Wednesday, December 20, 2017
I may have just used the recent royal engagement news as the basis of my Contracts final hypo, so I read with interest this complaint out of the Eastern District of New York, Purcell v. Pressman, 17-cv-6879 (behind paywall), that got sent to me under an alert. (I have the alert set up for "fanfiction," because of my scholarly interest in fan activities, and sometimes I get the most random hits on it, like this one.) The complaint is behind a paywall, but the New York Post has an article up that summarizes both this complaint and the previous fraud complaint filed in Connecticut District Court by Pressman against Purcell a few days before Purcell filed her lawsuit.
Basically, Purcell's complaint alleges a passionate and intense relationship begun in a hotel in Puerto Rico and continued over lavish vacations in Antigua and New York City. At one point, Pressman allegedly drew up a contract between his alleged business Triton and Purcell, containing certain provisions under which the company agreed to pay some of Purcell's expenses, although neither party ever signed the contract. The contract, according to the allegations of the complaint, was meant to be a gesture of commitment on the part of Pressman to his romantic relationship with Purcell. Pressman's complaint denies ever drafting the contract.
The allegations continue: Purcell and Pressman moved in together. A few days later, Pressman suffered a medical emergency and was rushed to the hospital after Purcell called 911. Pressman also disputes this version of the tale in his complaint, claiming he called 911 himself after Purcell failed to assist him; as you can tell, Pressman's complaint tells a different story about the relationship with Purcell, accusing her of defrauding him, instead of Purcell's opposite allegations.
While in the hospital, Purcell claims to have answered Pressman's ringing cell phone and to have realized only then that Pressman was married. The complaint then continues to allege further events in the relationship and then asserts a number of causes of action, including breach of contract based on the contract Pressman had allegedly drawn up.
The complaint concedes that neither party ever signed the contract, but Purcell alleges that she acted in reliance on the enforceability of the contract and so, therefore, the contract should be treated as valid, with the execution of it merely a formality. As I've stated, Pressman has denied ever drafting the contract.
There are no other pleadings in this case yet.
Tuesday, December 19, 2017
A recent case out of the Seventh Circuit, ADM Alliance Nutrition, Inc. v. SGA Pharm Lab, Inc., Nos. 16-2331 and 16-2953, reminds us all that signing a release of unknown claims can, indeed, do exactly that. (You can listen to the oral argument here).
The parties in question were two sophisticated commercial parties with presumably access to legal advice if they desired it. When they terminated their business relationship, they signed a release from all claims, known or unknown. ADM then later discovered alleged fraud on SGA's part during the course of their former business relationship and sought to sue for this fraud. The Seventh Circuit, however, enforced the plain language of the release, noting that releases are permitted to encompass unknown fraud claims:
Two sophisticated businesses signed an agreement to walk away from each other here. ADM chose to relinquish its right to bring any and all claims arising out of the Purchase Agreement, whether known or unknown. It also agreed that no representations were made to induce it to enter into the Termination Agreement other than those contained in the agreement.
Therefore, the release was enforced. Let this be a word of warning: Be careful when signing releases.
Monday, December 18, 2017
Venkat Balasubramani over on Technology and Marketing Law Blog has a piece on the defeat of a recent lawsuit against Facebook based on Facebook's tracking of logged-out users on third-party websites. The court had previously rejected other claims, which left only contract-based claims, which the court also rejected in this most recent ruling. Basically, Facebook's statements about not tracking logged out users could not be found in the terms of service. Instead, Facebook made them in other documents, like data use policies and help center pages. Therefore, the court found there was no contractual provision governing Facebook's behavior.
Wednesday, December 6, 2017
A recent case out of the Southern District of New York, Nusbaum v. E-Lo Sportswear LLC, 17-cv-3646 (KBF) (behind paywall), granted summary judgment based on a chain of emails between an employer and employee. The emails were discussing a severance provision, and the last email in the chain read in relevant part, "I am agreeing to the below . . . . I will sign when I get back." The parties never executed any further document.
The court nevertheless found an enforceable contract between them. Although it was true that the emails seemed to contemplate a final agreement, it was also true that both parties regarded the negotiations as concluded and the agreement reached at the time of the final email. The employee than spent nineteen months performing under this perceived agreement. It was clear from the emails that the parties had reached agreement on the material term, and the matter was not so complex that it needed to be reduced to a formal writing. Indeed, the employer admitted it usually did not reduce employment agreements to a formal writing. Therefore, the emails demonstrated that the parties had reached agreement and they were enforceable.
Monday, December 4, 2017
If you're looking for fact patterns involving consideration, a recent case out of the Northern District of New York, West v. eBay, Inc., 1:17-cv-285 (MAD/CFH) (behind paywall), has one for you.
The following allegations appeared in the complaint: West worked as a consultant for eBay. As a consultant, West told eBay about a business plan he had which represented a "unique business model" for virtual marketplaces. West said he was cautious about sharing his business plan, and eBay promised to keep the business plan confidential. West then sent the business plan to eBay. eBay subsequently promised to compensate West if it used the business plan. eBay then developed a mobile app that West alleged used the business plan. eBay, however, stated that the app was "independently conceived" by other eBay employees. This lawsuit followed, and eBay moved to dismiss West's complaint.
One of eBay's asserted grounds for dismissal was a lack of adequate consideration for the contract alleged in West's complaint. eBay claimed that the business plan was not "novel" and so had no value and could not serve as consideration. The court noted that under New York law, a not-novel idea can be adequate consideration if it was novel to the party to whom it was being disclosed. This requires a fact-specific inquiry. At the motion to dismiss stage, West had asserted enough facts that the business plan was idea was novel to eBay, meaning that it could serve as adequate consideration for the contract.
There were other causes of action and arguments involved that I'm not going to get into here, but the complaint also contained promissory estoppel and unjust enrichment claims that also survived the motion to dismiss, if you're interested.
Friday, December 1, 2017
Montana brings us an anticipatory breach case about a Mexican restaurant, Bridger Del Sol, Inc. v. VincentView, LLC, DA 17-0186.
Bridger Del Sol ("BDS") leased some property from VincentView for the purpose of operating a "casual, young, fun Mexican restaurant." I appreciate these adjectives. BDS's Mexican restaurant sounds like a place I'd want to be friends with.
BDS opened its casual, young, fun restaurant but the upstairs tenants turned out to not be so keen on their hip new downstairs neighbor, complaining about noise and cooking smells. VincentView then sent BDS a Notice of Default and stated that it would take over the premises prior to the expiration of the lease unless BDS stopped playing music and emitting cooking odors.
The court characterized that as an anticipatory breach on VincentView's part. As the court noted, "Restaurants commonly play music and must cook. Thus, VincentView's new rules were not reasonable or fair to BDS." This was therefore a breach of VincentView's duty of good faith and fair dealing and VincentView would have been unjustified in retaking the premises as it threatened unequivocally to do.
Thursday, November 30, 2017
I always struggle to think of examples of illegal contracts other than contracts to kill people, which makes for a dramatic class discussion but I fear might cause the students to write off illegal contracts as a subject better suited for Breaking Bad or something. So I was delighted to come across this recent case out of Michigan, M-D Investments Land Management, LLC v. 5 Lakes Adjusting, LLC, No. 336394 (behind paywall), dealing with an illegal contract.
While the contract is found illegal in this case, the facts are not glamorous. The plaintiff hired the defendant to adjust its fire insurance claim and signed a contract for the services. Later, the plaintiff filed this action seeking a declaration that the contract between the parties was illegal as against public policy, and therefore voidable at the plaintiff's option. The issue was that the contract had not been approved by the Department of Insurance and Financial Services ("DIFS") as required by Michigan statute.
The trial court found the contract in violation of the statute and thus voidable, and this appellate court agreed. The statute required the adjuster to seek approval from DIFS of its contract, and the defendant's failure to do so, no matter the reason, made the contract at least voidable at the plaintiff's option (which the plaintiff had chosen to exercise), if not void altogether.
The defendant argued that it has since obtained DIFS approval of its contract. However, it was undisputed that it did not have this approval for the entire time the contract with the plaintiff was in effect. Thus, the contract could not be saved by after-the-fact approval.
Wednesday, November 29, 2017
As a recent case out of Utah, Desert Mountain Gold LLC v. Amnor Energy Corp., No. 20160654-CA, reminds us, if your contract tells you what to do, you'd better do it.
In the case, the two parties had entered into a contract regarding mining claims. Desert Mountain allegedly breached the contract, which Desert Mountain disputed. Under the terms of the contract, in the event of a disputed breach such as this, the parties were required to "hold one informal meeting" before resorting to legal proceedings. Amnor sent Desert Mountain a communication stating that it was "willing to meet to discuss" the dispute. When Desert Mountain never took them up on the offer to meet, Amnor argued that it was justified in treating the contract as breached.
The court disagreed, because the court found that Amnor's statement was merely "casual." That was not enough to fulfill the requirement of holding an informal meeting. It should proposed a time to meet. Further, Amnor did not argue that Desert Mountain was in breach until fourteen months later, when Desert Mountain accused Amnor of being in breach for missing a royalty payment. The court said that violated the contract's "demand that it promptly seek legal action in the event that an informal meeting proved to be unsuccessful."
I quoted that in full because I think it's an interesting finding. The relevant clause as excerpted by the court states that, if the informal meeting is unsuccessful, the dispute "shall be resolved in a legal proceeding." The only place "promptness" seems to show up as a requirement is when the court reads it in. It's unclear what timeline the court would have viewed as prompt, given the contract doesn't provide for one, except that this one wasn't it.
The lesson from this case seems to be that if your contract calls for an informal meeting, you'd better not be casual about asking for it. Your informal meeting demands a little more proactive effort on your part. After all, we all know when people vaguely say "We should get together soon," no plans ever materialize!
Tuesday, November 28, 2017
I spent my Thanksgiving fretting about net neutrality, so I thought for my first blog entry back from the holiday I'd let us indulge in a bit of speculation about Chip and Joanna Gaines and their future plans. My love for HGTV is well-known to my Contracts students, as I am constantly mining it for hypos, so I read with interest this Vanity Fair piece stating that Chip and Joanna from "Fixer Upper" have pitched another show to other networks. The article notes that Chip and Joanna's contract with HGTV's parent company probably prohibits them from doing another home-improvement show for another network, so it speculates that they're pitching some other type of show, possibly a talk show.
Would you watch Chip and Joanna do a non-home-improvement show? What kind of show? And do you think networks will successfully negotiate for broader non-competes to keep their stars off competing networks altogether in the future?
Tuesday, November 21, 2017
As widely reported elsewhere such as by David Frakt in The Faculty Lounge, law schools seem to be turning desperate to hide their student recruiting practices and ABA communications (see, e.g., Desperation Times at Thomas Cooley). That blog post was cited to by the ABA in its brief in opposition to a motion filed by the Cooley law school for a temporary restraining order and preliminary injunction in an attempt to prevent the ABA from publishing a letter online stating Cooley's noncompliance with at least one accreditation standard.
Of course, law students choosing to attend law school execute legally binding contracts with their schools. So do employees choosing to work for these schools, many of which seem to be on the brink of discontinuation of operations. For how much longer can we as law schools continue defending _not_ telling applicants the real truth about their prospects for passing the bar given our applicants' LSAT scores which are, we have to admit, highly determinative in predicting ultimate bar passage rates? Is what we do ethical and professional? Do we even follow contract laws against fraud in the inducement, or torts fraud laws, when we as schools have information that could and likely is crucial to applicants' decision-making?
David Frakt developed what he calls a "risk band" that correlates LSAT scores and students' risk of failing the bar. Taking that even further, shouldn't applicants be told their _individual_, percent-wise chance of passing the bar? If, for example, students know that with an LSAT score of 143 (this is just a random example), they have virtually zero chance of passing the bar, would they still execute a three-year contract with a law school that may cost them upward of $100,000? I doubt it. More honesty and transparency is clearly required in both the law school hiring and admissions world.
Wednesday, November 15, 2017
I love when I reach the end of the semester teaching contracts because everything is still extra-fresh in my mind and every case starts to read like an exam hypo to me. This recent case out of New York, GB Properties NYC LLC v. Bonatti, 503564/2017, discusses time is of the essence issues in the context of a real estate contract.
The parties entered into the contract on July 28, 2016, and while no date was set for closing in the contract, the contract stated it should take place within 60 days of the contract's execution or on some other mutually agreeable date. Sixty days after execution of the contract, the plaintiff had not provided the necessary information to close. Defendants' counsel informed plaintiff's counsel that the closing would be scheduled for December 6 and that the date was "of the essence." Plaintiff's counsel requested an extension, which was agreed to and set for December 28, but time was still deemed to be of the essence in the extension document.
On December 28, the defendants appeared for the closing but the plaintiff never appeared. Two days later plaintiff's counsel requested an extension to January 12. The defendants agreed only if the plaintiff timely provided additional money to be held in escrow; otherwise they would consider the parties' contract to be concluded for violation of the time is of the essence condition and they would keep the money already in escrow (as had been provided in the contract by way of liquidated damages). The plaintiff did not provide extra money. On January 27 the defendants entered into a contract to sell the property to someone else. This lawsuit resulted, with the plaintiff seeking specific performance of the contract.
The defendants maintained that both parties agreed that the December 28 date was of the essence and the plaintiff was not ready to fulfill its contractual obligations on that date. Therefore, the plaintiff breached the contract and the defendants were entitled to declare the contract terminated and maintain the down payment as liquidated damages. The plaintiff, however, alleged that the failure to close was the defendants' fault because the defendants had not provided clean title by the closing date and so the defendants were not ready to close on December 28.
The court found that the defendants were ready to close on December 28 and that the extension negotiated between the parties unequivocally made the December 28 date of the essence. The plaintiff's failure to appear on that date was a breach of contract. The plaintiff itself admitted that it did not have the money for the closing on that date. Therefore, the plaintiff was in breach and the defendants were entitled to retain the down payment pursuant to the liquidated damages provision in the contract.
Monday, November 13, 2017
A recent case out of the District of New Mexico, Laurich v. Red Lobster Restaurants, LLC, No. CIV 17-0150 JB/KRS (behind paywall but you can read an article written about the complaint here), enforced an arbitration agreement between Red Lobster and a former employee, Laurich. Laurich was working at a Red Lobster when the restaurant chain was sold to the current corporate entity, the defendant in this case. When the defendant bought the restaurant chain, Laurich was informed during a shift that she had to look over an employment agreement. She asked for a paper copy but was told there were none and it was only available on the computer. She was also told that she had to sign the electronic document or she would be taken off the work schedule. So Laurich signed the document and went back to work. Unsurprisingly, the document contained an arbitration provision.
Laurich alleged that a fellow employee at Red Lobster eventually began harassing her on the basis of her race and sex, escalating to physical assault. She complained to her supervisors and eventually requested that the other employee not be there while she was there. She then learned that Red Lobster had terminated her employment. Laurich then filed this complaint and Red Lobster moved to compel arbitration under the agreement.
Laurich argued that the arbitration agreement was both illusory and unconscionable. The court found that it was not illusory: Laurich agreed to arbitrate and Red Lobster agreed to continue employing Laurich. That was sufficient consideration on both sides. It wasn't as if Laurich was already working for this corporate entity when she was asked to sign the agreement "out of the blue." Rather, she was presented the agreement as soon as Red Lobster became her employee.
Nor was the agreement unconscionable. The agreement was only half-a-page long and it was similar to one Laurich had been working under before. And the threat to be taken off the work schedule was only a temporary threat, not a threat of termination. So there was no procedural unconscionability, nor was the arbitration agreement substantively unconscionable. Both sides were bound by the clause, and Laurich was excused from paying arbitration fees.
Therefore, the court enforced the arbitration agreement.
Friday, November 10, 2017
When I teach accord and satisfaction, I always remind my students, "Don't forget, for this to work, there has to be a good faith dispute!" A recent case out of Illinois, Piney Ridge Properties, LLC v. Ellington-Snipes, Appeal No. 3-16-0764, carries the same reminder. The defendant took out a mortgage of almost $26,000. Although his monthly payment was over $600, he paid only $354 a month, which he did for a little over a year, and then stopped paying altogether. The mortgage company filed a foreclosure action and asserted that the defendant owed around $10,000 on the mortgage. The defendant by letter to the mortgage company's counsel agreed that that was the amount he owed. However, about a year later, while the foreclosure action was still in progress, the defendant sent the mortgage company a check for $354 on which he wrote "Acceptance of this check constitute [sic] payment in full of account." The mortgage company cashed the check. The defendant then filed a motion to dismiss the foreclosure action, arguing that his check constituted an accord and satisfaction on the mortgage debt.
The parties agreed that the check had a conspicuous statement that it was to fully satisfy the mortgage debt, and they agreed that the mortgage company cashed the check. However, the court noted that an accord and satisfaction can only be successful if there is a bona fide good faith dispute about the debt. The defendant had already admitted that he owed around $10,000; he was not disputing the amount. The court, in fact, concluded that it was likely that the defendant's action was done "in hopes of deceitfully escaping his larger mortgage debt." There being no good faith dispute between the parties, an accord and satisfaction did not occur here.
Thursday, November 9, 2017
I mean, our entire society is filled with contracts, so it's no surprise that Harvey Weinstein was surrounded by a web of contracts designed to protect himself from accusations. Not just the NDAs I've previously discussed, but also contracts with his lawyer and with the investigators they hired. Not to the mention the interaction between his contracts with the National Enquirer's publisher and the National Enquirer's information. Because Dylan Howard at the National Enquierer's publisher considered himself to have to act in Weinstein's best interests because of other business deals, it affected the way National Enquirer used the information gained by its reporters.
You can read the whole story here. It's extremely lengthy and I have not done it justice at all in this tiny blog entry, but it's got a lot about contracts there: what they said, why they existed, what was being done under them, etc. Just...a lot of contracts. All of them to keep people silent.
Sunday, November 5, 2017
St. Vincent de Paul trademark battle falters on breach of contract and promissory estoppel, but unjust enrichment survives
I think there is sometimes an impression out there that implied-in-fact contracts can be used to save all situations where formal contracts weren't executed, but that is definitely not the case. Implied-in-fact contracts still require some allegation of contractual intent between the parties. A recent case out of the Western District of Wisconsin, National Council of the U.S. Society of St. Vincent de Paul, Inc. v. St. Vincent de Paul Community Center of Portage County, Inc., 16-cv-423-bbc, reiterates this. (Actually, this case dates from late May, but just crossed my inbox now. No idea why, but I'll blog it for you anyway!)
The case is a trademark dispute over several trademarks owned by the plaintiff. The plaintiff sued the defendant for trademark infringement and the defendant asserted a number of counterclaims, including breach of contract. The defendant's breach of contract claim was based on a "contract implied in fact" because the plaintiff allegedly knew (either constructively or actually) about the defendant's use of the marks and the course of dealing between the parties created an implied contract regarding this use. But the complaint failed to show any intention to contract between the parties. Rather, its allegations illustrated that the parties coexisted but that they did so independent of each other.
Even if there was an implied-in-fact contract, though, it would be terminable at will, meaning that the plaintiff could terminate it when it objected to the arrangement. The court refused to infer that any implied-in-fact contract waived the plaintiff's trademark rights against defendant in perpetuity, considering that there was so little evidence of any contractual intent in the first place.
The defendant next asserted promissory estoppel but there was no allegation the plaintiff had ever made any promise that the defendant could rely on. The defendant's unjust enrichment claim, however, was allowed to proceed. The defendant had alleged that the plaintiff would benefit unjustly from the goodwill the defendant had built up in the community and that was enough to survive the motion to dismiss.
Saturday, November 4, 2017
A recent case out of the Southern District of New York, Al Hirschfeld Foundation v. The Margo Feiden Galleries Ltd., 16 Civ. 4135 (PAE) (the decision is behind a paywall, but you can read a news account of it here), is another contract interpretation case, this one involving a contract between the late cartoonist Al Hirschfeld and the art galleries that represented him. There are many things at issue in the case, among them the galleries' sale of giclees, "high-quality photostatic reproductions of existing works." The Foundation argued that the Galleries did not have the right under the contract to sell these giclees. The Galleries of course argued that they did.
The contract language at issue was a clause giving the Galleries the ability to reproduce works "in connection with [the Galleries'] promotion, advertising and marketing in furtherance of [the Galleries'] rights under this . . . Agreement." But the court found that this was a limited carve-out that did not extend to giclees. The reproductions done under this clause were meant to further the rights of the Galleries, not to be freestanding rights, which the giclees were. There was no indication that the parties intended the Galleries' ability to reproduce works to be extended to include the giclees.
There were lots of other issues in this case. I've just confined myself to this one in the interest of space.
Thursday, November 2, 2017
This recent case out of Nevada, Edy v. McManus Auctions, No. 70737 (behind paywall), caught my eye because it has facts that sound like a hypo. Basically, Edy attended a McManus auction. Prior to the auction, he examined what was purported to be a ruby pendant with a certificate estimating its value as $127,500. At the auction, Edy won the pendant with a bid of $15,842. However, when he brought the pendant to be appraised, he learned it was not a ruby and was only valued at $8,675.
Edy sued for breach of contract, unjust enrichment, and fraudulent misrepresentation, inter alia. However, his fraudulent misrepresentation claim was struck after he failed to submit a timely damages calculation pursuant to a court order. On an incomplete appellate record, the court found that the district court did not abuse its discretion in striking these claims. That left a contract claim without any allegations of misrepresentation, and the court found that the contract entered into at the auction was valid and binding. So Edy lost.
However, a concurrence in this case talked more about the misrepresentation allegations. The concurrence agreed that the district court's striking of the allegations was not an abuse of discretion, but the concurrence went on to analyze those allegations as if they have been permitted. McManus, at trial, admitted that the pendant was shown before the auction with a certificate claiming it was a ruby worth $127,500, just as Edy had claimed. McManus also testified that it knew there was a reserve price of $10,000, meaning that was the minimum acceptable bid, which was obviously far lower than the estimated value. Nevertheless, McManus did not independently verify the pendant nor did it disclose to the bidders that it might not be genuine or that it had such a low reserve price nor did it allow the bidders to get independent appraisals before the auction. Representations of value, the concurrence noted, are usually tricky bases for fraud, but here the pendant was unequivocally presented as a genuine ruby worth $127,500. The concurrence thought that was sufficient to constitute representations on behalf of McManus, had those allegations not been struck. But, without an adequate appellate record, the concurrence agreed that the district court's decision could not be reversed.
This case is a little tragic to me. I'm not sure what happened at the district court level, but it seems like the concurrence thinks the auction company was behaving questionably here. The concurrence stands as a warning to the auction company to be cautious about its practices in the future.
Wednesday, November 1, 2017
Court finds terms are not ambiguous when their dictionary definitions are consistent with the contract
We just finished talking about contractual ambiguity in my contracts class, so I was happy to see this recent case out of the Fourth Circuit, SAS Institute, Inc. v. World Programming Ltd. ("WPL"), No. 16-1808 No: 16-1857 (behind paywall), discussing that very issue in the context of a software license agreement. This is actually part of a much larger case with important copyright implications for computer software code, but, given the subject matter of this blog, I'm focusing on the contract claims. You can read the opinion of the Court of Justice of the European Union on the copyright questions here.
Among other things, the parties were fighting over the interpretation of a few of the contractual terms between them. However, the court reminded us that mere disputes over the meaning of a contract does not automatically mean that language is ambiguous. In fact, the court found here based on ordinary dictionary definitions that none of the terms were ambiguous.
First, the parties were fighting over a prohibition on reverse engineering. The court looked to dictionary definitions of "reverse engineering" to arrive at a definition that also made sense in the context of the contract. WPL tried to introduce extrinsic evidence on the meaning of the term but the court found there was no reason to turn to extrinsic evidence since the term was not ambiguous.
The parties were next fighting over the meaning of the license being for "non-production purposes only." The court construed this to have its "ordinary meaning" as forbidding "the creation or manufacture of commercial goods." WPL argued that the phrase had a technical meaning in the software industry, but the court did not find that the parties had intended to use this technical meaning. The dictionary definitions supported the court's construction of the phrase as unambiguous.
Tuesday, October 31, 2017
A recent case out of California, Diaz v. Hutchinson Aerospace & Industry, Inc., B271563, has a nice, organized unconscionability analysis that leads to finding an arbitration clause unenforceable.
The case concerns an employment agreement signed by Diaz with his employer Hutchinson. The employment contract was indisputably an adhesion contract, because it was distributed pre-printed to employees with no opportunity to negotiate. That does carry some degree of procedural unconscionability but the court characterized it as minimal, since it was not accompanied by any other elements of surprise or sharp dealing. Given the low degree of procedural unconscionability, the court required a high degree of substantive unconscionability.
Unfortunately for Hutchinson, that high degree of substantive unconscionability was met. First, the arbitration provision was one-sided: only claims against the employer were required to go to arbitration, not claims against the employee. Second, the arbitration provision limited discovery in such a way as to make it impossible for the employees to vindicate their rights.
Because this high degree of substantive unconscionability combined with the procedural unconscionability rendered the arbitration clause unenforceable, the court was justified in finding the entire agreement "permeated by an unlawful purpose" and refusing to enforce it.
Monday, October 30, 2017
In the wake of the Weinstein revelations, everyone is talking about it: NDAs seem to be part of the problem. They were used consistently to silence people from speaking out. The NDA seemed to be how you could get away with it, as Weinstein's last-ditch offer to Rose McGowan to keep the lid on the story seems to illustrate. You can read criticisms of NDAs at Vox, Variety (and again), CNN (and again), the New York Daily News, Above the Law, and Forbes. And that was just my first page of Google results. I've been blogging about the danger of them for a while. It's not just the rich and powerful using them; college campuses are also using them in the sexual assault context. And they're not just being used to cover up sexual abuse; Amber Heard's NDA restricted her from apparently ever even mentioning domestic abuse at all. It's easy to see why NDAs are popular among the powerful (the President also loves them). They allow complete and total control of the narrative. An NDA can make it a legal breach for you to tell the truth; an NDA can indeed make it legally enforceable for you to lie, basically. And, in this way, the fuzzy line between truth and fiction becomes fuzzier and fuzzier. And people get victimized and feel alone and the culture of contractual silence makes them lonelier, depriving them of support systems.
NDAs also exist for lots of valid and important reasons. But they are also being widely and abusively used and we as a society need to confront that. The question isn't why less powerful people sign these NDAs. Until we can fix power imbalances (and we're a long way from that), it's always going to happen. But we should really question the public policy justifications for NDAs in certain circumstances. These past couple of weeks have spotlighted lots of troubling systemic issues in our society. This is one of them.