ContractsProf Blog

Tuesday Top Ten - Contracts & Commercial Law Downloads for June 15, 2021

The Tuesday Top Ten is back after an "out-of-office" experience last week, so let's see what's hot on those SSRN download presses!

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 16 Apr 2021 - 15 Jun 2021

Rank	Paper	Downloads
1.	Tokenized: The Law of Non-Fungible Tokens and Unique Digital Property Joshua Fairfield Washington and Lee University - School of Law	1,168
2.	Content Moderation Remedies Eric Goldman Santa Clara University - School of Law	1,070
3.	Privacy in the Clouds, Revisited: An Analysis of the Privacy Policies of 40 Cloud Computing Services Felicity Turton, Dimitra Kamarinou, Johan David Michels and Christopher Millard Queen Mary University of London, School of Law - Centre for Commercial Law Studies, Queen Mary University of London, School of Law - Centre for Commercial Law Studies, Queen Mary University of London, School of Law - Centre for Commercial Law Studies and Queen Mary University of London, School of Law - Centre for Commercial Law Studies	375
4.	Justice in Arbitration: The Consumer Perspective Farshad Ghodoosi and Monica Sharif David Nazarian School of Business & Economics, California State University, Northridge and California State University, Los Angeles	288
5.	The Eye in the Sky Delivers (and Influences) What You Buy Hadar Yoana Jabotinsky and Michal Lavi Tel Aviv University - Cegla Center for Interdisciplinary Research of the Law and Hebrew University of Jerusalem - Faculty of Law	241
6.	Novel Issues in Canadian Labour Arbitration Related to COVID-19 Richard A. Bales Ohio Northern University - Pettit College of Law	149
7.	Taking Stock of Chapter 11 David A. Skeel University of Pennsylvania Law School	130
8.	Six Levels of Contract Automation: The Evolution to Smart Legal Contracts - Further Analysis Susannah Wilkinson and Jacques Giuffre Herbert Smith Freehills and Herbert Smith Freehills	120
9.	Private Law Theory and the Past Stephen James Bogle University of Glasgow - School of Law	108
10.	Contractual Stakeholderism Kish Parella Washington and Lee University - School of Law	106

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 16 Apr 2021 - 15 Jun 2021

Rank	Paper	Downloads
1.	Content Moderation Remedies Eric Goldman Santa Clara University - School of Law	1,070
2.	An Elusive Finality: The Illusive Standard for the Modification of Confirmed Chapter 13 Plans Amir Shachmurove Harvard Law School	535
3.	A Troublesome Prospect: Section 1322(b)(2) and a New Generation of Mixed-Use Developments Amir Shachmurove Harvard Law School	446
4.	Justice in Arbitration: The Consumer Perspective Farshad Ghodoosi and Monica Sharif David Nazarian School of Business & Economics, California State University, Northridge and California State University, Los Angeles	288
5.	Novel Issues in Canadian Labour Arbitration Related to COVID-19 Richard A. Bales Ohio Northern University - Pettit College of Law	149
6.	Six Levels of Contract Automation: The Evolution to Smart Legal Contracts - Further Analysis Susannah Wilkinson and Jacques Giuffre Herbert Smith Freehills and Herbert Smith Freehills	120
7.	Contractual Stakeholderism Kish Parella Washington and Lee University - School of Law	106
8.	Social Media as Contractual Networks: A Bottom up Check on Content Moderation Maayan Perel (Filmar), Niva Elkin-Koren and Giovanni De Gregorio Netanya Academic College, Tel-Aviv University - Faculty of Law and Centre for Socio-Legal Studies, University of Oxford	98
9.	Default Rules: Theoretical Foundations Eyal Zamir Hebrew University of Jerusalem - Faculty of Law	95
10.	Digital Infrastructure Integrity Protocol for Smart and Legal Contracts DIIP 2021 Ariane Garside, Susannah Wilkinson, Natasha Blycha and Mark Staples Herbert Smith Freehills, Herbert Smith Freehills, Herbert Smith Freehills and CSIRO Data61	89

 

Keeping with our Martial Arts Theme: Influencer Wins A Technical Knock-out in SDNY

Yesterday, we posted about a boxing match.   Today, we move on to mixed martial arts.

Have you ever wanted a behind-the-scenes look at how YouTuber "influencers" make money?  I certainly have.  I asked my daughter what seemed to me the obvious question: Why would anybody take seriously an endorsement from an "influencer" when you know that influencers get paid to endorse products and that their endorsement is thus effectively meaningless?  Her shrug, accompanied by an eye-roll spoke volumes.  

Fortunately, Jed Rakoff, of the Southern District of New York, just decided an influencer case, Brueckner v. You Can Beam, LLC,  that reveals quite a few details about how these deals work (H/T New York Contract Decisions Twitter Feed), although I admit I still don't really understand the premise behind these deals.

Josh Brueckner (Brueckner), for those who don't know, is a professional mixed martial arts athlete and influencer.   On February 1, 2020, he entered into an agreement with You Can Beam LLC (Beam), a nutritional supplements company.  The agreement provided that Brueckner would post (i) at least six promotional Instagram posts a year about Beam's nutritional supplements, (ii) at least one Instagram story per week mentioning a Beam product, and (iii) at least one YouTube video a month on Brueckner's YouTube channel, including Brueckner's coupon code and a link to the You Can Beam website in any YouTube videos. Even if the video was not about Beam’s products, Brueckner was required to link his coupon code in the description box. In exchange, he was to be paid a monthly fixed rate of $15,000 and a commission of $4 per unit sold using Brueckner's coupon code or link.  Wow, so that's how that works.  Thanks, Judge Rakoff!

The initial term of the agreement was one year, but then came COVID.  On March 17, Beam told Brueckner to “hold off” on the posting due to COVID-19 restrictions, because "everything with this virus has put us on hold unfortunately.” Beam still paid Brueckner his $15,000 for March, but they also sent him a termination notice dated April 8, 2020.  Contending that the termination was not in accordance with the contract terms, Brueckner filed suit on April 28th.  I'll say this for him, he's quick.  Beam counterpunched, alleging that Brueckner had been in breach of the agreement since February 28th, when Beam had sent him notice that he had failed to include a link and discount code in his YouTube videos as required under the parties' agreement.  Beam's counterpunch failed to land.

Brueckner moved for summary judgment, and he won.  Beam's sent its February 28 notice to the wrong address.  As a result, Brueckner was never properly put on notice that he was in breach.  Moreover, Brueckner clearly cured the alleged breach within the 10-day period provided for in the agreement.  As a result, he was not in breach when Beam instructed him to "hold off" on his influencing activities, and it was thus Beam, not Brueckner that was in breach. The Court granted Brueckner’s motion for summary judgment, finding Beam liable on Brueckner's breach of contract claim and dismissing Beam's breach of contract counterclaim.

Brueckner sought an additional $75,000 for the five months on the contract.  It is not clear if he could also seek to recover the $4 per sale he would have been entitled to but for Beam's breach.  As a side note, if you can offer reductions on each sale via coupon and pay an influencer $4 per sale, doesn't it seem like your product is overpriced?  Or is it common that most of what we pay for goes to marketing and not product.  Do I pay more for Progressive Insurance than Geico because Progressive has to pay Flo, while Geico stiffs its gecko?

H/T to ContractsProf Blog Intern Sydney Scott (left) for research on this post.

A Reason to Be Interested in the Mayweather/Logan Paul Fight

If you watched boxing legend Floyd Mayweather's exhibition bout against YouTuber Logan Paul, you should not have been disappointed.  That's because your expectations should have been very low.  I know very little about boxing, but I learned in researching this piece that Mayweather is a boxer, not a puncher, so he was unlikely to injure Logan Paul dramatically.  Logan Paul, on the other hand, although nearly twenty years younger and far bigger, was unlikely to land any clean blows on Mayweather.  And that is what ensued.  Mayweather landed nearly twice as many punches while throwing about half as many.  Paul demonstrated that he could take a punch and that he, quite literally, has thick skin, which likely serves him well in his line of work.

By Tim.Reckmann - File:Dubai_skyline_2015.jpg, CC BY-SA 3.0

But there is one area in which the exhibition match delivered quite the wallop: contractual controversy.  This fight, after all, was about making money.  According to legalreader.com, Mayweather sued the fight's promoter, PAC Entertainment Worldwide, when he did not  receive an initial payment of $30 million, a portion of his guaranteed $100 million take, which was due in March.  The fight was supposed to take place in Dubai, but PAC could not pull that off. Mayweather claimed that PAC's breach meant that he no longer had to perform and he was owed $122.6 million.  For that amount of money, I too would be willing to not fight Logan Paul.  The fight occurred in Miami last week, organized by a different promoter.  

Image by Brian W. Schaller

Whether and how much Mayweather can recover may turn on his take from the June 6th event.  Presumably Mayweather was only going to fight Logan Paul once.  Whatever he made will be subtracted from his provable damages as mitigation.  We'll see if we hear more about this in the coming months.

H/T to ContractsProf Blog Intern Alyssa Cross (left) for research on this post.

Subway's In-Store Ad and Website Terms and Conditions

The Second Circuit recently upheld a lower court decision that a customer that had seen Subway’s print ad in a store was not bound by the referenced terms and conditions on Subway’s website.  The plaintiff, Marina Soliman, was in a Subway sandwich shop when she saw an in-store, print advertisement offering special deals if she texted a keyword to a provided code.  She did and Subway began to send her text messages with a link to an electronic coupon.  She alleged that she texted Subway to stop sending her more messages but that she continued to receive them so she sued, claiming a violation of the Telephone Consumer Protection Act (“TCPA”).  Subway moved to compel arbitration pursuant to its website terms and conditions.  It claimed that because it’s in-store advertisement included a reference to its website terms and conditions which contained an arbitration clause, that Soliman was bound to bring any disputes in an arbitral forum. 

The Second Circuit, applying California law, said, “Nonsense!  This madness must stop!”  Actually, it said,

Soliman is not bound by the arbitration clause contained in the terms and conditions at issue.  More specifically, Subway has failed to demonstrate that such terms and conditions would be clear and conspicuous to a reasonable person in Soliman’s position for the following reasons:  (1) Subway failed to provide evidence regarding the size of the advertisement at issue, or the print size contained within that advertisement; (2) the reference to ‘[t]erms and conditions’ was buried on the advertisement in a paragraph that was printed in significantly smaller font relative to the other text on the advertisement, and the reference itself was surrounded by a substantial amount of unrelated information; (3) the advertisement only vaguely referenced ‘[t]erms and conditions,’ and did not state that a consumer would be agreeing to those terms if she sent a text message to Subway’s short code, nor did it otherwise direct the consumer to such terms; (4) access to the terms and conditions on the Subway website required Soliman to type in the URL text provided on the hard copy print advertisement into an internet browser on her cell phone or some other device with internet browsing capabilities; and (5) once linked to the Subway website, the heading stated that it contained ‘terms of use for this website,’ thus potentially suggesting to a reasonable person (searching for conditions of the promotional offer) that the website did not contain any terms or conditions beyond those relevant to the use of the website.”

The court concluded that this “combination of barriers” led it to conclude that the terms and conditions were not “reasonably conspicuous under the totality of the circumstances and that a reasonable person would not realize she was being bound to them by texting Subway to receive promotional offers.

 

The opinion is informative – providing insight into what makes notice conspicuous (or not) - it even contains a colorful image of the actual print advertisement (see above.  Can you see the reference to the Terms and Conditions?).  The case is another example of how courts have become much more realistic about how a “reasonable” person interacts with T&Cs.

Introducing the ContractsProf Blog Interns

Courtesy of my law school's generous support for my academic endeavors, we now have the assistance of two rising 2Ls at the Oklahoma City University (OCU) School of Law to assist in research relating to and the composition of new blog posts.  

Alyssa Cross (left) earned a B.A. from Oklahoma State University in 2020.  She was active in moot court as an undergraduate, and she and her partner took first place in OCU's 1L moot court competition.  She interned with Legal Aid Services of Oklahoma in 2020.   Alyssa hopes to build on her moot court successes as a member of the OCU National Moot Court Team.  She is also an officer in the American Constitution Society

Sydney Scott (right) graduated magna cum laude from Langston University with a B.S in Business Administration (Management).  While there, she was a member of the Varsity Track and Field Team.  While at Langston, she interned with Tulsa County District Judge, the Honorable Sharon Holmes.  At OCU, she is a BLSA Representative.  

Both were students in my first-year contracts course, and I am looking forward to working with them.

Arbitration and Amazon's Conditions of Use

Last week, the Wall Street Journal reported that Amazon quietly dropped its mandatory arbitration clause from its Conditions of Use.  In fact, the Conditions of Use were updated May 3, 2021.  The provision marked “DISPUTES” now states:

Any dispute or claim relating in any way to your use of any Amazon Service will be adjudicated in the state or Federal courts in King County, Washington, and you consent to exclusive jurisdiction and venue in these courts. We each waive any right to a jury trial.

Unfortunately, Amazon doesn’t have prior versions of its Conditions of Use on its website for the sake of comparison, but thanks to the amazing Wayback Machine (the Internet archive), the DISPUTES provision (at least the one updated May 2018) used to say:

Any dispute or claim relating in any way to your use of any Amazon Service, or to any products or services sold or distributed by Amazon or through Amazon.com will be resolved by binding arbitration, rather than in court, except that you may assert claims in small claims court if your claims qualify. The Federal Arbitration Act and federal arbitration law apply to this agreement.

There is no judge or jury in arbitration, and court review of an arbitration award is limited. However, an arbitrator can award on an individual basis the same damages and relief as a court (including injunctive and declaratory relief or statutory damages), and must follow the terms of these Conditions of Use as a court would.

To begin an arbitration proceeding, you must send a letter requesting arbitration and describing your claim to our registered agent Corporation Service Company, 300 Deschutes Way SW, Suite 208 MC-CSC1, Tumwater, WA 98501. The arbitration will be conducted by the American Arbitration Association (AAA) under its rules, including the AAA's Supplementary Procedures for Consumer-Related Disputes. The AAA's rules are available at www.adr.org or by calling 1-800-778-7879. Payment of all filing, administration and arbitrator fees will be governed by the AAA's rules. We will reimburse those fees for claims totaling less than $10,000 unless the arbitrator determines the claims are frivolous. Likewise, Amazon will not seek attorneys' fees and costs in arbitration unless the arbitrator determines the claims are frivolous. You may choose to have the arbitration conducted by telephone, based on written submissions, or in person in the county where you live or at another mutually agreed location.

We each agree that any dispute resolution proceedings will be conducted only on an individual basis and not in a class, consolidated or representative action. If for any reason a claim proceeds in court rather than in arbitration we each waive any right to a jury trial. We also both agree that you or we may bring suit in court to enjoin infringement or other misuse of intellectual property rights.

Quite a difference! 

So what caused this change of mega-corporate heart?  The WSJ article says that Amazon made the change after plaintiffs’ lawyers “flooded” the company with “more than 75,000 individual arbitration demands” on behalf of Echo users that were suing over privacy claims. 

This is just the latest example of how law firms with the resources to do so are leveraging the tools of efficiency to level the playing field made even more lopsided by wrap contracts.  This mass-arbitration filing tactic was first discussed on this blog with respect to Door Dash.  The big question is, will other companies follow Amazon’s lead? 

Nice Illustration of the Doctrine of Illusory Promise; Also, Listen to Your Mother!

Rabbi Vilmos Meisels, living in Britain, acquired five Brooklyn rental properties worth over $100 million as of 2017.  In January 2017, Vilmos entered into a contract, styled a "Sale, Deed, and Agreement" (the Agreement)  which purported to transfer the properties to his sons, Henry and Jacob, in exchange for $15 million.  Henry, and Henry's son, Joel, managed the property, and they shared the proceeds of the business with Vilmos and Jacob, until Vilmos passed in 2019.  At that point, Henry ceased making payments, sought a declaration that the properties were his and that no further payments were necessary.    

Enter (at 3:20 in the video below), Vilmos's widow, Frumme Sarah. 

I wish.  No, his widow's name is Minia, but she claimed that the properties were not Vilmos's to sell.  That issue was too complicated for the court to resolve at a preliminary stage in the litigation.  However, the court could address the question of whether or not the Agreement entailed an illusory promise and thus was unenforceable for lack of consideration.

In Meisels ex rel. Stamford Equities, LLC v. Meisels, the District Court for the Eastern District of New York sided with Minia.  The Agreement provided that payment was to be made within thirty days of handwritten notice from Vilmos or after Vilmos's death.  Bizarrely, however, the Agreement also provided that "delaying payment can in no way retract from the validity of this sale."  Minia correctly deduced that the Agreement as written did not require that Henry pay anything at all.  In addition, the Agreement provided that it could only be enforced by Vilmos, which became very hard for him to do once he died.

Along the way, the court cleared away some jurisdictional issues.  Jacob, although a party to the Agreement and possible beneficiary thereof, sided with his mother and attempted to join the suit, spoiling the court's diversity jurisdiction.  But the court swept aside procedural niceties and dismissed Jacob from the suit so that it could address the sweet little contracts issue.  The court likewise made short work of Henry's clever argument that Minia had no standing to challenge the validity of a contract to which she was not a party.  Henry's view, if accepted, would enable parties to sell non-parties' property without their consent and then deny them standing to challenge the conversion.  Not saying that's what you were up to, Henry.

Technically, although Minia brought a 12(c) motion for judgment on the pleadings, the court treated it as a 12(f) motion to strike Henry and Joel's affirmative defenses.  Those defenses rested on the validity of the Agreement.  They attempted to characterize the language that rendered their promises illusory as merely limiting Minia's remedies to a suit for damages.  The court sagely noted that, without the ability to challenge the transfer of the property, a suit for damages would be quite useless.  In any case, any attempt by the court to construe payment terms would violate the Statute of Frauds as interpreted under New York law.  Minia's motion was granted, and I suspect that decides the case, but we shall see.  

H/T to the New York Contracts Decisions Twitter Feed and to my new R.A.s, Sydney Scott and Alyssa Cross, for their assistance.

French Pediatrician and Holocaust Survivor Abandons Quest to Recover Nazi-Looted Art

According to this news article, a French citizen, Léone-Noëlle Meyer, has spent decades trying to regain control over paintings, including the Pissarro at issue (below, right), a Picasso, and a Renoir, that were owned by her adopted parents before the Nazis expropriated them.  Ms. Meyer was born in Paris in 1939.  In 1942, her mother and grandmother were sent to Auschwitz and she was placed in an orphanage.  She was adopted in 1946 by Yvonne Bader, the daughter of the founder of a celebrated art gallery.The painting is currently on loan at the Musée d’Orsay, but it is due to be shipped back to its current owner, the University of Oklahoma(!).  Last week, Ms. Meyer abandoned her attempt to recover the painting.  The reason?  She signed a contract.

Pissarro, Bergère rentrant des moutons

The headline of the main story linked to above describes her as an "heiress."  Who puts that on their resumé?  Wikipedia describers her as an heiress but also as a pediatrician, businesswoman and philanthropist.  She was as pediatrician for 45 years, so why not go with that?  

French law provides for the repatriation of Nazi-looted art owned by French citizens.  For reasons that are unclear, Ms. Meyer could not find a French gallery willing to take her Pissarro on a permanent basis.  Perhaps the price she was asking was too high, and most people descended from the original owners of Nazi-looted art cannot keep that art themselves because the insurance costs are too high.  Moreover, one wants such art on public display.

Five years ago, Ms. Meyer agreed to allow the painting to split its time between French galleries and the University of Oklahoma.  The painting was to move once every three years.  Now, Ms. Meyer concedes that she can find no French gallery willing to assume the costs of the transport.  Her only recourse was to challenge the enforceability of the contract.  She attempted to argue that she was coerced and that her American attorney left her with no choice but to agree to the Pissarro-sharing agreement.  That argument likely was not a winner, and with no French gallery willing to participate in the deal, Ms. Meyer had not choice but to acquiesce in the University of Oklahoma's unencumbered title to the painting.

Sad outcome.  One upside.  I'll be seeing it soon.

H/T, OCU rising 2L Rachel S. Wyatt.

New In Print

Blog editor Nancy Kim's novel is now in print and in my hands!

What the World Has Lost Because the Movie "Bloomer Girls" Was Never Produced

Thanks to Richard Carlson of the South Texas College of Law Houston, we can share this recording of the original Broadway production of "Bloomer Girls," the musical.  

Nearly 80 years later, this song still slaps.

For another musical take on Parker v. 20th Century Fox, this one from Professor Richard Craswell, you can check out this earlier post.

Noom and Deceptive Website Design

A lawsuit filed in New York  against weight loss app Noom claims that the company manipulates consumers into auto-enrollment and -renewing subscriptions by luring them with “free trial” offers.  The plaintiffs claim that the company tricks New York consumers into buying “multi-month ‘diet’ plans that they never wanted and never use and that they do it through deceptive website design.

The complaint alleges that Noom claims to use a “cognitive-behavioral approach” to offer a “supposedly revolutionary diet” but that “where the psychology most comes into play is getting enormous numbers of consumers to hand over their credit card information for a free trial without realizing they will later be auto-enrolled into perpetually ‘renewing’ multi-month diet plans.”  There are two particularly devious features of Noom’s program according to the complaint  – first, the subscription must be cancelled by the end of the trial period or it is automatically renewing; and second, the trial is difficult to cancel.

Auto-enrollment and -renewing subscriptions in general are fine print traps for the unwary, but the allegations in the complaint indicate that Noom’s program are especially worrisome for those concerned about algorithmic and website design manipulations – the so-called “dark patterns.”  The co-founder of the company, Artem Petakov, is a former Google engineer who studied psychology and computer science at Princeton and according to the complaint, “rather than employing cognitive behavioral therapy to benefit consumers” uses this “scientific knowledge to take advantage of the consuming public, as its entire sales and automatic renewal model is designed to exploit well-studied weaknesses in human decision-making.” 

The complaint contains a series of screenshots which reveal how a consumer might be lured into signing up.  The consumer answers 18 questions about diet and weight loss after which Noom “supposedly calculates the quiz’s results but does not disclose them to the consumer.”  In order to get the results, the consumer has to enter an email to “see how much weight you can lose for good with Noom.”  There are other tactics employed here, such as payment page that looks more like a donation page and a “countdown clock” to lend a sense of urgency to the entire process and make the consumer less careful.  The auto-subscription information is in fine-print and “designed to be overlooked.”

The complaint alleges that the company “buries its charges by not sending consumers a receipt when it charges for the full, multi-month diet plan” and does not otherwise provide payment confirmation (which would alert consumers to the fact that the trial program has ended and that they were automatically enrolled into the paying portion of the program).  According to the complaint, Noom makes it “extremely difficult for consumers to cancel their trial membership.” Apparently, the consumer who signs up for the trial, can’t go to “Settings” and cancel the subscription but has to contact a virtual trainer.  These are all obstacles that make it easy to hide unwanted charges from a consumer.

There’s more - the complaint is 86 pages long – and I can’t summarize it all here.  But the complaint provides an excellent illustration of how companies can use the insights from behavioral economics and social psychology to manipulate and mislead consumers.

 

(H/T to Mark Budnitz)

Tuesday Top Ten - Contracts & Commercial Law Downloads for June 1, 2021

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 02 Apr 2021 - 01 Jun 2021

Rank	Paper	Downloads
1.	Content Moderation Remedies Eric Goldman Santa Clara University - School of Law	1,022
2.	Tokenized: The Law of Non-Fungible Tokens and Unique Digital Property Joshua Fairfield Washington and Lee University - School of Law	1,007
3.	Privacy in the Clouds, Revisited: An Analysis of the Privacy Policies of 40 Cloud Computing Services Felicity Turton, Dimitra Kamarinou, Johan David Michels and Christopher Millard Queen Mary University of London, School of Law - Centre for Commercial Law Studies, Queen Mary University of London, School of Law - Centre for Commercial Law Studies, Queen Mary University of London, School of Law - Centre for Commercial Law Studies and Queen Mary University of London, School of Law - Centre for Commercial Law Studies	335
4.	Market Power Parasites: Abusing the Power of Digital Intermediaries to Harm Competition Noga Blickstein Shchory and Michal Gal University of Haifa, Faculty of Law and University of Haifa - Faculty of Law	178
5.	Novel Issues in Canadian Labour Arbitration Related to COVID-19 Richard A. Bales Ohio Northern University - Pettit College of Law	143
6.	The Eye in the Sky Delivers (and Influences) What You Buy Hadar Yoana Jabotinsky and Michal Lavi Tel Aviv University - Cegla Center for Interdisciplinary Research of the Law and Hebrew University of Jerusalem - Faculty of Law	135
7.	Six Levels of Contract Automation: The Evolution to Smart Legal Contracts - Further Analysis Susannah Wilkinson and Jacques Giuffre Herbert Smith Freehills and Herbert Smith Freehills	107
8.	Taking Stock of Chapter 11 David A. Skeel University of Pennsylvania Law School	104
9.	Private Law Theory and the Past Stephen James Bogle University of Glasgow - School of Law	101
10.	Contractual Stakeholderism Kish Parella Washington and Lee University - School of Law	93

 

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 02 Apr 2021 - 01 Jun 2021

Rank	Paper	Downloads
1.	Content Moderation Remedies Eric Goldman Santa Clara University - School of Law	1,022
2.	An Elusive Finality: The Illusive Standard for the Modification of Confirmed Chapter 13 Plans Amir Shachmurove Harvard Law School	411
3.	A Troublesome Prospect: Section 1322(b)(2) and a New Generation of Mixed-Use Developments Amir Shachmurove Harvard Law School	382
4.	Novel Issues in Canadian Labour Arbitration Related to COVID-19 Richard A. Bales Ohio Northern University - Pettit College of Law	143
5.	Six Levels of Contract Automation: The Evolution to Smart Legal Contracts - Further Analysis Susannah Wilkinson and Jacques Giuffre Herbert Smith Freehills and Herbert Smith Freehills	107
6.	Contractual Stakeholderism Kish Parella Washington and Lee University - School of Law	93
7.	Social Media as Contractual Networks: A Bottom up Check on Content Moderation Maayan Perel (Filmar), Niva Elkin-Koren and Giovanni De Gregorio Netanya Academic College, Tel-Aviv University - Faculty of Law and Centre for Socio-Legal Studies, University of Oxford	88
8.	Default Rules: Theoretical Foundations Eyal Zamir Hebrew University of Jerusalem - Faculty of Law	88
9.	Digital Infrastructure Integrity Protocol for Smart and Legal Contracts DIIP 2021 Ariane Garside, Susannah Wilkinson, Natasha Blycha and Mark Staples Herbert Smith Freehills, Herbert Smith Freehills, Herbert Smith Freehills and CSIRO Data61	85
10.	The Liberal Promise of Contract Hanoch Dagan Tel Aviv University - Buchmann Faculty of Law	78

Another Business Interruption Insurance Claim Denied

Deer Mountain Inn, LLC operated a country inn and restaurant in Tannersville, NY (picture below is of a different place of public accommodation).  Under Governor Cuomo's closure order, Deer Mountain's inn qualified as an "essential business" and could remain open, but it's restaurant could not offer in-person dining.  Deer Mountain sought recovery for loss of business income under a policy issued to it by Union Insurance, which denied the claim.  Deer Mountain sued, an, in an opinion issued last week, the Federal District Court for the Northern District of New York sided with the insurer and dismissed Deer Mountain's action.

The key provision of the insurance contract reads as follows:

We will pay for the actual loss of Business Income you sustain due to the necessary suspension of your operations during the period of restoration. [sic] The suspension must be caused by direct physical loss of or damage to property at premises which are described in the Declarations and for which Business Income Limit of Insurance is shown in the Declarations. The loss or damage must be caused by or result from of a Covered Cause of Loss.

Other potentially relevant provisions also require property damage or loss.  In addition, the policy includes a virus or bacterium exclusion that provides that the insurer.  . .  "will not pay for loss or damage caused by or resulting from any virus, bacterium or other microorganism that induces or is capable of inducing physical distress, illness or disease . . . "

Citing extensive case law, the court concluded that the business income and extra expense provisions track the language at issue in previously decided cases and do no cover mere loss of use unconnected to physical damage.  While plaintiff was able to cite to case law from other jurisdictions that was more favorable, but New York has uniformly rejected arguments that language such as that at issue in this policy is ambiguous.

The court also found that the policy's civil authority provision was inapplicable because the Governor Cuomo's closure order did not prohibit access to the insured facility, and no other provisions of the policy were met.  The court was unmoved by perfectly reasonable arguments that advice from civil authorities that people "shelter in place" had an impact on the plaintiff's business barely distinguishable from an order prohibiting access to the plaintiff's inn and restaurant.  Because the court found no covered losses, there was no reason to consider the virus or bacterium exclusion.

The court dismissed all of plaintiff's claims, including its class claims, with prejudice.

H/T @NY_Contracts.

An AAUP Special Report: Never Waste a Good Pandemic

The American Association of University Professors (AAUP) issues a Special Report, Covid 19 and Academic Governance.  The news is not good.  We law professors had a rough ride after 2008's Great Recession, but most law schools were able to ride out the storm and most law schools are now steering towards calmer waters.  Meanwhile, smaller colleges and universities are taking on a lot a water as a result of the pandemic, and the report sadly evidences that contracts and tenure do little to protect faculty when educational institutions founder.

The title of this post is a quotation from a university administrator, allegedly in the service of "disaster capitalism."  That is, some university administrations may have used the pandemic as an excuse to eliminate programs and faculty that were not carrying their weight in terms of revenue generation.   Saying the quiet part loud, academic administrators welcomed the opportunity created by the pandemic.  They invoked "act of God" provisions to close departments and terminate tenured faculty members, and they tossed aside existing faculty handbooks, replacing them with new ones written by administrators with limited faculty input.   The result may be a permanent adjustment of university governance that will make it -- wholly unsurprisingly -- more resemble corporate governance, with power concentrated in the hands of university administrators, while faculty governance is constrained, especially with respect to financial matters.

The AAUP document is illustrative rather than exhaustive.  It reports on an investigation into eight institutions.  While the investigation was ongoing, the AAUP was inundated with reports of similar developments at other institutions, but the report remains focused on eight: Canisius College (NY), Illinois Wesleyan, Keuka College (NY), Marian University (WI), Medaille College (NY), National University (CA), University of Akron, and Wittenberg University (OH).

The report makes for sobering reading.  There seems to be something of a playbook that administrations follow.  Faculty as a whole respond rather timidly, voicing their objections but ultimately acquiescing as their colleagues agree to severance or early retirement.  They have little choice, as courts tend to back administrations, who can rely on "financial exigency" or "act of God"  provisions in faculty handbooks, and tenured faculty members have few options if they lose their jobs.  The AAUP acknowledges that educational institutions face significant financial challenges, and the report does not suggest that there is an alternative to cutting programs and terminating tenure lines.  Rather, it admonishes these institutions for failing to follow AAUP procedures and guidelines for doing so with the involvement of and input from faculty.

The AAUP tacitly acknowledges that it has a problem.  According to the report Kenneth Macur of Medaille College wrote to his faculty on April 15th, “I believe that this is an opportunity to do more than just tinker around the edges. We need to be bold and decisive . . . . A new model is the future of higher education.”  That new model does not include the tenure system as we currently know it.

The report indicates that AAUP reached out to Dr. Macur seeking an interview. 

In his May 12 response, the president declined a request for an interview by the investigating committee, submitting instead a three-page statement, which claimed that Medaille “has no affiliation or relationship with the AAUP, does not have a faculty chapter of the AAUP, and does not have any faculty listed as members on the AAUP’s website.  The AAUP does not govern, accredit, or have any authority over Medaille College.” It is symptomatic of the current state of affairs in American higher education, we believe, that a college president would declare his intention to dismantle tenure at his institution to the Wall Street Journal but refuse to participate in an investigation conducted by the AAUP.

In such circumstances, all AAUP can do is name and shame, but it is not clear if that approach will be effective.  One would hope that being the focus of an AAUP report would serve a disciplinary function on such institutions, but they seem willing to take the risk, and most likely consequence of negative publicity would be declining enrollments and more cuts to faculty and staff.

John Deere Tractors and Contracts of Adhesion Have Farmers Shouting "Hay!"

The first motor vehicle I ever drove was a tractor, and I still admire the machines, now exclusively from afar.  Perhaps that is why a story on NPR this morning caught my ear.  The story covers the experience of a farmer, Walter Schweitzer, who was trying to make hay while the sun shone, but for some reason NPR rendered this as "hustling to cut and bale his hay while the weather was still good."  Sheesh, what a missed opportunity.  But I digress. 

The point is, his tractor broke down, and Schweitzer couldn't fix it because he did not have access to software that would have enabled him to diagnose the problem.  Who did have access to the software?  John Deere, and only John Deere.  Schweitzer eventually had to take the tractor to the dealer, which kept it for a month and charged him $5000 for a faulty fuel sensor that a local mechanic could have replaced for a fraction of the price. 

The problem is that modern tractors are extraordinarily sophisticated machines that cost upward of $200,000, but when you buy such a tractor, you are only buying the machine itself.  The manufacturer retains ownership of the software.  Farmers have been lobbying for access to the software, and the manufacturers promised to make it available, but . . . so far nothing.

Enter state legislatures with a possible solution to the problem: so-called right-to-repair bills, which require the manufacturer to share software with the farmers.  So far, these bills, although introduced in 12 states, have uniformly failed because of concerns that they might cause safety risks and environmental harms.  Farmers are trying to hack into their machines to access the information they need, or they are going retro and buying old tractors that work without all the software.

Meanwhile, there's more bad news as reported in this article on Vice.  The tractors compile data on their use.  The upside is that the manufacturers can share the data with the farmers who use the tractors in order to help the farmers maximize their yields.  The downside is that the farmers have no way to know what data is being collected, with whom it is being shared, and for what purposes it is being used.

According to the article (which is from 2018 but likely is still accurate),

The John Deere EULA, which a farmer automatically agrees to by turning a key on their equipment, not only forbids repair and modification, but also protects the company against lawsuits for “crop loss, lost profits, loss of goodwill, loss of use of equipment arising from the performance or non-performance of any aspect of the software.”

The article highlights other problems, such as:

• The machines can cost $500,000 or more; the farmers can't afford them so they lease them, often from the manufacturer;
• The manufacturer may learn form Apple and plan the obsolescence of these machines, simply by not updating the software;
• Manufacturers could remotely shut down equipment if they think farmers are violating the EULA by, for example, engaging in self-repair; and
• If the farmers can hack into their machines' software systems, others might do so as well with malign intent.

 

Tuesday Top Ten - Contracts & Commercial Law Downloads for May 25, 2021

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 26 Mar 2021 - 25 May 2021

Rank	Paper	Downloads
1.	Content Moderation Remedies Eric Goldman Santa Clara University - School of Law	979
2.	Tokenized: The Law of Non-Fungible Tokens and Unique Digital Property Joshua Fairfield Washington and Lee University - School of Law	918
3.	Privacy in the Clouds, Revisited: An Analysis of the Privacy Policies of 40 Cloud Computing Services Felicity Turton, Dimitra Kamarinou, Johan David Michels and Christopher Millard Queen Mary University of London, School of Law - Centre for Commercial Law Studies, Queen Mary University of London, School of Law - Centre for Commercial Law Studies, Queen Mary University of London, School of Law - Centre for Commercial Law Studies and Queen Mary University of London, School of Law - Centre for Commercial Law Studies	322
4.	Contractual Evolution Matthew Jennejohn, Julian Nyarko and Eric L. Talley Brigham Young University - J. Reuben Clark Law School, Stanford Law School and Columbia University - School of Law	298
5.	Portraits of Bankruptcy Filers Pamela Foohey, Robert M. Lawless and Deborah Thorne Indiana University Maurer School of Law, University of Illinois College of Law and University of Idaho	231
6.	Market Power Parasites: Abusing the Power of Digital Intermediaries to Harm Competition Noga Blickstein Shchory and Michal Gal University of Haifa, Faculty of Law and University of Haifa - Faculty of Law	173
7.	Creating Cryptolaw for the Uniform Commercial Code Carla Reyes Southern Methodist University - Dedman School of Law	169
8.	Novel Issues in Canadian Labour Arbitration Related to COVID-19 Richard A. Bales Ohio Northern University - Pettit College of Law	139
9.	One, Two, Sort the Shoe; Three, Four, Win Some More: The Rhyme and Reason of Phil Ivey’s Advantage Play at the Borgata Nanci Carr California State University, Northridge - Department of Business Law	118
10.	Amazon as a Seller of Marketplace Goods Under Article 2 Tanya J. Monestier Roger Williams University School of Law	118

 

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 26 Mar 2021 - 25 May 2021

Rank	Paper	Downloads
1.	Content Moderation Remedies Eric Goldman Santa Clara University - School of Law	979
2.	Choice of Law in the American Courts in 2020: Thirty-Fourth Annual Survey Symeon Symeonides Willamette University - College of Law	509
3.	An Elusive Finality: The Illusive Standard for the Modification of Confirmed Chapter 13 Plans Amir Shachmurove Harvard Law School	376
4.	A Troublesome Prospect: Section 1322(b)(2) and a New Generation of Mixed-Use Developments Amir Shachmurove Harvard Law School	341
5.	Novel Issues in Canadian Labour Arbitration Related to COVID-19 Richard A. Bales Ohio Northern University - Pettit College of Law	139
6.	One, Two, Sort the Shoe; Three, Four, Win Some More: The Rhyme and Reason of Phil Ivey’s Advantage Play at the Borgata Nanci Carr California State University, Northridge - Department of Business Law	118
7.	Amazon as a Seller of Marketplace Goods Under Article 2 Tanya J. Monestier Roger Williams University School of Law	118
8.	Six Levels of Contract Automation: The Evolution to Smart Legal Contracts - Further Analysis Susannah Wilkinson and Jacques Giuffre Herbert Smith Freehills and Herbert Smith Freehills	96
9.	Contractual Stakeholderism Kish Parella Washington and Lee University - School of Law	92
10.	Digital Infrastructure Integrity Protocol for Smart and Legal Contracts DIIP 2021 Ariane Garside, Susannah Wilkinson, Natasha Blycha and Mark Staples Herbert Smith Freehills, Herbert Smith Freehills, Herbert Smith Freehills and CSIRO Data61	82

Contracts Issues in Shtisel, Season 3, Part I

I am a big fan of the Israeli television series Shtisel.  I was thrilled when Netflix made Season 3 available but also a bit apprehensive, because I just didn't think the writers could maintain the intensity of their dramedy without drifting into formulaic schtick or melodrama.  Season 3 begins with a grieving widower, an orthodox woman unable to bear children, and a school principal facing removal from his position as a punishment for some pretty brutal corporal punishment caught on a smart phone.  The season was tipping towards melodrama.  But the show sustains its remarkable balancing act, revealing unexpected depths in its characters, brought out through fabulous acting, inventive plot twists that don't overtax the viewers' indulgence, and brilliant pacing and editorial interweaving of different threads. 

I just watched an episode in which the main character from Seasons 1 & 2, Akiva Shtisel (Michael Aloni) did not appear at all.   I didn't miss him, even thought I am very intrigued by his journey in Season 3, because I was so caught up with what was going on with the other characters.  The show is especially fun for me, because it provides just the life-support needed to sustain my dwindling recollection of Hebrew and Yiddish.  In addition, the show depicts strong-willed, even stubborn, characters constrained by fervent religious belief.  They constantly collide with one another while stuck between a rock and a hard place. The show's women are remarkably practical, creative, and determined, but also vulnerable and thus inevitably brittle; its men are deeply flawed and often shrewdly self-interested but also passionate and sometimes endowed with a softness and compassion that the women cannot always afford -- or don't think they can risk.

Contracts, formal and informal, and negotiation pervade the series.  I am only halfway through the season, and I don't want to provide too many spoilers, but here are some of the contractual/transactional interactions that arise:

• Has a school principal been effectively terminated from employment if he has been informed of his termination but does not agree to it?  If he responds by setting up a rival school and sets out to poach his former employer's students, has he breached any obligations absent a covenant not to compete?
• If an art collector agrees to exchange paintings she has purchased from a gallery for new paintings by the same artist of equal quality, is that a subjective condition of satisfaction or a an illusory promise, given that the collector seems to have total discretion to determine whether the substitute paintings are of equal quality?
• Can a young man get out of an arranged marriage when: the prospective bride and groom have no real connection, and the groom has fallen for another woman; and the bride's family has asked for additional consideration above the amount agreed upon at the start of the arrangement?
• If an orthodox Jew providing catering services for a secular tv producer promises to supply orthodox Jews who will perform as extras on demand, has he breached when he substitutes hipsters for the orthodox Jews?

I expect I will add a Part II to this post once I finish the season.

Handy Overview on the Student Suits against Universities from Inside Higher Education

Over at Inside Higher Education (IHE), Doug Lederman provides a review of the fate of the hundreds of suits filed against colleges and universities by students claiming that they did not get the educational experience promised to them due to the colleges' and universities' responses to the pandemic.  The news is mostly bad for plaintiffs, but some cases are proceeding to trial, and at least two schools have settled to end the suits.  

As readers of this blog should know, most states do not recognize a cause of action for "educational malpractice," nor do they entertain suits that would put courts in the position of second-guessing educational institutions about how best to deliver their curricula.  It's like a business judgment rule for higher education.  The cases that succeed have to allege that the educational institution made some specific promise on which it failed to deliver.  For the most part, courts seem to be more willing to entertain such claims as they relate to fees than tuition, a point not addressed in the IHE piece.

Barry University Campus

According to IHE, Southern New Hampshire University paid $1.25 million to settle claims brought against it, and Barry University paid $2.4 million.  IHE does the math and figures that Barry's claim comes out to about $350 per student, but that calculation does not take into account lawyers' fees, nor is it clear whether all 7000 Barry students are eligible to be part of the plaintiff class.  In any case, the point is that some institutions are willing to pay a bit to make these cases go away.  Schools are especially vulnerable if they have developed online educational programs for which they charge less and if their in-person education became essentially indistinguishable from their online program as a result of closures necessitated by the pandemic.

H/T John Wladis.

Teaching Assistants: Dorothy A. Brown, Critical Race Theory, 3rd Edition

I just received my copy of the third edition of Dorothy Brown's Critical Race Theory: Cases Material and Problems.  The book devotes about 35 pages to a discussion of critical race theory and contracts, which is the subject of this blog post.  The rest of the book provides an introduction to critical race theory and then there are individual chapters dedicated to torts, contracts, property, criminal procedure, criminal law, and civil procedure.  The book seems ideally suited to a course dedicated entirely to critical race theory.  I would be interested in hearing from contracts profs who have also made use of the book in their course.  The book is not expensive, and since it's been out since 2014, there ought to be used copies in circulation, but it is still hard to make students buy a 330-page book, if you can only assign the introductory chapters and the contracts chapter.  Ideally, one could get a group of doctrinal faculty members across the curriculum to each assign the relevant chapters for their courses, but that's would involve herding cats, so . . . .

The chapter on contracts begins with excerpts from an article, Racial Inequality in Contracting: Teaching Race as a Core Value by friend of the blog, Deborah Zalesne (pictured left).  In it, Deborah pushes back against the law school imperative to train students to "think like a lawyer" by mastering "objective," "neutral" rules of general applicability.  Approaches to doctrine that value efficiency rather than fairness bake into the law assumptions that privilege the dominant groups whom the law was designed to protect.  Introducing critical approaches to the doctrine right from the start is the best way to train lawyers who know the law but also know the ways in which it applies inequitably along lines of race and gender.

Courts suppress the interplay of race, class, and gender with contracts law because lawyers and judges are trained to treat such matters as irrelevant to legal decision-making.  As a result, the race and gender of parties to legal proceedings are erased, rendering women and racial minorities "invisible" in the case law.  In order to counter this trend, Deborah explores the relevance of race to contracts doctrine in connection with consumer racial profiling and culturally sensitive approaches to assent and interpretation.

After that introduction to a critical race theory approach to contracts, the chapter provides a some background on unconscionability doctrine, followed by Judge Skelly Wright's opinion in Williams v. Walker Thomas Furniture, about which we have posted recently here.  There follows an excerpt from Amy H. Kastely's 1994 article, Out of the Whiteness: On Raced Codes and White Race Consciousness in Some Tort, Criminal, and Contract Law.  Professor Kastely provides a critical perspective on Skelly Wright's opinion.  Although Skelly Wright appropriately invoked the unconscionability doctrine in the case, along the way he indulged the stereotype of the poor, uneducated, helpless Black welfare recipient.  The opinion has about it the whiff of paternalism.  Professor Kastely thinks the opinion could have improved by focusing not on the particulars of Ms. Williams' situation but on the structural racism that creates the climate in which predatory business practices thrive.  The law often asks how a "reasonable person" would respond to the facts of a case.  As it turns out, we all respond pretty much the same way to form contracts, but vendors would never get away with offering terms, like Walker-Thomas's notorious cross-collateralization clause to consumers in affluent (White) neighborhoods.

The chapter next provides additional commentary on the Walker-Thomas opinion in the form of a student note by Eben Colby, now a partner with Skadden.   Colby suggests that Skelly Wright's intervention did little to protect consumers like Ms. Williams.  Walker Thomas adjusted its contract, but it continued to pursue remedies against its customers, who continued to fall behind in their payments.  Statutory measures, such as the Truth in Lending Act, turned out to be more effective in disciplining the company than the common-law unconscionability doctrine.

The chapter concludes with Muriel Morisey Spence's fictionalized account of the facts of Walker-Thomas in an excerpt from her article, Teaching Williams v. Walker-Thomas Furniture.  Her alternative facts render Williams a more sympathetic party, to the extent that students may be inclined to judge her harshly for buying a stereo system that cost several times her monthly income.  Professor Morisey's approach strengthens the criticisms posed in the previous segments.  Skelly Wright's approach is paternalistic, and that paternalism cabins the unconscionability doctrine is ways that are not helpful.  The particularities of Ms. Williams' background explain very little.  She was a responsible mother and a wise consumer who managed her household on a tiny income for years.  What befell her could have befallen any consumer, regardless of education or income, because people often face unforeseen financial setbacks and are suddenly on the wrong side of a nasty contractual term of which they never had any reason to take notice.

The book contains great materials, and they remain timely.  That said, there are now many contracts profs who have concluded, for precisely the reasons given in the chapter, that Walker-Thomas is not the best vehicle for introducing students to the doctrine of unconscionability.  If a new edition is in the works, it is to be hoped that it could be revised to consider the many contexts outside of unconscionability where race and the law intersect.  The links below provide some examples of what those contexts might be.  

This post is part of a continuing series on introducing critical perspectives, including critical race theory, into the teaching of first-year contracts.  Other posts in the series include:

• Guest Blogger Marissa Jackson Sow on Whiteness as Contract and the Police, Part II
• Guest Blogger Marissa Jackson Sow on Whiteness as Contract and the Police, Part I
• Teaching Assistants: Marissa Jackson Sow, "Whiteness as Contract"
• Teaching Assistants: Threedy, Dancing Around Gender
• Guest Post by Alan White, Systemic Racism and Teaching Contracts
• Guest Post by Deborah Post on Williams v. Walker-Thomas
• Guest Post by Chaumtoli Huq, Part III: Counter-Hegemonic Narratives
• Guest Post by Chaumtoli Huq, Part II: Freedom to Contract and the Reasonable Man
• Guest Post by Chaumtoli Huq, Part I: The Decolonial Framework
• Guest Post by Deborah Zalesne, The (In)Visibility of Race in Contracts: Thoughts for Teachers
• What Should a Court Do in Response to Racist Contractual Threats? Wolf v. Marlton Corp.
• Guest Post by Charles Calleros: Raising Issues of Race, Ethnicity, and Culture in 1L Contracts: Language Barriers
• Guest Post by Charles Calleros, Talking about Race in the Contracts Course: Interface with Civil Rights Laws, Part II – Consideration
• Guest Post by Charles Calleros, Talking about Race in the Contracts Course: Interface with Civil Rights Laws, Part I – Mutual Assent
• Teaching Assistants, Emily Houh's Redemptive Theory of Contract Law

Keren on Takhshid’s Assumption of Risk in Consumer Contracts

Over at Jotwell, Hila Keren has reviewed Zahra Takhshid’s article, Assumption of Risk in Consumer Contracts and the Distraction of Unconscionability, 42 Cardozo L. Rev. ___ (forthcoming, 2021).  I recommend reading it and so won’t review the review, but I will note that the focus on exculpatory clauses should make this a particularly relevant and timely article. Keren also does what good reviewers should do – she situates the article within the existing body of legal scholarship more generally, finding that it “belongs with the law and economy project as it illuminates how contracts’ enforcement is far from neutral and instead facilitates rising inequality.”