Friday, September 6, 2024
Friday Frivolity: Liquid Death Tries to Top Pepsi with Its Own Jet Gimmick
Liquid Death is an interesting case of the self-aware, self-indulgent, post-modern marketing scheme. Stage one of marketing is to try to conflate in the mind of the audience appearance and reality. Post-modernism, among other things, questions whether we are really capable of distinguishing appearance and reality. See recent Presidential campaigns. Stage two of marketing embraces both phase one and insights drawn from post-modernism. Advertisers now say, yes, we're lying to you, but we both know you can't distinguish appearances from reality, so why not buy something that appears flashy but we both know is actually nothing special, and we'll both have a good laugh because we are taking your money but you know that we are taking your money based on pure puffery? If you prefer, we can make it a non-fungible token.
Enter Liquid Death. "Don't Be Scared" the marketers tell us. "It's just water. And iced tea." But we've marketed it in such a way that you will think it is edgy and pay more for it. Not only that, but we've put it in aluminum cans, which are eco-friendly, because the only thing young people enjoy more than being edgy is being environmentally-aware and edgy.
But if you really want to reduce your carbon footprint, what you need is your own jet. Sure beats the bus.
Despite Liquid Death's protestations that this is all very real, it seems to just look real. The details of how it works are here. Winning this contest would get very expensive very quickly, as the rules note:
The winner is solely responsible for all costs and expenses associated with shipping, insuring, storing (e.g., in a hangar, except as set forth in Section 6 above), maintaining, and handling the Jet, all required Federal Aviation Administration (“FAA”) certification(s), permits, licenses and any other legally-required permissions, consents and/or documentation, as well as any and all federal, state, and local taxes, if any, that apply to the Prize (whether the Jet Prize or the Cash Prize, as applicable based on what the winner elected to receive).
But the winner has the option of taking cash ($257,000) instead of the jet. The winner is to be announced on September 20th, at an event that promises to be very flashy.
Don't be fooled by appearances. It is highly unlikely that anybody is going to take the jet, at least not as anything other than an investment that they can flip before they incur significant costs. Or you can just join in the fun, buy some Liquid Death, and murder your thirst.
September 6, 2024 in Famous Cases, Food and Drink | Permalink | Comments (0)
First Circuit Rules on Contract & Bailment Disputes Regarding Liberace's Piano
At issue is a piano, once owned by Liberace (right with actor Maureen O'Hara). The First Circuit's opinion is mostly concerned with law stuff, on which more below. Thomas F. Harrison provides the factual summary in the Courthouse News.
According to the reporting, Baldwin pianos (Baldwin), owned since 2001 by the Gibson Foundation, Inc. (Gibson), asked Rob Norris to remove a piano made for Liberace from a Manhattan ballroom undergoing renovation. The piano was encrusted with 10,000 rhinestones. When Baldwin requested that the piano be returned in 2015, Mr. Norris refused, claiming that the piano was a gift given in the expectation that Mr. Norris and his Rockland, Mass. business, The Piano Mill, would use the piano for promotional purposes.
Apparently, Gibson, which may have lost track of the piano, suddenly grew interested when Mr. Norris gave an interview in which he estimated the value of the piano at $500,000. His attorney now says that his client was "puffing" as Liberace himself was wont to do.
The First Circuit opinion in Gibson Foundation, Inc. v. Norris focuses not so much on the colorful characters involved but, alas, on statutes of limitations. Gibson alleged either a breach of a bailment, or a breach of a warehousing agreement. The District Court had granted Norris summary judgment, finding that the three-year statute of limitations had run on Gibson's bailment claim and that it had not provided sufficient evidence to support a jury finding that a contract existed between the parties.
For the purposes of the appeal from summary judgment, the court assumed that a bailment agreement existed, but the statute of limitations for bailments under Massachusetts law turned out to be a very tricky issue. Under Massachusetts law, it seems that the statute of limitations for a breach-of-bailment claim is either three years, if the gist of the claim sounds in tort, or six years, if the gist of the claim sounds in contract. Here, the First Circuit concluded, a reasonable jury could conclude that the gist of the claim derived from a breach of a mutually beneficial arrangement and thus that six-year statute of limitations could apply. Norris gave consideration by storing the piano; in exchange, The Piano Mill was allowed to use the piano for promotional purposes. Accordingly, the First Circuit reversed the District Court's grant of summary judgment on Gibson's bailment claim. It was not, as a matter of law, time-barred.
Norris argued in the alternative that Gibson could not establish a bailment because it could not establish that it owned the piano. Gibson Brands, the Gibson entity that claimed to own the piano, had filed for bankruptcy in 2018. In that proceeding it had to list its assets, and it omitted the piano. No matter, said the First Circuit. At least for the purposes of summary judgment, Gibson established a prima facie case for ownership simply because it had possession of the piano prior to handing it over to Mr. Norris.
Given its findings in connection with the breach-of-bailment claim, it comes as no surprise that the First Circuit also reversed the District Court's grant of summary judgment to Mr. Norris on Gibson's breach-of-contract claim. However, it affirmed the District Court's denial of summary judgment to Gibson on both of its claims. The case was remanded and proceeded to trial. In July, as Brian Dowling reports on Law360 here, the jury handed a victory to Gibson.
If you are not a Boomer or Gen-X, you may be wondering who this Liberace fellow was. You can't go amiss with a Google search, but make sure you watch a video. Liberace was always on, and so whatever you find will be a faithful representation of his public persona. Here's a taste:
September 6, 2024 in Celebrity Contracts, Music, Recent Cases | Permalink | Comments (0)
Thursday, September 5, 2024
Two District Courts Weight in on the FTC's Ban on Non-Competes
Back in April, we posted about the new Federal Trade Commission (FTC) rule that bans most non-competes and may also ban some other restraints on the ability of employees to leave their jobs. The response was quick and predictable. Ryan, LLC v. Federal Trade Commission was filed pretty much immediately in the Northern District of Texas. ATS Tree Services, LLC (ATS) filed its claim in the Eastern District of Pennsylvania two days after the new rule was promulgated.
The Ryan court struck first, issuing a preliminary injunction in early July. The Eastern District denied ATS's motion for a preliminary injunction in ATS Tree Services, LLC v. Federal Trade Commission in late July. Then, on August 20th, the District Court in the Ryan case granted Ryan's motion to set aside the non-compete rule and enjoined it from going into effect on its effective date of September 4th or thereafter.
In the Pennsylvania case, ATS claimed that it would be irreparably harmed if it could not require that its employees sign non-compete clauses prohibiting them from working for rival tree-trimming services for one year after leaving ATS. ATS claimed that is non-compete clause is necessary to enable ATS to recoup its investment on the specialized training that its employees receive. ATS argued that the FTC either lacked regulatory power to ban non-competes or exceeded that power. In the alternative, ATS argued that the ban was arbitrary and capricious. If none of those things are true, ATS maintained that the FTC Act is an unconstitutional delegation of legislative power to the agency under the major questions doctrine.
In denying ATS's motion for a preliminary injunction Judge Hodge (left) first found that ATS would suffer no irreparable harm from the non-compete ban. Moreover, she concluded that ATS had not established that it would likely win on the merits. ATS could not establish irreparable harm because its alleged losses were either de minimis or in any case insufficient to amount to irreparable harm. Moreover, ATS failed to make a credible factual allegation that there was any danger that it would lose employees once the ban goes into effect.
Judge Hodge was no more impressed with the somewhat exotic argument that the rule would strip ATS of its contractual rights. She did not find any binding caselaw endorsing the argument that loss of contractual rights amounts to irreparable harm. To the extent that the harm related to employees using their ATS training to benefit rival businesses, she did she not see why ATS could not protect its contractual rights through the less onerous mechanism of non-disclosure agreements.
On the merits, Judge Hodge was satisfied that the FTC had power to enact the law and that doing was was not arbitrary and capricious. She also found that the FTC had previously issued equally sweeping rules without implicating the major questions doctrine and that this situation was thus distinguishable from recent cases in which SCOTUS invoked that doctrine. Finally, Judge Hodge rejected ATS's argument based on Schechter Poultry because it's not 1935, or at least not yet.
Things went differently before Judge Brown (right) in the Northern District of Texas. Having already granted the motion for a preliminary injunction, it is hardly surprising that Judge Brown went ahead and granted the full injunction. Unlike her preliminary injunction, however, which applied only to the named plaintiffs and intervenors, this injunction is nationwide.
She granted the motion for an injunction on multiple grounds. First, she concluded that the FTC lacked substantive rule-making authority with respect to unfair methods of competition and thus lacked authority to create the non-compete ban. In addition, Judge Brown found that the FTC acted arbitrarily and capriciously in creating the ban. She found that the ban was "based on inconsistent and flawed empirical evidence," and that the FTC failed to consider the upside of non-compete agreements, disregarding substantial evidence supporting such agreements. Just as Judge Hodge chided ATS for failing to consider how it might use devices other than its sweeping non-compete to protect its investment in its employees, Judge Brown faults the FTC for failing to consider less sweeping alternatives to the ban it imposed. Having ruled on statutory grounds, Judge Brown did not address Ryan's constitutional claims.
Both opinions are persuasive in their own terms and they reach their conclusions categorically and without acknowledgment that the case is a close one. It is challenging for a non-expert in administrative law to know which judge got it right. My hunch is that this challenge would have been dismissed without much fanfare in the period between Schechter Poultry and the Roberts Court, and I suspect that an opinion like Judge Brown's would have been hard to imagine before Gundy. It may also be that executive agencies have gotten much more ambitious in this era of Congressional gridlock. And so perhaps rules like this one were relatively rare before, say 2009.
September 5, 2024 in Commentary, Current Affairs, In the News, Legislation, Recent Cases | Permalink | Comments (0)
Wednesday, September 4, 2024
Eleventh Circuit Wrestles with Georgia's Non-Compete Statute
Georgia's law on non-competes is complicated, as we discussed in June (covering a case decided in September 2023. Last December, the Eleventh Circuit tried its hand at interpreting Georgia's overlay of a statutory regime, the Georgia Restrictive Covenants Act (GRCA), on its common-law rules on non-competes. Like the Georgia case we discussed in June, this one resulted in a remand with somewhat complicated instructions.
In the Eleventh Circuit case, Charles Baldwin had worked for twenty years for franchisees of Express Oil Change, LLC (Express), beginning in 1998. Mr. Baldwin became a highly-trusted employee of two enterprising Express franchisees, Adam Fuller and Darrell Lamb. When Fuller and Lamb set up business entities, they hired Mr. Baldwin to manage them and gave him something like an equity interest in those businesses, even though he had no control over them and no ownership stake. When Fuller and Lamb sold their 29 stores back to Express, they offered Mr. Baldwin a roughly $2 million payment but required that he agree not to compete with express. He also had to sign an asset purchase agreement which he was not allowed to see. Mr. Baldwin protested these conditions, but with 80% of his retirement hanging in the balance, he signed both documents and dated them March 8, 2021.
Under the terms of the restrictive covenant, Mr. Baldwin could not work for any competitor within five miles of any business owned by Express or related entities. Express and its affiliates owned over 1100 businesses in 29 states. The term competitor was defined broadly enough to preclude Mr. Baldwin from working in the automotive repair or maintenance industry. It was to last for four years, although the geographic scope was reduced after eighteen months.
Mr. Baldwin went to work for Express, but after twelve weeks, he parted ways with the business because the work conditions were not satisfactory. In August, 2021, Mr. Baldwin wanted to set up his own business, just under five miles from the nearest Express business. He wrote to the company asking for permission, which was denied. He sued to challenge the scope of the non-compete. After removal to federal court, the District Court found the non-compete unreasonable as to duration and scope. It reduced the duration to two years, and it reduced the scope to preclude Mr. Baldwin from work for a competitor within a five-mile radius of any of the Express franchises at which he had previously worked.
In Baldwin v. Express Oil Change, LLC, the Eleventh first found that the passage of time had mooted part of the challenge to the non-compete. Because eighteen months had passed, the geographic scope of the non-compete had, by its own terms, been reduced.
Applying the GRCA to the surviving aspects of the non-compete, the Eleventh Circuit agreed with the District Court that the non-compete's geographic scope was unreasonable. While not adopting the District Court's reasoning in its entirely, the Eleventh Circuit found "not clearly erroneous" the District Court's conclusion that Express's restrictions on Baldwin went much further than necessary to protect its legitimate business interest in preventing Baldwin from “luring away its technicians and, vicariously, its customers.”
However, the Eleventh Circuit found that the District Court applied the wrong standard under the GRCA for the reasonableness of the non-compete's duration. The District Court had applied a presumption that anything over two years was unreasonable, but here the appropriate presumption was that anything over five years was unreasonable. The longer durational standard applied here because, the Eleventh Circuit concluded, Mr. Baldwin was no ordinary employee, covered by O.C.G.A. § 13-8-57(b), but was a "seller" as defined in O.C.G.A. § 13-8- 57(d).
The two courts reached different conclusions based on their differing deployments of the rule of construction that prohibits rendering any part of a statute "mere suplusage." The dispute was over whether the phrase "material part" relates to the sale or to the employee's part in that sale. The district court sought to avoid reading "material part"out of the statute by treating it as relating to the employee's part in the sale. The Eleventh Circuit thought the more harmonious reading of the statute resulted from treating "material part" as relating to the nature of the sale. My students would, I think, be happy to learn that courts also struggle in applying canons of construction.
Finally, the Eleventh Circuit rejected Express's challenge to the District Court's authority to take a "blue pencil" to its covenant -- that is, to revise it rather than to either uphold it or strike it down. It upheld the District Court's ruling on geographic scope and remanded the case for the District Court to determine whether Mr. Baldwin could overcome the statutory presumption that a five-year duration to the non-compete was reasonable.
September 4, 2024 in Labor Contracts, Recent Cases | Permalink | Comments (0)
Tuesday, September 3, 2024
Tuesday Top Ten - Contracts & Commercial Law Top SSRN Downloads for September 3, 2024
Top Downloads For:
Contracts & Commercial Law eJournalRecent Top Papers (60 days)
As of: 05 Jul 2024 - 03 Sep 2024Rank | Paper | Downloads |
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1. | 2,311 | |
2. | 211 | |
3. | 207 | |
4. | 176 | |
5. | 171 | |
6. | 161 | |
7. | 147 | |
8. | 146 | |
9. | 134 | |
10. | 132 |
Top Downloads For:
Law & Society: Private Law - Contracts eJournalRecent Top Papers (60 days)
As of: 05 Jul 2024 - 03 Sep 2024Rank | Paper | Downloads |
---|---|---|
1. | 207 | |
2. | 176 | |
3. | 161 | |
4. | 58 | |
5. | 53 | |
6. | 50 | |
7. | 46 | |
8. | 44 | |
9. | 38 | |
10. | 36 |
September 3, 2024 in Recent Scholarship | Permalink
Fintech Class Action Sent to Arbitration
Klarna, Inc. (Klarna) provides buy now, pay later financial services that permit purchasers to pay for its products in four installments without interest or fees. The first payment is deducted at the time of purchase. Three more follow automatically in two-week increments. In this case, each payment was about $81.
In December, 2020, Najah Edmondson made use of Klarna's buy now, pay later product. Between December 2020 and April 2021, she made several further purchases using the Klarna App, which she had downloaded. On two occasions, when Klarna attempted to automatically deduct the payments from Ms. Edmondson's account, her account had insufficient funds. Ms. Edmondson's bank charged her $70 for the overdrafts, and she wanted to sue Klarna on behalf of a similarly-situated purchasers, alleging common-law fraud and violations of Connecticut's Unfair Trade Practices Act. Klarna moved to compel arbitration, and the District Court rejected that motion, finding that Ms. Edmondson never received reasonable notice and never gave knowing assent to the arbitration agreement.
In Edmondson v. Klarna, Inc., the Second Circuit reversed. The Second Circuit noted that Ms. Edmondson had multiple opportunities to familiarize herself with Klarna's terms. The District Court found that Klarna had not provided adequate notice on its Pay-With-Klarna screen because the screen was too cluttered. The District Court found the App's LogIn screen similarly defective. Although Ms. Edmondson was presented with hyperlinked language stating, "I agree to the payment terms," the District Court found that "[t]here is nothing anywhere on the screen that would alert a reasonable user to the fact that clicking 'confirm and continue' has any contractual significance at all, much less acceptance of a contract that includes an arbitration agreement." Although the Login screen instructed users to "sign up" or "log in," the District Court found it insufficiently clear that doing so entailed agreement to terms.
On appeal, the issue was whether a reasonably prudent web user would have been put on notice of Klarna's terms. In order for that standard to be met, the terms first must be presented in a clear and conspicuous way. Next, the user must give an unambiguous manifestation of assent, which means that a reasonably prudent user would know that they had agreed to be legally bound by the vendor's terms.
The test is quite fact specific, and the Second Circuit did undertook several comparison's of Klarna's web interface with those that had been found wanting or sufficient in prior cases. In short, the Second Circuit concluded that the Klarna check-out "widget" (left) provided sufficient notice of its terms. As you can see, the screen is relatively uncluttered, and a the court found that a reasonably prudent web browser or App user would have been on notice that the hyperlinked terms were connected to a purchase of Klarna's products. Edmondson manifested unambiguous consent to Klarna's terms when she clicked on "Confirm and continue" to finalize her purchase in December 2020.
The Second Circuit thus reversed the District Court's denial of Klarna's motion to compel arbitration and remanded the case with instruction to grant that motion.
September 3, 2024 in Recent Cases | Permalink | Comments (0)
Monday, September 2, 2024
Update from St. Thomas University School of Law
Two weeks ago, we reported on an attempt to dismiss a tenured law professor in a manner that did not accord with the procedural rights created by the university's faculty handbook. She sued for wrongful termination.
Last Thursday, Julianne Hill, writing for the ABA Journal reported that St. Thomas University has now reinstated Professor Lauren Gilbert but also has initiated termination proceedings against her. In its reinstatement letter, the University reiterated its view that Professor Gilbert's acts of "insubordination" justified termination, and it added a new, unspecified charge of an "inappropriate relationship" with a student. In response, Professor Gilbert's attorney has promised to add a defamation claim to her suit against the university.
The University seems to have handled this episode with unique incompetence. The original termination letter cited a university handbook for staff that it claimed governed its relationship with Professor Gilbert in relevant part. Its decision to reinstate her and to follow the procedures set forth in the faculty handbook suggests a total abandonment of that position, which ought to be a matter of considerable embarrassment to university counsel or outside counsel or both.
The charges added to the reinstatement letter are extraordinarily odd. Her termination letter cited Professor Gilbert's failure to attend graduation (with notice but without permission) as another "act of insubordination by you." If the University was going to cite petty offenses, it might have mentioned conduct that, standing alone, would justify for-cause termination. If, as Professor Gilbert contends, there is no basis for the allegation, the University has, at the very least, created another legal issue that will increase its costs or perhaps increase what it will have to pay to settle the matter.
Meanwhile, because Professor Gilbert has been reinstated, she will continue to draw her salary and benefits. However, because of the University's rather outré claim that she constitutes a threat to endanger the community and/or students, she cannot teach or even set foot on campus. Assuming that the grounds in the original termination letter were the best justifications that the University could concoct for the summary dismissal of a tenured professor, Professor Gilbert deserves a better academic home. But because the University has now conceded that she is entitled to full salary and benefits until the appropriate termination process is completed, she has some time to find one.
September 2, 2024 in Commentary, In the News, Labor Contracts, Law Schools, Recent Cases | Permalink
Teaching Assistants: Krawiec & Oman on Specific Performance of Personal Service Contracts
A longer version of this blog post is forthcoming in the Iowa Law Review Online! Expect a jubilant post with a link when it goes up!
Courts do not order specific performance of personal service contracts. Seems a no-brainer. There's the Thirteenth Amendment's broad prohibition on involuntary servitude, there are enforcement challenges, there are autonomy concerns, and there is the sense that any such order would simply be kicking the litigation can down the road a piece. And yet, Kimberly Krawiec (below left) and Nate Oman (below right) argue in their new article, The Case for Specific Performance of Personal Service Contracts, which is forthcoming in the Iowa Law Review, that the law ought to recognize certain exceptions to the per se rule. These are two very skilled contracts experts who combine erudition with boldness. They are not shy about treading on subjects that some might consider taboo. In fact, it's Professor Krawiec's brand!
Their carve-out from the rule is limited to cases in which parties of relatively equal bargaining power agree in advance to the remedy. Representation by counsel is an indicator of equality of bargaining power. They illustrate their concept with three archetypes: the coach, the teacher, and the pop star.
They first note that most employment agreements are at-will, and so specific performance isn't an option. In the rare cases when a party has the market power to demand a contract for term, it is worth reconsidering our wonted hostility to specific performance, especially in light of a generation of scholarship that has argued that money damages are often insufficient and that we should consider expanding the availability of specific performance.
They would not replace a per se rule against specific performance with a per se rule in favor of it. It would remain an extraordinary remedy, to be awarded in the court's discretion and premised on a finding that money damages will not make the non-breaching party whole.
The Authors first enumerate the problems with the per se rule. Money damages are often difficult to calculate and hence under-compensatory. Nor is it possible to approximate the effect of an order of specific performance (a positive injunction) with negative injunctions. The latter may reduce harms but do not fully compensate for lost performance. The Authors further point out that damages are a zero-sum game that at best give the parties the benefit of their bargain -- and they often don't achieve even that. The option of specific performance opens up the possibility for post-breach negotiations. In situations where a departing employee values the new position above the cost of buying out their contract, there is the possibility that the parties, with the help of an order of specific performance, will agree to an efficient breach. The non-breaching party is made whole or can even negotiate a benefit. The breaching party can be made better off, as is their new employer.
The Authors next take on certain Thirteenth-Amendment shibboleths. While we all partake of smug pieties regarding involuntary servitude when contemplating specific performance of service contracts, the Authors think that the orders of specific performance that they are contemplating would not run afoul of the Thirteenth Amendment. Their arguments are persuasive, but to be honest, I've always thought that the other, more situated arguments against specific performance of service agreements have more force.
They next address the autonomy arguments against specific performance. They make two main points here: First, high money damages can impose a greater burden on autonomy than the requirement that one perform a short-term contract. Second, because orders of specific performance can lead to negotiation, they can be autonomy-enhancing compared to an order to pay money damages. Concerns about workplace domination are misplaced because low-wage workers are almost always at-will, and thus could not be subject to the remedy of specific performance in any case. There is the lingering problem of contract terms, such as non-compete provisions, that have a post-contractual afterlife, even if employment is at-will. The Authors' solution is simply not to enforce one-sided non-competes. The remedy of specific performance should not be available where the parties do not have relative equality of bargaining power.
My main concern with the specific performance remedy is what the Authors call "monitoring concerns;" that is, the challenges involved in judicial enforcement of positive injunctions. The "monitoring concern" is two-fold: parties forced to perform will do so half-heartedly or otherwise inadequately, and courts are not well-positioned to monitor or adjudicate the quality of performance. The Authors respond that courts are frequently called upon to monitor the quality of performance, at times through the doctrine of good faith. This response does not satisfy me because doing so is not cost-free, and it circles back to the Authors' well-articulated concern with the adequacy of money damages to compensate for incomplete performance. Yes, parties often dispute whether a contract has been adequately performed, but they are far more likely to do so if forced into a partnership at least one part party no longer finds worthwhile. And then, how does one determine the remedy for inadequate performance in cases like, to use the Authors' examples, the coach, the teacher, or the pop star? Does one prove a coach's inadequacy through the team's won-loss record? Does one prove a teacher's bad faith by the student's grades? Did that Bruce Springsteen performance leave you with the impression that he was just feeling "meh" about New Jersey?
The Authors say that courts have gotten far better at monitoring contractual performance, but there remains the concern that their specific performance remedy for a law suit may involve prolonged, expensive monitoring followed by another law suit that will either restart the cycle or return us to our wonted remedy of money damages, warts and all. In sum, the Authors' dismissal of monitoring concerns strikes me as overly hasty. That said, I am not terribly bothered by their haste given the relatively narrow scope of their defense of the specific performance remedy.
Finally, the Authors illustrate three scenarios in which on might think the per se rule against specific performance ought to be set aside. They first address the instance of the successful college football coach who leaves before the end of his contractual term for a more lucrative and high-profile position. In the actual case on which their hypo is based, the aggrieved university sought liquidated damages under the contract, and the parties eventually settled. The Authors think specific performance should be available here, and I have to say I disagree.
First, the Authors say that they want parties to be able to stipulate to specific performance ex ante. In this case, they have not, and I believe they would not, even if they were confident that a court would enforce the provision. The Authors take seriously contractual language about the importance to the university of stability in their football program, but I've seen my share of college football coaches come and go, and I don't buy it. In fact, in the typical case, the university sacks the coach before the end of the contractual term, they pay outrageous liquidated damages, and there may be no duty to mitigate. The coach doesn't want the protection of specific performance; nor does the school. But even if they did, how does the coach perform when everyone knows he would rather be elsewhere and will leave at the earliest opportunity? How does he recruit players for teams he will not coach? How does he get the players to believe that he is really committed to them, when they know for a fact that he is not. Freshmen and Sophomores will enter the transfer portal rather than wait around to see what mystery coach takes over. And what would count as evidence of a breach of the duty of good-faith performance in this context?
The Authors' next example is a specialized teacher, but here they just don't seem committed to the bit. They acknowledge that an order of specific performance against a teacher would rarely be appropriate. I actually find it hard to imagine a scenario when I think it would be appropriate. The Authors provide all sorts of reasons why specific performance would only in the most unusual circumstances apply to a teacher.
I think their most promising example is sui-generis pop-stars for whom no substitute performance would be adequate. They provide the example of Jack Dempsey's 1926 refusal to fight Harry Wills because, as he put it, in his charmingly pugilistic manner,
Entirely too busy training for my coming Tunney match to waste time on insurance representatives[. A]s you have no contract suggest you stop kidding yourself and me also.
Plaintiff did have a contract, but it had, the court held, only speculative damages. The Authors think specific performance would be a good remedy in this case, and I think they may be right. Whether or not Dempsey wanted to fight Wills, if ordered to, he would either do so or pay his way out of the contract. If forced to fight, Jack Dempsey would fight, because his career depended on defending his heavyweight title. But would Dempsey agree to a specific performance remedy ex ante? I think his answer would be, "Stop kidding yourself."
Whether one can make a pop star perform depends on the pop star. I have heard tales of underwhelming performances by Bob Dylan, especially on the divorce tour. I think Elvis Costello at his punkiest cut sets short when he got fed up with his audiences. Try asking him to cover a "Pink Floyd" song. His response will not be pretty. I have never heard of anybody claiming that these artists did not perform in good faith. [I have seen both in Oklahoma City in the last two years, and I have no complaints -- quite the contrary!] But artists who trade on their connection to and devotion to their fanbase would not likely be willing to risk a perceivably lackluster performance. There is some evidence that audiences have no idea whether the Riverdance performers they saw were yelling "do it for the lotto!" instead of their usual yipping and wooing
Despite my criticisms, I agree with the Authors that we should consider an expanded specific performance remedy. I am especially sympathetic to their view that orders of specific performance can lead to settlement discussions. So, for example, I teach Fitzpatrick v. Michael, a case in which an elderly man reneged on a promise to leave his house and his cars to his live-in caregiver upon his death. He also evicted her from his home without notice. The court first noted that Ms. Fitzpatrick was entitled to a remedy, but then it found that it could not fashion one for her, in part because it could not order specific performance of a service agreement. I say, go ahead and order them to live together. He was a man of some means; he would have either acquiesced or paid her what she was owed.
The Blum Examples and Explanations supplement that I use provides two additional instances where I think an order of specific performance would do the trick. First, there is the case of a musician, "Harpo," who agrees to perform for "the going rate" in a piano bar. The proprietor learns that the going rate is too high and reneges. Money damages won't make Harpo whole because his main motivation was exposure. I saw specific performance as ideal here, because Harpo is very motivated, and the proprietor's only obligation is to pay, which he certainly can do. Similarly, Blum has a separate example (which serves a different purpose) where a young tenor is hired to play in a big-city opera house. Tweaking Blum's hypothetical, let's imagine that the mitigation offer is to pay the young tenor the same to perform the same role at a smaller, up-state venue. Performing at Glimmerglass is not the same as performing at the Met, so just as with Harpo, it's not just about or even primarily about the money for the tenor. On the other hand, there is no question that the young tenor will perform to the best of his ability if the court orders specific performance at the Met. The opera house will do nothing to undermine him, as its patrons pay a lot for those seats. Specific performance makes sense to me in this context as well.
I have gone on longer than usual, so I will end by recommending this piece. I find the ideas encouraging and challenging, even though I an pushing the Authors to think further about the contexts in which their expanded specific performance remedy should apply.
I will add only that Robert Hillman has also written a response to the piece, "The Case Against Static Contract Remedies," on JOTWELL.
September 2, 2024 in Contract Profs, Recent Scholarship | Permalink | Comments (0)
Friday, August 30, 2024
George Santos Sues Jimmy Kimmel Over Use of Cameo Video
Not a great week for George Santos (left). First, he had to plead guilty to wire fraud and identity theft. Now, he has lost his case against Jimmy Kimmel.
What do you do when you have been expelled from the House of Representatives and your campaign for re-election as an Independent has failed? One option is to capitalize on your notoriety by posting personalized videos through Cameo. Rudy Giuliani does it. Rod Blagojevich does it. Why shouldn't George Santos do it? According to The Guardian, the money is good, and Mr. Santos has bills to pay. As part of his plea agreement, he has to pay $375,000.
There is one down-side, of course. Some mean-spirited people might use the videos to make fun of Mr. Santos. According to the allegations of the complaint, that is what Jimmy Kimmel and his co-defendants did. Under the "guise of fandom," the defendants intentionally deceived Mr. Santos, broadcast his videos on television in order to demean and humiliate him, and then bragged about how it would be a "dream come true" if Mr. Santos were to sue, alleging fraud. Well, Mr. Santos knows a lot about fraud, and he did not hesitate to make Mr. Kimmel's dreams come true.
Mr. Santos filed suit in Santos v. Kimmel in February, alleging copyright infringement, fraudulent inducement, breach of contract, and unjust enrichment. The Complaint concedes that Cameo users can request videos licensed for personal or business purposes. However, Mr. Santos claims, neither license permits the national broadcast of the videos. Using pseudonyms, Mr. Kimmel allegedly created fourteen fake Cameo user accounts and solicited different personal videos from Mr. Santos for those fake accounts. Mr. Santos claims to have provided videos for these accounts, subject to licenses for personal use. Mr. Kimmel then broadcast five videos on his show, Jimmy Kimmel Live, and on various social media accounts in a segment he called "Will Santos Say It?." The answer, in every case is yes. Some examples are below, starting at around 6:50 in. Kinda lame actually. Not great comedy. Whatever.
Mr. Kimmel moved to dismiss the complaint, and Mr. Santos then amended the complaint. I have not been able to find a link to the amended complaint online. Mr. Kimmel then renewed his motion to dismiss. On August 19, the District Court dismissed the complaint based on the fair use doctrine. Mr. Santos's claims for breach of an express or implied contract were duplicative of his copyright claims and thus were also subject to dismissal.
August 30, 2024 in Celebrity Contracts, In the News, Recent Cases, Television | Permalink | Comments (0)
Thursday, August 29, 2024
Reviewing Larry DiMatteo and Irma Russell and Barbara K. Bucholtz, Part III
This is the third post in my series on Larry Di Matteo's Principles of Contract Law and Theory (Principles) and Irma Russell and Barbara K. Bucholtz's Mastering Contract Law (Mastering). The aim is to all some attention to these two books while using them to stimulate my thinking as I once again consider how to teach contracts law to first-year students. The two books are very different. Principles is a scholarly textbook addressing advanced topics at a very high level of sophistication. Mastering is a study-guide for first-year students. They both have their charms, but they are very different. Each entry in this series will cover a chapter in each book, with some splitting of chapters because the books don't have the same number of chapters. Most weeks, the chapters will not cover corresponding subject-matters. So be it.
The third chapter of Principles begins with a discussion of freedom of contract, which it splits into negative and positive freedom. Positive freedom is the freedom of individuals to contract without state interference in the form of required terms; negative freedom is freedom from state interference in the form of prohibited terms. And yet Principles notes that, at least in the context of asymmetrical bargaining, which is ubiquitous, some limitations on freedom of contract are unavoidable. (58)
Editorializing here, this is a highly libertarian presentation of positive and negative freedom. The tradition of positive freedom rooted in continental liberalism acknowledges the role of states in creating spheres in which individuals can exercise their freedom. That is, from the perspective of central Europeans prior to German and Italian unifications and the collapse of the Habsburg Empire, it was hard to imagine freedom without a strong state to create a realm in which freedom could develop and nourish.
From this perspective, the two freedoms that Principles describes are simply two sides of the same negative conception of freedom. What is left out is the, in my view, necessary intervention of the state, through, to give just one obvious example, the provision of a court system facilitating the enforcement of contractual obligations. We will soon be posting reviews of recent works by Hanoch Dagan (above left) and Rebecca Stone (right) on freedom of contract, and suffice to say that both of them articulate theories of freedom of contract capacious enough to accommodate much more forceful interventions than contemplated in Principles. That said, the difference may come down to Principles regarding freedom of contract as a relatively narrow principle subject to external limitations, while Professors Dagan and Stone, especially the former, see freedom of contract itself as the source of the limitations.
The next section of the chapter explores five tensions that contracts law seeks to balance. First, Principles acknowledges that while contract law needs to project stability in order to promote confidence in the enforceability of binding promises, the law evolves, usually slowly but sometimes jarringly, in response to exogenous impulses like the arrive of the New Deal or electronic contracting. (58-59) In the next section, Principles veers away from the libertarian perspective discussed above and acknowledges the role of default terms and gap fillers in facilitating contract formation. Regulation might seem in tension with facilitation. In fact, they are symbiotic. (60-61) Third, Principles identifies a tension in theories of enforcement. Classical doctrine enforces based on promises; modern doctrine also enforces based on estoppel. (62-63) Principles next explores a tension between formal and substantive rules. The former may at times prevent the effectuation of the latter, as when a statute of limitation lapses or a contract cannot be enforced for wont of a wax seal. The abandonment of the writ system and a more capacious concept of consideration have eased some of these tensions, but they persist. (64-65) Finally, Principles notes that the seeming tension between the civil law tradition, which favors specific performance and the common law preference for expectancy damages is not as pronounced as it seems. The common law embraces specific performance when unique goods or property are involved, and Article 2 provides for an expansion of the availability of the remedy. Civil courts encourage settlement in lieu of specific performance, because the latter requires potentially costly monitoring (65-66)
In the final section of the chapter, Principles explores tensions in contracts theory as opposed to contracts doctrine. Freedom of contract is tempered by concerns over justice in asymmetrical contracts of adhesion. One-sided terms can be enforced only if reasonable (68-69) or meaningful consent can be guaranteed through disclosure requirements. (70) There follows a discussion of how relational contract theory and the doctrine of good faith result in shifts in contracts doctrine. (71-73) I would add that relational contract theory is especially important in understanding a tension mentioned earlier in the chapter (59) between the law on the books and the law in action. Non-breaching parties may forgive the breach in order to preserve the relationship, or the parties might renegotiate the present deal to adjust for changed circumstances.
Chapter 3 of Mastering is about interpretation. This strikes me as a surprising choice and not the only organizational idiosyncrasy of the book. I would treat formation before getting to interpretation. I suppose the justification for starting with interpretation is that it permits the Authors to foreground the principle that what courts ought to enforce is the intentions of the parties. So even before we learn about formation, we are thinking ahead to the end game of expectation damages.
An additional benefit of foregrounding rules of interpretation is that many of them have applications beyond the realm of contracts law. (20) They begin with Williston's distinction between interpretation and construction (21), on which see Gregory Klass's work, reviewed here. They then proceed to a discussion of interpretation in the statutory context, beginning with the "no vehicles in the park problem" and discussing the role of statutory definitions, legislative history, explication through case law, and public policy as a tool of interpretation. (22-24)
The Authors next discuss canons of construction, mostly focusing on contractual construction, but occasionally referencing statutory construction as well. (24-28) This is valuable material and it is well presented. I just think about how a first-year student would use this book. I have never seen a casebook or treatise that discusses interpretation before formation. The Restatement begins with formation. And so, if I were assigning or recommending Mastering to my students as a supplement, I would tell then to skip chapter 3 and return to it after we have completed formation. By that time, they will have read enough case law so that we could draw from that material to give examples of how the cannons might be deployed.
After a very short section on treatment of extrinsic evidence under the common law (29), the chapter next covers extrinsic evidence under Article 2, which they say is similar to common law rules on extrinsic evidence. (29-31) The chapter concludes with a brief section on the parol evidence rule (32), which certainly makes sense in connection with the discussion of extrinsic evidence, but is a bit odd, given that the authors say the parol evidence rule is not a rule of interpretation (19) and is covered separately in Chapter 9. I teach the parol evidence rule in the section of my course devoted to interpretation, but I agree that it is not a rule of interpretation. However, I would say the same about rules relating to the admissibility of extrinsic evidence.
Again, I have reservations about organization and scope of treatment. Chapter 9 provides a thorough treatment of the parol evidence rule but no further discussion of extrinsic evidence. Again, thinking about this book as something for first-year students, I think the discussion of extrinsic evidence is misplaced here and too cursory, given the importance of the subject matter and its conceptual difficulty. The Authors lay out the relevant UCC rules relating to extrinsic evidence clearly enough, but they provide only one concrete example, and even there they do not cite to a case but just describe it. Absent an opportunity to see how these rules play out in the case law, I don't think students can appreciate the dramatic effects of the UCC's rules on extrinsic evidence in cases like Nanakuli and Columbia Nitrogen. But those are pretty complex cases, best introduced after students have gained some familiarity with the material.
The first post in this series can be found here
Part II is here.
August 29, 2024 in Books, Commentary, Contract Profs, Recent Scholarship, Teaching | Permalink | Comments (0)
A Passover Night Different From All Other Passover Nights . . .
Since 2008, Greenwald Caterers had been hosting a Passover seder for the Orthodox Jewish community at a hotel in Lancaster, Pennsylvania (the Hotel). The contract gave community members the right to exclusive use of the entire hotel, with the exception of some common areas and represented that the hotel would maintain certain standards of cleanliness, including making sure that the facilities were maintained in accordance with Jewish regulations regarding kashrut -- all dining facilities had to be kosher and kosher for Passover.
In 2018, the Hotel was acquired by Wyndham and was undergoing re-branding and renovations. Notwithstanding these developments, the parties entered into a five-year agreement that the Hotel would continue to host the seder through 2023. However, according to the plaintiffs, they arrived for the 2019 seder to discover the Hotel in a state of disarray.
One of the centerpieces of a Passover seder is the "Four Questions" usually read/chanted by the youngest participant in the seder. The four questions begin by asking why this night is different from all other nights and then each verse of the four questions specifies ways in which the seder is different from other evening meals.
In what ways was the 2019 seder in Lancaster different from all other seders? As the U.S. District Court for Eastern Pennsylvania recounts in Greenwald Caterers LLC v. Lancaster Host LLC, attendees encountered in their rooms:
[C]at crates, cat litter, a “deeply inundating” smell of cat waste, plumbing issues, lack of water, sewage backups, mouse droppings, cockroaches, vermin, exposed nails, uncovered electrical outlets, mold, exposed lead paint, construction dust, non-functioning air conditioning, unmade beds, misplaced or missing furniture and beds, missing cots, missing doors, non-Kosher cooking utensils and cooking equipment, and inoperable telephones.
And of course, the kitchen facilities did not meet the Kosher standards specified in the contract. It's hardly the ten plagues, but it sounds pretty bad. The herbs must have been especially bitter that evening. Even after downing all four obligatory glasses of wine, nobody is going to be saying "Dayenu!"
And what's up with all the cats? Were the cats brought in to address the mouse and other vermin problems or did this rebranding and renovation crew consist of childless cat ladies? So many questions . . . .
Greenwald Caterers scrambled to accommodate its clients. It hired extra staff, found lodging for some attendees at neighboring hotels, provided free food and linens to guests, secured generators and fuel, and set up a temporary cooking facility. The court ruled on competing motions for summary judgment, denying plaintiffs' motion, granting defendants' motions in part, and moving the case a step closer to trial.
As to plaintiffs' motion, the court found that defendants had created disputes as to issues of fact with respect to each of plaintiffs claims for breach of contract. A jury must makes credibility determinations after hearing from fact witnesses. As a result, the court denied plaintiffs motion for summary judgment as to their breach of contract and declaratory judgment claims
In the next part of the opinion, the court granted the Hotel's motion to preclude testimony from two of the plaintiffs' three expert witnesses. A jury could hear from a third expert only as to certain issues. The court then granted some portions of the defendants' motions for summary judgment, excluding certain categories of damages from the case going forward. Five years after the incident, with the court having cleared away so many issues, I would be surprised if the case did not quickly proceed to settlement.
August 29, 2024 in Food and Drink, Recent Cases, Religion | Permalink | Comments (0)
Wednesday, August 28, 2024
Sidney DeLong on Contracts in Moby Dick -- Warning: Thar Be Spoilers!
Ahab’s Doubloon: A Contracts Analysis
Sidney W. DeLong
As he showed in Billy Budd, Herman Melville (right) knew his way around the law of the sea. Moby Dick is not generally thought of as a text on the common law but upon whales and whaling. Yet one of its central episodes invites a contract analysis.
Whaling Wage Contracts. Early in the novel Moby Dick, the narrator, Ishmael, describes the contract (“articles”) that a crew member of a whaling vessel signed with the owners of the vessel before beginning the voyage,
I was already aware that in the whaling business they paid no wages; but all hands, including the captain, received certain shares of the profits called lays, and that these lays were proportioned to the degree of importance pertaining to the respective duties of the ship’s company. I was also aware that being a green hand at whaling, my own lay would not be very large; but considering that I was used to the sea, could steer a ship, splice a rope, and all that, I made no doubt that from all I had heard I should be offered at least the 275th lay—that is, the 275th part of the clear net proceeds of the voyage, whatever that might eventually amount to.
The lay of a crewmember was often so little that after two or three years voyage, it might not cover the cost of liquor and other articles purchased on credit from the ship.
Shortly after the Pequod had set sail, Captain Ahab appeared on deck and addressed the assembled crew, beginning with a sort of catechism:
“What do ye do when ye see a whale, men?”
“Sing out for him!” was the impulsive rejoinder from a score of clubbed voices. . . .
“And what do ye next, men?”
“Lower away, and after him!”
“And what tune is it ye pull to, men?”
“A dead whale or a stove boat!” . . . .
These answers faithfully recited the duties undertaken by all the crew, in return for which they were to be paid their modest lays.
Ahab then made his offer:
“All ye mast-headers have before now heard me give orders about a white whale. Look ye! d’ye see this Spanish ounce of gold?”- holding up a broad bright coin to the sun- “it is a sixteen-dollar piece, men. D’ye see it? Mr. Starbuck, hand me yon top-maul.”
. . . Receiving the top-maul from Starbuck, he advanced towards the main-mast with the hammer uplifted in one hand, exhibiting the gold with the other, and with a high raised voice exclaiming: “Whosoever of ye raises me a white-headed whale with a wrinkled brow and a crooked jaw; whosoever of ye raises me that white-headed whale, with three holes punctured in his starboard fluke- look ye, whosoever of ye raises me that same white whale, he shall have this gold ounce, my boys!”
“Huzza! huzza!” cried the seamen, as with swinging tarpaulins they hailed the act of nailing the gold to the mast . . . .
As things turned out, it was Ahab himself who first sighted Moby Dick. But then, to keep the crew motivated, he enlarged his offer:
“[A]dvancing toward the doubloon in the main mast – ‘Men, this gold is mine, for I earned it; but I shall let it abide here till the white whale is dead; and then, whosoever of ye first raises him, upon the day he shall be killed, this gold is that man's; and if on that day I shall again raise him, then, ten times its sum shall be divided among all of ye! Away now!’”
Suppose it was not Ahab but a crew member who first raised Moby Dick: Could he have enforced the promise of the doubloon upon returning safely to port? Or suppose the conditions of the second promise had been fulfilled: Could the crew enforce the second promise of ten times the sum?
Alas, Melville made sure that we will never know whether the promises Ahab made to the crew of the Pequod would have stood up in a Nantucket courtroom at the end of the voyage. Moby Dick was “raised” but never killed. Ahab’s doubloon went to the bottom nailed to the main mast of the Pequod , while Ahab’s fate was to die affixed to the curse´d whale, entangled in his harpoon line, leaving the contracts questions unanswered.
Until now.
The Pre-Existing Duty Rule, Then and Now. There is a good reason that older contracts casebooks illustrate the law of contract modification with cases drawn from the 19th century history of seafaring. After the crew members signed their employment contracts (“articles”), they embarked on a journey that could, in the case of whaling vessels, last for years. Once at sea, the parties were locked in a bilateral monopoly: the crew could not quit their jobs and the shipowner could not hire replacements. Under these conditions, a sea captain’s promise to raise the crew’s wages became especially suspect when they returned to port.
In The Death of Contract, Grant Gilmore discussed the law of contract modification, duress, and the pre-existing duty rule citing Harris v Watson 170 Eng. Rep. 94 (1791) and Stilk v Myrick 170 Eng. Rep. 851 (1809). Each decision refused to enforce a captain’s unsolicited offer to pay extra wages to crew members who were unexpectedly forced to work short-handed or in dangerous circumstances. The English courts cited both the pre-existing duty rule and grounds of public policy: The crew had a contractual duty to work under all conditions and so gave no additional consideration for the promised wage increase. More importantly, permitting crews to enforce promises for extra wages would tempt the crew, once at sea, to make extortionate demands or even threaten mutiny. For an empire built on control of the sea, public policy demanded that their claims receive no judicial support.
In America, judicial hostility to mid-course modifications of seamen’s wages continued into the 20th Century and applied even when the crew was not at sea but only at a remote land location. In the familiar case of Alaska Packers Ass’n v Domenico, 117 F. 99 (9th Cir. 1902) the court refused to enforce a contract modification raising the crew’s rate of compensation for salmon fishing after the crew complained of bad nets. Law and economics scholars later justified Alaska Packers by its tendency to forestall the “hold-up game” otherwise made possible in locations remote from labor markets. As an added bonus, the mechanical pre-existing duty rule was far less costly to administer than a rule requiring a finding of duress or bad faith as a condition to non-enforcement.
Alaska Packers also found seamen’s wage claims under modified contracts to be unenforceable under agency law. The captain or master of the ship did not have actual or apparent authority to make promises binding on the owners. The captain himself was only a higher-paid employee of the owners.
Thus, under the common law in effect when the Pequod sailed, Ahab’s promise of the doubloon was unenforceable because it was not supported by consideration: the Q&A that preceded the offer showed that the crew were already committed to raise and hunt any whale to the death. Ahab offered them a gift, a bonus for doing what they were legally obliged to do.
The crew might argue that their duty was owed to the Pequod’s owners, but the offer came from Ahab, to whom the crew owed no pre-existing duties. The doubloon represented a side deal. But this argument might have outraged the court even more than the modification argument and for stronger public policy reasons. McDevitt v Stokes 192 S.W. 681 (Ky. 1917) refused to enforce a bettor’s promise of extra pay to a jockey if his horse won a race. Kentucky judges didn’t fancy enforcing bribes of jockeys by racing touts. Likewise, a Nantucket court concerned with protecting the whaling industry would have refused enforcement of a captain’s promise of extra wages to achieve a personal vendetta as tending to divert the crew from their primary mission, as it disastrously did in the case of the Pequod.
The Pre-Existing Duty Rule Today.
The strong public policies associated with marine commerce that led courts to refuse enforcement of promises of extra pay made on the high seas did not persist into land-based commercial contracts in the 20th Century. Employers’ fears of employee duress have been replaced by employers’ need for flexibility in the rapid modification of ongoing employee contracts. Employers now value the ability to make binding promises of extra compensation in circumstances in which they have a need to increase employee incentives.
The application of the pre-existing duty rule to modifications was modified in Restatement (Second) of the Law: Contracts. Retrospectively applying modern law to Moby Dick, if the bonus offers had been made by the owners, they might well have passed muster as modifications of the crew’s articles.
Section 89 Modification of executory contract.
A promise modifying a duty under a contract not fully performed on either side is binding
- a) If the modification is fair and equitable in view of circumstances not anticipated by the parties when the contract was made; or
- b) to the extent provided by statute; or
- c) to the extent that justice requires enforcement and view of material change of position in reliance on the promise.
The crew might have argued that, even though killing Moby Dick was within the literal definition of their duties, nevertheless the additional reward for raising Moby Dick was fair and equitable in light of the extraordinary risk involved, a risk that was not anticipated when they signed on. Indeed, Ahab’s mad quest for the whale destroyed the Pequod and cost the crew their lives. Moreover, once the Pequod had given chase to the deadly whale, the men had indeed incurred a “material change” in their safety in reliance on the promise of the doubloon.
Their reliance might also make Ahab’s later promise of ten times the original bonus enforceable as a gift promise under the modern principle of promissory estoppel, Their reliance was both foreseeable and detrimental. Refusal of enforcement would have been unjust in light of the risks the crew incurred in reliance on the promise.
The crew would still face the agency argument, however. But the claim for the doubloon against its owner, Ahab, should have been enforceable both as a unilateral contract and under the promissory estoppel principle. The crew foreseeably endangered themselves, as they were intended to do, in reliance on the promise and justice surely requires that their reliance made the promise enforceable.
But even if by some rationale the crew (or their survivors) should be deemed to have earned the doubloon, the problem would remain of collecting their bounty. In the literary undersea world, the doubloon remains forever affixed the mast of the Pequod.
August 28, 2024 in Books, Commentary, Labor Contracts | Permalink | Comments (0)
Tuesday, August 27, 2024
Tuesday Top Ten - Contracts & Commercial Law Top SSRN Downloads for August 27, 2024
Top Downloads For:
Contracts & Commercial Law eJournalRecent Top Papers (60 days)
As of: 28 Jun 2024 - 27 Aug 2024Rank | Paper | Downloads |
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1. | 2,201 | |
2. | 199 | |
3. | 194 | |
4. | 173 | |
5. | 154 | |
6. | 149 | |
7. | 137 | |
8. | 131 | |
9. | 131 | |
10. | 119 |
Top Downloads For:
Law & Society: Private Law - Contracts eJournalRecent Top Papers (60 days)
As of: 28 Jun 2024 - 27 Aug 2024Rank | Paper | Downloads |
---|---|---|
1. | 194 | |
2. | 173 | |
3. | 154 | |
4. | 53 | |
5. | 47 | |
6. | 47 | |
7. | 46 | |
8. | 42 | |
9. | 34 | |
10. | 28 |
August 27, 2024 in Recent Scholarship | Permalink
Texas Court Follows Illinois on Binding Minors to Parents' Arbitration Agreements, Case #2
In this morning's post, we covered an Illinois case in which a child, injured at an amusement park, had to arbitrate her claim against the venue because her mother had signed an arbitration agreement on her behalf. That case was brought against Chicago Urban Air. This second case is totally different. The defendant here is Pearland Urban Air LLC (Pearland).
The issue in Pearland Urban Air, LLC v. Cerna was slightly different from Headlee. Ms. Cerna took her child, R.W., to Pearland in August 2020. On that occasion, she signed a arbitration agreement with no set duration. She returned to Pearland with R.W. in November 2020, and on this second occasion, she signed no arbitration agreement. R.W. was injured on the second visit. Ms. Cerna sued for negligence, and Parkland moved to compel arbitration. The trial court denied the motion, without stating its grounds for doing so.
The Texas Fourteenth Court of Appeals found that the arbitration agreement that Ms. Cerna signed in August 2020 unquestionably governed. Her only argument was that R.W. never signed the agreement. Unlike Illinois, the Texas court did not rely on the third-party beneficiary doctrine, or at least it doesn't call it that. Rather, under Texas law, parents can sign arbitration agreements on behalf of their children and bind those children through what Texas law calls an equitable principle of direct-benefits estoppel. Having accepted the benefits of the agreement by enjoying Pearland's offerings, R.W. bound himself to the agreement's terms.
As to Ms. Cerna's arguments that the August agreement did not cover the November visit, that relates to the scope of the agreement between the parties. Questions of scope can be determined buy the arbiter. Similarly, Ms. Cerna argued that Texas's Arbitration Act prohibits arbitration of personal injury claims absent an agreement signed by each party and their attorneys. That argument constitutes a challenge to the arbitration provision itself . Ordinarily, a court could decide such an issue, but here the arbitration agreement delegates such questions to the arbiter.
Chief Justice Christopher (left) dissented on this last issue. She viewed the issue as one of contract formation. Absent an agreement signed by the parties and their attorneys, there is no agreement to arbitrate this personal injury claim as a matter of Texas law. However, Chief Justice Christopher believed the case to be governed by the Federal Arbitration Act, which has no signature requirement, and so she concurred on that basis.
I note that this is a less alarming version of what I have called arbitration-clause bootstrapping and David Horton has discussed as Accidental Arbitration and as Infinite Arbitration Clauses. It's just not reasonable to think that just because a person signs a form for one visit a venue that they agree to that form's terms for eternity. Why is it a problem to require that the venue provide the form with each visit? They change their terms regularly. Why not get consent regularly?
For more alarming examples, see our recent post on the Airbnb case in which Airbnb claimed that a guest injured at a rental was bound by its arbitration clause because, years earlier, he had registered on its site. More notoriously, Disney tried to compel arbitration in the case of a husband of a woman who died after eating in a Disney-affiliated restaurant on the ground that he had once had a trial subscription to Disney +. That wasn't Disney's only argument, but it is noteworthy that the company even tried it.
August 27, 2024 in Recent Cases | Permalink | Comments (0)
Child Bound By Parents' Arbitration Agreement with Amusement Park, Case #1
Today, we have two separate posts on two very similar cases.
The Headlees took their daughter, K.H. to an amusement part. This is the torts equivalent to "A guy walks into a bar." To reduce any suspense about what I am about to narrate, I add that K.H. was played on "Wipeout" an attraction at the park involving a trampoline and bars that one has to leap over or duck under. What could possibly to wrong?
Well, I'm sure nothing. But, just in case, the venue had K.H.'s mother sign the following release:
I, the Parent/Guardian, on behalf of myself and that of the minor(s) identified above, as applicable, have read the above Assumption of Risk, Waiver of Liability, and Indemnification Agreement and fully understand and agree to its terms. I understand that I am giving up substantial rights, including my right to sue, by executing this Agreement. I further acknowledge that I am agreeing to indemnify Urban Air, as provided above, for all claims the referenced minor may have against Urban Air. Lastly, I acknowledge that I am signing this Agreement freely and voluntarily, and intend my signature to constitute a complete and unconditional release of Urban Air for all liability due to (1) ordinary negligence of Urban Air and those parties named herein and (2) to the inherent risks of the activity, to the greatest extent permitted by the laws of the state in which the Urban Air is located. By signing below, the Parent or Court-Appointed Legal Guardian agrees that they are also subject to all the terms of this document, as set forth above.
Kristin Headlee also signed an arbitration agreement.
You will be shocked to learn that K.H. was severely injured when she was hit by one of Wipeouts rotating bars. Her parents sued for negligence in state court. The venue, Chicago Urban Air (Urban Air), had the case transferred to federal court based on diversity and then filed a motion to compel arbitration in the U.S. District Court for the Northern District of Illinois. The issue in Headlee v. Chicago Urban Air, LLC was whether the arbitration agreement was binding as against K.H., a non-signatory and a minor. Surprisingly, this issue has never been addressed under Illinois law, and caselaw from other jurisdictions is sparse, everywhere other than this blog, it appears.
The Headlees first argued that the arbitration agreement was procured through procedurally unconscionable means. The court rejected that argument. Yes, it was offered on a take-it-or-leave-it-basis, but there was really nothing underhanded about the arbitration provision, other than the general insanity that our law allows the proprietors of venues that put people at risk to insulate themselves from liability for their own negligence. Urban Air had no duty to explain the provision to the Headlees. The duty to read applies.
The Headlees' next argument was meatier. It argued that Kristin Headlee's agreement to arbitrate does not bind her daughter, and it would violate public policy to deprive a minor of her right to a jury trial. A Pennsylvania court refused to enforce an arbitration agreement against a minor in similar circumstance in 1998, but New Jersey went the other way in 2006. The court found no need to wade into unsettled waters. K.H. was bound as a third-party beneficiary to her mother's agreement to arbitrate. Because the issue was simply arbitration rather than a waiver of K.H.'s substantive rights, the court viewed the public policy considerations as less weighty in this context. The right to a jury trial is not a substantive right?
Finally, the Headlees claimed that K.H. disaffirmed the arbitration agreement. She may well have done so, but an infant's right to disaffirm an agreement is a defense to contractual liability, not an argument against the formation of an arbitration agreement. The Headlees are free to raise the argument that K.H. disaffirmed the arbitration agreement with the arbiter.
The court granted Urban Air's motion to compel. A second post on a similar case will follow later today.
August 27, 2024 in Recent Cases | Permalink | Comments (0)
Monday, August 26, 2024
Hiring at Boston University School of Law
Professor of Law /Associate Professor of Law
Boston University School of Law
BOSTON UNIVERSITY SCHOOL OF LAW, a top-tier law school with an international reputation, is a community of leading legal scholars, teachers, students, and alumni, who are dedicated to providing one of the finest legal educations in the world. Since our doors opened in 1872, we have admitted and enrolled accomplished students to our program regardless of their race, sex, and religion. The breadth and depth of our curriculum and scholarship as well as our innovative spirit are distinctive in U.S. legal education.
Boston University School of Law invites applications from both entry-level and experienced candidates for a number of positions with a projected start date of July 1, 2025. The search is broad and not limited to particular subjects, but we have especially strong teaching needs in Civil Procedure, Contracts, Criminal Procedure, Property, Trust and Estates, American Indian Law, AI Regulation, Professional Responsibility, Alternative Dispute Resolution, and Private International Development Law, International Law, Bankruptcy, Housing Law, Sexuality/Gender/Gender Identity and the Law, and Land Use Law. Experienced candidates should have a distinguished record of scholarly achievement, effective teaching, active service, and a distinguished record of inclusion. Junior lateral and entry-level, tenure-track candidates should have demonstrated potential for high scholarly achievement, teaching excellence, service, and a record of inclusion. We are additionally seeking candidates for the Director of our Student Innovations Law Clinic (Clinical). Please see that individual posting for a full description.
At Boston University School of Law, we are dedicated to building a just, inclusive, and engaged community of faculty, staff, and students. We recognize we have more work to do to achieve this vision. Boston University School of Law is committed not only to the ideals of faculty diversity and inclusion but also to the work of creating and implementing practices that combat exclusion and inequity by race, ethnicity, gender, gender identity, sexual orientation, disability status, religion, and other identities subject to historical subordination. We also strive to foster a more inclusive intellectual culture that represents and encourages a broad range of intellectual traditions and approaches to the law. We welcome expressions of interest from applicants of all identities, intellectual traditions, and perspectives.
BU conducts a background check on all final candidates for certain faculty and staff positions. The background check includes contacting the final candidate’s current and previous employer(s) to ask whether, in the last seven years, there has been a substantiated finding of misconduct violating that employer’s applicable sexual misconduct policies. To implement this process, the University requires a final candidate to complete and sign the form entitled “Authorization to Release Information” after execution of an offer letter.
We are an equal opportunity employer, and all qualified applicants will receive consideration for employment without regard to race, color, religion, sex, age, national origin, physical or mental disability, sexual orientation, gender identity, genetic information, military service, pregnancy or pregnancy-related condition, or because of marital, parental, or veteran status, or any other characteristic protected by law. We are a VEVRAA Federal Contractor.
How to Apply:
Applicants should send a letter of interest and a C.V. as soon as they are able to the Faculty Appointments Committee at [email protected]. Applications are being reviewed immediately and on a continuing basis, with priority given to those who submit early in the fall semester and are submitted prior to October 1, 2024. All open faculty positions are pending budgetary approval.
To learn more about the law school, visit our website at www.bu.edu/law.
August 26, 2024 in Help Wanted, Law Schools, Teaching | Permalink | Comments (0)
Florida Court Sends Patient's Protests Over Nude Photos to Arbitration
The plaintiff in M.P. v. Guiribitey Cosmetic & Beauty Inst. sough elective, cosmetic surgery from the defendant (Guiribitey). When she paid her deposit, the invoice included a choice-of-law provision providing for arbitration. On the eve of surgery, she received a 49-page packet, which included provisions for the use of photographs of the plaintiff:
The photographs may be used (anonymously) included and not limited to television, interviews, programs produced for cable TV, on the Internet, social media Facebook, Instagram, Snapchat or other media, for marketing, educational or promotional materials.
Although the plaintiff could have refused or qualified the scope of her consent, she did not do so. This packet also included a broad arbitration agreement that the plaintiff signed.
Upon discovering nude images of her body on Instagram, plaintiff sued, and Guiribitey moved to compel arbitration. Plaintiff alleged that the last-minute presentation of the arbitration agreement, the nonrefundable nature of her deposit, and judicial carve-out for fee collection claims rendered the agreement unconscionable and the product of duress. The trial court granted the motion to compel, and plaintiff appealed.
Much of the intermediate appellate court's opinion is taken up with plaintiff's argument on unconscionability. As to procedural unconscionability, plaintiff did not offer much beyond the argument that the contract was adhesive and offered on a take-it-or-leave-it basis. No other indicia of procedural unconscionability were present. The font was not unusual; the provisions were clearly delineated.
On substance, plaintiff had even less. She argued that the carve-out from arbitration for fee disputes rendered the arbitration provision substantively unconscionable. The court, however, found that such provisions are common and accord with common sense, as fee disputes are routine matters that would be unnecessarily complicated by subjecting them to arbitration.
Plaintiff's duress claim was equally unsuccessful. She argued that her agreement was coerced because the main arbitration agreement came only after she had already paid a non-refundable deposit. However, she was given notice that her relationship with Guiribitey would be governed by an arbitration agreement when she paid her deposit.
Finally, the dispute was clearly within the scope of the arbitration agreement, and so the court granted Guiribitey's motion to compel.
August 26, 2024 in Recent Cases, Web/Tech | Permalink | Comments (0)
Friday, August 23, 2024
South Texas College of Law Is Looking to Fill Tenure Track and VAP Positions
While all candidates for tenure-track and VAP positions will be considered, we particularly seek candidates interested in teaching: Legal Research and Writing; Contracts; Criminal Law; Constitutional Law; Property; and Wills, Trusts, and Estates. We seek candidates with outstanding academic records who are committed to both excellence in teaching and sustained scholarly achievement.
August 23, 2024 in Help Wanted, Law Schools | Permalink | Comments (0)
What's All the Fuss About? The Great Scrape
Occasionally, new private law scholarship posted on SSRN gets downloaded by thousands of people. When it does, inquiring minds want to know what all the fuss is about. This feature of the blog gives you the tl;dr on what you really ought to be reading for yourself. Today's subject is the most recent paper by Daniel Solove (below left) and Woodrow Hartzog (below right), The Great Scrape: The Clash Between Scraping and Privacy, which is pushing 2000 downloads on SSRN.
Scraping, the Authors tell us is. the automated extraction of large amounts of data from the internet. Through scraping, actors gather enormous amounts of data and personal information (worrisome) without notice or consent (troubling), and then this information provides fodder for AI tools such as facial recognition, deep fakes, and large language models (panic-inducing). (4 - parentheticals added). The Authors concede that scraping has its socially beneficial uses, but scraping of personal data "violates nearly every key privacy principle embodied in privacy laws, frameworks, and codes" and is, in short, "antithetical to privacy." (4) While scrapers contend that they make use of publicly available data, courts have recognized a privacy interest in publicly-available but practically obscure personal information. (4)
We need scraping to have a useable Internet, but scraping is in fundamental tension with basic privacy law. The Authors call for responding to the Great Scrape with the Great Reconciliation of scraping and privacy norms. (5)
Part I of the Article provides a history and explanation of scraping. We first learn that scraping, that is, online data harvesting, has been around as long as the Internet (7-9), but the power of scraping tools has grown vastly in the age of AI. (9-10) If you are on this site, statistically, it's more likely that you are a bot scraping the blog than a human reading the blog. Now, if you happen to be a bot, I'm not judging you. The Authors say I can't because the scraping of personal data occurs in the murk of an ethical twilight zone. (11-13) Which brings us to the current conundrum of "scraping wars." Some of the very websites that hire scrapers to enhance their functionality now object to being scraped for other purposes. (13-14) They are fighting back against the scraper through legal challenges with theories ranging from trespass and fraud to business torts and violations of privacy protections, (14-20) and by trying to use technology so that they can fight fire with firewall. (20-21) While scrapers are trying to buy out the resistance (23), regulatory intervention might change the market conditions for doing so. (23-27) The Authors highlight EU regulatory actions against Clearview AI. (25-26) While the FTC may have the legal means to regulate scrapers, it is not clear that it has the political clout to do so. (26-27)
In Part II, the Authors detail the fundamental tension between scraping and privacy. Privacy law is governed by bedrock principles known as the Fair Information Practice Principles (FIPP). FIPP comes down to three rules: only collect data when necessary, keep the data safe, and be transparent. According to the Authors, scraping violates all of these principles. (29). The overarching goad of FIPP is fairness, but the Authors also list seven other fundamental principles. (30-38). Their conclusion is not optimistic: "It is not clear that scraping can be performed in a privacy-friendly way." This is so because both the fundamental principles of privacy and the building blocks of privacy laws are "in dramatic conflict with scraping." (38)
Scrapers defend themselves by claiming that they only access publicly available information. In the next section of their paper, the Authors set out to show that the claim "that there is no privacy interest in publicly-available information is normatively and legally wrong." (39) First, it is simplistic to think that we can categorize information as "public" or private. People may still have an expectation of privacy in information that has been denoted "public" for certain purposes. (39-41) Some regulatory scheme and some caselaw recognize that privacy laws need to shield at least some publicly available information from scraping. There is safety in obscurity; SCOTUS implicitly recognized this in Carpenter when it noted that "A person does not surrender all Fourth Amendment protections by venturing into the public sphere." (44) One used to be able to make information about oneself available to the public without worrying about its dissemination, because the effort it would take to gather that information greatly exceeded its value. But with the aid of AI, scrapers can hoover up everyone's information with great efficiency. Privacy law has not fully reckoned with this environmental shift.
In Part III, the Authors introduce their proposed Great Reconciliation. They propose that we re-conceive scraping as a form of surveillance and as a data-security violation. (45) Defenders of scraping maintain that is just like human web browsing, which is true in the sense that a grain of sand is like a beach, or as the Authors put it, "But this ignores scraping's incredible affordances of scale." (47) The Authors propose that the data protection authorities, like the FTC, could impose obligations on entities entrusted with people's data to protect that data from scraping, just as they have an obligation to take measures to prevent other data-security violations. (49-50)
The Authors note that privacy law alone cannot effectuate the desired Great Reconciliation. Some privacy approaches might lead to a total ban on scraping, which would be undesirable (52-54), but other privacy laws are too loose and too easily evaded. (51) The solution involves a broader inquiry into whether particular forms of scraping are in the public interest. (52) One helpful first step would be to require individual consent for data scraping, but as anyone who has bought anything online this century knows, there are problems with the way courts have construed consent in this country. (54-55) Moreover, powerful websites may negotiate deals to sell scraping rights and further monetize their control of data, exacerbating the yawning gap between the haves and the have-nots. (55-56)
The Authors propose a legal system that regards scraping as a privilege. In order to exercise the privilege, the scraper must (1) have a valid justification; (2) provide substantive protections to ensure safety and avoid exploitation; and (3) provide procedural safeguards to ensure fairness and preserve the agency of the people whose information is to be scraped. (56) Their model draws on Lawrence Gostin's model for public health. (57-58) The remainder of the paper is a detailed proposal for assuring that scraping is conducted in a manner consistent with the public interest. It defies easy summary and demands careful reading, so I encourage you to undertake that task. (58-64)
If you missed our previous columns in the series and still don't know what the fuss was about, here's what you missed:
- Generative Interpretation by Yonathan Arbel and David Hoffman
- Lawyering in the Age of AI, by Jonathan Choi, Amy Monahan, and Dan Schwarcz
- Debt Tokens, by Diane Lourdes Dick, Chris Odinet, and Andrea Tosato.
- Governing AI Agents by Noam Kolt
August 23, 2024 in Contract Profs, E-commerce, Recent Scholarship, Web/Tech | Permalink | Comments (0)
Thursday, August 22, 2024
Mercer University School of Law Is Hiring
Hiring Announcement: Mercer University School of Law
The Mercer University School of Law invites applications for up to two entry-level or pre-tenured lateral faculty positions and one tenured faculty position, with appointments beginning in Fall 2025. We welcome applicants from all subject areas, with a particular focus on legal writing, commercial law, contracts, real property, civil procedure, business law, and remedies. We also encourage applications from truly entry-level candidates, including those without prior law teaching experience, who demonstrate significant potential for excellence in both teaching and scholarship.
Founded in 1873, Mercer University School of Law has a long tradition of producing practice-ready lawyers who are committed to service. The school has earned a reputation for providing excellent legal education with an intense focus on student and faculty interaction. With an enrollment of approximately 375 students, Mercer Law School is one of 12 schools and colleges of Mercer University, which is consistently listed among the top institutions of higher education in the nation. The School of Law is nationally recognized for its exceptional programs in legal writing, advocacy (moot court and mock trial), public service, and professionalism and ethics.
The School of Law is located in Macon, Georgia, a city of approximately 156,000 residents. Macon is known for its rich musical heritage (e.g., Otis Redding, Little Richard, the Allman Brothers), vibrant arts community, recreational offerings (e.g., the Ocmulgee Mounds National Historic Park), and affordable cost of living. Located 85 miles from Atlanta, Macon offers the livability of a smaller city with convenient access to big-city amenities.
Mercer University recognizes the power of a diverse community and encourages applications from individuals with varied experiences, perspectives, and backgrounds. Mercer University is an AA/EEO/ADA employer.
Applicants should hold a J.D. degree from an accredited institution, demonstrate a commitment to excellence in teaching, and show potential for excellence in research and scholarship. Interested applicants should complete the brief online application at http://hr.mercer.edu/jobs/ and attach a current CV with the names and contact information of three references. For more information, contact Professor Ishaq Kundawala, Chair, Appointments Committee, Mercer University School of Law, at [email protected].
August 22, 2024 in Help Wanted, Law Schools | Permalink | Comments (0)