that his appointment would not be presented to the Board and that he was no longer a candidate for a position. According to the Tribune, the Board next meets in September, after Professor Salaita's employment would have begun. The Chancellor apparently decided not to present Professor Salaita's contract for approval because of his extensive tweets on the Isreali-Palestinian conflict, which may or may not be anti-Semitic, depending on how one reads them.
As reported here in Inside Higher Ed, the University of Illinois has agreed to pay Steven Salaita $875,000. The University has now severed all ties with Professor Salaita who will not teach there.
Last week, we noted a series of articles in The New York Times about mandatory arbitration and class action waivers in consumer and employment contracts. The reporter behind those stories did an interview on NPR's Fresh Air. You can listen and read it here.
Hat tip to my student Marla Gee.
Monday, November 9, 2015
California takes its laws against minors contracting seriously. Very seriously. Dancing with the Stars favorite Bindi Irwin, daughter of “Crocodile Hunter” Steve Irwin, must prove that her father was really killed in 2006 in order for her to get the earnings from the popular dancing show. So far, Bindi Irwin has allegedly presented “insufficient proof” that her father has waived those earnings. This despite worldwide shock that the beloved wildlife TV show stars was killed in a freak accident by a stingray in 2006.
California law requires underage entertainers to get court approval of their contracts to avoid the rampant abuses of minors in the industry of yesteryear. Parents of minors must now sign a quitclaim waiving any rights to the child's earnings. Bindi's mother, Teri, has already signed, but Steve has not, for obvious reasons.
The show’s owners, BBC Worldwide, is working with the court to work out the situation.
Under her contract with BBC, Bindi earns a guaranteed salary of $125,000 as well as weekly sweeteners for each week she stays on the show. So far, Bindi has done very well, even earning top scores one week. The shows airs on Monday nights on ABC.
Wednesday, November 4, 2015
Once something turns up on the mainstream media, it often goes viral. Let's hope that's the case with The New York Times series on the dangers of the Supreme Court's recent jurisprudence on arbitration and class action waivers. Part III, which focuses on religious arbitration, is here.
My student, Collin Johnson, called to my attention some reports on National Public Radio on the same subject. You can read or listen here and here. The second reports on efforts by the Federal Consumer Financial Protection Bureau to ban financial institutions from imposing mandatory arbitration and class action waivers.
Monday, November 2, 2015
Danish toy building brick maker Lego recently turned down an order for several million lego bricks that were to have been used in an art exhibit by Chinese artist and human rights activist Ai Weiwei in Melbourne. Why? Because Lego refrains from “actively engaging in or endorsing the use of Lego bricks in projects or contexts of a political agenda.”
The bricks would have been used for two projects, one of which would have consisted of mosaic portraits of twenty Australian advocates for human rights and for information and Internet freedom. Prominent lawyers such as Michael Kirby and Geoffrey Robertson would have been depicted as would have WikiLeaks founder Julian Assange.
Last year, Mr. Ai used Legos to create mosaic portraits of 176 political exiles and prisoners of conscience in an exhibit on Alcatraz Island in San Francisco. At that time, Mr. Weiwei bought the toys via a nonprofit helping him develop the Alcatraz exhibition.
This is apparently not the first time that the Lego Group is turning down otherwise valuable contracts for its popular bricks. Just this year, Lego rejected a proposal to make Lego figures of the female United States Supreme Court justices, also because such use was considered “political.” (Huh?!) Previously, Lego has tried to persuade a Polish artist to withdraw an installation that used Lego bricks to depict a Nazi concentration camp (Lego, in turn, withdrew that request after lawyers got involved.).
China’s reaction to the Ai Weiwei story? The state-run Chinese Global Times reported that “as China becomes more powerful, commercial organizations and national governments will become more well behaved and more scared to apply a double standard to China.” (Link to Global Times not available, but see here for coverage from NPR and the NY Times) Surely, at least part of that statement must be a mistranslation. If not, then let’s indeed hope that governments and corporations alike become better behaved (if not, could we give them time out?).
Does this case make sense from a business point of view? Perhaps, if the company wants to err on the extremely cautious side of avoiding negative PR in general. Or is this perhaps rather an issue of not risking to upset a very valuable and increasingly affluent country such as China? Should it matter to a manufacturer what its products are sold for? Said Weiwei: “A company that sells pens [also] cannot tell a writer that he or she can’t do political or romantic writing. It’s really none of their business.”
Having been born and raised in Denmark, Lego’s attitude surprises me somewhat. Danes – whether organizations or individuals – often weigh in on important social issues. Danes are often not afraid to speak their minds on important social issues. That is simply how “small talk” and opinion-making is formed in the nation. As a nation, Denmark often touts itself as a world leader when it comes to other complex issues such as comprising the environment, energy and health care even though those could also be seen as “political” in nature. On that backdrop, Lego’s attitude seems even more conservative from a PR point of view, but of course, it is a multi-million dollar company worried about the bottom line. Fair enough, but in a way, it would be refreshing if companies would take more responsibility for the ultimate effects of their products. Some are. For example, some companies are voluntarily reducing the sugar content in their products or at least providing less sugary alternatives to traditional products. Others are not (the gun industry, to mention one). But where, such as in the Lego case, companies decide to be overly cautious in relation to issues that do not seem all that controversial and that are not even funded or otherwise supported by the vendor itself, it seems that we are risking censorship via corporatism.
The future of Weiwei’s exhibits is unknown, but he is reported to be making use of Lego collection points after having received numerous offers of Lego donations on social media.
A lot of folks in legal education were pissed off at The New York Times last week. Some fine responses include Michael Simkovic's and Frank Pasquale's. I would just like to draw attention to the last two paragraphs of the Times editorial, which strain to draw some connection between loans that go to law students and the decrease of funds available to pay for legal representation for the poor. Rising student debt and decreased funding for legal services are two sides of the same coin, and it is really peculiar to blame law schools for politicians' failures to adequately fund education or legal services . . . but today we are here to praise The New York Times.
I'm not sure why this is news but yesterday's Sunday Times prominently featured an article that tells it like it is about arbitration clauses and class action waivers. The title and sub-title tell it all: Arbitration Everywhere, Stacking Deck of Justice: Vast Trend Locks Americans Out of Court -- Rulings Greatly Favor Business. This is the first in a series of stories called Beware the Fine Print. Part II is called In Arbitration, "A Privatization of the Justice System.
Ah, the Old Grey Lady returns to form.
Wednesday, October 21, 2015
Amazon is suing approximately 1,000 individuals who are allegedly in breach of contract with the Seattle online retailer for violating its terms of service. Amazon is also alleging breach of Washington consumer protection laws.
In April, Amazon sued middlemen websites offering to produce positive reviews, but this time, Amazon is targeting the actual freelance writers of the reviews, who often merely offer to post various product sellers’ own “reviews” for as little as $5. (You now ask yourself “$5? Really? That’s nothing!” That’s right… to most people, but remember that some people don’t make that much money, so every little bit helps, and numerous of the freelancers are thought to be located outside the United States.) The product sellers and freelancers are alleged to have found each other on www.fiverr.com, a marketplace for odd jobs and “gigs” of various types.
There are powerful incentives to plant fraudulent reviews online. About 45 percent of consumers consider product reviews when weighing an online purchase. Two-thirds of shoppers trust consumer opinions online. For small businesses, it can be more economical to pay for positive reviews than to buy advertising. For example, a half-star increase in a restaurant's online rating can increase the likelihood of securing, say, a 7 p.m. booking by 15 to 20 percent. “A restaurateur might be tempted to pay $250 for 50 positive reviews online in the hopes of raising that rating.”
As law professors, we are not beyond online reviews and thus potential abuses ourselves. See, for example, www.ratemyprofessor.com. There, anyone can claim that they have taken your course and rank you on your “Helpfulness,” “Clarity,” and “Easiness,” give you an overall grade as well as an indication of whether you are hot or not (clearly a crucial aspect of being a law professor…) To stay anonymous, people simply have to create a random anonymous sounding email address. Not even a user screen name appears to be required. Hopefully, that website does not have nearly as much credibility as, for example, Yelp or TripAdvisor, but the potential for abuse of online reviews is clear both within as well as beyond our own circles.
As shown, though, some companies are taking action. TripAdvisor claims that it has a team of 300 people using fraud detection techniques to weed out fake reviews. But fraudulent reviews aren't thought to be going away anytime soon. One source estimates that as many as 10-15% of online reviews are fake (to me, that seems a low estimate, but I may just be a bit too cynical when it comes to online reviews).
So, next time you are reading reviews of a restaurant online, I suppose the learning is that you should take the reviews with a grain of salt.