ContractsProf Blog

Editor: D. A. Jeremy Telman
Valparaiso Univ. Law School

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Tuesday, July 14, 2015

Non-Compete and Non-Solicitation Clauses Void in Tech Employment Contracts in Hawaii

Hawaii's Governor David Ige recently signed a bill  into law making "a non-compete or a non-solicit clause in any employment contract relating to an employee of a technology business... void and of no force and effect." 

Under the law, effective July 1, a "technology business" is defined as a "trade or business that derive the majority of its gross income from the sale or license of products or services resulting from its software development or information technology development, or both."  It excludes businesses that are part of the broadcast industry or any telecommunications carrier.  There are exceptions, such as when the restrictive covenant is in connection with the sale of a business or partnership.  Furthermore, agreements to protect trade secrets are still valid.

With this bill, Hawaii joins California and a few other states in invalidating non-compete clauses in employment agreements.  In doing so, it has made clear that it has a "strong public policy" in promoting the growth of new businesses and recognized the "special hardship on employees of technology businesses" who are unduly restricted given the unique and limited geographic area of the state. 

Important to note is how this will affect not just those contracts where the choice of law clause selects Hawaii, but those where the governing law is one other than Hawaii's (or California's).  In those cases, it's likely that a Hawaiian court will not enforce the governing law clause if it would defeat this important state policy in favor of tech worker mobility -- i.e. an employer probably won't be able to get around Hawaii's law by selecting another state's law in the governing law clause.  (I'm currently working on a book about contract clauses and hope to write a short post on governing law clauses in the near future).

July 14, 2015 | Permalink | Comments (0)

Weekly Top Tens from the Social Science Research Network

SSRNSSRN Top Downloads For Contracts & Commercial Law eJournal
RECENT TOP PAPERS 

RankDownloadsPaper Title
1 161 The Influence of Comparative Law on the English Law of Obligations 
Andrew Burrows 
University of Oxford - Faculty of Law 
2 159 The Law, Economics, and Psychology of Manipulation 
Eric A. Posner 
University of Chicago - Law School 
3 145 After the Revolution: An Empirical Study of Consumer Arbitration 
David Horton and Andrea Cann Chandrasekher 
University of California, Davis - School of Law and University of California, Davis - School of Law 
4 142 Freedom to Tinker 
Pamela Samuelson 
University of California, Berkeley - School of Law 
5 127 Facilitating Incomplete Contracts 
Wendy Netter Epstein 
DePaul University - College of Law 
6 96 The Consumer Financial Protection Bureau and the Quest for Consumer Comprehension 
Lauren E. Willis 
Loyola Law School Los Angeles 
7 92 Controlling Shareholder's Long-Term Commitment Through Private Benefits of Control 
Albert H. Choi 
University of Virginia School of Law 
8 92 The Commission's E-Commerce Sector Inquiry – Analysis of Legal Issues and Suggested Practical Approach 
Lars KjølbyeAlessio Aresu and Sophia Stephanou 
Latham & Watkins LLP, Latham & Watkins LLP and Latham & Watkins LLP 
9 90 Reinterpreting the Status-Contract Divide: The Case of Fiduciaries 
Hanoch Dagan and Elizabeth S. Scott 
Tel Aviv University - Buchmann Faculty of Law and Columbia University - Law School 
10 89 A Theory of Global Trade Law and the WTO 
Panagiotis Delimatsis 
Tilburg Law and Economics Center (TILEC) 

SSRN Top Downloads For LSN: Contracts (Topic)
RECENT TOP PAPERS 

RankDownloadsPaper Title
1 264 Two Cheers for Corporate Experimentation: The A/B Illusion and the Virtues of Data-Driven Innovation 
Michelle N. Meyer 
Union Graduate College - Icahn School of Medicine at Mount Sinai Bioethics Program 
2 161 The Influence of Comparative Law on the English Law of Obligations 
Andrew Burrows 
University of Oxford - Faculty of Law 
3 159 The Law, Economics, and Psychology of Manipulation 
Eric A. Posner 
University of Chicago - Law School
4 145 After the Revolution: An Empirical Study of Consumer Arbitration 
David Horton and Andrea Cann Chandrasekher 
University of California, Davis - School of Law and University of California, Davis - School of Law 
5 127 Facilitating Incomplete Contracts 
Wendy Netter Epstein 
DePaul University - College of Law 
6 92 The Commission's E-Commerce Sector Inquiry – Analysis of Legal Issues and Suggested Practical Approach 
Lars KjølbyeAlessio Aresu and Sophia Stephanou 
Latham & Watkins LLP, Latham & Watkins LLP and Latham & Watkins LLP 
7 90 Reinterpreting the Status-Contract Divide: The Case of Fiduciaries 
Hanoch Dagan and Elizabeth S. Scott 
Tel Aviv University - Buchmann Faculty of Law and Columbia University - Law School 
8 85 Lexical Opportunism and the Limits of Contract Theory 
Jeffrey M. Lipshaw 
Suffolk University Law School 
9 84 What We Know About Contract Law and Transacting in the Marketplace – A Review Essay 
John Gava 
Adelaide Law School 
10 75 The Laws of Asian International Business Transactions 
Gilles Cuniberti 
Universite du Luxembourg - Faculty of Law, Economics and Finance

 

 

 

July 14, 2015 in Recent Scholarship | Permalink

Monday, July 13, 2015

NY Times on the "Gig Economy"

Today's New York Times has an article about how Uber and Lyft are merely the latest incarnation of a decades-long trend towards replacing (or attempting to replace) employees with independent contractors.  According to the Times, Uber is a rather extreme version, officially employing only 4000 people, while 160,000 people make their living through Uber.  The Times attributes stagnating wages to this "gig economy," acknowledging that other forces, including the decline of unions and globalization, are also contributing factors.  As of 2014, 18% of all jobs held in the United States are occupied by independent contractors.

But the process has its roots in older trends, such as the move towards franchises that got going in the 1960s and has continued its steady expansion.  In the hospitality industry, hotel chains enter into franchise agreements with hotel operators, who in turn now increasingly turn to independent contractors to provide services within their hotels.  The results has been a decline in wages in the industry in the 21st century.  

As usual in Times articles these days, if you read on below the fold, you will learn the upside to the "gig economy."  Some people choose to be self-employed consultants to that they can work flexible hours and work from home.  But it's hard to find a silver lining here for ordinary workers.  Some can succeed as independent contractors, but their wages tend to be low, they have no job security, and the work may come in uncontrollable bursts followed by long, anxiety-producing lulls.  

July 13, 2015 in In the News, Labor Contracts | Permalink | Comments (0)

Weekly News Roundup

ChicagoBlackhawksLogo.svgWe have some news from the world of hockey, that is, the sport of the 2015 Stanley Cup Champion Chicago Blackhawks (logo pictured).   While elite teams (like the Blackhawks) struggle to keep their rosters under the salary camp (Goodbye Patrick Sharp; Goodbye Brandon Saad -- thanks for the memories and the Cups!), as reported on ESPN.com, the L.A. Kings used an alleged "material" breach of contract to terminate center Mike Richards rather than buying him out to evade the cap.  The alleged material breach was at first mysterious, but it has now bee reported, e.g., here on Forbes.com, that Richards was detained at the Canadian border in illegal possession of OxyContin.  But the Forbes report also indicates that Richards' mere arrest is not grounds for termination, and even if he is convicted, the NHL's drug policy does not call for termination.  It calls for substance abuse treatment.  Go Blackhawks!

The Bangor Daily News reports that author Tess Gerritsen has dropped her $10 million law suit against Warner Bros. for breach of contract in connection with the film "Gravity."  As we reported previously, a District Court in California dismissed her complaint but  allowed her twenty days to amend and refile.  The complaint is based on a $1 million contract Gerritsen signed in 1999 to sell the book’s feature film rights to a company that was eventually purchased by Warner Bros.  Gerritsen has admitted that the film "is not based on" her book, but she asserts that the book clearly inspired the film.  

 

 

July 13, 2015 in Books, Celebrity Contracts, Film, In the News, Sports | Permalink | Comments (0)

Wednesday, July 8, 2015

Contracts News that Hits Home

There but for fortune . . . .  I spent three happy years teaching in the history department at the College of Charleston.  Having studied in New York for nearly ten years, I never imagined myself living in the South, but Charleston is a charming city, and the College of Charleston was a gem when I was there, with a dedicated faculty of scholars and teachers and an unbelievably beautiful campus.  When I learned that Charleston was opening a law school, I was very tempted to apply for a position.

Charleston
Broad St., Charleston, by Khanrak

Charleston's Post & Courier reported on Monday that Charleston Law School (CLS) has terminated seven faculty members, including two tenured faculty members.  The two filed lawsuits in late June alleging breach of contract.  They are seeking an injunction that would allow them to retain their status as tenured professors while also enjoining the CLS's owners from making expenditures that might otherwise be used to pay them their salary.  The two fired professors were signatories of a letter published by 17 CLS faculty members in the Post & Courier in mid May.  I assume that they are alleging retaliatory firing in violation of the very thing tenure is designed to protect.  Certainly, the optics are bad.  A preliminary injunction hearing is scheduled for the end of the month. 

I have no doubt that, if I had decided to apply for a faculty position at Charleston and been hired there, I would have signed that letter.  And then I too might be experiencing the joy of having to file a lawsuit in order to keep my tenured position.  I do not know enough of the details to speak to the merits of the professors' claims, but my inclination it to root for them.

Stay tuned. 

July 8, 2015 in Commentary, Help Wanted, In the News, Law Schools, Recent Cases | Permalink | Comments (2)

Tuesday, July 7, 2015

Weekly Top Tens from the Social Science Research Network

SSRNSSRN Top Downloads For Contracts & Commercial Law eJournal
RECENT TOP PAPERS 

RankDownloadsPaper Title
1 214 A Crib Sheet for Contracts Profs 
Victor P. Goldberg 
Columbia Law School 
2 159 The Influence of Comparative Law on the English Law of Obligations 
Andrew Burrows 
University of Oxford - Faculty of Law 
3 152 The Law, Economics, and Psychology of Manipulation 
Eric A. Posner 
University of Chicago - Law School 
4 140 After the Revolution: An Empirical Study of Consumer Arbitration 
David Horton and Andrea Cann Chandrasekher 
University of California, Davis - School of Law and University of California, Davis - School of Law 
5 138 Freedom to Tinker 
Pamela Samuelson 
University of California, Berkeley - School of Law 
6 125 Facilitating Incomplete Contracts 
Wendy Netter Epstein 
DePaul University - College of Law 
Date posted to database: 20 May 2015 
Last Revised: 20 May 2015
7 90 The Consumer Financial Protection Bureau and the Quest for Consumer Comprehension 
Lauren E. Willis 
Loyola Law School Los Angeles 
8 89 Reinterpreting the Status-Contract Divide: The Case of Fiduciaries 
Hanoch Dagan and Elizabeth S. Scott 
Tel Aviv University - Buchmann Faculty of Law and Columbia University - Law School 
9 87 A Theory of Global Trade Law and the WTO 
Panagiotis Delimatsis 
Tilburg Law and Economics Center (TILEC) 
10 85 Controlling Shareholder's Long-Term Commitment Through Private Benefits of Control 
Albert H. Choi 
University of Virginia School of Law 

SSRN Top Downloads For LSN: Contracts (Topic)
RECENT TOP PAPERS f

RankDownloadsPaper Title
1 257 Two Cheers for Corporate Experimentation: The A/B Illusion and the Virtues of Data-Driven Innovation 
Michelle N. Meyer 
Union Graduate College - Icahn School of Medicine at Mount Sinai Bioethics Program 
2 214 A Crib Sheet for Contracts Profs 
Victor P. Goldberg 
Columbia Law School 
3 159 The Influence of Comparative Law on the English Law of Obligations 
Andrew Burrows 
University of Oxford - Faculty of Law 
4 152 The Law, Economics, and Psychology of Manipulation 
Eric A. Posner 
University of Chicago - Law School 
5 140 After the Revolution: An Empirical Study of Consumer Arbitration 
David Horton and Andrea Cann Chandrasekher 
University of California, Davis - School of Law and University of California, Davis - School of Law 
6 125 Facilitating Incomplete Contracts 
Wendy Netter Epstein 
DePaul University - College of Law 
7 89 Reinterpreting the Status-Contract Divide: The Case of Fiduciaries 
Hanoch Dagan and Elizabeth S. Scott 
Tel Aviv University - Buchmann Faculty of Law and Columbia University - Law School 
8 83 What We Know About Contract Law and Transacting in the Marketplace – A Review Essay 
John Gava 
Adelaide Law School 
9 78 Rethinking Promissory Estoppel 
Eric Alden 
Northern Kentucky University, Chase College of Law 
10 73 Lexical Opportunism and the Limits of Contract Theory 
Jeffrey M. Lipshaw 
Suffolk University Law School

 

July 7, 2015 in Recent Scholarship | Permalink

New Book: Money Awards in Contract Law

WintertonHart Publishing is delighted to announce the publication of

‘Money Awards in Contract Law’ by David Winterton

Hart is pleased to offer you 20% discount on the book

To order online with your 20% discount please click on the link below the title and then click on the ‘pay now’ button on the right hand side of the screen. Once through to the ordering screen type ref: CV7 in the voucher code field and click ‘apply’

Alternatively, please contact Hart Publishing’s distributor, Macmillan Distribution Limited, by telephone or email (details below) quoting ref: CV7

Money Awards in Contract Law

David Winterton

The quantification of money awards for breach of contract is a topic of both significant theoretical interest and immense practical importance. Recent debates have ranged from the availability of gain-based awards to the theoretical basis for principles of remoteness and mitigation. While these and other important issues, such as the recovery of compensation for non-pecuniary loss, are touched upon, the book's principal objective is to challenge the orthodox understanding of the expectation principle, as famously laid down by Parke B in Robinson v Harman. According to this understanding, the usual objective of money awards for breach of contract is to compensate for 'loss' suffered by reference to the position the innocent party would have occupied had the contract been performed. After challenging this orthodoxy, Dr Winterton proposes a new account of the money awards provided in response to breach of contract which draws an important distinction between substitutionary and compensatory awards. The book aims to provide a coherent picture of contractual rights and remedies and will be of interest to judges, practitioners and academics alike.

David Winterton is a Lecturer in Law at the University of New South Wales.

BOOK DETAILS

June 2015   9781849464574   244pp   Pbk   RSP: £50

20% Discount Price: £40

 Order Online

If you would like to place an order you can do so through the Hart Publishing website (link below). To receive the discount, please click on the ‘pay now’ button on the right hand side of the screen. Once through to the ordering screen type ref: CV7 in the voucher code field and click ‘apply’.

http://www.hartpub.co.uk/BookDetails.aspx?ISBN=9781849464574

Alternatively, please contact Hart Publishing’s Distributor, Macmillan Distribution Limited, by telephone or e-mail and quote reference CV7 when placing your order.

Macmillan Distribution (MDL), Brunel Road, Houndmills, Basingstoke, RG21 6XS, UK

UK ORDERS: Tel: +44 (0)1256 302692    Fax: +44 (0)1256 812521 / 812558      E-mail: direct@macmillan.co.uk

EU AND ROW ORDERS: Tel: +44 (0)1256 329242    Fax: +44 (0)1256 842084    E-mail: export@macmillan.co.uk

July 7, 2015 in Books, Recent Scholarship | Permalink

Monday, July 6, 2015

New Scholarship on CFPB's Attempt to Regulate a Part of the Fringe Economy

CodinetFrom the Southern University Law Center's Christopher Odinet (pictured) and newly published in the Banking Law Journal:

Payday Lenders, Vehicle Title Loans, and Small-Value Financing: The CFPB's Proposal to Regulate the Fringe Economy

 You can find the article on SSRN here, where you can also find this abstract:

The market for payday lenders, businesses that provide vehicle title loans, and other small-value financing players is rife with controversy. Some see them as predatory lenders that weave a web of never-ending debt designed to capture the weakest and most economically vulnerable of society. However, advocates of these financial institutions argue that for many Americans who are otherwise shut out of the conventional lending market, these players provide the only viable source of credit in times of economic hardship. Whatever the view, these businesses, their borrowers, and the credit markets that they together comprise are often referred to in legal and economic research and literature as the "fringe economy." And interestingly, aside from a patchwork of state law rules, this area of the financial services sector is fairly unregulated.


However, on Thursday, March 26, 2015 the U.S. Consumer Financial Protection Bureau released a report outlining the agency's long heralded plans to impose nation-wide regulations on the fringe economy. The first part of this article gives an overview of the fringe economy, the types of services and products it provides, and gives a snapshot of existing, state-based regulations. The second part goes into the nuts and bolts of the proposed rules.

 

July 6, 2015 in Contract Profs, Recent Scholarship | Permalink | Comments (0)

Friday, July 3, 2015

Weekly News Roundup

Trump
By Michael Vadon via Wikimedia Commons

Late night comedians everywhere celebrated when Donald Trump (pictured) announced his candidacy for President.  We too are grateful for the blog fodder.  Politico reports that the Donald is suing Univision over its decision to withdraw from a five-year $13.5 contract to broadcast the Miss USA and Miss Universe Pageants, which Trump co-owns.  As Time Magazine reports here, NBC has also backed out of airing the Miss USA Pageant, and several people involved have also given the Donald their notice.  Trump's partners were upset by statements he made as part of his Presidential campaign that disparaged Mexico and Mexicans.  Never fear, the pageant will still be broadcast on Reelz (whatever that is).  

Meanwhile, London's The Guardian reports that Harvey Keitel is suing E*Trade for withdrawing from a commitment with Keitel to feature him in a series of three commercials for $1.5 million.  According to The Guardian, E*Trade really wanted Christopher Walken for the spots.  It was willing to settle for Keitel, until Kevin Spacey became available.  E*Trade offered Keitel a $150,000 termination fee, but Keitel says that's not enough.

Students are often astonished that major corporations sometimes operate through informal arrangements such as letters of intent.  The fact that they do -- and that they can get in trouble by doing so -- is illustrated in Belfast International Airport's (BIA) attempt to enforce a letter agreement with Aer Lingus.  As reported by the BBC, BIA read the letter as embodying a ten-year commitment from Aer Lingus to fly out of BIA.  The court found that the agreement merely covered pricing should Aer Lingus continue to fly out of BIA for ten years.  Aer Lingus decided to switch to Belfast City Airport, claiming that its arrangement with BIA was no longer financially viable.

July 3, 2015 in Celebrity Contracts, E-commerce, In the News, Television, Travel | Permalink | Comments (0)

Thursday, July 2, 2015

New in Print

Pile of BooksKelli A. Alces, The Fiduciary Gap, 40 J. Corp. L. 35 (2015)

Claudia H. Allen, Bylaws Mandating Arbitration of Stockholder Disputes? 39 Del. J. Corp. L. 751 (2015)

Aaron E. Ghirardelli, Rules of Engagement in the Conflict between Businesses and Consumers in Online Contracts, 93 Or. L. Rev. 719 (2015)

Lori D. Johnson, Say the Magic Word: A Rhetorical Analysis of Contract Drafting Choices. 65 Syracuse L. Rev. 451 (2015) 

Dennis Lazarev, Dispute Resolution Clauses in International Sponsored Research Contracts, 16 Cardozo J. Conflict Resol. 585 (2015)

John Linarelli, Concept and Contract in The Future of International Law, by Joel Trachtman, 67 Rutgers U. L. Rev. 61 (2015)

July 2, 2015 in Recent Scholarship | Permalink

Wednesday, July 1, 2015

Uber's New (No) Privacy Policy

Uber has announced changes to its privacy policy which take effect July 15.  These changes would allow Uber to do more than rate you - it would allow them to keep detailed information about your whereabouts even when you are not using the app and even when you have turned off your GPS.    This means Uber will know where you are 24/7.   Oh, and they also want to be able to bombard your contacts with promotions.  The Electronic Privacy Information Center (EPIC) recently filed a complaint with the FTC asking them to step in.  Hopefully it will.  The complaint is available here and  it's really worth a read as it lays out the devious changes to Uber's privacy policies and their business practices.  This NYT article also explains how these changes may affect consumers.

What drives me crazy about privacy policies such as Uber's - other than the massive vacuuming of consumer information and the erosion of our baseline expectations of privacy- is the way they try to couch what they are doing in misleading terms.  Uber's "update" on its privacy policy, for example, starts the same way other privacy sucking companies' privacy policies do - by professing deep concern for our privacy, "We care deeply about the privacy of our riders and drivers."  Sound familiar? This type of statement gives users the false impression that the changes to the privacy policy actually protect privacy.

Uber claims that users can opt-out of these changes, but I'm skeptical.  Users may technically have this ability, but it won't be easy to figure out.  As the EPIC complaint notes, Uber's opt-out places an "unreasonable burden on consumers and is not easy to exercise."

Of course, most Uber users won't be aware of any changes to its privacy policy since most people won't read the privacy policy.  Most consumers count on companies to act ethically - and when that fails, we believe the FTC or some other governmental entity, will save us. 

 

July 1, 2015 | Permalink | Comments (0)

Tuesday, June 30, 2015

Weekly Top Tens from the Social Science Research Network

SSRNSSRN Top Downloads For Contracts & Commercial Law eJournal
RECENT TOP PAPERS 

RankDownloadsPaper Title
1 204 A Crib Sheet for Contracts Profs 
Victor P. Goldberg 
Columbia Law School 
2 158 The Influence of Comparative Law on the English Law of Obligations 
Andrew Burrows 
University of Oxford - Faculty of Law 
3 138 The Law, Economics, and Psychology of Manipulation 
Eric A. Posner 
University of Chicago - Law School 
4 135 After the Revolution: An Empirical Study of Consumer Arbitration 
David Horton and Andrea Cann Chandrasekher 
University of California, Davis - School of Law and University of California, Davis - School of Law 
5 134 Freedom to Tinker 
Pamela Samuelson 
University of California, Berkeley - School of Law 
6 133 Pluralistic Legal Theories: In Search of a Common Denominator 
Ronen Perry 
University of Haifa - Faculty of Law 
7 119 Facilitating Incomplete Contracts 
Wendy Netter Epstein 
DePaul University - College of Law 
8 88 Reinterpreting the Status-Contract Divide: The Case of Fiduciaries 
Hanoch Dagan and Elizabeth S. Scott 
Tel Aviv University - Buchmann Faculty of Law and Columbia University - Law School 
9 83 The Consumer Financial Protection Bureau and the Quest for Consumer Comprehension 
Lauren E. Willis 
Loyola Law School Los Angeles 
10 81 A Theory of Global Trade Law and the WTO 
Panagiotis Delimatsis 
Tilburg Law and Economics Center (TILEC) 

SSRN Top Downloads For LSN: Contracts (Topic)
RECENT TOP PAPERS 

RankDownloadsPaper Title
1 242 Two Cheers for Corporate Experimentation: The A/B Illusion and the Virtues of Data-Driven Innovation 
Michelle N. Meyer 
Union Graduate College - Icahn School of Medicine at Mount Sinai Bioethics Program 
2 204 A Crib Sheet for Contracts Profs 
Victor P. Goldberg 
Columbia Law School 
3 158 The Influence of Comparative Law on the English Law of Obligations 
Andrew Burrows 
University of Oxford - Faculty of Law 
4 138 The Law, Economics, and Psychology of Manipulation 
Eric A. Posner 
University of Chicago - Law School 
5 135 After the Revolution: An Empirical Study of Consumer Arbitration 
David Horton and Andrea Cann Chandrasekher 
University of California, Davis - School of Law and University of California, Davis - School of Law 
6 133 Pluralistic Legal Theories: In Search of a Common Denominator 
Ronen Perry 
University of Haifa - Faculty of Law 
7 119 Facilitating Incomplete Contracts 
Wendy Netter Epstein 
DePaul University - College of Law 
8 88 Reinterpreting the Status-Contract Divide: The Case of Fiduciaries 
Hanoch Dagan and Elizabeth S. Scott 
Tel Aviv University - Buchmann Faculty of Law and Columbia University - Law School 
9 80 What We Know About Contract Law and Transacting in the Marketplace – A Review Essay 
John Gava 
Adelaide Law School 
Last Revised: 19 May 2015
10 77 Rethinking Promissory Estoppel 
Eric Alden 
Northern Kentucky University, Chase College of Law 

 

 

June 30, 2015 in Recent Scholarship | Permalink

Monday, June 29, 2015

SCOTUS decision on the Spiderman Contract

Given the major U.S. Supreme Court opinions that were released last week, it's no surprise that the one involving contracts, Kimble v. Marvel Entertainment, LLC, didn't make the headlines.  The case involved an agreement for the sale of a patent to a toy glove which allowed Spidey-wannabes to role play by shooting webs (pressurized foam) from the palm of their hands.  Kimble had a patent on the invention and met with an affiliate of Marvel Entertainment to discuss his idea --in Justice Elena Kagan's words--for "web-slinging fun."  Marvel rebuffed him but then later, started to sell its own toy called the "Web Blaster" which, as the name suggests, was similar to Kimble's.  Kimble sued and the parties settled.  As part of the settlement, the parties entered into an agreement that required Marvel to pay Mr. Kimble a lump sum and a 3% royalty from sales of the toy.  As Justice Kagan notes:

"The parties set no end date for royalties, apparently contemplating that they would continue for as long as kids want to imitate Spider-Man (by doing whatever a spider can)*."

It wasn't until after the agreement was signed that Marvel discovered another Supreme Court case, Brulotte v. Thys Co. 379 U.S. 29 (1964) which held that a patent license agreement that charges royalties for the use of a patented invention after the expiration of its patent term is "unlawful per se."  Neither party was aware of the case when it entered into the settlement agreement.  Marvel, presumably gleeful with its discovery, sought a declaratory judgment to stop paying royalties when Kimble's patent term expired in 2010.

In a 6-to-3 opinion written by Justice Kagan (which Ronald Mann dubs the "funnest opinion" of the year), the Court declined to overrule Brulotte v. Thys, even though it acknowledged that there are several reasons to disagree with the case.  Of interest to readers of this blog, the Court stated:

"The Brulotte rule, like others making contract provisions unenforceable, prevents some parties from entering into deals they desire."

In other words, the intent of the parties doesn't matter when it runs afoul of federal law.  Yes, we already knew that, but in cases like this - where the little guy gets the short end - it might hurt just the same to hear it.  In the end, the Court viewed the case as more about stare decisis than contract law and it was it's unwillingness to overrule precedent that resulted in the ruling.

Yet, I wonder whether this might not be a little more about contract law after all.  The Court observed in a footnote that the patent holder in Brulotte retained ownership while Kimble sold his whole patent.  In other words, Brulotte was a licensing agreement, while Kimble was a sale with part of the consideration made in royalties. This made me wonder whether another argument could have been made by Kimble. If Kimble sold his patent rights in exchange for royalty payments, and those royalty payments are unenforceable, could he rescind the agreement?  If the consideration for the sale turns out to be void ("invalid per se"), was the agreement even valid?  The question is probably moot now given the patent has expired....or is it?  Although Kimble did receive royalty payments during the patent term, he presumably agreed to a smaller upfront payment and smaller royalty payments in exchange for the sale of the patent because he thought he would receive the royalty payment in perpetuity.  So could a restitution argument be made given that he won't be receiving those royalty payments and the consideration for the sale of the patent has turned out to be invalid?

 

 *Yes, I made an unnecessary reference to the Spiderman theme song so that it would run through your head as you read this - and maybe even throughout the day.

 

 

June 29, 2015 in Current Affairs, Famous Cases, In the News, Recent Cases | Permalink | Comments (2)

More Bad News on the Privacy Front

Surveillance_camerasJed Rubenfeld declared the end of privacy in an article that appeared in Stanford Law Review in 2008.  Around the same time, Danial Solove explored the role of social media in eroding privacy in Scientific American. National Public Radio introduced a series on the end of privacy back in 2009.  In January, Science Magazine devoted a special issue to the end of privacy.

But all is not lost!  Contracts can protect our privacy, and corporations routinely agree to privacy policies that restrict their right to sell or otherwise transfer or share the private information they collect when their customers use their services.

Such contractual provisions can protect consumers . . . unless the company itself is sold or transferred to (merged into) another company.  Then the private information that the company has collected just becomes another asset that can get sold off like any other asset.  So says a report in today's New York Times.  About 85% of the privacy policies of companies reviewed (including Amazon, Apple, Facebook, Google, LinkedIn and Hulu) provide that "the company might transfer users' information in case of a merger, acquisition, bankruptcy, asset sale or other transaction . . . "

D'oh!

June 29, 2015 in E-commerce, In the News | Permalink | Comments (0)

New in Print: Martha Ertman's Book and others

Ertman, Love's Promises

Martha Ertman's new book, Love's Promises: How Formal and Informal Contracts Shape All Kinds of Families (Beacon Press 2015) is the subject an online symposium over at Concurring Opinions.

And in other publication news . . . 

Robert Bejesky, Mercenaries, Myrmidons, and Missionaries, 37 U. Ark. Little Rock L. Rev. 45 (2014)

Gregory Crespi, Agreements to Alter the Limitation Period Imposed by U.C.C. Section 2-725: Some Overlooked Complications, 46 St. Mary's L.J. 199 (2015) 

Royce de R. Barondes, Frictions and the Persistence of Inferior Contract Terms. 9 Va. L. & Bus. Rev. 257 (2015)

Bob Wessels, Contracting Out of Secondary Insolvency Proceedings: The Main Liquidator's Undertaking in the Meaning of Article 18 in the Proposal to Amend the EU Insolvency Regulation, 9 Brook. J. Corp. Fin. & Com. L. 236 (2014)

 Eric A. Zacks, Contract Review: Cognitive Bias, Moral Hazard, and Situational Pressure, 9 Entrepren. Bus. L.J. 379 (2015)

June 29, 2015 in Books, Contract Profs, Recent Scholarship | Permalink

Wednesday, June 24, 2015

Weekly Top Tens from the Social Science Research Network

SSRNSSRN Top Downloads For Contracts & Commercial Law eJournal
RECENT TOP PAPERS 

RankDownloadsPaper Title
1 184 A Crib Sheet for Contracts Profs 
Victor P. Goldberg 
Columbia Law School 
2 180 The Validity of Restraints on Alienation in an Oil and Gas Lease 
Luke Meier and Rory M. Ryan 
Baylor University - Law School and Baylor University - Law School 
3 157 Lex Mercatoria 
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University of Bremen - Faculty of Law 
4 150 The Influence of Comparative Law on the English Law of Obligations 
Andrew Burrows 
University of Oxford - Faculty of Law
5 133 Freedom to Tinker 
Pamela Samuelson 
University of California, Berkeley - School of Law 
6 130 Pluralistic Legal Theories: In Search of a Common Denominator 
Ronen Perry 
University of Haifa - Faculty of Law 
7 117 Facilitating Incomplete Contracts 
Wendy Netter Epstein 
DePaul University - College of Law 
8 107 After the Revolution: An Empirical Study of Consumer Arbitration 
David Horton and Andrea Cann Chandrasekher 
University of California, Davis - School of Law and University of California, Davis - School of Law 
9 103 The Law, Economics, and Psychology of Manipulation 
Eric A. Posner 
University of Chicago - Law School 
10 96 The Forum Selection Defense 
Stephen E. Sachs 
Duke University School of Law 

SSRN Top Downloads For LSN: Contracts (Topic)
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June 24, 2015 in Recent Scholarship | Permalink

Tuesday, June 23, 2015

PayPal's New Agreement and the FCC

Last week, the Federal Communications Commission acted to approve a number of proposals that update the TCPA (Telephone Consumer Protection Act), popularly known as the  "Do Not Call" law that prohibits companies from interrupting consumers' dinner time conversations with pesky telemarketing calls.  They closed a number of existing loopholes and clarified that phone companies can now block robocalls and robotexts to cell phones. The ruling also makes it easier for consumers who have previously consented to withdraw consent. 

So what does this have to do with contracts?  We all know how easy it is to consent to online terms.  PayPal does, too.  PayPal recently informed its customers that it was unilaterally amending its User Agreement.  As anyone reading this blog knows, there are serious problems with unilateral modification clauses, especially in the context of wrap contracts that nobody reads.  Yet, some courts have found that these clauses are enforceable (others have found they are not because they lack consideration and/or notice/assent).  PayPal's recent announced modifications caught the attention of the Federal Communications Commission.  The FCC Chief expressed concern that PayPal's prospective agreement may run afoul of federal law.  The TCPA requires express written consent before any company can make annoying prerecorded telemarketing calls to consumers.  The written consent, however, isn't the ridiculous version of consent that suffices as contractual consent in some courtrooms.  There are certain requirements including that the agreement be "clear and conspicuous" and that the person is "not required to sign the agreement...as a condition of purchasing the property, goods, or services."  In other words, it can't be a "take it or leave it" situation.  Pay Pal's amended User Agreement, however, appears to contain "take-it-or-leave-it" language as it doesn't indicate how customers may refuse to consent to receive calls without having their account shut down.  Furthermore, unlike contract law where blanket assent is okay, blanket consent is not okay under the FCC rules.  (This blog post provides a nice overview of the issues and also notes that eBay (PayPal's soon-to-be former parent) encountered similar problems with the New York Attorney General). 

PayPal's agreement is not the only reason the FCC acted last week, but as Bob Sullivan points out in this post here, it may have been the reason it acted so quickly.  Expect to see an updated version of PayPal's agreement in the near future.

 

 

 

June 23, 2015 in Current Affairs, In the News, Miscellaneous, Web/Tech | Permalink | Comments (0)

Monday, June 22, 2015

New Scholarship from Jeff Lipshaw

JlipshawFriend of the blog, Jeff Lipshaw (Suffolk Law) has a new article available for download on SSRN.

Here is the abstract:

This essay is a reflection on the gap between the real-life practice of contract law and some of the academic theory that tries to explain it. I define “lexical opportunism” as an adversary’s clever lawyering, using contractual text of a complex business arrangement, ironically as devoid of thoughtful drafting or close negotiation as the boilerplate in a consumer contract, but which, when turned into a legal theory, creates a potential for staggering liability beyond all common sense. A multi-billion lawsuit, recently settled, serves as an example, and triggers my discussion of (a) what it means to engage in theoretical assessment in contract law, (b) how the justification of contract law by way of inhibiting economic opportunism is based on the simplest examples, rather than the kind of contract discourse found in any real-world contract worth spending millions to litigate, and (c) how normative theory based on upholding the moral sanctity of promise keeping evaporates when the parties disagree about the meaning of their promises. I argue that both economic and moral theories about contract law fail to account for issues in the use of language and depend on the naïve adoption of the correspondence theory of truth. The nature of language permits opportunism, and the only check on it is the desire, from whatever motivation, not to be opportunistic. I conclude with what I hope are some constructive thoughts about the appropriate use of theory in lawyering, and thereby mitigate my skepticism whether any single theory or discipline is capable of meaningful explanation or prediction about lexical opportunism.

 

June 22, 2015 in Contract Profs, Recent Scholarship | Permalink

Thursday, June 18, 2015

Uber Is the New Britney Spears

We used to count on Britney Spears as the leading source for blog fodder.  Move aside Britney.  Uber just passed you by.  We have two new Uber stories just in California alone.

First, last week the District Court for the Northern District of California issued its opinion in Mohamed v. Uber Technologies.  Paul Mollica of the Employment Law Blog called that decision a "blockbuster," because it ruled Uber's arbitration agreement with its drivers unconscionable and therefore unenforceable.  The opinion is very long, so we will simply bullet point the highlights.  With respect to contracts entered into in 2013, the court found:

  • Valid contracts were formed between plaintiffs and Uber, notwithstanding plaintiffs' claims that they never read the agreements and that doing so was "somewhat onerous";
  • While Uber sought to delegate questions of enforceability to the arbiter, the court found that its attempt to do so was not "clear and unmistakable" as the contract included a provision that "any disputes, actions, claims or causes of action arising out of or in connection with this Agreement or the Uber Service or Software shall be subject to the exclusive jurisdiction of the state and federal courts located in the City and County of San Francisco, California"; 
  • In the alternative, the agreement was unconscionable and therefore unenforceable;
  • The procedural unconscionability standard of "oppression," generally assumed in form contracting, was not overcome in this instance by an opt-out clause; the opt-out was inconspicuous and perhaps illusory;
  • The procedural unconscionability standard of "surprise" was also met because the arbitration provision was "hidden in [Uber's] prolix form" contract; and
  • Uber's arbitration provisions are substantively unconscionable because the arbitration fees create for some plaintiffs an insuperable bar to the prosecution of their claims.

The court acknowledged that the unconscionability question was a closer question with respect of the 2014 contracts but still found them both procedurally and substantively unconscionable.

There is much more to the opinion, but that is the basic gist.

Eric GoldmanIn other news, as reported in The New York Times here, the California Labor Commissioner's Office issued a ruling earlier this month in which it found that Uber drivers are employees, not independent contractors as the company claims.  The (mercifully short!) ruling can be found here through the good offices of Santa Clara Law Prof, Eric Goldman (pictured).

The issue arose in the context of a driver seeking reimbursement for unpaid wages and expenses.  The facts of the case are bizarre and don't seem all that crucial to the key finding of the hearing officer.  Although plaintiff''s claim was dismissed on the merits, Uber has appealed, as it cannot let the finding that its drivers are employees stand.

But the finding is a real blockbuster, especially as Uber claims that similar proceedings in other states have resulted in a  finding that Uber drivers are independent contractors.  Here's the key language from the ruling:

    Defendants hold themselves out to as nothing more than a neutral technological platform, designed simply to enable drivers and passengers to transact the business of transportation.  The reality, however, is that Defendants are involved in every aspect of the operation.  Defendants vet prospective drivers . . . Drivers cannot use Defendants' application unless they pass Defendants' background and DMV checks

Meredith    Defendants control the tools the drivers use . . . Defendants monitor the Transportation Drivers' approval ratings and terminate their access to the application if the rating falls below a specific level (4.6 stars).

As the Times points out,  few people would choose to be independent contractors if they had the option to be employees.  Our former co-blogger Meredith Miller has written about similar issues involving freelancers, and we blogged about it here.  So far, it appears that five states have declared that Uber drivers are independent contractors, while Florida has joined California in finding them to be employees.  For more on the implications of this ruling, you can check out this story in Forbes, featuring insights from friend of the blog, Miriam Cherry.

June 18, 2015 in In the News, Recent Cases, Travel, Web/Tech | Permalink | Comments (0)

Wednesday, June 17, 2015

New in Print

Pile of BooksWendy Netter Epstein, Facilitating Incomplete Contracts. 65 Case W. Res. L. Rev. 297 (2014)

W. Stanfield. Johnson, Hercules, Winstar, and the Supreme Court's Conspicuous and Potentially Consequential Error, 44 Pub. Cont. L.J. 199 (2015)

David Kenny & Rosemary Hennigan. Choice-of-Court Agreements, the Italian Torpedo, and the Recast of the Brussels I Regulation. 64 Int'l & Comp. L.Q. 197 (2015)

Thomas H. Koenig, & Michael L. Rustad, Fundamentally Unfair: An Empirical Analysis of Social Media Arbitration Clauses, 65 Case W. Res. L. Rev. 341 (2014)

Amy L. Peikoff, Of Third-Party Bathwater: How to Throw out the Third-Party Doctrine While Preserving Government's Ability to Use Secret Agents, 88 St. John's L. Rev. 349 (2014)

Katherine M. Urban, Sustainable Acquisition and the Post-Conflict Environment: Why Adopting a Federal Sustainable Procurement Policy for Post-Conflict Environments that Mirrors those Adopted by Some Local Governments Would Help Lead to Mission Success, 44 Pub. Cont. L.J. 261 (2015)

In addition, we have an entire symposium on Atlantic Marine and forum selection clauses form the Hastings Law Journal 

Hastings Law Journal

Atlantic Marine and Choice-of-Law Federalism

Andrew D. Bradt

Volume 66, Issue 3, 617-42

Full Article

Governing Law on Forum-Selection Agreements

Kevin M. Clermont

Volume 66, Issue 3, 643-74

Full Article

Atlantic Marine and the Future of Party Preference

Scott Dodson

Volume 66, Issue 3, 675-92

Full Article

Atlantic Marine and the Future of Forum Non Conveniens

Robin Effron

Volume 66, Issue 3, 693-718

Full Article

Gaming the System: Protecting Consumers from Unconscionable Contractual Forum-Selection and Arbitration Clauses

Linda S. Mullenix

Volume 66, Issue 3, 719-60

Full Article

Five Questions After Atlantic Marine

Stephen E. Sachs

Volume 66, Issue 3, 761-76

Full Article

Enforcing Forum-Selection Clauses

Bradley Scott Shannon

Volume 66, Issue 3, 777-94f

Full Article

Atlantic Marine Through the Lens of Erie

Adam N. Steinman

Volume 66, Issue 3, 795-822

Full Article

 

 

June 17, 2015 in Government Contracting, Recent Scholarship | Permalink