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Monday, May 2, 2011

NY Times on Law School Merit Scholarships

As if our co-blogger Meredith Miller had not depressed us enough on Friday with her thoughts on job prospects for recent graduates, the New York Times piled on in its Sunday Business section with this article about merit scholarships that may not be all that they seem.

The story is about students who are lured to schools with merit scholarships that will free them from their obligation to pay law school tuition, so long as they maintain a certain grade point average.  Most students assume that this will be no problem, because they arrive at law school with gaudy GPAs.  As this chart compiled by Stuart Rojstaczer shows, the average undergraduate GPA was 3.11 in 2006-07.  In such a Lake Wobegon world where all the students are above average, it seems reasonable for newly admitted law students to think they can make the grade without breaking a sweat. 

The Times concludes that schools are luring students in with merit scholarships and then withdrawing those scholarships from a shockingly high number of students.  Why?  The answer is obvious to anyone inside the legal academy: to pump up their U.S. News numbers, of course. Law schools want high LSATs and undergraduate GPAs in their first year class.  So they use fellowships to draw in students whose test scores and GPAs would otherwise take them elsehwere. 

But is there injustice involved?  The report states that the phrase "bait and switch" comes up a lot and that students are "shocked when their scholarships disappear."  Would the injustice not be greater if an underperforming merit scholar got to keep her scholarship while a dark horse student with a 3.5 GPA still had to pay her way?  And is it really too much to expect students who are admitted with merit fellowships to ask about grade distributions or use -- I don't know, perhaps the internet -- to find out how likely it is that they will keep their fellowships?  Law schools frequently use current students to recruit newly admitted students.  Contacts with current students are an ideal way to get just this sort of information. 

Moreover, what U.S. News-conscious law schools take away, other U.S. News-conscious law schools may give.  That is, let's say a student went to a 4th-tier law school in order to get the free ride.  After the first year, the student loses her free ride because of a low GPA.  She likely can transfer to a 3rd-tier school, perhaps even one that wouldn't have taken her at all as a 1L -- let alone with a scholarship -- because the other side of gaming the U.S. News system is poaching transfer students from lower-ranked schools.  The student will still end up paying full tuition for two years of law school, but the alternative is paying full tuition for three years of law school.

Yes, law schools should be up front with information about the likelihood that students will lose their fellowships.  My guess is that, because of the optimism bias, providing that information would not hurt law school recruitment.  According to the Times, Chicago-Kent offers students the choice between a guaranteed $9000/year fellowship and a $15,000 fellowship contingent on maintaining a 3.25 GPA.  Ninety percent of the students assume the risk. 

[JT]

 

May 2, 2011 in About this Blog, Commentary, Law Schools, Legislation | Permalink | Comments (0) | TrackBack (0)

Friday, January 14, 2011

Federal Contractors and Arbitration of Sexual Assault and Harassment Claims

Al_Franken_Official_Senate_Portrait As reported in the Bureau of National Affairs (BNA) Federal Contracts Report (subscription necessary, alas) -- and nowhere else that I can find on the web -- on December 8, 2010, the Department of Defense (DoD) issued its final rule implementing Section 8116 of the 2010 Defense Appropriations Act, known as the Franken Amendment.  The Amendment applies to DoD contracts of more than $1 million and provides that contractors awarded such contracts must not require employees to arbitrate their Title VII claims or "any tort relating to or arising out of sexual assault or harassment."

According to the BNA Report, the Franken Amendment was a response to the case of Jamie Leigh Jones, a former employee of government contractor and former Halliburton-subsidiary, KBR.  Ms. Jones alleged that her fellow KBR employees drugged and gang-raped raped her while she was working for the company in Baghdad.  She further alleged that KBR confiscated, hid and tampered with the rape kit compiled by an army doctor who treated Ms. Jones.  KBR then allegedly confined Jones to a shipping container under armed guard and denied her food, water and medical treatment. 

Jones's case inspired Senator Franken (pictured) because KBR argued that her claims were subject to arbitration and sought dismissal of her suit from the federal courts.  The Fifth Circuit denied KBR's motion to compel arbitration and remanded the case to the District Court.  KBR's petition for cert. was denied in March.  

[JT]

January 14, 2011 in Current Affairs, Government Contracting, Legislation | Permalink | Comments (0) | TrackBack (0)

Wednesday, December 1, 2010

Drafting executive compensation contracts

1908RandallCountyCourthouseCanyonTexas907TJnsn There aren't many areas these days where contracts have to be more carefully crafted than that of executive compensation.  So you may be interested in a webinar that BNA is putting on next week.  Here's the info:

Living on the Edge: Avoiding 409A and 162(m) Pitfalls in a Shifting Environment
Thursday, December 09, 2010
1:00 PM - 2:30 PM ET

Agenda: This BNA webinar will explain how to approach the design and administration of your executive compensation programs (including employment and severance agreements) and avoid the ever-tightening net of tax penalties under Section 409A and 162(m). It will cover common "traps for the unwary" and foot faults that may result in unintentional violations of Sections 409A and 162(m) and provide practical suggestions to guide decision making in these areas to optimize compliance. It will focus on areas where compliance has proven particularly difficult and flag common situations that present the highest risk of IRS challenge. Attendees will acquire practical information on how to avoid common 409A and 162(m) violations, how to spot the violations when they have occurred, how to correct violations when possible, and how to assess penalties when the violation cannot be corrected. Since attendees are often not the only ones in their organizations responsible for the oversight of matters that can lead to 409A and 162(m) violations, attendees will leave with suggestions and tools to aid them in maximizing success by coordinating with others throughout their organizations.

Program Highlights:

  • Traps for the unwary -- the 10 most common situations that risk 409A or 162(m) violations, and how to recognize and deal with them
  • Common foot faults - how drafting or operational mistakes that seem minor can result in serious tax penalties
  • Implementing compliance procedures, including coordination within the organization
  • Presentation of practical tips for spotting compliance issues requiring legal review
  • What to do if a violation is discovered - panic, corrections, penalties, gross-ups

FGS

December 1, 2010 in Commentary, Legislation, Meetings | Permalink | Comments (0) | TrackBack (0)

Thursday, July 1, 2010

Movie Futures No Longer in Production - An Update

Movie-tickets-popcorn Previously, we blogged about movie futures.  Cantor Fitzgerald was expecting to open an online futures market that would allow film studios, institutions and moviegoers to place bets on the box-office revenue of Hollywood’s biggest releases. It even had the green light from regulators.

However, it looks like the current financial reform legislation has thrown rotten tomatoes at the plan.  The LA Times reports:

With financial reform legislation that would outlaw trading in box-office futures headed toward final passage, the company is giving up on its plans, said Richard Jaycobs, the executive heading the effort for Cantor Fitzgerald.

"The broader opportunity of motion picture finance is still something we have to evaluate, but we know now we're not going to do futures contracts," he said. "The bill is quite clear."

Though the financial reform bill isn't yet law, its box-office futures provision was made retroactive to June 1 by the House-Senate conference committee that hammered out final language for the bill last week. That would put a stake into both Cantor Exchange and its main competitor, Media Derivatives, which received final approval from the commission June 14.

Jaycobs said his firm was simply overwhelmed by the lobbying power of the Motion Picture Assn. of America, which on behalf of the six major studios persuaded Sen. Blanche Lincoln (D-Ark.) to insert a box-office-futures ban in her original version of the bill. The association also got House-Senate negotiators last week to not only keep the provision but also make it retroactive.

"I've really come to respect the MPAA's ability to be effective on [Capitol] Hill," Jaycobs said.

The major studios and some others in Hollywood had argued that box-office futures markets could create negative publicity for movies before they're released and would be too easy to manipulate. Backers have said they would be a useful financial tool for film investors.

This is how a bill becomes 2000 pages.

[Meredith R. Miller -- h/t Allen Blair (Hamline)]

July 1, 2010 in In the News, Legislation | Permalink | Comments (0) | TrackBack (0)

Friday, June 4, 2010

UCC Legislative Update

Since my last update, Mississippi and Wisconsin have enacted Revised Article 1, Mississippi has enacted the 2002 Articles 3 and 4 amendments, and Florida and Georgia have enacted Revised Article 7. Most of these enactments will take effect on July 1; all of them will be in effect by August 1.


Revised Article 1

As of June 1, 2010, Revised Article 1 was in effect in thirty-seven states: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Minnesota, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, and West Virginia.

Mississippi SB 2419 and Wisconsin SB 472, enacted this spring, will take effect on July 1 and August 1, respectively.  Pending bills in Massachusetts (HB 89) and Ohio (HB 490) have shown some signs of life; but both have many hurdles to clear to achieve enactment this year.

What constitutes "good faith" remains a bone of contention. Twenty-six of the 37 states in which Revised Article 1 is already in effect enacted the uniform § R1-201(b)(20) "honesty in fact and the observance of reasonable commercial standards of fair dealing" definition, while 11 retained the pre-revised 1-201(19) "honesty in fact" default standard and the heightened standard §§ 2-103(1)(b) & 2A-103(3) impose on merchants. Mississippi SB 2419 adopts uniform § R1-201(b)(20); Wisconsin SB 472 retains the bifurcated standard; and Indiana SB 501 replaces the bifurcated standard Indiana enacted in 2007 with the uniform § R1-201(b)(20) standard. As of August 1, twenty-eight states will require all parties to act honestly and observe reasonable commercial standards of fair dealing; while twenty-three (including DC and the 11 states that have not yet acted on Revised Article 1) will require mere honesty from non-merchants, reserving for merchants the further obligation to observe reasonable commercial standards of fair dealing.


Article 2 & 2A Amendments 

Oklahoma's 2005 amendments to its versions of Sections 2-105, 2-106, and 2A-103 (about which I previously reported here) represent the only successful effort to amend any state's enactment in a manner consistent with any of the 2003 amendments.  There has been no reported action on this year's Oklahoma HB 3104 (detailed in my last update), which would have enacted more of the 2003 amendments, since it was referred to committee on February 2, 2010 -- the day following its introduction.


Article 3 & 4 Amendments 

As of June 1, 2010, the 2002 amendments to Articles 3 and 4 were in effect in eight states: Arkansas, Kentucky, Minnesota, Nevada, New Mexico, Oklahoma, South Carolina, and Texas.  Indiana SB 501, enacted in May 2009, and Mississippi SB 2419, enacted in April 2010, each take effect on July 1, 2010.

The only reported pending Articles 3 and 4 bill is Massachusetts HB 90, which has been languishing for nearly seventeen months in the Joint Committee on Financial Services, to which it was referred on January 10, 2009.


Revised Article 7

As of June 1, 2010, Revised UCC Article 7 was in effect in thirty-six states: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Minnesota, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Utah, Virginia, and West Virginia.

Florida HB 731 and Georgia HB 451, both enacted in May, will take effect on July 1.  Pending bills in Massachusetts HB 89 (see above) and Ohio HB 490 (ditto) have shown some signs of life; but both have many hurdles to clear to achieve enactment this year.  Two other Revised Article 7 bills introduced or reintroduced this year -- Washington SB 5154 and Wisconsin AB 688 -- are, to borrow a line from Mike Myers's quotable Stuart Mackenzie, "teats up" for the time being (although the odds are good that one or both legislatures will revive Revised Article 7 in a future legislative session).


[Keith A. Rowley]

June 4, 2010 in Film Clips, Legislation | Permalink | Comments (0) | TrackBack (0)

Monday, March 1, 2010

UCC Legislative Update

It has been a fairly quiet eight months on the UCC legislative front since my last update.

Revised Article 1

As of March 1, 2010, Revised Article 1 was in effect in thirty-seven states: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Minnesota, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, and West Virginia.

State legislatures continue to grapple with the definition of "good faith," although the uniform § R1-201(b)(20) definition has the upper hand.  Of the 37 enacting states, 26 have adopted the uniform definition, while 11 have retained the pre-revised definition that, in conjunction with § 2-103(1)(b), imposes a different good faith standard on merchants and non-merchants.  Effective July 1, 2010, one of those eleven minority states (Indiana) will join the majority as SB 501, enacted in 2009 primarily for the purpose of amending Articles 3 and 4, also included a new good faith definition for Indiana's Article 1.

With many state legislatures occupied with more pressing issues of the moment, 2009 yielded only three new adoptions -- Alaska, Maine, and Oregon -- down from five in 2008, and seven in 2007.  While a downward trend in new enactments eventually becomes inevitable once two-thirds of the states have signed on, 2009's three enactments were the fewest in a year since 2003 (when Idaho became the third state overall to enact Revised Article 1).

As of March 1, only two states -- Mississippi and Wisconsin -- appear to be serious candidates to enact Revised Article 1 in 2010.

Mississippi SB 2419, introduced and amended (to replace a choice-of-law provision that appeared to have derived from the original § R1-301 that all 37 enacting states have declined to adopt and the ALI and NCCUSL have disavowed with one that reflected the substitute § R1-301 the ALI and NCCUSL promulgated in 2008) in January, unanimously passed the Mississippi Senate on February 10.  It is presently before the House Judiciary Committee.

Wisconsin AB 687, introduced on January 25 and amended on February 16 to replace the uniform R1-201(b)(20) "good faith" definition with the pre-revised 1-201(19) version, received the Assembly Committee on Financial Institutions's unanimous approval on February 26.  It is presently before the Assembly Rules Committee.

Two other bills, Massachusetts HB 89 and Washington SB 5155, seem less likely to produce results.

Massachusetts HB 89, a fifth attempt to enact Revised Article 1 in the Commonwealth, was assigned to the Joint Committee on Economic Development and Emerging Technologies on January 20, 2009.  No further action has been reported as of March 1, 2010.

Washington SB 5155, introduced on January 15, 2009, appeared to be drawn directly from the language of official Revised Article 1 circa 2001, including the original version of § R1-301.  At an initial public hearing on January 23, 2009, all those testifying in support of and in opposition to the bill opposed the choice-of-law provision.  The Washington Senate has taken no further action on the bill.

Article 2 and 2A Amendments

As of March 1, 2010, only three state legislatures (Kansas, Nevada, and Oklahoma) have considered bills proposing to enact the 2003 amendments to UCC Articles 2 and 2A. In 2005, Oklahoma amended Sections 2-105 and 2A-103 of its Commercial Code to add that the definition of “goods” for purposes of Articles 2 and 2A, respectively, “does not include information,” see 12A Okla. Stat. Ann. §§ 2-105(1) & 2A-103(1)(h) (West 2009), and amended its Section 2-106 to add that “contract for sale” for purposes of Article 2 “does not include a license of information,” see id. § 2-106(1). The net effect is similar to having enacted Amended §§ 2-103(k) & 2A-103(1)(n), both of which exclude information from the meaning of “goods” for purposes of Article 2 and 2A, respectively. Otherwise, no state has enacted any of the 2003 amendments.

While the list of states enacting any of the 2003 amendments may not change in the near future, the number of amendments Oklahoma enacts may.  Introduced on February 1, 2010, Oklahoma HB 3104 proposes amendments to forty-nine sections of Article 2 and four sections of Article 2A.  The bill includes neither the reformulation of Sections 2-206 and 2-207 nor the addition of Sections 2-313A and 2-313B included in the 2003 Article 2 amendments.  Many of the amendments appear designed to facilitate electronic signatures and transactions and to accommodate the terminology surrounding them that grows out of UETA, E-SIGN, and Revised UCC Articles 1 and 7, or to otherwise align Article 2 and 2A terminology with that used in Revised Articles 1 and 7.  That is not to say that HB 3104 proposes only cosmetic changes to Oklahoma's versions of Articles 2 and 2A.  Several of the proposed amendments alter existing substantive rights, obligations, or remedies.  Some of those alterations (e.g., raising the statute of frauds floor from $500 to $5,000) do not seem to be inherently controversial; some (e.g., granting/recognizing a right to cure after a justifiable revocation) may or may not be controversial depending on how courts have interpreted the current Article 2; and some (e.g., giving sellers the right to recover consequential damages) do seem inherently controversial.  This, however, is neither the place nor the time for a detailed assessment of HB 3104. 

Article 3 and 4 Amendments

As of March 1, 2010, the 2002 amendments to Articles 3 and 4 were in effect in eight states: Arkansas, Kentucky, Minnesota, Nevada, New Mexico, Oklahoma (for a second time), South Carolina, and Texas.

In addition to enacting the 2002 amendments to Articles 3 and 4 and the usual conforming amendments, Indiana SB 501, which Governor Mitch Daniels signed into law on May 12, 2009, but does not take effect until July 1, 2010 also revises the definition of “good faith” in Ind. Code § 26-1-1-201(19) to require all parties to act honestly and to observe reasonable commercial standards of fair dealing. At present, Ind. Code § 26-1-1-201(19) requires only “honesty in fact.” Like the rest of SB 501, this change will take effect July 1, 2010, and further tip the balance among enacting states in favor of the unitary good faith definition in uniform R1-201(b)(20).

As of March 1, 2010, the only pending Articles 3 and 4 bill is Massachusetts HB 90, which has been languishing for more than a year.

Revised Article 7

As of March 1, 2010, Revised UCC Article 7 was in effect in thirty-six states: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Minnesota, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Utah, Virginia, and West Virginia.

Additional bills are currently pending in Georgia, Massachusetts, Washington, and Wisconsin; but only the Wisconsin bill appears to be making any progress.

First introduced on February 18, 2009, Georgia HB 451 won unanimous approval in the Georgia House on March 12, and the Senate Judiciary Committee recommended passage on March 26. However, the legislature adjourned on April 3 without a third reading and final action in the senate.  HB 451 was "recommitted" to the Georgia Senate on January 11, 2010.  No further action has been reported.

Massachusetts HB 89, which also proposes adopting Revised Article 1, was assigned to the Joint Committee on Economic Development and Emerging Technologies on January 20, 2009.  No further action has been reported.

Washington SB 5154 was introduced on January 15, 2009, scheduled for a public hearing on January 23, 2009, and then stalled, like its Revised Article 1 counterpart, but without as compelling a reason.  It was "reintroduced and retained in present status" on January 11, 2010.  No further action has been reported.

Wisconsin AB 688 was introduced on January 25, 2010.  On February 22, the Assembly Committee on Jobs, the Economy and Small Business unanimously recommended passage.  The bill is now before the Assembly Rules Committee.


[Keith A. Rowley]

March 1, 2010 in E-commerce, Legislation | Permalink | Comments (0) | TrackBack (0)

Thursday, October 22, 2009

Update on Franken Amendment: Jamie Leigh Jones interview

We previously mentioned the "Franken Amendment" to the 2010 Defense Appropriations bill, which would withhold defense contracts from companies like Halliburton if their contracts restrict employees from suing in court for claims such as sexual assault, battery and discrimination

Jamie Leigh Jones and her attorney appeared on the Rachel Maddow Show last night to tell ther story, and speak in support of the amendment.  If you are interested in this development, it is worth watching:

[Meredith R. Miller]

October 22, 2009 in Government Contracting, In the News, Legislation | Permalink | TrackBack (0)

Wednesday, October 7, 2009

A Narrow Proposal Aimed at Mandatory Arbitration in the Contracts of Employees of Government Contractors

The broadly drawn Arbitration Fairness Act, which would invalidate pre-dispute arbitration clauses in employment, franchise and consumer contracts, has been milling about Congress.  Supporters of the Act have often pointed to the unbelievably grim story of Jamie Leigh Jones, an employee of Halliburton who was gang raped by fellow employees and detained in a shipping container while working oversees in Iraq.  Apparently she is not the only female employee of a government contractor to have endured such an unspeakable experience. 

Halliburton fought tooth-and-nail to invoke the arbitration clause in Ms. Jones’ employment contract and to thereby keep her claims against it out of court.  Ultimately, after four years of fighting for her right to sue in court, the Fifth Circuit recently construed the scope of Ms. Jones' arbitration clause narrowly, and held that Ms. Jones should not be compelled to arbitrate her claims.  But the Fifth Circuit’s holding, of course, is limited to that particular contract and that particular jurisdiction, and its reach and influence is as yet unknown. 

 Ms. Jones’ case is undoubtedly an egregious and extreme example of the potential injustices occasioned by pre-dispute (or “mandatory”) arbitration clauses in the employment context.  Those who support the Arbitration Fairness Act have told her story in support of its passage – leaving one to wonder whether the story, while a compelling one, was sui generis, and not a basis on which to paint a broad policy against pre-dispute arbitration in all employment contracts, as well as consumer and franchise contracts.

But, Stuart Smalley Sen. Al Franken has found bipartisan support in a narrower piece of legislation that would directly address cases like that of Ms. Jones.  He has proposed an amendment to the 2010 Defense Appropriations bill that would withhold defense contracts from companies like Halliburton if their contracts with their employees restrict employees from suing in court for claims such as sexual assault, battery and discrimination

Franken spoke eloquently and persuasively of the need for this legislation, which is so narrow in scope it seems hardly objectionable:

Though, some Republicans remained unwilling to walk across the aisle to meet Franken on this legislation; Sen. Jeff Sessions described the amendment as a “political attack on Halliburton.” 

Wait a second, who was attacked here?

[Meredith R.  Miller] [h/t Emily Small]

October 7, 2009 in In the News, Legislation | Permalink | Comments (1) | TrackBack (0)

Wednesday, July 1, 2009

Mid-Year Legislative Update

With most state legislatures having concluded their business for the year, here is the 2009 mid-year legislative update.

Revised Article 1

As of January 1, 2009, Revised Article 1 was in effect in thirty-four states: Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Minnesota, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Oklahoma, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, and West Virginia.

Notwithstanding my suggestion elsewhere that the substitute § R1-301 NCCUSL and the ALI promulgated last year might “grease the skids” for additional enactments this year, 2009 has turned out to be a relatively quiet legislative year for Revised Article 1, with only three enactments -- down from five in 2008, and seven in 2007. While the most noteworthy nonuniformity among the thirty-seven enactments remains the definition of “good faith” -- with 26 states having adopted the uniform § R1-201(b)(20) definition and 11 having retained the pre-revised definition that imposes a different good faith standard on merchants and non-merchants -- all three 2009 enactments adopt the uniform definition and one of the eleven states (Indiana) that retained the pre-revised definition has amended its version of Revised Article 1 to adopt the uniform definition effective July 1, 2010.

As of June 30, Alaska (HB 102), Maine (LD 1403), and Oregon (SB 558) have enacted Revised Article 1 thus far this year. The Alaska and Oregon enactments take effect on January 1, 2010, with Maine’s following on February 15, 2010.

The Washington legislature failed to act on SB 5155 before adjourning sine die on April 26. (That’s probably just as well, because the introduced version of SB 5155 appeared to be drawn directly from the language of official Revised Article 1 circa 2001 and included the no-longer-official version of Revised 1-301 that all 37 enacting states have declined to adopt).

It is possible that the Massachusetts legislature will consider a Revised Article 1 bill sometime this year; however, having waited months for HD 89 to be assigned a bill number, and given the failure of four prior bills to garner a floor vote in either chamber, I would be surprised to see definitive action anytime soon.

Article 2 and 2A Amendments

As of June 30, 2009, only three state legislatures (Kansas, Nevada, and Oklahoma) had considered bills proposing to enact the 2003 amendments to UCC Articles 2 and 2A. In 2005, Oklahoma amended Sections 2-105 and 2A-103 of its Commercial Code to add that the definition of “goods” for purposes of Articles 2 and 2A, respectively, “does not include information,” see 12A Okla. Stat. Ann. §§ 2-105(1) & 2A-103(1)(h) (West Supp. 2008), and amended its Section 2-106 to add that “contract for sale” for purposes of Article 2 “does not include a license of information,” see id. § 2-106(1). The net effect is similar to having enacted Amended §§ 2-103(k) & 2A-103(1)(n), both of which exclude information from the meaning of “goods” for purposes of Article 2 and 2A, respectively. Otherwise, no state has enacted the 2003 amendments.

Article 3 and 4 Amendments

As of January 1, 2009, the 2002 amendments to Articles 3 and 4 were in effect in six states: Arkansas, Kentucky, Minnesota, Nevada, South Carolina, and Texas. By July 1, 2010, that number will increase by at least 50%.

As of June 30, 2009, Indiana (SB 501), New Mexico (SB 74), and Oklahoma (SB 991) have enacted the 2002 amendments to Articles 3 and 4. Oklahoma SB 991 will take effect on November 1, 2009; New Mexico SB 74 will take effect on January 1, 2010; and Indiana SB 501 will take effect on July 1, 2010.

In addition to enacting the 2002 amendments to Articles 3 and 4 and the usual conforming amendments, Indiana SB 501 also revises the definition of “good faith” in Ind. Code § 26-1-1-201(19) to require all parties to act honestly and to observe reasonable commercial standards of fair dealing. At present, Ind. Code § 26-1-1-201(19) requires only “honesty in fact.” Like the rest of SB 501, this change will take effect July 1, 2010, and further tip the balance among enacting states in favor of the unitary good faith definition in uniform § R1-201(b)(20).

Revised Article 7

As of January 1, 2009, Revised UCC Article 7 was in effect in thirty-one states: Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Maryland, Minnesota, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Oklahoma, Pennsylvania, Rhode Island, Tennessee, Texas, Utah, Virginia, and West Virginia. As of July 1, Revised Article 7 will be in effect in South Dakota, as well.

This has been a relatively active legislative year for Revised Article 7. In addition to South Dakota SB 89, which takes effect on July 1, Alaska (HB 102), Maine (LD 1405), and Oregon (SB 558) have already enacted Revised Article 7 in 2009, and Louisiana HB 403 lacks only Governor Bobby Jindal's signature (or pocket veto). Alaska HB 102 and Oregon SB 558 will take effect on January 1, 2010, as will Louisiana HB 403 (if enacted). Maine LD 1405 will take effect on February 15, 2010.

Georgia HB 451 made significant progress toward adoption. First introduced on February 18, the Georgia House unanimously passed the House Judiciary Committee’s substitute version on March 12, and the Senate Judiciary Committee recommended passage on March 26. However, the legislature adjourned on April 3 without a third reading and final action in the senate.

Washington SB 5154 stalled, like its Revised Article 1 counterpart, but without as compelling a reason.

UETA

Although the Georgia legislature did not pass HB 451 prior to adjourning, it did pass the Uniform Electronic Transactions Act (HB 126), to which Governor Sonny Perdue affixed his signature on May 5. As a result, effective July 1, 2009, Illinois, New York, and Washington will be the only states in which UETA is not in effect.

[Keith A. Rowley]

July 1, 2009 in E-commerce, Legislation | Permalink | Comments (0) | TrackBack (0)

Wednesday, April 1, 2009

"Pay for Performance" sponsor explains legal reasoning . . . sort of

Bbb The sponsor of the "Pay for Performance Act of 2009" gives his reasoning in a Huffington Post piece today.  Freshman Rep. Alan Grayson (left), who introduced the bill, is a Harvard Law grad who was a staff clerk at the D.C. Circuit and used to do government contracts work at the Fried, Frank ifirm n D.C., but his explanation for why his bill is reasonable contains some dubious legal reasoning.  His basic argument is that "the taxpayers are owners [of these covered institutions], and owners of companies set salaries for their employees."

Setting aside whether the bill is a good idea -- lots of folks are lining up on either side -- Grayson's legal analysis is wrong.  The "taxpayers" (to pick nits, it's the 'government," not the "taxpayers" that owns the stake) certainly have an ownership interest in those entities where the government has taken a capital stake.

But it's not true that "owners" of public companies "set salaries for their employees."  It is the directors of a company who are responsible for making decisions on employment and compensation -- the owners' only remedy is to fire the directors.  That's not a nit-picky distinction.  There's a solid line of cases going back to McQuade v. Stoneham (1934) which hold that any attempt by shareholders to bind directors to whom they can employ and at what compensation is void.  Directors are free to ignore commands from their majority shareholders, and are, in fact, required to do so if they believe that the action isn't in the firm's best interest.

None of this is to say that the government can't do this -- that's one for the Con Law folks, probably -- but it is curious that a highly trainsed lawyer has offered a pretty dubious legal analysis in support of it.

[Frank Snyder]

[NOTE:  Edited to remove erroneous description of the scope of the act.  F.S.]

April 1, 2009 in Commentary, Current Affairs, In the News, Legislation | Permalink | Comments (0) | TrackBack (0)

Sunday, September 7, 2008

UCC Legislative Update

Nearly three months after both houses of the Illinois legislature passed SB 2080, Governor Rod Blagojevich signed it into law on August 22, making Illinois the 34th state to enact Revised UCC Article 1 and the 31st state to enact Revised UCC Article 7. 

As have all thirty-three prior state enactments, and consistent with the ALI's and NCCUSL's promulgation earlier this year of a substitute for the original version of uniform R1-301, Illinois Public Act 95-0895 (neé SB 2080) rejects the 2001 uniform version of R1-301 in favor of language generally tracking its version of pre-revised 1-105.  Act 95-0895 also rejects the uniform good faith definition in R1-201(b)(20), joining Alabama, Arizona, Hawaii, Idaho, Indiana, Nebraska, Rhode Island, Tennessee, Utah, and Virginia in opting to retain the bifurcated good faith standard of pre-revised 1-201(19) and 2-103(1)(b).

Act 95-0895 will take effect January 1, 2009.

[Keith A. Rowley]

September 7, 2008 in Legislation | Permalink | TrackBack (0)

Monday, August 18, 2008

NY Codifies "Professor Review Copy Not for Resale"

I vaguely recall a discussion on the Contracts Listserv about the legal weight (if any) of the publisher's stamp on textbooks proclaiming: "Professor Review Copy Not for Resale." Well, New York has passed the Textbook Access Act, the central purpose of which is to "promote open and transparent marketing, choice, pricing and purchasing of course materials." Section 724(1) happens to prohibit instructors from reselling complimentary copies of textbooks. The full text of the statute is made available by Prof. Minna Kotkin over at Clinicians With Not Enough To Do.

New York profs with bags packed for the Strand, consider yourselves forewarned.

[Meredith R. Miller]

August 18, 2008 in In the News, Legislation | Permalink | Comments (1) | TrackBack (0)

Wednesday, July 16, 2008

Arbitration Fairness Act Moves to Full Committee

Prof. Paul Secunda / Workplace Prof Blog reports that, yesterday, the House Commercial and Administrative Law Subcommittee decided by a voice vote to report the Arbitration Fairness Act bill (H.R. 3010) favorably to the full House Judiciary Committee.  The bill would ban pre-dispute arbitration agreements in employment, consumer and franchise contracts. 

[Meredith R. Miller]

July 16, 2008 in In the News, Legislation | Permalink | TrackBack (0)

Wednesday, May 28, 2008

Ding, Dong, the Which* is Dead

At its annual meeting last week, the American Law Institute approved an amendment, which NCCUSL (a.k.a. the Uniform Law Commission) had previously approved, replacing the oft-jilted text of Revised UCC § 1-301 with language consistent with pre-Revised UCC § 1-105:

§ 1-301. Territorial Applicability; Parties’ Power to Choose Applicable Law.

  (a) Except as otherwise provided in this section, when a transaction bears a reasonable relation to this state and also to another state or nation the parties may agree that the law either of this state or of such other state or nation shall govern their rights and duties.

  (b) In the absence of an agreement effective under subsection (a), and except as provided in subsection (c), [the Uniform Commercial Code] applies to transactions bearing an appropriate relation to this state.

  (c) If one of the following provisions of [the Uniform Commercial Code] specifies the applicable law, that provision governs and a contrary agreement is effective only to the extent permitted by the law so specified:

    (1) Section 2-402;

    (2) Sections 2A-105 and 2A-106;

    (3) Section 4-102;

    (4) Section 4A-507;

    (5) Section 5-116;

    [(6) Section 6-103;]

    (7) Section 8-110;

    (8) Sections 9-301 through 9-307.

In so doing, the bodies responsible for the Uniform Commercial Code followed the lead of thirty-two of the thirty-three states that have enacted Revised Article 1 to date. Only Louisiana — deferring to its Civil Code to ascertain the applicable law where the transaction does not fall within the scope of a more specific choice-of-law provision elsewhere in the UCC — has enacted a version of Revised § 1-301 that differs non-trivially from the new official version.

* - As in, "Which state's law do you want to govern our contract?"

[Keith A. Rowley]

May 28, 2008 in Legislation | Permalink | TrackBack (0)

Monday, May 26, 2008

Speaking of International Law ...

Moved by the spirit of Jeremy's recent shout out to the new International Law Prof Blog, I realized it has been more than a year since I last updated this blog's readers on the status of the U.N. Convention on Contracts for the International Sale of Goods (CISG) and the U.N. Convention on the Use of Electronic Communications in International Contracts (CUECIC).

Since last May, the number of CISG Contracting States stands fast at 70.  During that same span, the number of signatories to the CUECIC has increased from 10 to 18 with the additions of Colombia, Honduras, Iran, Montenegro, Panama, Philippines, Republic of Korea, and Saudi Arabia.  However, because none of the signatories have yet ratified or acceded to the CUECIC, it is not yet in effect in any country; whereas, depending on one's opinion on the effect of the U.S. Supreme Court's recent Medellin decision on the viability of the CISG in the United States, the CISG is in effect in either all of its Contracting States (except in transactions in which the parties have expressly contracted out of the CISG) or all of them except the U.S. (except in transactions in which the parties have expressly contracted into the CISG).

[Keith A. Rowley]

May 26, 2008 in Legislation | Permalink | TrackBack (0)

Saturday, May 17, 2008

Not-Quite-Mid-Year UCC Legislative Update

Out of deference to friends and colleagues updating casebooks and statutory supplements for publication prior to the start of fall classes, as well as friends and colleagues teaching contracts or commercial law courses this summer or preparing or updating their own teaching materials for the fall, here's the early edition of this year's Mid-Year UCC Legislative Update.

Revised Article 1 (2001)

As of January 1, 2008, twenty-nine states -- Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Minnesota, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Oklahoma, Rhode Island, Texas, Utah, Virginia, and West Virginia -- had enacted Revised Article 1, and twenty-eight of those enactments were in effect (Kansas's version has a delayed effective date of July 1, 2008).

As of May 17, 2008, four more states -- Pennsylvania (HB 1152), South Dakota (SB 93), Tennessee (SB 3993), and Vermont (HB 563) -- have enacted Revised Article 1 thus far this year.  All four enactments will take effect on or before July 1, 2008.  With only one other pending bill -- Illinois SB 2080 -- having made any progress (the Illinois Senate passed it unanimously on April 9 and it is currently scheduled for a hearing before the Illinois House Judiciary Civil Law Committee on May 20), it appears that 2008 will yield the fewest new enactments since 2004.  That said, Revised Article 1 will be law in at least two-thirds of the states by July 1.

As I have discussed previously, the two primary bones of contention during the enactment process have been uniform R1-301's choice-of-law rules and uniform R1-201(b)(20)'s "good faith" definition.  None of the thirty-three enacting states has adopted uniform R1-301; instead, all have chosen to either leave their pre-revised 1-105 in place or to enact a substitute 1-301 with language consistent with pre-revised 1-105.  (Louisiana subsequently amended its substitute 1-301 to diminish the distinction between choice-of-law rules applicable to UCC and non-UCC transactions; but, a fuller exploration of that amendment is another topic for another day.)  There had been less uniformity with regard to defining "good faith."  Twenty-three states -- including Pennsylvania, South Dakota, and Vermont -- have enacted uniform R1-201(b)(20)'s "honesty in fact and the observance of reasonable commercial standards of fair dealing" definition; while ten states -- including Tennessee -- have retained pre-revised 1-201(19)'s "honesty in fact in the conduct or transaction concerned" definition, reserving the requirement of commercial reasonableness for merchants under 2-103(1)(b) & 2A-103(3).  If enacted as it currently reads, Illinois SB 2080 would make uniform R1-301 0-for-34 and would make Illinois the eleventh enacting state to retain the bifurcated good-faith standard.

In response to the widespread failure of uniform R1-301, NCCUSL has approved and the ALI will consider later this month a substitute uniform R1-301, which -- as so many states have already done while enacting Revised Article 1 -- retains the essence of pre-revised Section 1-105.

Amended Articles 2 & 2A (2003)

The 2003 amendments to Article 2 and 2A continue to stagnate.  Bills proposing their enactment have died unceremonious deaths in Kansas and Nevada.  Oklahoma amended Sections 2-105 and 2A-103 of its commercial code to add that the definition of "goods" for purposes of Articles 2 and 2A, respectively, "does not include information," see 12A Okla. Stat. Ann. §§ 2-105(1) & 2A-103(1)(h) (West Supp. 2008), and amended its Section 2-106 to add that "contract for sale" for purposes of Article 2 "does not include a license of information," see id. § 2-106(1).  The net effect is similar to having enacted Amended §§ 2-103(k) & 2A-103(1)(n), both of which exclude information from the meaning of "goods" for purposes of Article 2 and 2A, respectively.  Attempts to further amend Articles 2 and 2A in Oklahoma have been unsuccessful and no other state's legislature has considered a bill proposing to enact the 2003 Article 2 and 2A amendments.

Amended Articles 3 & 4 (2002)

For several years now, those who teach UCC Articles 3 and 4 have had to caution students that New York and South Carolina had not adopted the 1990 revisions of Article 3 and 4, on which most payments teaching materials focus much of their attention.  More recently, we have had to decide how much emphasis to give the 2002 amendments to Article 3 and 4 -- which, until April 15, only five states (Arkansas, Kentucky, Minnesota, Nevada, and Texas) had enacted.

By affixing his signature to SB 936 on April 15, Governor Mark Sanford made law a sweeping revision of South Carolina's Articles 3 and 4 that has the effect of enacting the 1990 revisions as amended by the 2002 amendments.

New York SB 4120 proposes comparably sweeping changes to New York's versions of Article 3 and 4. However, SB 4120 has not made any progress since it was introduced and referred to the Senate Judiciary Committee on March 27, 2007, and re-referred to the Committee on January 9, 2008.

The only other bill currently pending that proposes adopting the 2002 amendments to UCC Articles 3 & 4 (along with certain conforming amendments to other articles) is Oklahoma HB 2588, which was introduced on February 4, 2008.  On February 5, HB 2588 was referred to the House Judiciary and Public Safety Committee, which voted on February 28 to recommend passage.  No further action has been reported as of May 17, 2008.

Revised Article 7 (2003)

As of January 1, 2008, twenty-eight states -- Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Hawaii, Idaho, Indiana, Iowa, Kansas, Maryland, Minnesota, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Oklahoma, Rhode Island, Texas, Utah, Virginia, and West Virginia -- had enacted Revised Article 7, and twenty-seven of those enactments were in effect (Kansas's version has a delayed effective date of July 1, 2008).

As of May 17, 2008, Pennsylvania (HB 1152) and Tennessee (HB 3950) have enacted Revised Article 7 thus far this year.  Both enactments will take effect on or before July 1, 2008.   

The only other pending bills are Illinois SB 2080 and Massachusetts HB 4302 -- both of which combine Revised Articles 1 & 7.  As discussed above, Illinois SB 2080 appears to be making progress toward enactment.  Massachusetts HB 4302, by contrast, appears to be headed nowhere.

[Keith A. Rowley]

May 17, 2008 in Legislation | Permalink | TrackBack (0)

Friday, May 9, 2008

Congress May Close Loophole for Defense Contractors

Congressional_sealAccording to the Associated Press, as reported in the Orlando Sentinel, Congress is moving to close a loophole that until now has permitted military contractors to avoid paying taxes and evade the strictures of U.S. employment law by setting up off-shore shell corporations. 

According to the report, U.S.-based military contractors have been setting up subsidiaries in places like the Cayman Islands.  These subsidiaries then employ U.S. citizens who provide support services for the U.S. military abroad.  As foreign corporations doing work abroad, these subsidiaries do not pay social security or medicare taxes for their workers and need not abide by federal labor and anti-discrimination laws.  The A.P.'s investigation suggests that the off-shore subsidiaries exist only on paper, without an address or phone number. 

The House passed tax legislation two weeks ago that would treat  foreign subsidiaries of U.S. government contractors as U.S. corporations.  The Senate is now considering the measure.  Today's New York Times features an editorial urging passage of the legislation. 

[Jeremy Telman]

May 9, 2008 in Government Contracting, In the News, Legislation | Permalink | Comments (0) | TrackBack (0)

Thursday, April 17, 2008

Vermont and Pennsylvania Enact Revised Article 1; Tennessee and Illinois Progress Toward Enactment

Governor Jim Douglas signed Vermont HB 563 into law on April 10.  Governor Ed Rendell did likewise to Pennsylvania HB 1152 on April 16.  Pennsylvania HB 1152, by its terms, takes effect on or about June 15, 2008.  Vermont HB 563, along with Kansas SB 183 (enacted last year) and South Dakota SB 93 (enacted earlier this year), will take effect on July 1, 2008.

Vermont HB 563 and Pennsylvania HB 1152 both eschew uniform R1-301 (making it 0-for-32 for those scoring at home) and adopt the uniform R1-201(b)(20) good faith definition (that tally now stands at 23-to-9 in favor of the new unitary standard).

Elsewhere:

The Tennessee Senate and House have approved slightly different versions of Tennessee SB 3993.  The Tennessee Senate is scheduled to vote next Monday (April 21) whether to accept the House's amended version.

The Illinois Senate has unanimously approved Illinois SB 2080, which now awaits a first reading in the Illinois House.

Massachusetts HB 4302 continues to idle.

The bills pending in Tennessee, Illinois, and Massachusetts all reject uniform R1-301.  The Massachusetts bill adopts the uniform R1-201(b)(20) good faith definition, while the bills pending in Tennessee and Illinois retain the bifurcated good faith standard currently in effect by replacing the language of uniform R1-201(b)(20) with "honesty in fact in the conduct or transaction concerned."

[Keith A. Rowley]

April 17, 2008 in Legislation | Permalink | TrackBack (0)

Friday, March 14, 2008

South Dakota Makes 30

By affixing his signature to SB 93 on March 13, 2008, Governor Mike Rounds made South Dakota the thirtieth state to enact Revised Article 1.  South Dakota's enactment, along with Kansas's (enacted last year), will take effect on July 1, 2008.

SB 93, like the versions of Revised Article 1 enacted in Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Minnesota, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Oklahoma, Rhode Island, Texas, Utah, Virginia, and West Virginia, rejects uniform R1-301.  (To date, only the U.S. Virgin Islands has adopted uniform R1-301.)

SB 93, like the versions of Revised Article 1 enacted in Arkansas, California, Colorado, Connecticut, Delaware, Florida, Iowa, Kansas, Kentucky, Louisiana, Minnesota, Montana, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Oklahoma, Texas, and West Virginia, adopts uniform R1-201(b)(20)'s definition of "good faith."  By contrast, Alabama, Arizona, Hawaii, Idaho, Indiana, Nebraska, Rhode Island, Utah, and Virginia retained the pre-R1 “honesty in fact in the conduct or transaction concerned” definition in Article 1 and left 2-103(1)(b) & 2A-103(3) unchanged.

The bills currently pending in Massachusetts, Pennsylvania, Tennessee, and Vermont do not appear to be making much progress.  But, you can count on your faithful correspondent to alert you if that changes.

[Keith A. Rowley]

March 14, 2008 in Legislation | Permalink | TrackBack (0)

Friday, February 22, 2008

UCC Article 1 Legislative Update (2/22)

As of January 1, 2008, Revised UCC Article 1 was in effect in 28 states -- Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Indiana, Iowa, Kentucky, Louisiana, Minnesota, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Oklahoma, Rhode Island, Texas, Utah, Virginia, and West Virginia.  Kansas's version of Revised Article 1, enacted last year, will take effect on July 1.  Of the 29 state enactments to date, 0 of 29 include the uniform Revised 1-301 choice of law provision -- each of the 29 enacting state legislatures having opted instead for some variation of its state's pre-revised 1-105 -- and only 20 of 29 include the uniform 1-201(b)(20) definition of "good faith" -- 9 state legislatures opting to retain the pre-revised "honesty in fact" definition in Article 1 and reserve "the observance of reasonable commercial standards of fair dealing" requirement for parties and transactions subject to that standard under another Article.

As of February 22, 2008, bills proposing to enact Revised Article 1 were pending in five states: Massachusetts, Pennsylvania, South Dakota, Tennessee, and Vermont.  Massachusetts HB 4302, which succeeds the previously unsuccessful HB 3731, is currently awaiting a third reading in the Massachusetts House.  Pennsylvania HB 1152, which was tabled last fall after passing the Pennsylvania House, was removed from the table on February 12 and awaits a third reading in the Pennsylvania Senate.  South Dakota SB 93 unanimously passed the South Dakota Senate on January 29, unanimously passed the South Dakota House yesterday, and now awaits Governor Mike Rounds's approval (or lack of disapproval, as the case may be).  Tennessee HB 3949 and SB 3993 were both introduced on January 31 and are currently before their first committees in their respective introducing chambers.  Vermont HB 563 passed the Vermont House on January 24 and is now before the Vermont Senate Economic Development, Housing & General Affairs Committee.  All five currently-pending bills reject the uniform Revised 1-301 choice of law provision (opting instead for some variation of pre-revised 1-105) and embrace the unitary good faith standard of uniform Revised 1-201(b)(20).

[Keith A. Rowley]

February 22, 2008 in Legislation | Permalink | TrackBack (0)