ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Monday, March 28, 2016

Assent in Healthcare Contracts

Here, Stacey Lantagne reports on a very sad story of what can happen if health care customers fail to follow accurate procedure and, at bottom, dot all the I’s and cross all the T’s when contracting for health care services.

For me, this speaks to the broader issue of whether or not patients can truly be said to have given consent to all the procedures and professionals rendering services to patients. I think this is often not the case. As you know, Nancy Kim is an expert on this area in the electronic contracting context. She kindly alerted me to this story in the health care field.  (Thanks for that.) The article describes the practice of “drive-by doctoring” whereby one doctor calls in another to render assistance although the need for this may be highly questionable. The NY Times article describes an instance in which one patient had meticulously researched his health care insurance coverage, yet got billed $117,000 by a doctor he did not know, had never met, and had not asked for. That doctor had apparently shown up during surgery to “help.”

Of course, this is a method for doctors to make end runs around price controls. Other methods are increasing the number of things allegedly or actually performed for patients. Other questionable practices include the use of doctors or facilities that all of a sudden turn out to be “out of network” and thus cost patients much more money than if “in network.” I personally had that experience a few years ago. I had to have minor surgery and checked my coverage meticulously. The doctor to perform the surgery was in network and everything was fine. She asked me to report to a certain building suite the morning of the surgery. All went well. That is, until I got the bill claiming that I had had the procedure performed by an “out of network” provider. This was because… the building in which the procedure was done by this same doctor was another one than the one where I had been examined! When I protested enough, the health care company agreed to “settle” in an amount favorable to me.

In these cases, patients typically have very little choice and bargaining power. In the emergency context, what are they going to do? There is obviously no time to shop around. You don’t even know what procedures, doctors, etc., will be involved. The health care providers have all the information and all the power in those situations. However, in my opinion, that far from gives them a carte blanche to bill almost whatever they want to, as appears to be the case, increase their incomes in times when insurance companies and society in general is trying to curb spiraling health care costs.

In the non-emergency context, how much of a burden is it really realistic and fair to put on patients who are trying to find out the best price possible for a certain procedure, only to be blind-sighted afterwards? That, in my opinion, far exceeds fair contracting procedure and veers into fraudulent conduct. Certainly, such strategies go far beyond the regular contractual duty to perform in good faith.

Of course, part of this is what health care insurance is for. But even with good health care insurance, patients often end up with large out-of-pocket expenses as well. The frauds in this context are well known too: most health care providers blatantly offer two pricing scheme: one (higher) if they have to bill insurance companies, and a much lower price if they know up front to bill as a “cash price.”

We have a long ways to come in this area still, sadly.

March 28, 2016 in Commentary, Current Affairs, Miscellaneous, Science, True Contracts | Permalink | Comments (1)

Sunday, February 14, 2016

Solar Contracts - Still Trouble on the Horizon

Change is coming to the energy field, finally. As the realization is broadening that fossil fuels have to be left in the ground, solar and wind energy are becoming more popular to investors and private households alike.

The problem is still the types of contracts and financing options available. An average solar system costs $14,700. If paying that in cash, homeowners would typically save around $50 a month on their electric bills. However, most people cannot afford to pay that in cash. Financing options will reduce the monthly savings to about $20-30 a month. “Net metering,” which allows homeowners to sell electricity back to the utilities, may result in bigger savings.

Problems still loom on the horizon with contracts in this area. A new financing program known as the “Property Assessed Clean Energy” financing program (“PACE”) allows solar panel buyers to finance the system and add the loan to the property as a tax assessment. Some are criticizing that for making it difficult or sell the homes or refinance mortgages.

More importantly, utility companies are complaining that the electric grids were designed to send electricity to consumers, but not receive it back. The utility industry is even referring to individually owned power systems as “disruptive technologies.” This new interaction will force changes in the market and infrastructure. But so what? Utilities have had a chance to make quite a lot of money for years on end, often in pure or monopoly-like situations. Now the market is changing. Utilities must adapt to necessary societal changes. This is clearly one of them. The resentment towards new technological change by parties in an industry that is per se technological is inexpedient and childish. Yes, utilities have invested much money in the existing electricity infrastructure, but they have surely never been promised that the market wouldn’t change and that users won’t demand other product sources than what has been the case for, now, more than a hundred years. Time has come to innovate. La-2451929-fi-0204-agenda-solar-panels-009-ik-jpg-20160207

The industry is also complaining that in the future, new rules are going to force the industry to provide more services, which will cost more money and thus result in fewer savings via alternative energy sources. Yeah, let’s see about that one. That still sounds like a contrarian, outmoded argument against inevitable progress.

What could be more troublesome is the expected erosion of benefits such as solar credits. For example, the existing 30% federal solar tax credit will end in 2019 unless, of course, Congress renews it. Hopefully under the new Paris Agreement on climate change and with the looming risks, financial and otherwise, on continually rising global temperatures (2015 was yet another hottest year on record), such and other benefits will be increased, not decreased.

For anyone wishing to buy a solar system, the best deal on the market still seems to be buying outright, even if via a property tax assessment. Many of the still-typical 20-year lease contracts are still too lengthy in nature. Too many things could change in this marketplace to make them seem like a viable option.

It is too bad that with as many hours of sunshine as many parts of this nation has, there still is not a really good, viable option for solar energy contracts for middle- or low-income private homeowners.

February 14, 2016 in Commentary, Current Affairs, Science, True Contracts, Web/Tech | Permalink | Comments (0)

Thursday, January 21, 2016

Fired for Posting Critical Comments about Employer on Facebook

On Thursday, the U.S. Circuit Court of Appeals for the D.C. Circuit heard arguments about whether a clothing company illegally fired three retail store employees for their Facebook posts criticizing the employer. The case involves the as-of-yet little developed area of how labor law applies to social media usage as well as other complex issues of contracts and employment law. The case is Design Technology Group v. NLRB, Case Number 20-CA-035511.  The case also demonstrates the issue of poor workplace conditions and how little employees can do under contracts law or other bodies of law against this, which I have blogged about before (most recently here). I am not an employment law expert.  I simply find this case very interesting from the point of view of how social media law is developing in relation to what is, after all, also an employment contract.

In the case, three employees repeatedly brought various safety concerns to the attention of the store manager. Among other things, the employees felt that the area of San Francisco where the store was located was relatively unsafe at certain times of the evening and that, perhaps, store hours could thus be changed to alleviate this problem. Homeless people would also gather in numbers outside the store to watch a burlesque video that the store played on a big TV screen right inside a window, thus potentially also attracting various (other) unsavory characters. Images

Allegedly, the store manager did not respond to these safety concerns and treated the employees in an immature and unprofessional way. The three employees discussed the events not at the water cooler, which is so yesteryear, but on Facebook. These posts included messages such as

  • “It’s pretty obvious that my manager is as immature as a person can be and she proved that this evening even more so. I’m am unbelieveably [sic] stressed out and I can’t believe NO ONE is doing anything about it! The way she treats us in NOT okay but no one cares because everytime [sic] we try to solve conflicts NOTHING GETS DONE!!... “
  • “800 miles away yet she’s still continues to make our lives miserable. phenomenal!”
  • “hey dudes it’s totally cool, tomorrow I’m bringing a California Worker’s Rights book to work. My mom works for a law firm that specializes in labor laws and BOY will you be surprised by all the crap that’s going on that’s in violation 8) see you tomorrow!” Unknown

One of the employees did bring the California worker’s rights book—which covered issues such as benefits, discrimination, the right to organize, safety, health, and sanitation—to work and put it in the break room where other employees looked through it, noticing that they were entitled to water and sufficient heat.

This same employee also (naïvely) sent resumes from the company computer in spite of company rules allowing only sporadic computer access (the store manager had allegedly set a bad example by using the store computer for personal purposes herself). The company discovered this as well as the Facebook posts, and fired the three employees.

The company argues that the workers commented on Facebook only in order to create a pretext for filing a claim with the NLRB. The smoking gun, according to the company, is the following exchange of (select, but most salient) Facebook postings:

  • “OMG the most AMAZING thing just happened!!!! J”
  • “What … did they fire that one mean bitch for you?”
  • “Nooooo they fired me and my assistant manager because “it just wasn’t working out” we both laughed and said see yaaah and hugged each other while giggling ….Muhahahahaha!!! “So they’ve fallen into my crutches [sic].”

The use of the expression “Muhahaha” is, according to the company, the smoking gun indicating the employee’s desire to get fired. It does indeed seem to indicate _some_ reveling in the turn of events, but arguably not a desire to be fired.  The “top definition” of the phrase on the user-created online “Urban Dictionary” is, today, “supost [sic] to be an evil laugh when being typed in a game.” Case briefs list it as “An evil laugh. A laugh one does when they are about to do something evil. Such as when a villain has a plot to take over the world, he does this laugh right before it goes into effect. Also a noise made by people who have just gotten away with an evil deed or crime….” The “evil laughter” entry on Wikipedia describes the phrase Muhahaha as being “commonly used on internet Blogs, Bulletin board systems, and games. There, [it is] generally used when some form of victory is attained, or to indicate superiority over someone else.”

The company appeals a ruling from the National Labor Relations Board (“NRLB”) finding the terminations unlawful because the employees’ discussions of working conditions were protected concerted activities under the National Labor Relations Act. The company claims that the comments were not legally protected because they were part of a scheme to manufacture an unfair labor practice claim.

It will be interesting to see how the Court of Appeals will address the social media aspect of this case. One the one hand, it does seem exceptionally naïve to expect to be able post anything in writing on the internet – Facebook, no less – without it potentially being seen by one’s current or future employer. I’m sorry, but in 2016, that should not come as a surprise to anyone (note that the company also used email monitoring software to discover whether its employees applied for jobs with competitors, which at least one of the employees here did). Note to employees who may not have a home computer or internet access: use a library computer.

On the other hand: does it really matter what employees post to their “friends” about their jobs, absent torts or other clear violations of the law (not alleged here)? Isn’t that to be expected today just as employees previously and still also talk in person about their jobs? Isn’t the only difference in this case that the posts are in writing and thus traceable whereas “old-fashioned” gossip was not? If employees merely state the truths, as seem to have been the case in this instance perhaps apart from the last “Muhahaha” comment, isn’t it overreaching by the employer to actually _fire_ the employees if they, of course, otherwise provided good services? Even if the employees are exaggerating, boasting, or outright lying, should employers be able to fire employees merely because of private comments on Facebook posted to one’s online “friends”?

An alternative idea might be to consider whether the employees were actually on to something that (gasp!) could help improve a poor work situation for the better.

The National Federation of Independent Business’ Small Business Legal enter has filed an amicus brief in support of the company, alleging that the NLRB decision “allow[s] employees regardless of their motive or actual misconduct to become termination-proof simply by making comments relating to their employment online.”

That’s hardly what the employees are arguing here. They do, however, argue a right to discuss their employment situation online without a snooping employer terminating them just for doing so. In this case, the employees had, noticeably, tried to improve highly important workplace issues in a fruitful way. The situation did, however, escalate. In and of itself, however, the “fallen into my clutches” comment, although of admittedly debatable intent, does not seem to indicate that the employees were attempting to manufacture an unfair labor practice claim. The employees seemed to have been primarily concerned with safety issues and working conditions, but were fired in retaliation for their critical online arguments. That, to me, seems like a fair argument.

Stay tuned for the outcome of this case!

January 21, 2016 in Commentary, E-commerce, Famous Cases, Labor Contracts, Science, Web/Tech | Permalink | Comments (0)

Monday, December 14, 2015

The Emperor’s New (Warm Weather) Clothes?

On Saturday, a new international treaty surplanting the expired Kyoto Protocol was finally reached by 195 nations. For business contracting and numerous, if not all, aspects of life now and in the future, the global climate will be key. 

The main aim of the agreement is to keep temperature rise “well below” 2° C.  The nations will additionally “pursue efforts” to limit the temperature increase to 1.5° C. Thousands of scientists have for a long time reiterated the belief that temperatures rising above 2° Celsius could be devastating, so the aspirational goal of 1.5° C is, of course, a positive sign that national leaders may finally be realizing the dire straits of the planet’s climate situation.

So, this is good news, right? To some extent, yes. “The Paris Agreement for the first time brings all nations into a common ClimateChangecause based on their historic, current and future responsibilities.” However, current national commitments still do not go far enough. As they currently stand, we are headed towards a warming of more than 3° C; much higher than the scientifically advisable goal. The national pledges must be increased over time.  Starting in 2018, each country will have to submit new plans every five years to reach the 1.5/2° goal by 2100. The thought is that even though current coals do not suffice to keep climate warming to the agreed-upon limits, they will over time, starting soon.

History shows, though, that many nations have so far neither been ready nor politically able to make effective greenhouse gas reduction commitments. Previous aspirational goals have not been realized by the great majority of nations, although some not only met, but exceeded their commitments. It’s tempting to note that “time will tell if the situation changes this time,” but we simply don’t have much time to turn around the problem before it is too late for many regions, species and peoples around the world. For example, a temperature increase of 2° C will still be very problematic for low-lying nations such as many small island states, who seem to have been almost entirely forgotten about by many in this context. That, however, was considered one of the “prices” to be paid for reaching the deal. (A true contractual-like bargaining strategy.) Human rights are only mentioned in the preamble to the Agreement and not in the Agreement itself.

Nation themselves will determine their “intended nationally determined contributions,” which are not directly legally binding under notions of hard law as they are not mandatory with top-down enforcement if the nations fail to do so.  Among other factors, the word "contribution" and not, for example, "commitments" demonstrate the legal cautiousness of the agreement.  Nations must, of course, still strive to reach their goals under the UNFCCC and the notion of pacta sunt servanda, but these are not worded in a manner that gives them a firm, legally binding effect. The only directly legally binding parts of the Agreement are some procedural aspects such as the review procedures.

Of course, the reason why the Agreement was adopted by so many parties was precisely that no legal requirements were imposed on nations. Some, such as the United States, would not have accepted this. A senior Obama administration official notes that the Agreement "does not require submission to the Senate because of the way it is structured and because the pieces that are binding are already part of existing agreements.” A legally smart and pragmatic maneuver. But it still remains to be seen whether the United States and other nations act – and act quickly enough - to prevent the problem escalating in spite of good intentions.  I may be one of the few in this context, but I’m still skeptical. The intended time frames still seem too long to me and the actual promised action too meager. I fear that these are simply the “Emperor’s New Clothes,” celebrated so much, perhaps, because of so many years of no action.

Nonetheless, it is certainly remarkable and a very good sign that the world community finally agreed on the dangers posed by climate change and thus a 2° C limit.  That's a good start.  In the words of Miguel Arias Cañete, the European Union’s commissioner for energy and climate action, “[t]oday, we celebrate, [t]omorrow, we have to act. This is what the world expects of us.” But if we have simply turned a corner back to where we came from, namely hoping that sufficient action will be taken soon and pointing out that the world expects that, we might have celebrated a bit too early. I hope I am wrong. Climate change is like a cancer: horrible, always inconvenient, and tough to deal with at many levels. But the longer one waits in tackling it, the worse it will get.

December 14, 2015 in Commentary, Current Affairs, In the News, Legislation, Science | Permalink | Comments (0)

Saturday, November 21, 2015

Consent Agreement on Embryo Destruction a Legally Binding Contract

A California Superior Court Judge has ruled that a consent agreement between spouses about what to do with frozen embryos in case of divorce has the effect of a legally binding contract. This was the first such ruling in California. The case is In re the Marriage of Stephen E. Findley and Mimi C. Lee.

Shortly before Dr. Lee and Mr. Findley were married in 2010, Dr. Lee discovered that she had cancer. The couple decided to create and store embryos to preserve their chances of having a child. Shortly after the marriage, the couple signed a consent decree stating that the embryos were to be destroyed if the couple divorced. They marriage went downhill and ended in an acrimonious divorce in 2015.

Dr. Lee, however, argued for her right to keep the embryos. She argued that because of her age – she is 46 – the embryos are her only chance of having a child on her own. She testified that she considered the fertility clinic agreement a mere consent form and that she thought she could change her mind about it later on.

Judge Anne-Christine Massullo found that a consent agreement is a legally binding contract. It must be upheld in order to render certainty to IVF clinics and individuals who undergo IVT treatment regarding their dispositional choices before embryos are created. Said the judge about holding IVT agreements to be mere contracts: “It is a disturbing consequence of modern biological technology that the fate of … embryos … must be determined in a court by reference to cold legal principles.” That may be a valid concern, but equally important is, undoubtedly, the rights and concerns of both marital parties.

Consider this as well: Dr. Lee had offered her ex-husband to waive child support if he would let her use the embryos. However, such a promise is meaningless in California where such an agreement cannot be enforced. In contrast, Mr. Findley testified that Dr. Lee had once asked him “how much money the embryos were worth to him” and indicated that she could turn a possible child against him in the future. The court found “well founded” Mr. Findley’s belief that Lee would use any child born of the embryos as a money extortion device. Said the judge: “Mr. Findley should be free from court compelled fatherhood and the uncertainties it would bring.”

In this case, these included potential extortion by a highly educated woman – an anesthesiologist - who seems able consider her potential children to be not only objects of affection, but also vehicles for a monetary reward. Mr. Findley testified that he would like to have children some day, just not with Dr. Lee. Wise decision, it seems, and one that the court equally wisely supported, even though it had to resort to “cold legal principles.”

11/21/2015

Consent Agreement on Embryo Destruction a Legally Binding Contract

A California Superior Court Judge has ruled that a consent agreement between spouses about what to do with frozen embryos in case of divorce has the effect of a legally binding contract. This was the first such ruling in California. The case is In re the Marriage of Stephen E. Findley and Mimi C. Lee, Case No. FDI-13-780539, http://www.sfsuperiorcourt.org/sites/default/files/pdfs/FINDLEY_Statement_Of_Decision%20Rev_1.pdf

Shortly before Dr. Lee and Mr. Findley were married in 2010, Dr. Lee discovered that she had cancer. The couple decided to create and store embryos to preserve their chances of having a child. Shortly after the marriage, the couple signed a consent decree stating that the embryos were to be destroyed if the couple divorced. They marriage went downhill and ended in an acrimonious divorce in 2015.

Dr. Lee, however, argued for her right to keep the embryos. She argued that because of her age – she is 46 – the embryos are her only chance of having a child on her own. She testified that she considered the fertility clinic agreement a mere consent form and that she thought she could change her mind about it later on.

Judge Anne-Christine Massullo found that a consent agreement is a legally binding contract. It must be upheld in order to render certainty to IVF clinics and individuals who undergo IVT treatment regarding their dispositional choices before embryos are created. Said the judge about holding IVT agreements to be mere contracts: “It is a disturbing consequence of modern biological technology that the fate of … embryos … must be determined in a court by reference to cold legal principles.” That may be a valid concern, but equally important is, undoubtedly, the rights and concerns of both marital parties.

Consider this as well: Dr. Lee had offered her ex-husband to waive child support if he would let her use the embryos. However, such a promise is meaningless in California where such an agreement cannot be enforced. In contrast, Mr. Findley testified that Dr. Lee had once asked him “how much money the embryos were worth to him” and indicated that she could turn a possible child against him in the future. The court found “well founded” Mr. Findley’s belief that Lee would use any child born of the embryos as a money extortion device. Said the judge: “Mr. Findley should be free from court compelled fatherhood and the uncertainties it would bring.”

In this case, these included potential extortion by a highly educated woman – an anesthesiologist - who seems able consider her potential children to be not only objects of affection, but also vehicles for a monetary reward. Mr. Findley testified that he would like to have children some day, just not with Dr. Lee. Wise decision, it seems, and one that the court equally wisely supported, even though it had to resort to “cold legal principles.”

November 21, 2015 in Current Affairs, Science, True Contracts | Permalink | Comments (0)

Thursday, July 30, 2015

Contracts for Trophy Hunting A Bad Idea

I earlier blogged on an American TV personality's contract to hunt and kill one of the most highly endangered species on earth: a black rhino.  That hunt has now been completed at a price tag of $350,000.  The asserted reasoning for wanting to undertake the hunt: the money would allegedly help the species conservation overall and the local population. Studies, however, show that only 3-5% of that money goes to the local population. Some experts believe that the money could be much better spent for both the local population and the species via, for example, tourism to see the animals alive.  This brings in three to fifteen times of what is created through so-called "trophy hunting."

This past week, the world community was again outraged over yet another American's hunt - this time through a contract with a local rancher and professional assistant hunter - of Cecil the Lion.  The price? A mere $50,000 or so.  This case has criminal aspects as well since the landowner involved did not have a permit to kill a lion. The hunter previously served a year of probation over false statements made in connection with his hunting methods: bow and arrow.

This is also how the locally famous and collared Cecil - a study subject of Oxford University - was initially hunted down, lured by bait on a car to leave a local national park, shot, but not killed, by Minnesota dentist Walter Palmer, and eventually shot with a gun no less than 40 hours after being wounded by Palmer.

Comments by famous and regular people alike have  been posted widely since then.  For example, said Sharon Osbourne: ""I hope that #WalterPalmer loses his home, his practice & his money. He has already lost his soul."

I recognize that some people - including some experts - argue for the continued allowance of this kind of hunting. Others believe it is a very bad idea for many biological, criminal, ethical, and other reasons to allow this practice.  If you are interested in signing a petition to Zimbabwe Robert Mugabe to stop issuing hunting permits to kill endangered animals, click here.  It will take you less than 60 seconds. 

 

July 30, 2015 in Celebrity Contracts, Commentary, Current Affairs, Famous Cases, In the News, Legislation, Science, Travel, True Contracts | Permalink | Comments (0)

Tuesday, March 31, 2015

Physicist Publishes Autobiography, Defying the Department of Energy: A Contracts Take

Building the H-BombMy friend Ken Ford is enjoying his fifteen minutes of fame, courtesy of the Department of Energy (D0E), which is displeased with his memoir, Building the H-Bomb: A Personal History.  According to this report in the New York Times, DoE officials told Dr. Ford to make cuts to his book that would have eliminated 10% of the text.  DoE personnel flagged 60 separate passages in the book for editing.

This demand (and the DoE made clear that it was making demands not requests) came as a surprise to Dr. Ford, who had submitted the book for DoE review expecting the process to be a mere formality.  In Dr. Ford's view, the book contains no secrets, as the information that he included in his book relating to the history of the hydrogen bomb either had been previously disclosed or was released to him through FOIA requests.  The DoE sees things differently, but the agency is unlikely to respond to the publication of Dr. Ford's book, in large part because any action it takes would only draw attention to the information whose disclosure it regards as improper.  

The Times articles covers the story well and provides some examples of material that the DoE regards as classified but Dr. Ford regards as public.  We would like to focus on a couple of contractual issues.  First, the Times references Ken's alleged contractual obligation arising from a non-disclosure agreement he signed in the 50s.  Dr. Ford does not recall what that agreement said, but he provided this blog with a copy of a similar agreement dated from September 2014.  The DoE asked Dr. Ford to sign this new non-disclosure agreement  in connection with its review of his manuscript.   That document provides the government with multiple remedies should Dr. Ford reveal any classified information, including:

  • termination of security clearances and government employment;
  • recovery of royalties and other benefits that might result from any sort of disclosure of classified information; and 
  • criminal prosecution under Titles 18 and 50 of the U.S. Code and the Intelligence Identities Protection Act of 1982.

Given this non-disclosure agreement, one would expect that Dr. Ford's publisher would be reluctant to publish the book, fearing that it too might become a target of government scrutiny.  In order to protect his publisher against liability, Dr. Ford agreed to amend his publication agreement to expand the usual indemnification clause.  The additional language in the contract provides that Dr. Ford will indemnify his publisher "against any suit, demand, claim or recovery, finally sustained, by reason of . . . any material whose dissemination is judged by the United States Government to have violated the Author's obligations regarding the handling of sensitive information."  

Steven Aftergood provides further information on the Federation of American Science Secrecy blog here.  

Dr. Ford provides an overview of the story that his book tells, as well as links to about a score of documents, eight of which are annotated with Dr. Ford's comments, on George Washington University's National Security Archives.

March 31, 2015 in Books, Government Contracting, In the News, Science | Permalink | Comments (0) | TrackBack (0)

Wednesday, February 11, 2015

Construction Contracts that Kill

Property development is often considered a way for local communities to earn more taxes and evolve with times in general.  But when construction and other development is approved in geologically risk areas such as flood zones and things go awfully wrong, is this a mere property and contracts issue, or may criminal liability lie?

In France, the answer is the latter.  The former mayor of the small French seaside town La Faute-sur-Mer  was just sentenced to jail for four years for deliberately hiding flood risks so that he and the town could benefit from the “cash cow” of property development, a French court has held.  His deputy mayor received a two-year sentence in the same plot.

In 2010, the cyclone Xynthia hit western Europe and knocked down seawalls in the French town, leading to severe floods and 29 deaths. 

Wait… a cyclone in France?  Yes.  Climate change is real and it’s here.  Unless we do something about it (which apparently we don’t), things will only get worse.  As on-the-ground steps that could prevent extreme results such as the above are often simply ignored or postponed while more and more research is done and money saved at various government scales, lawsuits will necessarily follow.  The legal disciplines, including contracts law, will have to conform to the new realities of a rapidly changing climate.  For starters, we need to seriously question the wisdom and continued desirability of constructing more and more homes in coastal and other flood prone areas.  Ignoring known risks is, well, criminal.

February 11, 2015 in Commentary, Current Affairs, Government Contracting, Labor Contracts, Science | Permalink | Comments (0) | TrackBack (0)

Monday, December 22, 2014

Gift or Curse?

After years of conducting research on the genes of various animals, George Doe (a pseudonym), an accomplished biologist with a PhD in cellular and molecular biology, decides to have his own genes examined for fun and to discover whether he may be genetically predisposed to cancer.  He buys a test kit online from one the many companies that provide such services these days.  He is so excited about the process that he also buys a kit for his mother and father as gifts.  They all have their genes tested.  George finds out that he is not predisposed to cancer.  But that’s not it.  He also finds out that another male who has had his own genes tested and is thus registered with the same company is “50% related” to George.  This can only mean one of three things: this other male is George’s grandfather, uncle or … half brother.  After intense and testy family discussions, George’s father apparently admits that he had fathered this other male before marrying George's mother.  George’s parents are now divorced and the entire family torn apart with no one talking to each other.

A very sad affair.  Of course, nothing appears to be contractually wrong with this case: at the bottom of one’s profile with www.23andme.com, the company that provided the tests in this case, George and his family had checked a small box indicating for them to do so “if you want to see close family members in this search program.”  The company is said to have close to one million people in its database.  With modern science, close family members can easily be identified out of such data if opting into being notified. 

Here, the company does not appear to have done anything wrong legally.  Quite the  opposite: if anything, the above shows that the buyers in these situations may not be sufficiently mentally prepared for the information they may discover through DNA testing.  Arguably, they should be.  After all, the old adage “watch out what you ask for, you may get it” still rings true.

But isn’t this situation akin to the various other situations we have blogged a lot about here this past year where customers buy various items online and click – or not – on various buttons, thus signaling at least alleged acceptance of, for example, terms of service requiring arbitration instead of lawsuits in case of disputes?  As I have argued, many people probably just clicks such buttons without fully realizing what the legal or, in cases such as the above, factual results may be.  Should online vendors be required either legally to make such check boxes or other online indicia of acceptance a lot more obvious?  Or should they at least be required to do so for reasons of business ethics? 

I think so.  Most working people are exceptionally busy these days.  Frankly, not many of us take the time to scrutinize the various implications - legal or otherwise – of the purchases we make online, especially because the agreements we accept in cyberspace are presented so very differently online, yet are so deceptively similar in legal nature that we probably feel pretty comfortable with simply clicking “I accept” as the vast majority of such transactions present no or only minor problems for us? And aren’t the vendors the party with the very best knowledge of some, if not most, of the problems that arise in these contexts?  How hard would it really be for them to make sure that they use all the “bells and whistles” to truly put people on notice of what typical problems encountered may be, exactly to avoid legal problems down the road?  One would think so, although, of course, customers also carry some of the burden of educating ourselves about what we buy and what that may mean.  This is perhaps especially so when such delicate issues as the above are involved.

For George Doe, the above unfortunately turned out to be much more of a curse that kept on giving instead of a gift that kept on giving.

On behalf of your blogging team here at ContractsProfs Blog: Happy Holidays!

December 22, 2014 in Commentary, Current Affairs, E-commerce, Miscellaneous, Science, Web/Tech | Permalink | TrackBack (0)

Tuesday, July 15, 2014

Warning: Burning Gasoline May Kill You

By Myanna Dellinger

The city of Berkeley, California, may become the first in the nation to require that gas stations affix warning stickers to gas pump handles warning consumers of the many recognized dangers of climate change.  The stickers would read:

Global Warming Alert!  Burning Gasoline Emits CO2

The City of Berkeley Cares About Global Warming

The state of California has determined that global warming caused by CO2 emissions poses a serious threat to the economic well-being, public health, natural resources, and the environment of California.  To be part of the solution, go to www.sustainableberkeley.com

Consumers not only in California, but worldwide are familiar with similar warnings about the dangers of tobacco.  The idea with the gas pump stickers is to “gently raise awareness” of the greenhouse gas impacts and the fact that consumers have alternatives.  In their book “Nudge,” Richard Thaler and Cass Sunstein addressed the potential effectiveness of fairly subtly encouraging individual persons to act in societally or personally improved ways instead of using more negative enforcement methods such as telling people what not to do.  Gas pump stickers would be an example of such a “nudge.”

But is that enough?  World scientists have agreed that we must limit temperature increases to approximately 2° C to avoid dangerous climate change.  The problem is that we are already headed towards a no less than 5° C increase.  To stop this tend, we must reduce greenhouse gas emissions by 80% or more (targets vary somewhat) by 2050.  Stickers with nudges are great, but in all likelihood, the world will need a whole lot more than that to reach the goal of curbing potentially catastrophic weather-related calamities.

Of course, the oil and gas industry opposes the Berkeley idea.  The Western States Petroleum Association claimsthat the labels would “compel speech in violation of the 1st Amendment” and that “far less restrictive means exist to disseminate this information to the public without imposing onerous restrictions on businesses.”  Why this type of sticker would, in contrast to, for example, labels on cigarette packaging, be so “onerous” and “restrictive” is not clear.  Given the extent of available knowledge of climate change and its potential catastrophic effects on people and our natural environment, the industry is very much behind the curve in hoping for “less restrictive means.”  More restrictive means than labels on dangerous products are arguably needed.  Even more behind the curve is the Association’s claim that the information on the stickers is merely “opinion” that should not be “accorded the status of ‘fact’”.   The Berkeley city attorney has vetted the potential ordinance and found the proposed language to be not only sufficiently narrow, but also to have been adopted by California citizens as the official policy of the state. 

It seems that instead of facing reality, the oil and gas industry would rather keep consumers in the dark and force them to adopt or continue self-destructive habits.  That didn’t work in the case of cigarettes and likely will not in this case either.  We are a free country and can, within limits, buy and sell what we want to.  But there are and should be restrictions.  In this case, the “restriction” is actually not one at all; it is simply a matter of publishing facts.  Surely, in America in 2014, no one can seriously dispute the desirability of doing that.

The Berkeley City Council is expected to address the issue in September.

July 15, 2014 in Commentary, Current Affairs, In the News, Legislation, Science | Permalink | Comments (0) | TrackBack (0)

Thursday, May 8, 2014

Vermont First State to Require Labeling of GMOs

By Myanna Dellinger

On May 8, 2014, Vermont became the first state in the nation to require foods containing GMOs (genetically modified organisms) to be labeled accordingly.  The law will undoubtedly face several legal challenges on both First Amendment and federal pre-emption grounds, especially since giant corporate interests are at stake.

Scientists and companies backing the use of GMOs claim that GMOs are safe for both humans and the environment.  Skeptics assert that while that may be true in the short term, not enough data yet supports a finding that GMOs are also safe in the long term.

In the EU, all food products that make direct use of GMOs at any point in their production are subjected to labeling requirements, regardless of whether or not GM content is detectable in the end product.  This has been the law for ten years. 

GMO stakeholders in the United States apparently do not think that we as consumers have at least a right to know whether or not our foods contain GMOs.  Why not, if the GMOs are as safe as is said?  A host of other food ingredients have been listed on labels here over the years, although mainly on a voluntary basis.  Think MSGs, sodium, wheat, peanuts, halal meat, and now gluten.  This, of course, makes perfect sense.  But why should GMOs be any different?  If, for whatever reason, consumers prefer not to eat GMOs, shouldn’t we as paying, adult customers have as much a say as consumers preferring certain other products? 

Of course, the difference here is (surprise!) one of profit-making: by labeling products “gluten free,” for example, manufacturers hope to make more money.  If they had to announce that their products contain GMOs, companies fear losing money.  So why don’t companies whose products don’t contain GMOs just volunteer to offer that information on the packaging?  The explanation may lie in the pervasiveness of GMOs in the USA: the vast majority (60-80%, depending on the many sources trying to establish certainty in this area) of prepared foods contain GMOs just as more than 80% of major crops are grown from genetically modified seeds.  Maybe GMOs are entirely safe in the long run as well, maybe not, but we should at least have a right to know what we eat, it seems.

Bon appétit!

 

May 8, 2014 in Commentary, Current Affairs, Food and Drink, In the News, Legislation, Science, True Contracts | Permalink | Comments (0) | TrackBack (0)

Monday, January 27, 2014

Severe Economic Disruptions from Climate Change

Severe Economic Disruptions from Climate Change

For many, climate change remains a far off notion that will affect their grandchildren and other “future generations.”  Think again.  Expect your food prices to increase now, if they have not already.  Amidst the worst drought in California history, the United Nations is releasing a report that, according to a copy obtained by the New York Times, finds that the risk of severe economic disruptions is increasing because nations have so dragged their feet in combating climate change that the problem may be virtually impossible to solve with current technologies. 

The report also says that nations around the world are still spending far more money to subsidize fossil fuels than to accelerate the urgently needed shift to cleaner energy.  The United States is one of these.  Even if the internationally agreed-upon goal of limiting temperature increases to 2° C, vast ecological and economic damage will still occur.  One of the sectors most at risk: the food industry.  In California, a leading agricultural state, the prices of certain food items are already rising caused by the current drought.  In times of shrinking relative incomes for middle- and lower class households, this means a higher percentage of incomes going to basic necessities such as food, water and possible medical expenses caused by volatile weather and extreme heat waves.  In turn, this may mean less disposable income that could otherwise spur the economy. 

Disregarding climate change is technologically risky too: to meet the target of keeping concentrations of CO2 below the most recently agreed-upon threshold of 500 ppm, future generations would have to literally pull CO2 out of the air with machinery that does not yet exist and may never become technically or economically feasible or with other yet unknown methods.

Of course, it doesn’t help that a secretive network of conservative billionaires is pouring billions of dollars into a vast political effort attempting to deny climate change and that – perhaps as a consequence – the coverage of climate change by American media is down significantly from 2009, when media was happy to report a climate change “scandal” that eventually proved to be unfounded.

The good news is that for the first time ever, the United States now has an official Climate Change Action Plan.  This will force some industries to adopt modern technologies to help combat the problem nationally.  Internationally, a new climate change treaty is slated for 2015 to take effect from 2020.  Let us hope for broad participation and that 2020 is not too late to avoid the catastrophic and unforeseen economic and environmental effects that experts are predicting.

Myanna Dellinger

Assistant Professor of Law

Western State College of Law

 

January 27, 2014 in Current Affairs, Food and Drink, In the News, Legislation, Science, Television | Permalink | Comments (1) | TrackBack (0)

Sunday, November 24, 2013

Solar Panel Leases – A Brilliant Idea or Keeping Consumers in The Dark?

In California and a dozen other states, it is becoming increasingly popular to have solar panels installed on private properties to reduce household electric bills.  In addition to potentially significant energy savings, solar panels also help private parties mitigate climate change at the very local level.  However, solar panels are expensive.  Instead of buying them outright (an average-size residential system costs about $35,000), many consumers choose to lease the systems instead.  This option typically entails no upfront costs and, as many solar panel providers tout, “low monthly rental fees” that are supposedly offset by utility bills savings and the avoidance of maintenance and upgrading otherwise associated with individually owned systems. 

So is this a contractual win-win situation?  Not necessarily so.  Solar panel leases typically comprise terms that may either surprise the unwary consumer or turn out to be more favorable to the solar panel owners than the homeowners in the long run. 

 For example, state or federal tax benefits, renewable energy credits sold to companies to offset carbon emissions, and state or utility cash incentives go to the solar panel owners and thus not the leasing homeowners.  Some contracts contain escalator clauses increasing the initially low lease payments over time.  What is also often left unsaid, at least upon initial conversations with solar panel providers, is that if a household already has low electricity bills, leases structured as is often typically the case may not pay at all or be financially beneficial enough to justify the risks inherently involved in transactions between consumers and sophisticated energy company for something as new and technologically risky as solar electric panels.  This risk is enhanced by the fact that the contract duration used by many California solar panel providers is no less than twenty years.  Much could happen over two decades in relation to both the technical and financial aspects of these types of contracts: technology could (and likely will) change so that in the years to come, more effective systems are developed that could have produced even greater benefits for homeowners then tied to contracts for “old” technology.  Utilities could reduce their electric rates so that the leases are not as commercially viable anymore.  State and federal subsidies and other rules could change the entire energy field.  Could consumers down the road prevail on an argument that imposing contracts of such durations in field so rapidly evolving is sufficiently draconian to be unconscionable?  Probably not.

 In California as in many - if not most - other states, unconscionability consists of both procedural and substantive elements and are evaluated on a sliding scale.  The procedural element addresses the circumstances of contract negotiation and formation, focusing on oppression or surprise due to, among other factors, unequal bargaining power and the lack of meaningful choice.  Substantive unconscionability pertains to the fairness of the actual terms of an agreement and to assessments of whether these terms are overly harsh or one-sided.  However, substantive unconscionability “turns not only on a ‘one-sided’ result, but also on an absence of ‘justification’ for it.”  Several problems thus abound for consumers attempting this argument.  First, no reasonable argument can be made that leasing solar panels rises to the level of “needed services” or “life necessities” that even perceivably liberal California courts have called for in connection with the lack-of-choice prong.  Second, consumer choice does exist here: homeowners could, for example, simply not rent the panels if not sure of the ultimate advantageousness of the deal.  They could buy the systems outright instead, or ask their utility providers if it is possible to increase the percentage of household power purchased from renewable sources if interested in acting on climate change.  Substantively, twenty years is a long time, but far from uncommon in contractual contexts.  Finally, the solar panel companies have an arguably justified cause for requiring a twenty-year duration, namely installing the equipment at no upfront payment, servicing it over years, and the chance to recover a good return on it.

Myanna DellingerSolar power is one of many solutions that could prove viable in mitigating climate change.  In a nation with as much annual sunshine as the United States, solar power will hopefully quickly become much more prevalent than is currently the case and help us as a nation become more energy independent.  Consumers may be well able to obtain current and significant energy savings if operating solar systems on their properties.  But consumers should realize that twenty-year leases constitute a significant legal commitment that will be difficult, if not impossible, to avoid if better technological solutions should be discovered in the next years to come.

Myanna Dellinger, JD, MA, Assistant Professor of Law, Western State College of Law

November 24, 2013 in Contract Profs, Science | Permalink | Comments (0) | TrackBack (0)

Monday, August 15, 2011

New Collective Bargaining Agreement Ends NFL Lock-Out

Football In March the National Football League Owners (NFL) elected to lockout the players organized through the National Football League Players Association (NFLPA) as the parties could not agree on a new Collective Bargaining Agreement (CBA). This lead to several star players, including Tom Brady and Payton Manning, brining an antitrust suit against the NFL. Four and a half months later, as reported here on National Football Post.com, the two sides have agreed to a new CBA that will last through the 2020 season and the 2021 draft.  ESPN reports that as a condition of the new CBA, all pending litigation needed to be settled.  In the end, as ESPN reports here, NFL players agreed to release their claims without any compensation.  

National Football Post.com provides a detailed summary of the 300-page plus CBA.  The new CBA introduces several changes from the prior agreement, focusing on the players’ health and safety, benefits for retired players, the draft and free agency, compensation for rookies entering the league, and the economics surrounding the salary cap. In order to promote player health and safety, the new CBA reduces the length of off-season programs and organized team activities. If limits on-field practice time and the amount of contact practices, and increases the number of days off for players. In addition, the CBA allows current players to remain in the player medical plan for life and offers enhanced financial protection for injured players. The NFL and NFLPA also agreed to a $50 million per year joint fund for medical research, healthcare programs and charities.

Increased benefits for retired players include the creation of a “Legacy Fund” devoted to increasing the pension for those players who retired before 1993. The two sides also agreed to improve post-career medical options, the disability plan, the 88 plan (which provides assistance to disabled players and those with certain diseases developed due to playing), career transition and degree completion programs, and player care plan.  

Under the new CBA players become unrestricted free agents (UFA) after four accrued seasons in the league. Players can become restricted free agents (RFA) after three accrued seasons in the league. Teams with RFAs have a right of first refusal on players who sign an offer sheet with another team allowing teams the opportunity to match the offer or receive draft pick compensation for the players.

Another new element to the CBA is the creation of a rookie pay scale. Under the new agreement, all drafted players will receive 4 year contracts and all undrafted players receive 3 year contracts. The teams have a maximum total compensation they can spend for each draft class and there are limited contract terms within the rookie contracts. The CBA also contains strong rules against rookies holding out and not signing with the teams, and teams also have the option to extended the rookie contract of a first round draft pick to a fifth year based on an agreed upon tender amount. The money saved by teams based on this structure is creating a new fund starting in 2012 to redistribute the money to current and retired players as well as into a veteran player performance pool.  

The two sides also agreed upon a new salary cap and revenue sharing agreement that will be in place over the length of the new CBA. Starting with the 2012 season the salary cap will now be based on a share of “all revenue,” and the players are to receive 55% of the national media revenue, 45 % of NFL ventures revenue, and 40% of local club revenue.  Player minimum salaries also saw a 10% increase for this year and will continue to increase throughout the length of the agreement.

Finally,  the agreement also stipulates that there is to be no judicial oversight of the CBA, and that if there are disputes the NFL and NFLPA will employ an independent third party arbitrator which they agree upon to settle the dispute. To insure labor peace, the new agreement contains a clause stating that the players will not strike nor will the owners lock out the players during the duration of the agreement.

Boogity, boogity, boogity, Amen.

[JT & Jared Vasiliauskas]

August 15, 2011 in In the News, Labor Contracts, Science | Permalink | Comments (0) | TrackBack (0)