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Wednesday, June 17, 2015

Sign of the Times - The Post-Prom Waiver

The New York Times had an article in last weekend's Style section about the post-prom waiver.  Apparently, in some suburbs, liability conscious parents and schools hosting a post-prom after party are asking teenagers and their parents to sign a waiver.   My initial reaction was, Really?  Has it come to this?  But the more I thought about it, I could understand why some schools and parent- hosts might think it was a good idea. I did a quick search of "post prom waivers" and it seems that they serve several purposes. 

First, they waive liability.  The waiver would probably not be enforceable to stop lawsuits based upon negligence -- none of the ones I found even sought release for negligent acts on the part of the host - and certainly would not be effective to bar suits claiming gross negligence or recklessness on the part of the host.  They generally did not overreach by which I mean they did not seek to waive liability for everything under the sun (like this Borat release). 

Second, and related to the waiver, was an assumption of the risk clause.  This requires the student and the student's parent to knowingly and voluntarily assume the risk of harm relating to the student's participation in post-prom activities.  It seems as though post-prom activities have become much more active than when I was in high school - I found parties where there are extreme sports challenges and what looked like sumo wrestling!(?)  The waivers also contained a medication release form, which given the laws in this area, is a prudent measure.

Third, and most useful, all the post-prom waivers I found established guidelines or rules of conduct.  These clearly outline the school's (or host's) expectations for student behavior as well as parental responsibilities.  They establish, for example, whether the event is a "lock-in" (meaning the students can't leave the premises) and the rules regarding pick-up times and who may attend the event.  Given this is prom night, they also set out very clearly the expectations regarding drugs and alcohol - i.e. there will be NONE of that.  Students and parents know that drugs and alcohol are not allowed, but putting this in the waiver allows the conversation to happen.  More importantly, I think, it communicates to them that the school is not messing around. The language tends to be very express that illegal activity will not be tolerated and police will be called.  Some people may think these types of reminders (and other disclosures) are not useful.  I think it depends upon the disclosure.  In a post-prom waiver, where the students and parents will be reading it for useful information, such as what to bring, etc, it reinforces expectations and allows parents to set up their own rules in the event the student breaks the school rules (i.e. no leaving the house all summer if I have to bail you out of jail at 3am...)   All the waivers I read were also short and, for the most part, clearly written.

Finally, there are the indemnity type clauses.  Unlike exculpatory clauses (which free the school/host from liability), an indemnity clause makes the student responsible for harm caused to others.  Most of the ones I saw seemed fine - they required the students/parents to assume responsibility for any damages they caused.  Again, I don't think this gives the host any more rights than they would otherwise have since you are generally liable for any property damage that you cause.  It is useful, however, for setting expectations for conduct.  Sure, you might have to check some of your wild physical activity -  no whirling dervish dancing around the Ming vases - but from the host's point of view, understandable.  It's also useful for setting expectations after you break the vase.  You can't pretend it's unfair that you have to pay for it because you knew in advance.  Kind of like those "You break it, you buy it," signs in stores.

I'm still not convinced that these waivers are a good idea although I don't think they are necessarily a bad idea as long as they are clearly written, short and, most of all, reasonable and limited in scope.  It's unclear whether they will be enforceable, and again, I think it depends upon how reasonable they are in terms of scope and  process (they are signed well in advance of the event and both the student and a parent/guardian must sign it).  Given our litigious and form contracting society, I don't think they are going away.

 

June 17, 2015 in In the News, Miscellaneous, True Contracts | Permalink | Comments (0)

Monday, June 1, 2015

Opt-out arbitration provisions

As I mentioned in a previous post, I recently took a look at Instagram's terms of use.  I found it interesting that it contained an opt-out provision for arbitration.  A clause at the top of the page states the following in bold:

ARBITRATION NOTICE: EXCEPT IF YOU OPT-OUT AND EXCEPT FOR CERTAIN TYPES OF DISPUTES DESCRIBED IN THE ARBITRATION SECTION BELOW, YOU AGREE THAT DISPUTES BETWEEN YOU AND INSTAGRAM WILL BE RESOLVED BY BINDING, INDIVIDUAL ARBITRATION AND YOU WAIVE YOUR RIGHT TO PARTICIPATE IN A CLASS ACTION LAWSUIT OR CLASS-WIDE ARBITRATION.

(Side note - I found it rather lazy for Instagram not to include section numbers in its TOU.  One of the reasons to have an opt-out provision is to guard against claims of unconscionability as in Hey, they had a choice!  They could have opted out!  It doesn't make sense then to make the user scroll through the entire agreement and try to find the arbitration clause instead of just referring to it). 

The arbitration clause itself permits the user to opt-out "within 30 days of the date that you first became subject to this arbitration provision."  Furthermore, the user has to provide written notice and send it to Instagram's offices. 

Of course, very few users will opt-out.  First of all, very few people read TOU.  Second, a lot of people don't know what arbitration is so they don't know to opt-out.  Finally, Instagram puts a "hurdle" in the user's way - they have to send a written notice.  The last time I had to mail a card, it took me several days.  I had to find an envelope, for one thing.  Then I had to find some stamps.  I don't even know where the post office is near my house and when I asked the cashier at the grocery store, he looked at me as though I were Rip Van Winkle --stamps?  

Contrast the written notice requirement to opt-out with how Instagram updates its TOU: 

"You agree that we may notify you of the Updated Terms by posting them on the Service, and that your use of the Service after the effective date of the Updated Terms (or engaging in such other conduct as we may reasonably specify) constitutes your agreement to the Updated Terms."

So, Instagram only has to post changes to its website but the user has to mail a notice to its headquarters in order to opt-out of arbitration? Why not have all notices be effective if sent via email?  Maybe because some people might actually choose to opt-out of arbitration then.

Instagram's opt-out clause is not unusual - in fact, it's quite common.  The CFPB recently issued  its report on the use of arbitration clauses .  It found that a  fair number of banking and credit card agreements contained provisions allowing consumers to opt-out of arbitration clauses but that very few consumers chose to opt-out.  There were a number of other interesting findings and the report is well worth reading although the report is rather long.  Professor Jean Sternlight of University of Nevada - Las Vegas summarized some of the key findings here

 

 

 

 

June 1, 2015 in Miscellaneous, True Contracts, Web/Tech | Permalink | Comments (0)

Wednesday, May 20, 2015

Rising Minimum Wages

Should salary levels be regulated or mainly left to individual contractual negotiations between the employee and his/her employer?  The former, according to the Los Angeles City Council and governance entities in several other cities and states.  

On Tuesday, Los Angeles decided to increase the minimum salary to $15 an hour by 2020.  Other cities such as San Francisco, Chicago, New York, and Seattle have passed similar measures.  Liberal strongholds, you say?  Think again.  Republican-leading states like Alaska and South Dakota have also raised their state-level minimum wages by ballot initiative.  Some companies such as Walmart and Facebook have raised their wages voluntarily.

But the effect is likely to be particularly strong here in Los Angeles, where around 50% of the work force earn less than $15 an hour.  That’s right: in an urban area with super-rich movie studios, high-tech companies, hotels, restaurants, health companies and much more, half of “regular” employees barely earn a living salary.  In New York state, around one third of workers make less than $15 an hour.  Take into consideration that the cost of living in some cities such as Los Angeles and maybe even more so San Francisco and New York is very high.  In fact, studies show that every single part of Los Angeles is unaffordable on only $15 an hour if a person spends only the recommended one third on housing.  

“Assuming a person earning $15 an hour is also working 40 a week, which is rare for a minimum wage employee, and that they're not taking any days off, they'd be earning $31,200 a year.  An Economic Policy Institute study released in March found that a single, childless person living in Los Angeles has to make $34,324 a year just to live in decent conditions (and that was using data from 2013).”

Opponents, however, say that initiatives such as the above will make some cities into “wage islands” with businesses moving to places where they can pay employees less.  Others call the initiative a “social experiment that they would never do on their own employees” (they just did...)  But “even economists who support increasing the minimum wage say there is not enough historical data to predict the effect of a $15 minimum wage, an unprecedented increase.  A wage increase to $12 an hour over the next few years would achieve about the same purchasing power as the minimum wage in the late 1960s, the most recent peak.”  

Time will tell if the sky falls from the above initiative or if the system in a rich urban area such as Los Angeles can cope.  Said Gil Cedillo, a councilman who represents some of the poorest sections of the city and worries that some small businesses will shut down, “I would prefer that the cost of this was really burdened by those at the highest income levels.  Instead, it’s going to be coming from people who are just a rung or two up the ladder here.”

This is, of course, not only an issue of the value of low-wage work and fending for yourself to not end up at the bottom of the salary chain.  It is a matter of alleviating urban poverty and improving the nation’s overall economy for a sufficient amount of people to better get the economy back on track for more than the few.

May 20, 2015 in Commentary, Current Affairs, In the News, True Contracts | Permalink | Comments (9) | TrackBack (0)

Monday, May 18, 2015

Retirement Investment Brokers Contractually Bound to Act as Fiduciaries

Under a United States Labor Department plan, investment brokers may be required to bind themselves contractually as fiduciaries for their clients in the future.  Only a few states such as California and Missouri require brokers to act as fiduciaries at all times.  In others, brokers must simply recommend investments that are “suitable” for investors based on various factors, but are not required to adhere to the higher fiduciary “best-interest” standard.

The contemplated advantages are two-fold.  First, the rule is thought to better protect investors from broker recommendations that, if followed, would help the brokers earn more or higher fees, but fail to meet investors’ best interests.  A contractually stipulated duty would also help “deflate arguments that brokerages typically raise to deflect blame for bad advice, such as that an investor has in-depth financial know-how.  

Second, arbitration cases would be easier to prove.  This is so because arbitrators currently rely on state laws when determining the standard of conduct to be followed by the brokers, which is one of the threshold issues to be analyzed in investor cases.  A uniformly required fiduciary standard would, it is thought, be more investor-friendly.

Needless to say, there are also contrary views.  For example, some attorneys fear that investors’ lawyers will start or increase a hunt for more retirement account cases to represent.  Others worry about an increased amount of class action cases.

Regardless, given the complexity of today’s investment world, requiring brokers to act as fiduciaries for their clients does indeed seem like the “good step in the right direction” as the president of the Public Investors Arbitration Bar Association recently called the initiative. 

May 18, 2015 in Current Affairs, Legislation, True Contracts | Permalink | TrackBack (0)

Thursday, May 7, 2015

West Virginia Supreme Court of Appeals Refuses to Enforce Unethical Fee-Splitting Agreement

WV SealGary Rich and Joseph Simioni met in connection with an asbestos case involving West Virginia University.  Rich is an attorney.  Simioni has a J.D. but was never admitted to the bar.  Starting in the 1990s, the two men collaborated on two additional asbestos cases and contracted with out-of-state law firms to help them class action litigation.  It appears that until 2002, the men agreed that they would split the proceeds of their work 50/50.  but then Rich announced there would be an 80/20 split in his favor. The parties then proceeded on this basis and committed their agreement to writing in 2005.  

Rich now contends that he was under the impression that Simioni was a licensed attorney, and he did not realize that Simioni was not licensed until 2000 or 2001.  He consulted with the former Chief Lawyer Disciplinary Counsel of the West Virginia State Bar, who told him that Sinioni “might not be able to get paid ethically."

Simioni eventually filed sued in District Court against the out-of-state law firms, seeking recovery based in quantum meruit, unjust enrichment and breach of an implied contract.  The District Court certified the following question to the Supreme Court of Appeals:

Are the West Virginia Rules of Professional Conduct statements of public policy with the force of law equal to that given to statutes enacted by the West Virginia State Legislature? 

The Supreme Court of Appeals answered in the affirmative, at least with respect to Rule 5.4 of the Rules of Professional Conduct. which prohibits fee-sharing between lawyers and non-lawyers..  The Court held for the first time (but based on numerous authorities) that fee-sharing agreements between lawyers and non-lawyers violate public policy.  The parties sought to persuade the court to find an alternative mechanism for compensating Simioni by setting aside the agreement to share fees and compensate Simioni in quantum meruit, but the Court rejected that as an attempt to circumvent the rule.

May 7, 2015 in Recent Cases, True Contracts | Permalink | Comments (1) | TrackBack (0)

Friday, May 1, 2015

Caveat Vendor in a Banksy Sale in Gaza?

Banksy in BethlehemIn March, while I was co-teaching  a course called International Humanitarian Law in Israel and Palestine with Professor Yaël Ronen, I visited Bethlehem with my students.  Among other things, we saw the image at left, attributed to Banksy, on a wall in Bethlehem.

So today's New York Times story about Banksy's other creations in Gaza caught my eye.  The heart of the story, for the purposes of this blog, is that Banksy apparently painted an image of a weeping Greek goddess an the iron door of a destroyed home in Gaza.  An enterprising Gazan artist bought the door for less than $200, saying he wanted to protect the goddess.  The owner of the door was unaware that the painting could be worth hundreds of thousands of dollars.

According to the Times, the local authorities, Hamas, have confiscated the door, and its ownership and value are to be determined by a court.  I'm not sure what law the courts in Gaza would apply to such a dispute.  Does anybody think the buyer of the door has a duty to disclose its possible worth to the vendor?  

May 1, 2015 in In the News, Recent Cases, True Contracts | Permalink | Comments (1) | TrackBack (0)

Friday, April 3, 2015

Playing Fair Down Under

In New Zealand, a ban on unfair terms in consumer contracts has taken effect and will, according to the Commerce Commission, will be enforced starting immediately.   The regulation forms part of the 2013 Fair Trading Act.  Australia introduced a similar ban in 2010.

The Consumer Organization “Consumer NZ” has launched its “Play Fair” campaign to increase awareness of the new law and related consumer issues.   According to Consumer NZ, companies had been given plenty of notice of the upcoming ban and thus to review their contracts in order to remove unfair terms, but had to a large extent failed to do so.

The Act will apply to standard-form consumer contracts often used by electricity retailers, gyms, TV service providers and many others.

But what makes a term “unfair”?  The Act defines a term as unfair if it would “would cause a significant imbalance between the rights of the company and the consumer, is not reasonably necessary to protect the legitimate interests of the company, [or] would cause detriment, whether financial or otherwise, to the consumer if it were to be applied or relied on.”   The Act contains a list of terms that courts are likely to regard as unfair.  This covers terms that would allow a company to unilaterally vary the terms of the contract, renew or terminate it, penalize consumers for breaching or terminating the contract, vary the price without giving consumers the right to terminate the contract, or vary the characteristics of the goods or services to be supplied.  

After intense lobbying by the insurance industry, that industry was exempted from the ban.

Even though this Act is a consumer protection device, only the New Zealand Commerce Commission can, for now, enforce it.  The contemplated fine for violations is $600,000.

In the USA, there are, of course, various statutory and common law protections against unfair terms such as those contained in the UCC as well as fraud protections.  However, the deterrence effect of these does not seem effective in relation to at least some industries.  Alternatively, perhaps the protections are not broad enough, sufficiently well-known, or sufficiently easy to enforce.  Or perhaps people just give up and deal with other companies, or pay what they are asked to do by the companies. 

I personally just spent no less than two hours chatting online with a major health care provider over their sudden allegation that a certain doctor I had used was “not in network” (with me thus allegedly owing a few thousand dollars to the insurance company) despite that particular provider being listed on the provider’s own website as “in network” and the doctor having confirmed this.  Eventually and after numerous contractual and factual arguments, I was able to persuade provider that I was right.  But how many others in my situation would simply give up and cave in to, as was the case, the provider’s repeated bootstrapping arguments that “their ultimate price was fair”?

Only two days later, I heard from a moving company that had agreed to move a car for me for $500 (and confirmed this twice) that the “price is actually $600.”  When I told them no, it is not, they repeated their allegation that “we did not have a contract.”  After telling them a few things about contract formation and modification principles and after declining listening to their attempted, time-consuming warnings about using other companies that were “scam artists,” I am now looking for a new contract another vendor.

Despite whatever legal protections we may officially have in this country against consumer fraud, it is still rampant.  New Zealand’s government enforcement system is interesting, but time will tell if they have more success preventing consumer fraud than we do here.

April 3, 2015 in Commentary, Current Affairs, Legislation, True Contracts | Permalink | Comments (0) | TrackBack (0)

Monday, March 30, 2015

On a Lighter Note: Valet Service Companies Needing to Take Crash Course on Contracts

Earlier this month, Los Angeles-area media reported a somewhat humorous of a valet service that gave away a relatively expensive new car to a random guy claiming that he had "lost the [valet] ticket."  Yup, the valet service actually just gave the car to the man who was sporting an Ohio state tattoo.  (Of course, this story is not funny for the frustrated car owner).

But wait, the story gets weirder than that (it is, after all, LA, where we worry a lot about our cars...): the valet service sent the responsible employee home and referred the customer to his insurance company.  Initial reports indicated that the insurance company did not want to pay for this loss as no theft had occurred... as is always the case, however, the media did not follow up on the end of this story, to the best of my knowledge.

Another valet contract that you must read and that was shared today on the AALS listserv for Contract Professors reminded me of this story.  Hat tip to Professor Davis!

Contract

Valet companies may have to brush up on their contract writing skills soon...

March 30, 2015 in Commentary, Contract Profs, Current Affairs, Famous Cases, In the News, True Contracts | Permalink | Comments (0) | TrackBack (0)

Eric Goldman on Consumer Review Bans

Eric GoldmanWriting for Forbes.com, Santa Clara Law Prof Eric Goldman (pictured) reports on a recent SDNY case, Galland v. Johnston The case is similar to others about which we have blogged recently.  Plaintiffs rent out their apartment in Paris through a website.  The rental agreement associated with the property provides that defendants would “not to use blogs or websites for complaints, anonymously or not."  Notwithstanding this clause, defendants posted reviews of the apartment that were not entirely positive.  In one case, plaintiffs offered a defendant $300 to remove a three-star review from a website.  The defendant refused and complained to the website.  Plaintiff then sued defendants for, among other things, breach of contract, extortion and defamation.

The magistrate judge dismissed all of the claims except the breach of contract claim.  Plaintiffs objected to this disposition.  Defendants did not, which may be a good reason why the District Court let the breach of contract claim stand while upholding the Magistrate's dismissal of the remaining claims.  Indeed, the District Court's opinion did not address the breach of contract claim.  

Professor Goldman expresses surprise that the Magistrate allowed the breach of contract claim to stand.  Other New York courts have found that contracts clauses that prohibit customer reviews are a deceptive business violate New York's consumer protection laws.  Professor Goldman also points out that they violate public policy regardless of New York law.

March 30, 2015 in In the News, Recent Cases, True Contracts | Permalink | Comments (0) | TrackBack (0)

Thursday, March 26, 2015

Water Contracts and Adequate Assurances (to Continue Business as Usual)

Some weeks ago, I blogged here about water rights and shortages in drought-ridden California.  Of course, California is not the only state where contractual water rights interface with development and public health concerns. 

In Ohio, shale driller Gulfport Energy recently filed suit against the town of Barnesville for rights to extract water for Gulfport’s fracking operations.  Gulfport had a contract with Barnesville entitling it to draw water from a local reservoir at one cent per gallon.  Under the contract, Gulfport would be able to draw the water unless the village determined that such action would endanger public health.  Water rights were subsequently also issued to another driller.  In the fall of 2014, the village told Gulfport to stop drawing water from the reservoir because of too low water levels.  Gulfport’s suit now asks for adequate assurances of performance of the water contract to ensure that it can continue its fracking operations. 

Whether that is a good idea is another story.  From a short-term perspective: yes, we need energy preferably domestically sourced to avoid international supply interruptions and the geopolitical problems that are associated with importing energy raw materials.  But fracking and fossil fuel production in general are associated with other severe problems including heavy water usage in the case of fracking.  Such water, the argument goes, is better used for other things such as farming and household consumption. 

Business as usual for fracking companies may not be the best idea seen from a societal point of view.  Contracts rights are only a small part of this much bigger problem.  However, time seems to have come for governments to incorporate escape clauses not only for “public health concerns” into water contracts, but also for drought concerns.  This is not always done, as the above case shows, but such a relatively easy step could help solve at least some contractual disputes.  In times of increasing temperatures and decreasing rainfall in some areas, such contract drafting may well make sense.

March 26, 2015 in Commentary, Current Affairs, Food and Drink, Government Contracting, True Contracts | Permalink | TrackBack (0)

Where Congress Won't Act, Private Ordering Fills a Gap

ThermometerToday's New York Times reports that Microsoft will require the companies with which it partners, its contractors and vendors who employ more than 50 workers, to provide their employees who do work for Microsoft with 15 days of annual paid sick leave and vacation time.  Microsoft expects that it will have to increase its pay to these partners to help them with the added expense of the policy.  

As the Times points out, it is a very American approach to the protection of workers' rights.   Congress will not act and only a few state legislatures have done so.  Microsoft, like other large technology companies, can afford to provide decent wages and benefits to its workers.  However, companies increasingly prefer to contract work out to small companies that do not treat their workers nearly as well.  

The Times notes that the gap is not only between skilled computer programmers and unskilled or semi-skilled janitors or groundskeepers but also between whites and African Americans and Latinos.  While the latter, traditionally-underrepresented minorities account for our 3-4% of tech workers, they account for 75% of janitorial and maintenance workers.  Eschewing Google's and Facebook's approaches of replacing contract workers with its own employees, entitled to company benefits, Microsoft has explained its move in a manner also consistent with the great American tradition of enlightened self interest.  Microsoft general counsel explained that: 1) happy workers are more productive; and 2) sick workers who come to work can infect others.  

This move can have a big impact, especially if other major companies follow Microsoft's lead, but I'm not sure that the effects will all be good for workers.  If a contractor has some workers that work for Microsoft and some that don't, the Microsoft jobs suddenly become highly sought-after.  A company may try to stay below the 50-employee threshold to avoid the private regulation.  Or it may divide Microsoft work among its staff (in the interests of internal morale), which might dilute the effects of the regulation.  If you do only 20% of your work for Microsoft, do you only qualify for three days of vacation/sick leave?  It may take a few years (and a few contracts disputes) to work out the kinks.

March 26, 2015 in Commentary, In the News, True Contracts | Permalink | Comments (0) | TrackBack (0)

Wednesday, March 11, 2015

Contractual Dispute over Pricey Airport Water

We all know the feeling of having to pay twice as much - or more - for food and drink in airports compared to most other places.  Two vendors at the Los Angeles International Airport (“LAX”) are now taking this practice to the next level: they are suing each other for alleged contracts violations and price gouging.

Boutique retailer Kitson Stores runs two stores at LAX.  It apparently charges around $2.55 for a liter of water (roughly a quart) at those stores.  Competitor Hudson Group charges $5 a bottle (size unknown, but presumably roughly the same and expensive at any rate).  Kitson is alleging that Hudson is gouging passengers with its “hugely inflated” water prices and is trying to force Kitson out of business at the airport.  Hudson is countering that Kitson is hardly concerned about consumer price protections, but that this lawsuit is really a diversion from Kitson’s alleged contractual violations. 

Whichever turns out to be the case, airport prices are well known to be very high for everything from chewing gum to dinner.  Perhaps higher-than-usual rent prices are to blame, at least in part.  Of course, airport retailers also enjoy a captive market (almost literally).  Consumers are, however, still allowed to bring an empty bottle to the airport and fill it with free water from, for example, the increasing number of “bottle filling stations” that are thankfully also appearing in more and more airports.  This does seem to be a case of fake altruism, but is nonetheless a lawsuit that may resolve an important issue.

March 11, 2015 in Food and Drink, Miscellaneous, Travel, True Contracts | Permalink | Comments (0) | TrackBack (0)

Thursday, March 5, 2015

Artistic license

Artistic License

The official portrait of former President Bill Clinton has been completed.  See it here.   It was painted in the “conservative realistic style” … maybe a little too realistic and not sufficiently conservative?

According to the artist, Nelson Shanks, the bluish shadow of a person that you see on the mantelpiece next to Clinton is that of Monica Lewinski in her infamous blue dress.  You got that right: the artist himself has admitted that he purposefully scarred the picture just as the Lewinsky scandal scarred Clinton’s second term.  The artist has apparently caught quite some flak for having done this.  Regardless of artistic freedom and setting aside all thoughts about the scandal per se, what is, after all, at issue here is a contract for artwork depicting a former President of the United States of America.  A bit more respect may have been in order.  This was not any regular client having a portrait done; it’s in effect the entire nation that commissioned this work.  Perhaps a subjective satisfaction clause would have been in order here.  Even if it had been any “regular” client, deliberately depicting one’s paying client in a highly controversial light seems to me to be in questionable taste. 

On the other hand, the argument has been made that if the artist had been held to certain contractual stipulations, the portrait of the 42nd President would have been “stiff and untrue.”  

That’s not the case?  Take a look and judge for yourself.  While much has been made of Clinton holding an actual, gash, newspaper – so retro – the strange positioning of his fingers on his hip looks more bizarre to me.  An indication of his alleged two-sided look at what constituted “the truth” in certain contexts?  To me, it looks more like the V sign for, perhaps, Clinton’s ultimate victory over at least some of the political and other challenges he faced.  

 

 

 

March 5, 2015 in Commentary, Government Contracting, In the News, True Contracts | Permalink | Comments (0) | TrackBack (0)

Tuesday, March 3, 2015

Want a Class with that Barrista Job?

Last year, Starbucks announced a new corporate-supported educational program that one year later is still viable: Starbucks will reimburse its full-time workers for taking online classes with Arizona State University.  Partial tuition (58%) will be offered to freshmen and sophomores and full tuition for juniors and seniors as long as credits are earned within the past 18 months so as to keep students on track.  

As you may have noticed if you are a Starbucks customer, very many of its employees appear to be college-aged.  In fact, 70% of Starbucks’ workforce are either in school already or have had to drop out because of various personal difficulties.  

This program seems to be a benefit to employees who cannot afford to go to school full time (or even part time), but who desire and education.  What is remarkable is also how few “strings” are attached to the program.  For example, the employees do not even have to stay with Starbucks after the completion of their degree.  Said CEO Howard Schultz (still the CEO): "We want to attract and retain great people. We want to provide [our employees] with new tools and new resources to have advancements in the company.” 

What is in it for ASU?  This has been said to be a coup for the university, which already has one of the nation’s largest and most highly regarded online programs.   Of course, Starbucks has a large amount of employees with, presumably, many coming and going, so ASU now has access to a large database of potential students, something many universities – private and public - are craving in these competitive times.

For the students and the university, rates may be discounted.  This is normal in this type of situation.   What would truly make a difference would be if the rates could become so reduced for students that they would, in effect, have no out-of-pocket costs altogether. 

What, to me, is interesting about this situation is that a public university has found out workable model for online classes and cooperation with a private business venture when many private universities have not. 

The somewhat strange catch here is that ASU cannot enter into any other arrangement with a for-profit business for four years, but that Starbucks is free to advertise its partnerships with a few other schools.

See the contract at issue here.

See Starbucks’ description of the program here.

March 3, 2015 in Commentary, Current Affairs, E-commerce, Food and Drink, Labor Contracts, Teaching, True Contracts | Permalink | Comments (0) | TrackBack (0)

Monday, February 23, 2015

Contract Modifications – Differing Standards for Pop Stars?

2012 American Idol winner Phillip Phillips has lodged a “bombshell petition” with the California Labor Commissioner seeking to void contracts that Phillips now finds manipulative, oppressive, and “fatally conflicted.”  

Before winning season 11 of “American Idol,” Phillips signed a series of contracts with show producer “19 Entertainment” governing such issues as his management, recording and merchandising activities.  These contracts are allegedly very favorable to 19 Entertainment, for example allowing the company as much as a 40% share of any moneys made from endorsements, withholding information from Phillips about aspects of his contractual performance such as the name of his album before it was announced publicly, and  requiring Phillips to (once) perform a live show once without compensation.  19 Entertainment has also lined up such gigs for Phillips as performing at a World Series Game, appearing on “Ellen,” the “Today Show,” and “The View.”

It is apparently not unusual for those on successful TV reality shows to renegotiate deals at some point once their career gets underway.  Phillips claims that he too frequently requested this, but that 19 Entertainment turned his requests down.  Can he really expect them to agree to post-hoc contract modifications?

Very arguably not.  Under the notion of a pre-existing legal duty, a party simply cannot expect that the other party to a contract should have to or, much less, should be willing to change the contractually expected exchange of performances.  This seems to be especially so in relation to TV reality shows where the entire risk/benefit analysis to the producer is that the “stars” may or may not hit it big.  For hopeful stars, the same considerations apply: their contracts may lead them to fame and fortune… or not.  That’s the whole idea behind these types of contracts.  Of course, if industry practice is to change the contracts along the way and if both parties are willing to do so, they are free to do so.  Otherwise, the standards for contractual modifications are probably the same for entertainment stars as for “regular” contractual parties. 

Another issue in this case is whether an “agent” is a company or a physical person.  Under the California Talent Agencies Act (“TAA”), only licensed “talent agents” can procure employment for clients.   Phillips is attempting to apply the TAA to entertainment companies like 19 Entertainment.  If Phillips is successful, the ramifications may be significant for the entertainment industry in which companies very often negotiate deals with performers without taking the TAA into account.  In Citizens United v. Federal Election Commission, the United States Supreme Court famously gave personal rights to corporations, albeit only in the election context.   Time will tell how California looks at the issue of corporate personhood and responsibilities in the entertainment context.

Adjudications under the controversial TAA are notoriously slow and could leave contractual parites in “limbo” for a very long time.  Time and patience is not what Hollywood parties are known to have a lot of, so stay tuned for the outcome of this dispute.

February 23, 2015 in Celebrity Contracts, Current Affairs, In the News, Legislation, Television, True Contracts | Permalink | Comments (0) | TrackBack (0)

Tuesday, February 17, 2015

Submitting a Law Review Article about Wrap Contracts through a Wrap Contract

I've been away from the submission process for a few years.  In the meantime, Scholastica has entered the picture, which from an author's view is simply an expensive headache, and more journals are encouraging authors to submit directly through either e-mail or their own online submissions process. 

Having been a historian before becoming a law professor, I am still grateful for the advantages of student-edited law journals and authors' ability to submit to scores of journals simultaneously.  I still believe that this process is better for authors and not significantly less arbitrary that double-blind peer review.  Lots of scholarship gets published that does not end up getting used or cited under both systems, but the peer review process banishes lots of possibly meritorious scholarship to the dung-heap of history based on the opinions of two people whose reasoning might be insufficient to justify such a heavy penalty.

That said, I do find a new feature of online submission processes disquieting.  At least one journal that encourages authors to submit through their online submission form features a Submission Agreement that includes a link to a separate page containing the journal's "attribution and usage policies."  The latter are incorporated by reference, and thus one must agree to them in advance before submitting the article.  There is nothing particularly onerous in the Submission Agreement or the usage policies, but the problem is that authors submit to dozens or scores of journals.  The journals cannot really expect authors (or their administrative assistants who submit on their behalves) to read through boilerplate terms.  So there we have it -- forms that purport to bind law professors to terms to which they have not meaningfully consented.  This is especially ironic if, like me, you have been writing about the dangers of form contracts and the degraded version of "consent" in this context. 

The practice is especially irksome as the submission process does not otherwise involve a contract.  When I submit my article to multiple journals for publication, I am submitting an invitation for offers.  I have no obligation to the journals, and they have no obligation to me.  They don't even have to read my piece before rejecting it, nor do they have to respond in any way to me.  And if they do offer to accept my piece (which, note, is typically described as an "offer to publish" not as an "acceptance"), I can reject that offer and go merrily on my way.  

The introduction of form contracts at the submission state --  a point at which the parties have no legal relationship -- is simply unnecessary.

February 17, 2015 in Commentary, True Contracts | Permalink | Comments (0) | TrackBack (0)

Tuesday, January 27, 2015

A Contract to Kill but no Intent to

A young Norwegian man has been fined $1,300 for accepting a contract to kill without the intent to follow up on it.  Yes, you read that right: all the authorities could charge this man with was contractual fraud.  Another 21-year old man ordered the killing of a teenage girl who had rejected the man’s romantic advances.  The punishment for the “offeror”?  Two years in prison with most of the sentence suspended because the suspect confessed.

Good thing that these men were caught and convicted of something… sort of a gruesome twist on the old, classic Al Capone story (of course, Capone only pled guilty to tax evasion and prohibition charges).  I know that the Scandinavian countries do not believe in the rehabilitative effects of relatively severe sentences such as those often dished out in the USA, but still...  Two years and $1,300 for an attempted contract on a teenage girl’s head?  That seems too lenient to me. 

January 27, 2015 in Famous Cases, In the News, Miscellaneous, True Contracts | Permalink | TrackBack (0)

Wednesday, December 31, 2014

Flying the Less Friendly Skies

Last month, United Airlines and Orbitz filed a by-now famous lawsuit against the 22-year-old computer specialist who created the website Skiplagged.com.  This website helps consumers find the cheapest round-trip airfare possible by buying tickets to a destination to which the traveler does not actually intend to travel, but instead getting off at a layover point which is the truly intended destination and discarding the last portion of the ticket.  Roundtrip tickets to certain popular destinations are often much cheaper than to other destinations sought by fewer passengers even though the more popular destinations are further away from one’s point of origin. 

To not cause the airline and other passengers undue trouble and delays, this practice, of course, requires not checking in luggage which, it seems, fewer and fewer travelers do anyway (next time you fly, notice the rush to get on board first with suitcases often much bigger than officially allowed and airline personnel deliberately ignoring this for reasons of “competition”).

The cause of action for this lawsuit?  “Unfair competition,” and breach of contract because of “strictly prohibited travel,” and tortuous interference with contract.

Unfair competition?  I admit that I have not yet read the rather long complaint, but I look forward to doing so very soon.  At first blush, however, how can “unfair” can it really be to assist consumers in finding airfare that they want at the best prices available?  United Airlines recognizes that there is a discrepancy between its prices to very popular destinations and others on the way, but claims [cite] that if many people “take advantage” of that price differential, it could “hurt the airlines.”  Come again?  Does it really matter that a customer – with no checked-in luggage – pays whatever price the airline itself has set but simply decides not to use up the entire item purchased?  Doesn’t that simply let the airline save gas and potentially give the empty seat to potential stand-by customers?  Does it matter to a newspaper that I choose to not read the sports pages? Must I eat the heal of my bread even though I don't like it?  What if I really don't like my bread and would rather eat a donut instead, as I thought might be the case?

The issue of breach of contract is arguably a closer one.  If airlines “strictly prohibit” the practice of only using part of a ticket, it may be promissory fraud to buy a ticket if one intends at the time of purchase to only use part of it.  This could also relate to the purchase of a round-trip ticket only to use it one-way as that too is often cheaper than a one-way ticket, as Justice Scalia found out himself recently.

The Skiplagged.com creator argues that he is only taking advantage of “inefficiencies” in airline travel that travelers have known about for a long time.  To me, it seems that airline contracting should work both ways as other types of contracting: airlines take advantage of their bargaining positions as well as their sophisticated knowledge of current and future air travel supply and demand structures.  They should do so!  I applaud them for that.  Jet travel has certainly made my personal and professional life much better than without relatively cheap air travel.  But every first year contracts law student also knows (or should know!) that contracting is not and should not be a one-way street.  Consumers too are getting more and more sophisticated when it comes to airline travel and other types of online contracting.  Websites enable us to inform ourselves about what we wish to spend our money on.  As long as consumers do not break the laws or violate established contracting principles, that does not strike me as “unfair competition,” that is simply informed consumerism in a modern capitalist society from which airlines and others have already benefited greatly.

Airlines, wake up: how about working with your customers instead of trying to fight them and modern purchasing trends?  How’s this for a thought: start offering one-way tickets for about half of a round-trip ticket just like other transportation vendors (trains, buses, subways) do.  Don’t you think that could set you apart from your competition and thus even earn you more customers?  If you can fly for a certain amount of money to a certain city, let people pay that only and then simply sell a second ticket for the remaining leg to the more popular end destination where the same plane is headed anyway.  Let people off the bus if they want to!  Let some one else on instead.  It doesn’t seem that hard to figure out how to work with current purchasing trends and your customers instead of resisting the inevitable.

For another grotesquely inappropriate lawsuit by United Airlines against its own customer, see Jeremy’s blog here.

I will blog more on this issue over the days to come.  For now, I’m glad I don’t have to head to an airport.  Happy New Year!

December 31, 2014 in Commentary, Contract Profs, Current Affairs, E-commerce, Famous Cases, Travel, True Contracts, Web/Tech | Permalink | Comments (0) | TrackBack (0)

Tuesday, December 9, 2014

California Goes after Shared Ride Companies

Jeremy Telman and I both recently blogged on the intense criticism of and focus on “shared economy” companies such as Uber, Lyft and airbnb.

In what seemed an inevitable turn of events, the Los Angeles and San Francisco district attorneys filed a consumer protection lawsuit on 12/9/2010 against Uber for making false and misleading statements about Uber’s background checks of its drivers.  George Gascon, the district attorney for San Francisco, calls these checks “completely worthless” because Uber does not fingerprint its drivers.  Uber successfully fought state legislation that would have subjected the company’s drivers to the same rules as those required of taxi drivers.  Allegedly, Uber has also defrauded its customers for charging its passengers an “airport fee toll” even though no tolls were paid for rides to and from SFO, and charging a “$1 safe ride fee” for Uber’s background check process.  California laws up to $2,500 per violation.  There are “tens of thousands” of alleged violations by Uber.  However, even that will likely put only a small dent in Uber’s economy as it is now valued at $40 billion (yes, with a “b”). 

Lyft has settled in relation to similar charges and has agreed to submit information to the state to verify the accuracy of its fares (although not its background checks).  It has also agreed to stop picking up passengers at airports until it has obtained necessary permits.  Prosecutors are continuing talks with Sidecar.

Time will tell what prosecutors around the nation decide to do against these and similar start-ups such as airbnb and vrbo.com, which are also said to bend or outright ignore existing rules.

The Los Angeles Times comments that the so-called “sharing economy” companies face growing pains that “start-ups in the past didn’t – dealing with municipalities around the world, each with their own local, regional and countrywide laws.”  It is hard to feel too sorry for the start-ups on this account.  First, all companies obviously have to observe the law, whether a start-up or not.  Today’s regulations may or may not be more complex than what start-ups have had to deal with before.  However, these companies should not be unfamiliar with complex modern-day challenges as that is precisely what they benefit from themselves, albeit in a more technological way.  Finally, there is something these companies can do about the legal complexity they face: hire savvy attorneys!  There are enough of them out there who can help out.  But perhaps these companies don’t care to “share” their profits all that much?  One has to wonder.  Sometimes, it seems that technological innovation and building up companies as fast as possible takes priority over observing the law. 

December 9, 2014 in Commentary, Current Affairs, E-commerce, Famous Cases, In the News, True Contracts, Web/Tech | Permalink | Comments (0) | TrackBack (0)

Friday, November 21, 2014

Happy Thanksgiving: Here's a Special Adhesion Contract Just for You

A student shared with me this flyer that her father received.  I have provided a large reproduction so that readers can read the fine print, which is really the focus of this post.

IMG_0663

 On my reading, the meaning of this is as follows: if

  • You made the mistake of having previously subscribed to the newspaper; and
  • You have the temerity to continue living at the same address; and
  • You do nothing else,

A newspaper will be delivered to you on Thanksgiving.  

Regardless of what you do with it, your inaction will be deemed consent to future deliveries and you will be charged unless you call the newspaper and put a stop to it.  

This "offer" is a turkey, and those receiving it should tell the newspaper to stuff it.

November 21, 2014 in Commentary, True Contracts | Permalink | Comments (2) | TrackBack (0)