ContractsProf Blog

This Is How We Will Get to Mars

According to The New York Times, SpaceX has confirmed that it has fired employees who circulated an open letter critical of SpaceX's Dear Leader, Elon Musk.  The letter complained that Mr. Musk was a "frequent source of distraction and embarrassment."  It is not entirely clear what action the company was being asked to take in response.  A time out?  No screens?

Apparently, no earnest but perhaps not-thought-through strategy goes unpunished in a company run by the leading proponent of unbridled free speech and chaining workers to their desks.  The president and chief operating officer of SpaceX, Gwynne Shotwell (left), explained the decision to terminate the employees as follows:

The letter, solicitations and general process made employees feel uncomfortable, intimidated and bullied, and/or angry because the letter pressured them to sign onto something that did not reflect their views. . . .  We have too much critical work to accomplish and no need for this kind of overreaching activism.

She went on to encourage SpaceX's remaining employees to focus on their mission.  "This is how we will get to Mars," she implored them.  What a fantastic sentence!  It didn't even have an exclamation mark after it.  It's just an ordinary thing you say, like "That's how you get to the nearest Starbucks."  Exclamation points are for doubters.  For people who acknowledge that doubts are a thing.  I am going to incorporate that line into every pep talk I deliver to my students, and I'm not going to exclaim it; I'm just going to say it and walk away.

Ms. Shotwell has stated that SpaceX anticipates sending a manned crew to Mars by the end of the decade.  You might think that a bit ambitious, but that is not the sort of thinking that will get us to Mars.  Once SpaceX has sent a crew to Mars, she continued, "within five or six years, people will see that that will be a real place to go."  Yes, Mars.  A real place to go.  That is exactly what I will be thinking in 2035 or so.  Why should we have to wait that long, you might think?  Well, I assume, that after we get to Mars, we also have to be able to get back from Mars.  But frankly, come to think of it, Ms. Shotwell never said, "This is how we will get back from Mars."  And she's right to leave that part out.  If I ended my pep talks for my students with "This is how we will get back from Mars," that might confuse them and then they wouldn't be focused on our mission.

Tuesday Top Ten - Contracts & Commercial Law Downloads for June 21, 2022

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 22 Apr 2022 - 21 Jun 2022

Rank	Paper	Downloads
1.	Not Your Keys, Not Your Coins: Unpriced Credit Risk in Cryptocurrency Adam J. Levitin Georgetown University Law Center	776
2.	The Limits of Regulation by Insurance Kenneth S. Abraham and Daniel Schwarcz University of Virginia School of Law and University of Minnesota Law School	142
3.	The Failure of Market Efficiency William J. Magnuson Texas A&M University School of Law	110
4.	The Dystopian Right of Publicity Dustin Marlan University of Massachusetts School of Law	108
5.	What Do Good Lawyers Know that the Rest of Us Don't? Introducing First-Year Law Students to 'Legal Realism' Gregory S. Crespi Southern Methodist University - Dedman School of Law	105
6.	Proprietary Restitution Timothy Liau and Rachel Leow National University of Singapore (NUS) - Faculty of Law and National University of Singapore (NUS) - Faculty of Law	89
7.	COVID-19 and Business Income Insurance: The History of 'Physical Loss' and what Insurers Intended it to Mean Charles Murray Miller, Richard Lewis, Chris Kozak and Chris Kozak affiliation not provided to SSRN, Reed Smith LLP and Michigan State University - Michigan State Law ReviewPlews Shadley Racher & Braun	81
8.	Contracting for Debt: The Relationship Between Debt Capitalism, Higher Education, and the Black-white Wealth Gap Magali Duque University of Pennsylvania Carey Law School	71
9.	Transcending the Public Law-Private Law Divide Jason N. E. Varuhas University of Melbourne Law School	68
10.	Non-Compliance with contract terms: a comparative view on (non)regulation and remedies Desiree Klingler and Pedro Telles University of St. Gallen and Copenhagen Business School - CBS Law	68

 

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 22 Apr 2022 - 21 Jun 2022

Rank	Paper	Downloads
1.	What Do Good Lawyers Know that the Rest of Us Don't? Introducing First-Year Law Students to 'Legal Realism' Gregory S. Crespi Southern Methodist University - Dedman School of Law	105
2.	Proprietary Restitution Timothy Liau and Rachel Leow National University of Singapore (NUS) - Faculty of Law and National University of Singapore (NUS) - Faculty of Law	89
3.	Cognition, Automation and the Future of Contract Law Ryan Catterwell University of Queensland	68
4.	Contract Logic Naveen Thomas New York University School of Law	63
5.	Pepsi’s Harrier Jet Commercial: A Class Activity Covering Contract Formation and More Michael Conklin Angelo State University - Business Law	50
6.	The Approach of Nigerian Courts to International Commercial Arbitration: The Need for a Paradigm Shift in Judicial Thinking Victor Chukwuma NAU	48
7.	Conflict, Consistency and the Role of Conventional Morality in Judicial Decision-Making Aditi Bagchi Fordham University School of Law	46
8.	Reviewing Choice of Law in International Contracts (Oxford University Press, 2021) Sagi Peari The University of Western Australia	43
9.	The Potential Legal Value of Relational Contracts in a Time of Crisis or Uncertainty Joan MacLeod Heminway University of Tennessee College of Law	38
10.	Humanizing Transactional Documents: Why and How Transactional Drafters Should Use Narrative Techniques Susan Chesler and Karen J. Sneddon Arizona State University (ASU) - Sandra Day O'Connor College of Law and Mercer Law School	32

The Future of Unions

Although this blog has a category called "Labor Contracts," we rarely use it.  Labor unions have long been in decline, and there just haven't been many labor contracts to discuss outside of the context of collective bargaining in professional sports.  Perhaps the tide has turned.

Over the weekend, The New York Times featured a story about Jaz Brisack, a Rhodes Scholar who decided that the best use of her time and talents was to become a union organizer and so she took a job as a Starbuck's barista.  Hers was the first Starbucks-owned store to unionize; 150 others have since followed suit, and 275 have filed paperwork to hold elections.   The are two unionized Starbucks shops in my fair city, Oklahoma City!  I don't always drink Starbuck's Coffee, but when I do, I will henceforth prefer to purchase it at 36th & May or 23rd and Robinson!

It is such a great story, and it is an exciting moment in the history of the labor movement. The long slide in the percentage of the work force in labor unions seems to have stalled.  There are even some signs of growth, such as this story about the first Apple Store to unionize.  

Let us hope for a future when Americans are outraged that there are billionaires and not by a mandatory living wage for hourly workers.

Contracts Issues and the January 6th Hearings

The House Committee investigating the events of January 6th is pushing a breach of contract or fraud claim.  We are surprised, because we thought we already covered these issues, but apparently, we merely broke the story, and there is more digging to be done. 

Already in December, we reported in this post about Fred Eshelman's suit seeking to recover $2.5 million from the Trump-affiliated True the Vote.  Then in April, Nancy Kim reported on the Trump campaign's recurring charges strategy here.  But there's more.

According to this report in The New York Times, committee member Rep. Zoe Lofgren, Democrat of California (right), is seeking to establish that Mr. Trump’s campaign and its allies used claims of election fraud to raise $250 million, purportedly for the purpose of pursing litigation to challenge the election.  At the time they raised the money, however, the campaign and its allies knew that there was no evidence of actionable voter fraud.  What allegations of fraud existed were either, in the considered opinion of Attorney General Bill Barr (left), "bullshit," or they were trivial instances that would not have come close to affecting the outcome of the election in any of the crucial five states where the election was close(ish) and Mr. Trump lost.  Ms. Lofgren thus alleges a "big rip-off" that was the partner to the "big lie."  Or who knows?  Perhaps the theory is that the big lie was just a stratagem to fuel the big rip-off.

The House Committee has apparently determined that the Trump campaign and its allies raised nearly $250 million through representations that those funds would go to an "election defense fund."  The fund did not exist, and the funds went to other purposes, including "a $1 million donation to the personal foundation of Mr. Trump’s chief of staff, Mark Meadows, and $204,857 to Trump hotels." 

The Times suggests that Ms. Lofgren and the Committee are pursuing a dual strategy.  First, they hope that even Mr. Trump's most loyal supporters will jump off the Trump train when they learn that their donations have been misappropriated.  That seems unlikely.  It's almost as if Ms. Lofgren were unaware that she is engaged in a partisan witch-hunt animated by her resentment of American greatness and her insatiable ambition to govern on behalf of woke capitalism, critical race theory and the LGBTQ+ agenda.  She must also not know that Bill Barr is a RINO loser who was a terrible Attorney General and has had no credibility with Trump supporters since the day he said he could find no evidence of systemic voter fraud.  In the alternative, the Committee may hope to excite some DoJ interest in pursuing criminal charges against Mr. Trump and his allies for the fraudulent fundraising schemes.  That also seems pretty unlikely.

Mother Jones provides an excellent update on Mr. Eshelman's law suit against True the Vote here.  A trial court dismissed the claim, saying it was in the purview of Texas Attorney General Ken Paxton.  Gulp.  Mr. Eshelman has appealed.  As to the recurring charges scam that the Trump campaign was running, the New York Times reported that the Trump campaign refunded nearly 11% of what it raised.  Apparently, people who felt they were defrauded by the campaign had a ready remedy.  As to those who did not seek a refund despite ample evidence that the election was lost and that donations would not be used to pursue litigation, do they want a remedy?

Tuesday Top Ten - Contracts & Commercial Law Downloads for June 14, 2022

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 15 Apr 2022 - 14 Jun 2022

Rank	Paper	Downloads
1.	The Limitations of Privacy Rights Daniel J. Solove George Washington University Law School	1,174
2.	An Overview of Privacy Law in 2022 Daniel J. Solove and Paul M. Schwartz George Washington University Law School and University of California, Berkeley - School of Law	596
3.	Not Your Keys, Not Your Coins: Unpriced Credit Risk in Cryptocurrency Adam J. Levitin Georgetown University Law Center	574
4.	The Limits of Regulation by Insurance Kenneth S. Abraham and Daniel Schwarcz University of Virginia School of Law and University of Minnesota Law School	118
5.	The Dystopian Right of Publicity Dustin Marlan University of Massachusetts School of Law	107
6.	The Failure of Market Efficiency William J. Magnuson Texas A&M University School of Law	106
7.	Proprietary Restitution Timothy Liau and Rachel Leow National University of Singapore (NUS) - Faculty of Law and National University of Singapore (NUS) - Faculty of Law	80
8.	AN APPRAISAL OF THE CONCEPT OF ANTI-SUIT INJUNCTION IN INTERNATIONAL ARBITRATION Chimezie Onuzulike G.Elias & Co	78
9.	What Do Good Lawyers Know that the Rest of Us Don't? Introducing First-Year Law Students to 'Legal Realism' Gregory S. Crespi Southern Methodist University - Dedman School of Law	76
10.	Culpability and Compensation Sandy Steel University of Oxford	73

 

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 15 Apr 2022 - 14 Jun 2022

Rank	Paper	Downloads
1.	Proprietary Restitution Timothy Liau and Rachel Leow National University of Singapore (NUS) - Faculty of Law and National University of Singapore (NUS) - Faculty of Law	80
2.	What Do Good Lawyers Know that the Rest of Us Don't? Introducing First-Year Law Students to 'Legal Realism' Gregory S. Crespi Southern Methodist University - Dedman School of Law	76
3.	Cognition, Automation and the Future of Contract Law Ryan Catterwell University of Queensland	62
4.	Unjust Enrichment in Australia 2018-2019 Samuel Walpole and Kit Barker TC Beirne School of Law and University of Queensland - TC Beirne School of Law	58
5.	Contract Logic Naveen Thomas New York University School of Law	53
6.	Pepsi’s Harrier Jet Commercial: A Class Activity Covering Contract Formation and More Michael Conklin Angelo State University - Business Law	48
7.	The Approach of Nigerian Courts to International Commercial Arbitration: The Need for a Paradigm Shift in Judicial Thinking Victor Chukwuma NAU	45
8.	Conflict, Consistency and the Role of Conventional Morality in Judicial Decision-Making Aditi Bagchi Fordham University School of Law	39
9.	Reviewing Choice of Law in International Contracts (Oxford University Press, 2021) Sagi Peari The University of Western Australia	39
10.	The Potential Legal Value of Relational Contracts in a Time of Crisis or Uncertainty Joan MacLeod Heminway University of Tennessee College of Law	35

SCOTUS Misses Another Opportunity to Address Contracts Issues

A mild case of COVID has given me even more opportunity than usual to indulge my taste for podcasts.  I was catching up with Will Baude and Dan Epps' Divided Argument episode, SMUGLER, when a contracts issue unexpectedly arose.

In 1971, the Supreme Court recognized an implied right of action to bring a claim against a federal officer for violation of federal constitutional rights in Bivens v. Six Unkown Fed'l Narcotics Agents.  The podcast hosts were discussing Egbert v. Boule, a case in which the Court, once again, refused to extend the Bivens remedy to a new factual situation, even though, as Dan Epps pointed out, this factual situation involved a 4th Amendment violation, precisely the factual situation that gave rise to the original Bivens action.  Will Baude remarked that, while there is a doctrinal test for determining whether Bivens applies, if you apply that test and think the answer is yes, you need to check your work.  Since the 1980s, the answer to the question of whether a Bivens remedy is available has always been no.

The facts of Egbert v. Boule are interesting and bizarre.  Robert Boule, whose Washington State property actually extends five feet into Canada, marketed his home as a bed and breakfast called "The Smuggler's Inn."  True to that name, Mr. Boule's establishment regularly served as a refuge for illegal cross-border traffic, including narcotics trafficking.  He had, at times, acted as a confidential informant, for which the government paid him in excess of $60,000.  Mr. Boule offered a service to people seeking illegal transit across the border.  He would pick them up in Washington State and drive them to the border, charging $100-150/hour for his time.  He would also charge them for one night's stay in The Smuggler's Inn, whether or not they indeed stayed overnight.  The accommodations are reproduced in the opinion (and below).  Justice Thomas includes the image in his majority opinion in order to show why Defendant Agent Egbert had grounds to suspect that Mr. Boule's Turkish client had not traveled from Turkey through New York to Washington State because he had read rave reviews of The Smuggler's Inn on TripAdvisor.
As he neared the border, Mr. Boule would then contact the authorities, who would arrest Mr. Boule's clients.  As Justice Thomas dryly notes in his majority opinion, "Boule would decline to offer his erstwhile customers a refund. In his view, this practice was 'nothing any different than [the] normal policies of any hotel/motel.'”  Will Baude picks up on this and mentions that the case he would really like to see is the one where one of Boule's clients sues for breach of contract.  Will, you are not alone.

That case would be interesting, I think.  I don't know if this would be a case of an illegal contract.  If so, of course, the court could not intervene on behalf of either party but would leave them as it found them.  It might, however, refer the matter to prosecutors, leaving the parties somewhat worse off than they started.  The court in question would not be the Supreme Court but a state court, and thus Divided Argument does not consider the contracts issue.

Perhaps this would be a case where the illegal components of the contract can be disentangled from the legal components.  Mr. Boule is charging for his time, for transportation services, and for lodgings.  There is nothing illegal about any of that.  Mr. Boule could defend himself on the ground that he had provided precisely the services he contracted for, at least insofar as he provided transportation.  As to the overnight lodging, as the quotation above makes clear, Mr. Boule's view is that hotels and motels routinely charge people whether or not those people actually lodge overnight.  They charge for taking the reservation and, we hope, for holding it.  The tough and interesting part of the case would be the challenge plaintiffs' attorneys would face in attempting to thread the needle so as to argue that their clients were fraudulently induced into accepting Mr. Boule's services without conceding the illegality underlying the entire transaction.

But the Court was not concerned with such quotidian matters.  For whatever reason, when Agent Egbert confronted Mr. Boule and his Turkish client, Mr. Boule refused to cooperate.  Agent Egbert allegedly responded with excessive force.  Later, after Mr. Boule filed a grievance and an administrative claim against Agent Egbert, the latter allegedly retaliated against Mr. Boule in various ways that violated the First Amendment.  In a predictable 6-3 decision, the Supreme Court denied Mr. Boule's Bivens action because the conservative majority denies all Bivens actions.  Only Justice Gorsuch had the intellectual honesty to separately concur.  He  observed that the case was not meaningfully distinguishable from Bivens, and he called upon the Court to stop the charade and overrule Bivens.

GEICO to Pay $5.2 Million to Woman Who Contracted STD in Insured's Car

Last week, a Missouri court of appeals decided M.O. v. GEICO, upholding a $5.2 million arbitral award to M.O. who contracted human papillomavirus (HPV) while having unprotected sex with GEICO's insured (Insured) in Insured's car.  M.O. filed a claim with GEICO, and an arbiter awarded her $5.2 million.  When M.O. tried to have that award enforced, GEICO intervened and challenged the award, alleging collusion fraud and undue means, and arguing that it had been denied a reasonable opportunity to defend its interests. 

M.O. first offered to settle with GEICO for $1 million, but GEICO rejected that offer and denied coverage.  GEICO then sought declaratory judgment in federal court.  Meanwhile, M.O. proceeded with her arbitration. Prior to their arbitration, Insured and M.O. entered into an agreement pursuant to Missouri Statute Section 537.065, providing that neither party would appeal or seek to modify the arbitral award in any way. 

The arbiter found that Insured knew that his throat cancer was HPV positive and that he therefore could transmit it through unprotected sex.  The arbiter thus concluded that Insured was negligent and that the sex in Insured's car caused or contributed to M.O's infection. 

Under the version Section 537.065 in force at the time, GEICO was entitled to notice that M.O. would be seeking to enforce the arbitral award.  Upon notice, GEICO was entitled to intervene, which it did.  However, that right of intervention entailed no right to review of the arbitral decision.  As the court explained,

[W]hen GEICO intervened, liability and damages had already been determined and judgment had been entered. Rule 52.12 did not bestow upon GEICO the right to relitigate those issues, nor did it provide GEICO with a right to intervene prior to judgment.

GEICO argued that it was being unfairly denied its right to appeal under Missouri Statutes Section 435.405, which gives parties 90 days to seek to vacate an arbitral award.  Unfortunately for GEICO, it was not a party to the arbitration at the time it sought to vacate the award, and so Section 435.405 did not apply.

Finally, GEICO alleged that it was denied its due process rights under the U.S. Constitution and the Missouri constitution because it never had an opportunity to litigate and defend its rights.  The court flatly rejected this argument, as GEICO had passed on the chance to defend its when it denied coverage and refused to defend Insured.  GEICO also filed its federal claim for declaratory judgment, which gives it a second opportunity to vindicate its rights.

2012, but you get the idea

The Missouri opinion does not address the grounds for finding that this incident was covered under Insured's policy.  The key contractual language was that the damages incurred must arise from the "ordinary use of the vehicle.'  The car in question, according to NPR, was a 2014 Hyundai Genesis.  Ordinary use?  NPR also suggests that a jury may address that question when it hears GEICO's declaratory judgment claim in October.    

Weekend Frivolity: Oh, This Is Even Better than "No Vehicles"

What if Wittgenstein had come up with the "No vehicles in the park" hypothetical?

H/t Richard L. Jolly, via Stephen Mouritsen via Twitter.

Another Unanimous SCOTUS Opinion Limiting Mandatory Arbitration

Still reeling from Justice Kagan's opinion for the unanimous Supreme Court last month limiting employers' ability to compel arbitration, such employers got hit again by another unanimous opinion (except that Justice Barrett was recused).  This time the author is Justice Thomas, in Southwest Airlines v. Saxon.  The issue was whether Saxon, a ramp supervisor for ❤️Southwest❤️, is exempt from arbitration provisions under § 1 of the Federal Arbitration Act (FAA).  

According to § 1 of the FAA, workers who engage in foreign or interstate commerce are exempt from its provisions.  Ms. Saxon's employment "requires her to load and unload baggage, airmail, and commercial cargo on and off airplanes that travel across the country."  For that reason, the Court agreed with Ms. Saxon, and she cannot be compelled to arbitrate her claims. 

The victory is a limited one.  Ms. Saxon argued that because airlines engage in interstate commerce, all airline employees should be covered under § 1.  The Court disagreed.  Whether a worker is covered depends on the conduct in which that worker is required to engage.  The Seventh Circuit had reserved judgment on whether Ms. Saxon, as a ramp supervisor, would be exempt had she been restricted to a supervisory role.  However, the Seventh Circuit ruled that she was exempt from the FAA because she was personally required to load and unload aircraft.  The Supreme Court agreed.  It's a pretty simple case.

Because of the new fashion for textualism, Justice Thomas could not reach that pretty obvious conclusion without consulting a dictionary.  

The word “workers” directs the interpreter’s attention to “the performance of work.” Id., at ___ (slip op., at 10) (emphasis altered); see also Webster’s New International Dictionary 2350 (1922) (Webster’s) (worker: “One that works”); Funk & Wagnall’s New Standard Dictionary 2731 (1913) (worker: “One who or that which performs work”). Further, the word “engaged”—meaning “[o]ccupied,” “employed,” or “[i]nvolved,” Webster’s 725; see also, e.g., Black’s Law Dictionary 661 (3d ed. 1933) (defining “engage”)—similarly emphasizes the actual work that the members of the class, as a whole, typically carry out. Saxon is therefore a member of a “class of workers” based on what she does at Southwest, not what Southwest does generally.

Goodness.

Justice Thomas performed a similar service, resorting to dictionaries in rejecting an argument from ❤️Southwest❤️ that people who load cargo onto airplanes that fly between states are engaged in foreign or interstate commerce.  Yes, we need to look up "engaged" and "commerce," don't we?  Ugh.  

The opinion provides an extended discussion of the ejusdem generis canon of construction, on which both sides relied.  This is perhaps not the best advertisement for the utility of the canons.  The Court rejects both sides' ejusdem generis arguments, and it's generally not great when both sides rely on the same canon, but perhaps Karl Llewellyn would have a good chuckle over it. 

It was nice to see Justice Thomas picking up on a theme from Justice Kagan's opinion from last month.  In Concepcion and other cases, the Court relied on Congress's pro-arbitration purposes in giving expansive scope to employers' and vendors' abilities to impose mandatory arbitration on workers and consumers.   In Morgan v. Sundance, Justice Kagan stressed that Congress's pro-arbitration purposes extends only far enough to make arbitration provisions every bit as enforceable as other contractual provisions, but no more so.  Justice Thomas will not construe ambiguous language in the FAA to favor arbitration:

[W]e are not “free to pave over bumpy statutory texts in the name of more expeditiously advancing a policy goal.” New Prime, 586 U. S., at ___ (slip op., at 14). Here, §1’s plain text suffices to show that airplane cargo loaders are exempt from the FAA’s scope, and we have no warrant to elevate vague invocations of statutory purpose over the words Congress chose. 

Still confused about how class-action waivers fit into all of this, but that is a matter for another time.

This case could have afforded  the perfect opportunity for a one-paragraph opinion, consisting of Justice Thomas's conclusion:

Latrice Saxon frequently loads and unloads cargo on and off airplanes that travel in interstate commerce. She therefore belongs to a “class of workers engaged in foreign or interstate commerce” to which §1’s exemption applies. Accordingly, we affirm the judgment of the Court of Appeals.

What more is there to say, really?

Well, I'm glad ❤️Southwest❤️ lost, and I'm a bit disappointed in them for even trying to argue that § 1 should not apply to people who load cargo.  But I still ❤️ Southwest.  No fees for bags, no fees for changes, a sense of humor about itself, but most of all, a classless society.

I hope the reader found this blog post persuasive despite the fact that no dictionaries were consulted in its composition.

Tuesday Top Ten - Contracts & Commercial Law Downloads for June 7, 2022

This week, we revert to plain meaning for the Top Ten: Tuesday means Tuesday, and we will admit no extrinsic evidence to suggest otherwise! Enjoy this gathering of current top downloads on SSRN:

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 08 Apr 2022 - 07 Jun 2022

Rank	Paper	Downloads
1.	The Limitations of Privacy Rights Daniel J. Solove George Washington University Law School	1,147
2.	An Overview of Privacy Law in 2022 Daniel J. Solove and Paul M. Schwartz George Washington University Law School and University of California, Berkeley - School of Law	563
3.	Not Your Keys, Not Your Coins: Unpriced Credit Risk in Cryptocurrency Adam J. Levitin Georgetown University Law Center	552
4.	A Theory of Frustration and Its Effect Sagi Peari and Zamir Golestani The University of Western Australia and University of Western Australia Law School, Perth, Australia	181
5.	The Failure of Market Efficiency William J. Magnuson Texas A&M University School of Law	102
6.	The Dystopian Right of Publicity Dustin Marlan University of Massachusetts School of Law	102
7.	The Law and Macroeconomics of Custody and Asset Segregation Rules: Defining the Perimeters of Crypto-Banking Hossein Nabilou University of Amsterdam, Amsterdam Law School	86
8.	Proprietary Restitution Timothy Liau and Rachel Leow National University of Singapore (NUS) - Faculty of Law and National University of Singapore (NUS) - Faculty of Law	80
9.	AN APPRAISAL OF THE CONCEPT OF ANTI-SUIT INJUNCTION IN INTERNATIONAL ARBITRATION Chimezie Onuzulike G.Elias & Co	74
10.	Culpability and Compensation Sandy Steel University of Oxford	71

 

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 08 Apr 2022 - 07 Jun 2022

Rank	Paper	Downloads
1.	A Theory of Frustration and Its Effect Sagi Peari and Zamir Golestani The University of Western Australia and University of Western Australia Law School, Perth, Australia	181
2.	Reconstituting the Code of Capital: Could a Progressive European Code of Private Law Help Us Reduce Inequality and Regain Democratic Control? Martijn W. Hesselink European University Institute	85
3.	Proprietary Restitution Timothy Liau and Rachel Leow National University of Singapore (NUS) - Faculty of Law and National University of Singapore (NUS) - Faculty of Law	80
4.	Unjust Enrichment in Australia 2018-2019 Samuel Walpole and Kit Barker TC Beirne School of Law and University of Queensland - TC Beirne School of Law	57
5.	Contract Maps Spencer Williams Golden Gate University School of Law	57
6.	Smart Legal Contracts: From Theory to Reality Juan Carlos Reyes Independent	56
7.	Cognition, Automation and the Future of Contract Law Ryan Catterwell University of Queensland	56
8.	Contract Logic Naveen Thomas New York University School of Law	47
9.	Alternative Dispute Revolution: Technology and ADR in the Middle East Following the COVID-19 Pandemic Zachary R. Calo and Barry Solaiman Hamad bin Khalifa University and HBKU Law	45
10.	Pepsi’s Harrier Jet Commercial: A Class Activity Covering Contract Formation and More Michael Conklin Angelo State University - Business Law	45

A Dose of Reality about Reality Television

Every time I am in the gym, at least one of the television monitors is showing a show about home remodeling.  This is a disease.  I believe a steady dose of Stoic, or even Epicurean, philosophy might be a cure.  Or perhaps some Eastern philosophy.  Wanting material things is not the way to happiness.  These television shows encourage us to want things that we likely will not get or to want things better than what we currently have.  I prefer the life of the Cynic.  Better to be satisfied with some water and a pot of lentils.  This blog is my pot of lentils, but if I were to be stripped of it, I should make my way through life as an ordinary contracts prof.

But I could be wrong about much of this (add Skepticism to the mix).  Still, as recounted in The New York Times, there are worse things than unfulfilled fantasies of white oak cabinetry, soapstone counters, a black slate backsplash, and a glass-enclosed shower, or a renovation that makes it possible to flip a house and make some money.  Increasingly, participants in home renovation shows are suing production companies, alleging "fraud, misrepresentation and faulty workmanship," which leave homeowners with properties "riddled with code violations as well as safety and health hazards."  We will never know the true extent of these problems, because all of these transactions are covered by sweeping non-disclosure agreements (NDAs).  If you think NDAs are a good thing, I recommend watching Hulu's The Dropout.  

On television, we see a couple meeting with some construction experts.  They discuss various options, and the couple's excitement increases as they begin to imagine their home re-made.  Then we see early scenes of demolition, usually played for comic effect, as the homeowners struggle to wield a sledgehammer, but sometimes played for dramatic effect, as when the homeowners discover mold behind some boards.  Next comes the transformation, with the homeowners conveniently out of the way.  Finally, there is the reveal, at which the homeowners flip cartwheels or engage in otherwise conspicuous displays of joy and gratitude.  I mean, it's the gym, so the sound is off, but my impression is that these shows are about as formulaic as Dora the Explorer and Blues Clues.  

In reality, the narrative is similarly fixed.  The homeowners now claim that they were dissatisfied with the remodel, but they were contractually obligated to go through with the shoot.  At this point, of course, the production company has them over the barrel.  They were awarded a discount on labor and materials and had the advice of experts, but those baubles can be removed at the first sign of contractual breach.  Then comes the lawsuit brought by the homeowners, alleging fraud and breach of contract, followed by the predictable counter-suit for breach of the NDA.  The homeowners now claim that they were given very little time to review the contract and that its terms contradict things that they were told.

According to the Times, the scope of the NDAs can be extremely broad:

Nearly all contestants are required, when signing onto a program, to agree to a strict waiver that prevents them from speaking to the press or posting on social media, about not just the show itself, but also, according to one waiver reviewed by The New York Times, “any nonpublic information or trade secrets obtained or learned in connection with the program.”

Disputes between contractors and homeowners are not rare.  In one case that is a focus of the Times story, Nevada has a process for resolving them short of litigation.  The reality television shows weight the scales in favor of the contractors, however, because pursuing litigation now comes with the added threat of a countersuit for violation of the NDA.  And in some cases, the homeowners face claims not only for violation of the NDA, but for libel, slander, and product disparagement.  

Man Angered that He Got $300,000 for a Piece of Hideous Pop Art

In the latest story taking a chink out of the armor of NFTs, the New York Times reports that a hacker exploited a flaw in OpenSea's platform to purchase an NFT of a Bored Ape.  The flaw reset the purchase price to a price from an earlier transaction involving the same NFT.  As a result, Chris Chapman's virtual object sold for $300,000, rather than the $1 million that he was seeking.  This is yet more evidence that this secure mode of exchange is not secure. 

According to the Times, the glitch that allowed a hacker to make off with Mr. Chapman's ape has forced the company to pay out $6 million to NFT traders.  Mr. Chapman is still seeking compensation and reportedly rejected OpenSea's first offer of $30,000.  I'm not sure who holds the cards here.  NFT sales have dropped by 90 percent since September.  Can we hope for a day when Bored Apes are about as valuable as Beanie Babies?  

But there's more.  There is a widespread problem of hackers using phishing scams to swipe NFTs.  You can listen to one such story here.  According to the Times, OpenSea has been slow to freeze the accounts of such hackers, allowing the platform to profit from trafficking in stolen goods, as OpenSea takes a 2.5% cut each time an NFT is sold on its site.  

Still, the crypto enthusiasts howl, there is nothing safer or more secure than the blockchain.  It's an electronic ledger!  Surely a tool as boring as a ledger is too nerdy to become a tool for massive fraud.  And yet, the Times also reports that OpenSea is awash in "plagiarized" "art."  So, not secure, not reliable.  Why does every story about NFTs seem like it is, at best, only a few mouse clicks away from criminality?

I use scare quotes above because an NFT is just code.  Owning an NFT does not convey intellectual property rights, as Juliet Moringiello and Chris Odinet have explained.  Often, the NFT is a digital copy of an original object, and owning the NFT conveys no ownership of the original.  In this context, it is not clear what it means to call something "plagiarized," but I suppose what it means is that people generate fake NFTs of "valuable" NFTs and then sell them as if they were the "valuable" NFTs, and here the only problem is that NFTs should not be valuable.  Or, at least, the NFTs that are valuable, especially the Naked Ape series, are really bad art.  Hence "art."

OpenSea is trying to up its game.  It is freezing listings of stolen NFTs and screening for "plagiarized" content.  C'mon.  It's the Internet.  The NFT pirates will leave the open sea and find smooth sailing in a less regulated cove, inlet, or electronic bay.  And then OpenSea will lose its edge and there will be a new platform that will go through the same cycle and then the next and the next, until we all grow up or just grow tired and move on to the next thing.

New Journal of Law Teaching and Learning

We bring you news from the world of law publishing:

The Institute for Law Teaching and Learning is thrilled to be launching a new scholarly journal.  The Journal of Law Teaching and Learning will publish scholarly articles about pedagogy and will provide authors with rigorous peer review. We hope to publish our first issue in Fall 2023. 

If you have a scholarly article that might fit the needs of The Journal of Law Teaching and Learning, please consider submitting it directly to us via email at mcolatrella@pacific.edu or through the Scholastica platform. 

Tesla's Motion to Compel Arbitration Denied

This is probably not Elon Musk's top concern these days, but last week a California court denied his company's motion to compel arbitration in a case involving a Tesla worker who alleges in her complaint "nightmarish conditions of rampant sexual harassment" at the company.  Jessica Barazza alleges that she experienced a "pervasive culture of sexual harassment, which includes a daily barrage of sexist language and behavior, including frequent groping on the factory floor." She claims that she complained to managers and the company human resources department about what she described as a "frat house" environment, but the company failed to protect her. 

At this point in the proceedings, Tesla is simply trying to get the case dismissed and sent to arbitration.  Ms. Barazza claims that Tesla's arbitration agreement with her is unenforceable due to procedural and substantive unconscionability.  The alleged ground for substantive unconscionability is the agreement's one-sidedness.  Ms. Barazza must arbitrate its claims against Tesla, but Tesla can sue her.  The procedural unconscionability relates to the take-it-or-leave it nature of Ms. Barazza's employment agreement.  

According to Bloomberg.com, Alameda County Judge Stephen Kaus agreed with Ms. Barazza, finding that Tesla's arbitration agreement was unconscionable and denying Tesla's motion to compel arbitration.  Judge Kaus's key procedural finding was the Telsa did not present Ms. Barazza with the arbitration agreement until she had already quit her previous job in expectation of starting work at Tesla.  

New federal legislation bars employers from requiring arbitration of sexual harassment claims, but that law did not apply to claims that arose prior to its enactment.

(Quasi) Tuesday Top Ten - Contracts & Commercial Law Downloads for June 1, 2022

The "Tuesday" Top Ten returns after a short stint away—one that regrettably included, well, yesterday's Tuesday. Undaunted by such gossamer constraints as contractual plain meaning, the blog declares today to be quasi-Tuesday. Enjoy the latest, courtesy of our friends at SSRN:

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 02 Apr 2022 - 01 Jun 2022

Rank	Paper	Downloads
1.	The Limitations of Privacy Rights Daniel J. Solove George Washington University Law School	1,139
2.	An Overview of Privacy Law in 2022 Daniel J. Solove and Paul M. Schwartz George Washington University Law School and University of California, Berkeley - School of Law	543
3.	Not Your Keys, Not Your Coins: Unpriced Credit Risk in Cryptocurrency Adam J. Levitin Georgetown University Law Center	511
4.	Digital Assets: A Call To Action Johan David Michels, Sharon Hartung and Christopher Millard Queen Mary University of London, School of Law - Centre for Commercial Law Studies, affiliation not provided to SSRN and Queen Mary University of London, School of Law - Centre for Commercial Law Studies	316
5.	Total Return Meltdown: The Case for Treating Total Return Swaps as Disguised Secured Transactions Colin P. Marks St. Mary's University School of Law	242
6.	The Law and Macroeconomics of Custody and Asset Segregation Rules: Defining the Perimeters of Crypto-Banking Hossein Nabilou University of Amsterdam, Amsterdam Law School	235
7.	A Theory of Frustration and Its Effect Sagi Peari and Zamir Golestani The University of Western Australia and University of Western Australia Law School, Perth, Australia	181
8.	Locking Down 'Reasonable' Cybersecurity Duty Charlotte Tschider Loyola University Chicago School of Law	104
9.	The Failure of Market Efficiency William J. Magnuson Texas A&M University School of Law	100
10.	The Dystopian Right of Publicity Dustin Marlan University of Massachusetts School of Law	98

 

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 02 Apr 2022 - 01 Jun 2022

Rank	Paper	Downloads
1.	A Theory of Frustration and Its Effect Sagi Peari and Zamir Golestani The University of Western Australia and University of Western Australia Law School, Perth, Australia	181
2.	Reconstituting the Code of Capital: Could a Progressive European Code of Private Law Help Us Reduce Inequality and Regain Democratic Control? Martijn W. Hesselink European University Institute	83
3.	Proprietary Restitution Timothy Liau and Rachel Leow National University of Singapore (NUS) - Faculty of Law and National University of Singapore (NUS) - Faculty of Law	78
4.	Being 'Seen' vs. 'Mis-Seen': Tensions between Privacy and Fairness in Computer Vision Alice Xiang Independent	64
5.	Procuring Algorithmic Transparency Elizabeth A. Rowe University of Florida Levin College of Law	58
6.	Insuring Intentional Torts Christopher C. French The Pennsylvania State University (University Park) – Penn State Law	56
7.	Unjust Enrichment in Australia 2018-2019 Samuel Walpole and Kit Barker TC Beirne School of Law and University of Queensland - TC Beirne School of Law	55
8.	Cognition, Automation and the Future of Contract Law Ryan Catterwell University of Queensland	49
9.	Contract Maps Spencer Williams Golden Gate University School of Law	49
10.	Smart Legal Contracts: From Theory to Reality Juan Carlos Reyes Independent	49

A Dream UCC Article 2 Hypo

According to UCC, § 2-105(1), a good is anything "which are movable at the time of identification to the contract for sale."  So here, my friends, courtesy of The New York Times, is the hypo of a lifetime.

According to The Times, the developer of a 46-story building hoisted the Beaux Arts Palace Theater (above, in 1913) 30 feet in the air in order to make room for three floors of shopping space.  The repurposing of the space is a much more cost-effective use of the property, which is on Times Square.  

The hypo runs as follows.  First we have to ask the question: how do you move a 14 million pound, 1700 seat, landmark protected theater?  The answer: very slowly.  It took months to complete the process.  So imagine if, during that time, the theater had been sold.  Would that sale be governed by Article 2?

Don't like my hypo?  How about the earlier case of the Empire Theater (above, in 1912), which in 1998 was placed on rollers and moved 170 feet up the street?  A good?

The Dropout and Blawgs

Photo by Glenn Francis (Toglenn, CC BY-SA 4.0, via Wikimedia Commons)

Hulu's The Dropout tells an amazing story.  I do not know if it is fair to the main characters or an accurate representation of how easy it is to scam angel investors and the Katy Perry and Angry Birds addicted aging executives who run corporate dinosaurs like Walgreens.  It's also hard to imagine getting top science and technology graduates from top programs to sign non-disclosure agreement after non-disclosure agreement and to work under 24-hour surveillance and conditions where they are prohibited from speaking to colleagues from other parts of the enterprise. But perhaps I am naive about work conditions in start-ups, or perhaps young graduates are naive about contracts.  Both are possible.

But I do know that it features stunning performances by great actors, including Amanda Seyfried (right), who does for Elizabeth Holmes what Johnny Depp did for Willy Wonka, and William H. Macy.  How many iconic roles can one actor create?  If I were Richard Fuisz, I don't know if being played by William H. Macy (left) would take the sting out of being portrayed as an obsessive, jealous, greedy, glorified patent troll.  

Which brings me to the justification for this post.  In episode 6 of The Dropout, about three minutes in, Fuisz is making his first contact with Wall Street Journal reporter John Kerryrou (played wonderfully by Ebon Moss-Bachrach -- every scene with him and LisaGay Hamilton as his editor Judith Baker is priceless).  Fuisz says that he read something by Adam Clapper who writes something called the Pathology Blawg and then he furrows his brown and mutters "I don't know why he spells it like that."  Well we do!

Contracts at the NRA Convention

As reported here in The New York Times, a number of musicians who were slated to perform at the National Rifle Association (NRA) convention this weekend in Houston have pulled out.  The musicians include Don McLean (pictured. in 1976), best known for the iconic songs, "American Pie" and "Vincent," both from the early 1970s; Larry Gatlin, known, according to his Wikipedia entry, for country songs written in the 1970s and 80s; and Larry Stewart, who (also according to Wikipedia) had 18 top 40 hits with Restless Heart in the 80s and 90s.   Lee Greenwood (the singer-songwriter of “God Bless the U.S.A.”, also known as “Proud to Be an American”) and T. Graham Brown also cancelled appearances.

According to the CMT website, Mr. McLean issued the following statement:

[I]n light of the recent events in Texas, I have decided it would be disrespectful and hurtful for me to perform for the NRA at their convention in Houston this week.

Mr. Gatlin explained his decision to pull out as follows: 

I cannot, in good conscience, perform at the NRA convention in Houston this weekend.  While I agree with most of the positions held by the NRA, I have come to believe that, while background checks would not stop every madman with a gun, it is at the very least a step in the right direction toward trying to prevent the kind of tragedy we saw this week in Uvalde — in my beloved, weeping TEXAS.

Mr. Stewart posted the following on Facebook:

Due to the tragedy in Uvalde with the horrific school shooting and children who died, I want to honor the victims, families, the town and our friends in the great state of Texas the best I know how. So I have made the decision to pull out as a performer for the NRA convention this weekend, especially given the event is just down the road. I just believe this is best for me at this time. God Bless everyone involved!

Here on the ContractsProf Blog, our question is, what are the contractual consequences of doing so?  We have not seen the contracts, but it seems unlikely that the musicians had clauses allowing them to pull out in case of mass shootings on the eve of the convention.  Given that there have already been 27 school shootings and over 200 mass shootings in the U.S. this year, the event was hardly unforeseeable.  Nor did the Uvalde massacre render the musicians' performance commercially impracticable. 

However, it seems unlikely that the NRA would want to risk negative publicity and harm relationships that likely will soon return to normal by going after musicians for breach of contract.  Presumably the musicians will not be paid, and so, absent some argument that people flocked to Houston to hear performances by people they remember from their childhood rather than for the main attraction of an NRA convention, the damages from the breaches would likely be limited to inconsequential costs and unrecoverable deposits and the like.  Can the NRA book alternative acts on short notice?  Are other contracts affected (promoters, sound technicians, roadies, etc.)?  All interesting matters.  All likely to resolved through quiet negotiation and private settlement.

Of course, there is another option available to the NRA.  They could take a page out of David Kopel's book, as set out in this post over at the Volokh Conspiracy.  According to Kopel, those who link the NRA to mass shootings are hate groups carrying out a blood libel.  He denounced the "cowardly politicians" who canceled their appearances at the NRA convention held in Denver shortly after the Colombine shootings.  He concludes:

We say to each and every hate group, we reject your sick and twisted lies against us, for exactly the same reason we reject the blood libels against every race, every religion, and every other group: We reject Satan and all his works.

That sounds like a great conclusion to the NRA's opening brief in its case against the Satanic musicians.  And why not throw in suits against the cowardly politicians who once again pulled out from the convention this year?  Likely there are no damages when politicians fail to show up, but you can certainly hit them in the solar plexus of endorsements and campaign fund by alleging in court documents that they have abandoned the NRA in favor of Satan.

Ted Cruz, Donald Trump, and Kristi Noem need not worry.  They will not be sued.  They showed up.  As described here (with video), Mr. Trump enacted a scene from The Hunger Games, reading out the names of the dead as a bell tolled for each murdered child.  One hopes that the allusion was inadvertent, but given Mr. Trump's adoration of Hungarian strongman Viktor Orban, and his love affair with Kim Jong Un, who knows? 

Hat tip: Peter Gulia.

Weekend Frivolity: I Love the Kidzes!

I don't know what this is, but I think it is my students' generation celebrating their talents, their obsessions, and their linguistic inventiveness.  Also laughing at themselves.

 

Social Media Platforms Fare Better in the Eleventh Circuit than the Fifth

Last week, with some help from Eric Goldman, we reported on the Fifth Circuit's decision, lifting a stay on Texas's HB 20, which subjects social media platforms with more than 50 million monthly users (Platforms) to a highly intrusive and potentially punitive disclosure regime.  This week, in NetChoice, LLC v. Attorney General, an 11th Circuit panel preliminary enjoined portions of a similar Florida law.  If you follow such things, all three judges on the panel are Republican appointees.  Two are senior judges who were on the 11th Circuit when I clerked there.  I did not get to know Judge Tjoflat, but Judge Carnes (right) was my favorite judge on the court, other than my own Judge Barkett, of course.  Sometimes, we had to draft dissents to Judge Carnes's opinions.  I learned a lot from proximity to my Judge's exchanges with Judge Carnes.  I am happy to see that he and Judge Tjoflat are still on the bench.  The opinion comes from Judge Kevin Newsom, who has been on the Court only five years.  

The Court begins by quoting from the language that prompted the law, citing the absurdly hyperbolic rhetoric that poisons political action today. The law was created to punish “the ‘big tech’ oligarchs in Silicon Valley” who “silenc[e]” “conservative” speech in favor of a “radical leftist” agenda.  I know a radical leftist agenda when I see one, and it ain't Twitter or Facebook or YouTube, but whatever.

The holding comes on page 4 of the opinion

We hold that it is substantially likely that social-media companies—even the biggest ones—are “private actors” whose rights the First Amendment protects . . . , that their so-called “content-moderation” decisions constitute protected exercises of editorial judgment, and that the provisions of the new Florida law that restrict large platforms’ ability to engage in content moderation unconstitutionally burden that prerogative. We further conclude that it is substantially likely that one of the law’s particularly onerous disclosure provisions—which would require covered platforms to provide a “thorough rationale” for each and every content-moderation decision they make—violates the First Amendment. Accordingly, we hold that the companies are entitled to a preliminary injunction prohibiting enforcement of those provisions. 

The court declined to enjoin the law's less burdensome disclosure provisions.

Radical Leftist Oligarch Yachtsman

Judge Newsom begins with three basic points about the Platforms.  First, they are private; second, they do not produce the content on their sites; and third, they are not "dumb pipes."  Rather, they are successful because of their curatorial and editorial processes, which are a form of protected speech.

The Florida law is not identical to Texas HB 20.  For one thing, it only applies to platforms with more than 100 million monthly users.  That's still a low enough threshold to capture not only Twitter and Facebook but also Wikipedia, Etsy, and after the legislature changed its attitude towards one of the state's largest employers, Disney's website. 

However, like HB 20, Florida seeks to regulate Platforms as "common carriers."  The 11th Circuit demolishes this argument in two delightful steps.  First, the court demonstrates that, as a matter of law, Platforms are not common carriers.  Second, Florida (and Texas for that matter) may not strip the Platforms of the First Amendment protections to which they are entitled by labeling them common carriers.  

The 11th Circuit reviewed a sweeping District Court injunction.  In the District Court's rivew strict strutiny applied to the entire law because "was motivated by the state’s viewpoint-based purpose to defend conservatives’ speech from perceived liberal 'big tech' bias."  The law came "nowhere close" to surviving such scrutiny.   I like that approach, so it is worth exploring why the 11th Circuit pulled back from the District Court's  sweeping injunction.  

But first, a summary of the 11th Circuit's holdings:

The court found that the law's user-data access requirement and some of its less onerous disclosure provisions did not trigger First Amendment protections.  The user-data access provision, which "requires social-media platforms to allow de-platformed users to access their own data stored on the platform’s servers for at least 60 days," neither burdens editorial judgment nor compels disclosure.  Given the language quoted at the top of the opinion evidencing the clear political animus behind the legislation, why not affirm the District Court's injunction of the law in toto?  Because 11th Circuit precedent prohibits a court from looking behind the neutral language in a statute to discern legislative purpose.  

I can see the need for judicial caution in this area.  And yet, as Justice Gorsuch recently pointed out in dissenting from yet another absurd government invocation of the state secrets privilege, "There comes a point where we should not be ignorant as judges of what we know to be true as citizens."  Laws like HB 20 and this one, which particularly target "big tech" while excusing "small tech" rivals that cater to the political adherents of the governing party, are not content-neutral. Courts can take judicial notice of public statements explaining the purposes of such laws and strike them down as the politically-motivated attacks on speech and political process that they are.