ContractsProf Blog

Lying about age in sports

I fell down a rabbit hole recently looking at athletes who had lied about their ages. You can find a flurry of pieces about this online, from lists purporting to gather names together (I found some here and here and here) to more in-depth examinations of the phenomenon (see here and here and here and here). I fell down the rabbit hole courtesy of stumbling across a Baseball Prospectus piece on Albert Pujols. I discovered that there had been a flurry of discussion around Pujols's age when the prospect of his next (and last) baseball contract was looming, as you can see here and here and here. I'd never paid much attention to this issue before but it's interesting to contemplate how it intersects with contract law. 

In which we all learn a little bit about the business behind horse-drawn carriages in Nashville

A recent case out of Tennessee, Sugar Creek Carriages v. Hat Creek Carriages, No. M2017-00963-COA-R3-CV, lets us peek behind the scenes at the competition between horse-drawn carriage operators in Nashville, Tennessee. (You can listen to the oral argument here.) The defendant hired one of plaintiff's carriage operators, and the plaintiff sued based on the non-competition agreement that the employee had entered into. 

However, the court refused to enforce the non-competition agreement. The plaintiff's argument boiled down to training that it had provided to the employee, but the court warned the plaintiff that it couldn't protect itself against the employee's using general skills and knowledge learned on the job. There were no allegations of the employee having any confidential information and no allegations that any customers associated the employee with the plaintiff's business. And, in fact, the training that the plaintiff gave to the employee it actually made available to the public at large, encouraging them to use the training to go forth and start their own horse-drawn carriage businesses. So, having offered the training to others with explicit encouragement of competition, the court refused to allow the plaintiff to impose a non-competition restriction on the employee based on the same exact training. 

Assumption of risk stymies builder's impossibility argument

A recent case out of the District of Maryland, Green v. Jenkins Services, LLC, Case No. PWG-16-2572 (behind paywall), has something to say about impossibility and assumption of risk. In the case, Green hired Jenkins to demolish their fire-destroyed house and build them a new one. However, after demolition, Jenkins found that the land was unsuitable for an on-site sewage system, and therefore could not acquire the necessary permits for construction. As a result, Jenkins did not build the new house, and Green sued for breach of contract. 

Jenkins argued that it was excused from performance by impossibility, because it was not its fault that the land failed the tests the state required for building. But Green argued that Jenkins assumed the risk, since Jenkins had promised in the contract to obtain all the required permits. 

The court agreed with Green. Jenkins promised in the contract to obtain the proper permits, and Jenkins knew at the time it made this promise what the government regulations surrounding those permits were. Therefore, Jenkins assumed the risk that it might not be able to obtain the proper permits. If Jenkins had wanted to be excused from performance if the government refused to issue the permits, it should have provided so in the contract. Its failure to do meant it was in breach of contract. 

"Similar in concept" IHOP diner follow-up!

Thanks to Andy Feldstein of Huntington Technology Finance, who sent me an email after reading yesterday's IHOP post. Reading the opinion left me confused, but Andy points out that a visit to the Gunther Toody's website sheds a lot of light on the matter. Andy wrote that to the extent "similar in concept" has meaning, it's pretty clear IHOP and Gunther Toody's are two diners with extremely dissimilar concepts. Agreed. This was very helpful in clearing things up! 

Court answers the question: Is IHOP a diner?

I could not resist blogging this case out of the District of Colorado, Northglenn Gunther Toody's v. HQ8-10410-1045 Melody Lane, Civil Action No. 16-cv-2427-WJM-KLM (behind paywall), because it tackles these questions: "First, what is a diner? Second, is the IHOP restaurant a diner?"

I greatly enjoyed reading the court's definition of "diner," which, after evaluating expert testimony, settled on "a table service restaurant with a broad array of breakfast, lunch, and dinner offerings, most of which are perceived as American cuisine." The court then decided that IHOP qualifies as a diner. 

After that, though, things get a bit of a mess. The lease at issue prohibited the opening of "a diner similar in concept" to the one operated by the plaintiff. The court found that the parties provided it with no answer as to what that phrase meant. The court concluded it must be something more than just being "a diner," because otherwise there was no reason to include the "similar in concept" language. But plaintiff kept insisting that IHOP being a diner was enough to violate the clause. The court did not hold with that interpretation, since it left "similar in concept" with no work to do. The "concept," the court thought, had to refer to something more than just diners generally. The clause required the court to ask if IHOP was similar in concept to the plaintiff's restaurant, whereas plaintiff just kept arguing that the answer was yes, because they were both diners, without tackling the concept language (although I think the plaintiff was trying to argue that the concept was being a diner). Therefore, the court found that plaintiff offered no reasonable interpretation of the covenant and therefore there was no ambiguity. 

This ruling is confusing, because the "similar in concept" language was so slippery that no one seemed able to advance any meaningful definition of it at all...and that resulted in a finding that it was unambiguous. I would avoid this language in contracts, as I think this case proves it's actually pretty ambiguous. 

At any rate, the court went on to conclude that IHOP was not similar in concept to the plaintiff's restaurant, because the plaintiff failed to rebut the defendant's argument that they were different in concept. Which means that it sounds like there is some understanding of what "concept" means, after all...? I am confused by this case and have decided to mull it over at my local IHOP. 

Settlement agreements don't release claims related to fraud around the settlement itself

A recent decision out of the Eastern District of Louisiana, In re Chinese-Manufactured Drywall Products Liability Litigation, MDL No. 09-2047 (behind paywall), stems from a multi-district litigation over the sale of Chinese drywall in the Southeast during rebuilding efforts after Hurricanes Rita and Katrina. Eventually, five individual class settlements were approved by the court. 

Later, the Burns realized that their house contained Chinese drywall that was causing a variety of problems. They filed suit and included among their claims a failure to be informed of the multidistrict litigation. InEx, the particular defendant who supplied the Chinese drywall at issue in the Burns situation, alleged that the Burns did not opt out of the settlement and thus their claims were barred. The court ruled that the settlement did bar the Burns claim against InEx; however, the Burns allegations against Livers, the particular construction company that had performed the installation of the Chinese drywall in the Burns house, were allowed to survive. 

Among other things, Livers argued that it, too, should be protected by the InEx settlement agreement. The settlement agreement, it argued, released "[a]ny further claims and/or liabilities arising out of, or otherwise relating to, the sale, supply, marketing, distribution, or use of Chinese [d]rywall." Livers argued that the Burns claims against it were included in this umbrella. The court disagreed, because the Burns claims contained allegations that Livers had fraudulently concealed the existence of the Chinese drywall MDL. That claim was not released by the settlement. In fact, it could not have existed until after the settlement was perfected. The court therefore allowed the Burns to to pursue "an action against Livers for allegedly preventing them from filing a claim in the settlement program." 

Bill O'Reilly's sexual harassment settlement agreements

In case you missed it in the onslaught of news we're subjected to these days, the agreements settling several of the sexual harassment claims against Bill O'Reilly have been made public, thanks to a federal judge overruling the contracts' confidentiality clauses ("Strict and complete confidentiality is the essence of this agreement," reads one). You can read about them all over, including the New York Times, CNN, ThinkProgress, and Vogue.

The contracts say the usual things that we have come to expect regarding the confidentiality of the accusations but at least one of them contains the added twist that, should any incriminating documents come to light, the woman settling the claim is required to declare them to be "counterfeit or forgeries." The truth of the statement is irrelevant; the contract evidently requires the woman to lie and say they're counterfeit and forgeries even if they're genuine. 

Another interesting part of that "counterfeit or forgeries" contract is that the accusing woman's attorney agrees not to cooperate in any other action against O'Reilly and, indeed, agrees to switch sides and advise O'Reilly "regarding sexual harassment matters." This sounds like it raises all sorts of ethical issues. They're brought up in the other articles I've linked, and Bloomberg has a rundown of the ethical issues as well. 

Things lurking in these confidential agreements...

New York court rules sexual harassment by itself is not against an employer's interest such that it breaches a fiduciary duty

A recent case out of New York, Pozner v. Fox Broadcasting Company, 652096/2017, is related to the growing spotlight on sexual harassment cases. In the case, Pozner was terminated from his employment based on sexual harassment complaints and sued for breach of his employment contract. Fox brought counterclaims for breach of contract and fiduciary duty. 

I'm blogging this case because it has an interesting ruling on the fiduciary duty claim in the context of sexual harassment cases (which I assume we might see more of; or maybe not if maybe people just stop sexually harassing others /end wide-eyed optimism). The court found that the employee handbooks were contracts whose terms Pozner had agreed to abide to, but the court dismissed Fox's breach of fiduciary duty claim, because the fiduciary duty of loyalty is about the employee acting against the employer's interests, and no court in New York has found sexual harassment on its own can serve as a basis for a breach of that duty of loyalty. Fox did not allege enough to convince the court that Pozner's sexual harassment was against Fox's interest. The court noted that other cases where sexual harassment was part of a breach of loyalty involved other financial improprieties or allegations of fraud. 

When you're an at-will employee, if you don't quit, then you accept your new employment terms

A recent case out of Indiana, AmeriGlobe v. Althoff, Court of Appeals Case No. 46A05-1708-PL-1845, reminds all of us that, if you're an at-will employee, your terms of employment can change at any time. If you keep working instead of quitting, that constitutes your acceptance of those new terms. 

In the case, Althoff was employed by AmeriGlobe. He had a written employment contract that specified that his employment was terminable at will. When AmeriGlobe changed the commission rates it was paying Althoff, Althoff recognized that he had two choices: He could quit or continue to work. When he continued to work, he accepted his new terms of employment. An assertion that his commission should have been higher therefore failed. 

Tenured!

Allow me to share some good “personal” news for once: I just received word that all levels of the USD administration has voted for granting me tenure! The Board of Regents will cast its final vote on this in early May.

As some of you will know, it has not been an easy process. I encountered several tiring and stressful procedural hurdles with the USD administration, but the law school was at all times supporting me intensely just as I only got excellent scholarship reviews, so it all ended well! I could also not have done this without the excellent, tireless, and creative legal assistance not to mention very highly encouraging support of David Frakt, Esq.

I’ll now try to blog a lot more here. Tips and ideas on cases are always welcome (they are harder to find than you might think).

The Disney/Redbox dispute's contract angle

Lots of people have been discussing the recent Central District of California ruling, Disney Enterprises v. Redbox Automated Retail, Case No. CV 17-08655 DDP (AGRx) (those links are a random selection), a lawsuit brought by Disney against Redbox's resale of the digital download codes sold within Disney's "combo pack" movies, which allow instant streaming and downloading of the movie. There is an obvious copyright component to the dispute, but I thought I'd highlight the breach of contract portion of the decision. 

The DVD/Blu-Ray combo packs were sold with language on the box reading "Codes are not for sale or transfer," and Disney argued that Redbox's opening of the DVD box formed an enforceable contract around that term, which Redbox breached by subsequently selling the codes. However, the court found no likelihood of success on the breach of contract claim, based on the fact that the language on the box did not provide any notice that opening the box would constitute acceptance of license restrictions. The court distinguished other cases that provided much more specific notice. Redbox's silence could not be interpreted as acceptance of the restrictions. This was especially so because the box contained other language that was clearly unenforceable under copyright law (such as prohibiting further resale of the physical DVD itself). Therefore, the court characterized the language as "Disney's preference about consumers' future behavior, rather than the existence of a binding agreement." 

The court ended up denying Disney's motion for preliminary injunction. 

Pseudo-Contract?

Pseudo-Contract in the Harvard Law Review

The Harvard Law Review has committed to publishing an article on contract law theory for the first time since 2007.

The piece is Pseudo-Contract and Shared Meaning Analysis by Robin Bradley Kar (Illinois) and Margaret Jane Radin (Toronto), which appeared our Top Ten lists earlier this year.  Here is key thesis from the abstract:

Over the last several decades, courts and legal scholars have struggled with whether or when to consider boilerplate text as contract …. [C]ontract law has been shifting away from its traditional focus on enforcing parties’ actual agreements. This shift has been transforming the meanings of central contract law concepts. We view the shift as an untheorized paradigm slip, inviting a generalized theory of contract as assumption of risk and allowing private obligations to be created unilaterally without actual agreement. This sort of obligation is still called “contract.” But it is pseudo-contract.

It’s sure to generate lively debate.  Jeff Lipshaw (Suffolk) has already posted a response, Conversation, Convention, or Conversion?  in which he “caution[s] against rushing into shared meaning analysis as a broader basis for understanding contract formation or interpretation.”

The Stormy Daniels liquidated damages provision

Slate has a piece analyzing the enforceability of the liquidated damages provision in Stormy Daniels's contract with Donald Trump, quoting several very keen legal minds. (Disclaimer: including mine ;-))

Teaching Transactional Law and Skills

CALL FOR PROPOSALS AND REGISTRATION INFORMATION

Emory’s Center for Transactional Law and Practice is delighted to announce its sixth biennial conference on the teaching of transactional law and skills. The conference, entitled “To Teach is to Learn Twice: Fostering Excellence in Transactional Law and Skills Education,” will be held at Emory Law, beginning at 1:00 p.m. on Friday, June 1, 2018, and ending at 3:45 p.m. on Saturday, June 2, 2018.

Four New and Different Things about the Conference:

• Presentation of the inaugural Tina L. Stark Award for Excellence in the Teaching of Transactional Law and Skills. Note: For information about how to nominate yourself or someone else for this award, please visit http://bit.ly/2EVdFou.

• New 45-minute “Try-This” time slots for individual presenters to demonstrate in-class activities.

• Reduced registration fee for new transactional law and skills educators.

• Reduced registration fee for adjunct professors.

CALL FOR PROPOSALS

We are accepting proposals immediately, but in no event later than 5 p.m. on Friday, March 30, 2018. We welcome you to present on any aspect of transactional law and skills education as long as you view it through the lens of our theme. We expect to receive proposals about theories, programs, curricula, courses, approaches, methods, and specific assignments or exercises that foster excellence in transactional law and skills education. In other words, what works best (excellence in teaching) to achieve particular student outcomes (excellence in learning)? If it’s true that “to teach is to learn twice,” what wisdom can you impart to others who may want to replicate or imitate what you are doing? How have you made yourself a better teacher? And how have you assured that you are achieving the best student outcomes?

Try-This Sessions. Each Friday afternoon “Try-This Session” will be 45-minutes long and will feature one classroom activity and one individual presenter.

Panels. Each Saturday session will be approximately 90 minutes long and feature a panel presenting two or more topics grouped together for synergy.

Please submit the proposal form electronically via the Emory Law website at http://bit.ly/2BTD7pr before 5 p.m. on March 30, 2018.

PUBLICATION OF SELECTED MATERIALS

As in prior years, some of the conference proceedings as well as the materials distributed by the speakers will be published in Transactions: The Tennessee Journal o f Business La w , a publication of the Clayton Center for Entrepreneurial Law of The University of Tennessee, a cosponsor of the conference.

CONFERENCE REGISTRATION

Both attendees and presenters must register for the Conference and pay the appropriate registration fee: $220 (general); $200 (adjunct professor); or $185 (new teacher). Note: A new teacher is someone in their first three years of teaching. The registration fee includes a pre-conference lunch beginning at 11:30 a.m., snacks, and a reception on June 1, and breakfast, lunch, and snacks on June 2. We are planning an optional dinner for attendees and presenters on Friday evening, June 1, at an additional cost of $50 per person. Registration is now open for the Conference and the optional Friday night dinner at our Emory Law website at http://bit.ly/2BpTQVc.

TRAVEL ARRANGEMENTS AND HOTEL ACCOMMODATIONS

Attendees and presenters are responsible for their own travel arrangements and hotel accommodations. Special hotel rates for conference participants are available at the Emory Conference Center Hotel, less than one mile from the conference site at Emory Law. Subject to availability, rates are $149 per night. Free shuttle transportation will be provided between the Emory Conference Center Hotel and Emory Law. To make a reservation at the special conference rate, call the Emory Conference Center Hotel at 800.933.6679 and mention “The Emory Law Transactional Conference.” Note: The hotel’s special conference rate expires at the end of the day on May 18, 2018. If you encounter any technical difficulties in submitting your proposal or in registering online, please contact Kelli Pittman, Program Coordinator, at kelli.pittman@emory.edu or 404.727.3382. We look forward to seeing you in June!

Sue Payne- Executive Director

Katherine Koops- Assistant Director

Kelli Pittman- Program Coordinator

 

IMPORTANT

The deadline to register has been extended to Friday, March 30th. 

See the original flyer at http://law.emory.edu/academics/academic-programs/center-for-transactional-law-and-practice/conferences.html

Teaching Transactional Law and Skills

CALL FOR PROPOSALS AND REGISTRATION INFORMATION

Emory’s Center for Transactional Law and Practice is delighted to announce its sixth biennial conference on the teaching of transactional law and skills. The conference, entitled “To Teach is to Learn Twice: Fostering Excellence in Transactional Law and Skills Education,” will be held at Emory Law, beginning at 1:00 p.m. on Friday, June 1, 2018, and ending at 3:45 p.m. on Saturday, June 2, 2018.

Four New and Different Things about the Conference:

• Presentation of the inaugural Tina L. Stark Award for Excellence in the Teaching of Transactional Law and Skills. Note: For information about how to nominate yourself or someone else for this award, please visit http://bit.ly/2EVdFou.

• New 45-minute “Try-This” time slots for individual presenters to demonstrate in-class activities.

• Reduced registration fee for new transactional law and skills educators.

• Reduced registration fee for adjunct professors.

CALL FOR PROPOSALS

We are accepting proposals immediately, but in no event later than 5 p.m. on Friday, March 30, 2018. We welcome you to present on any aspect of transactional law and skills education as long as you view it through the lens of our theme. We expect to receive proposals about theories, programs, curricula, courses, approaches, methods, and specific assignments or exercises that foster excellence in transactional law and skills education. In other words, what works best (excellence in teaching) to achieve particular student outcomes (excellence in learning)? If it’s true that “to teach is to learn twice,” what wisdom can you impart to others who may want to replicate or imitate what you are doing? How have you made yourself a better teacher? And how have you assured that you are achieving the best student outcomes?

Try-This Sessions. Each Friday afternoon “Try-This Session” will be 45-minutes long and will feature one classroom activity and one individual presenter.

Panels. Each Saturday session will be approximately 90 minutes long and feature a panel presenting two or more topics grouped together for synergy.

Please submit the proposal form electronically via the Emory Law website at http://bit.ly/2BTD7pr before 5 p.m. on March 30, 2018.

PUBLICATION OF SELECTED MATERIALS

As in prior years, some of the conference proceedings as well as the materials distributed by the speakers will be published in Transactions: The Tennessee Journal o f Business La w , a publication of the Clayton Center for Entrepreneurial Law of The University of Tennessee, a cosponsor of the conference.

CONFERENCE REGISTRATION

Both attendees and presenters must register for the Conference and pay the appropriate registration fee: $220 (general); $200 (adjunct professor); or $185 (new teacher). Note: A new teacher is someone in their first three years of teaching. The registration fee includes a pre-conference lunch beginning at 11:30 a.m., snacks, and a reception on June 1, and breakfast, lunch, and snacks on June 2. We are planning an optional dinner for attendees and presenters on Friday evening, June 1, at an additional cost of $50 per person. Registration is now open for the Conference and the optional Friday night dinner at our Emory Law website at http://bit.ly/2BpTQVc.

TRAVEL ARRANGEMENTS AND HOTEL ACCOMMODATIONS

Attendees and presenters are responsible for their own travel arrangements and hotel accommodations. Special hotel rates for conference participants are available at the Emory Conference Center Hotel, less than one mile from the conference site at Emory Law. Subject to availability, rates are $149 per night. Free shuttle transportation will be provided between the Emory Conference Center Hotel and Emory Law. To make a reservation at the special conference rate, call the Emory Conference Center Hotel at 800.933.6679 and mention “The Emory Law Transactional Conference.” Note: The hotel’s special conference rate expires at the end of the day on May 18, 2018. If you encounter any technical difficulties in submitting your proposal or in registering online, please contact Kelli Pittman, Program Coordinator, at kelli.pittman@emory.edu or 404.727.3382. We look forward to seeing you in June!

Sue Payne- Executive Director

Katherine Koops- Assistant Director

Kelli Pittman- Program Coordinator

 

IMPORTANT

The deadline to register has been extended to Friday, March 30th. 

See the original flyer at http://law.emory.edu/academics/academic-programs/center-for-transactional-law-and-practice/conferences.html

A termination provision that goes both ways isn't illusory

A recent case out of the Southern District of Texas, Henderson v. A & D Interests, Inc., Civil Action No. 3:17-CV-096, deals with arguments regarding illusory promises and unconscionability. 

The plaintiffs were exotic dancers at the defendant's adult entertainment club. They sued and the defendant moved to compel arbitration pursuant to the agreement between the parties. The plaintiffs argued that the agreement was unenforceable because it was illusory. The relevant termination provision allowed either party to terminate "at any time with or without notice." Because the termination provision provided such rights to both parties, the court found it wasn't illusory and the agreement was enforceable. 

The plaintiffs also argued that the arbitration provision in the agreement was unconscionable because it required the parties to split the cost of the arbitration, which the plaintiffs argued would be prohibitive. However, the court found unpersuasive the plaintiffs' evidence on the estimate of the cost of the arbitration, and there was no evidence of the plaintiffs' ability to pay for an arbitration at the time they agreed to the provision, which to the court was the relevant moment. 

Yahoo!'s damages limitation provision in its terms of service might be unconscionable

There's a class action going on over data breaches at Yahoo! between 2013 and 2016, and a recent decision in the case in the Northern District of California, In re: Yahoo! Inc. Customer Data Security Breach Litigation, Case No. 16-MD-02752-LHK (behind paywall), finds that Yahoo!'s limitation-of-liability provisions have been adequately pled to be unconscionable. 

The provision at issue was found in Yahoo!'s terms of service and attempted to limit Yahoo!'s liability. The class action sought consequential damages, and Yahoo! moved to dismiss the claims for those damages, citing the provision. However, the plaintiffs argued that the provision was unconscionable, and the court agreed that they had sufficiently pled their argument to survive the motion to dismiss. 

In terms of procedural unconscionability, Yahoo!'s terms of service were a non-negotiable adhesion contract, and the limitation-of-liability provision was found near the end of its twelve pages. The fact that the plaintiffs could have chosen other email services did not bar a finding of procedural unconscionability. 

As far as substantive unconscionability goes, the plaintiffs alleged that the limitation-of-liability provision was one-sided and acted to block the plaintiffs from achieving adequate relief. The provision prohibited nearly every type of damages claim, virtually guaranteeing that the plaintiffs would not be able to be made whole in the event of a breach. In this case, consequential damages generally follow from data breaches, so the plaintiffs argued that consequential damages were necessary for their case. Finally, the plaintiffs argued that the only party in a position to guard against data breaches was Yahoo!, yet the limitation-of-liability provision placed the risk on the plaintiffs should Yahoo! fail to maintain adequate security. 

Being true to the spirit of "To Kill a Mockingbird"

The New York Times reports that an upcoming Broadway production of "To Kill a Mockingbird" is embroiled in a contract dispute. The new production features a script by Aaron Sorkin, governed by a contract that requires it to keep to "the spirit of the Novel." Author Harper Lee's estate believes the play's new script has breached this contract provision. 

The crux of the disagreement seems to be that Sorkin's script apparently updates the novel's depiction of racial politics and shifts Atticus Finch's developmental arc. Atticus, well-known as the crusading heroic lawyer at the center of the novel, apparently begins the play "as a naive apologist for the racial status quo" who eventually develops into the Atticus familiar from the novel. Sorkin in an interview described Atticus as evolving in part through interactions with a black character, Calpurnia, whose role Sorkin had expanded in the play as compared to the book. 

Lee's estate is objecting to the "massive alteration" of the novel, but the play's producers contend that, although the play is "different" from the novel, it is still true to the novel's spirit, pointing out that Lee's novel's universe was itself expanded and complicated by the recent publication of "Go Set a Watchman," in which an older Atticus is portrayed as a racist and segregationist. 

As anyone who's sat in an English class might agree, "the spirit of a novel" is rather vague and can be the source of much contentious disagreement. Literature can be a very personal experience, and what stands out as the vitally important part of a novel to one person can barely register to another. We could probably as a society reach a consensus on what "the spirit" of "To Kill a Mockingbird" might be, but I still don't think that would be of much assistance in resolving this dispute. There are, I think, two approaches to adapting a novel, and one is a requirement to be faithful to the letter, and the other is to be faithful in a more abstract way. I suspect that both parties here actually agree about what the spirit of "To Kill a Mockinbird" is but that Lee's estate believes the former approach to adaptation to be the only acceptable one, and that the producers of the play believe the latter to be acceptable. This reminds me of a recent New Yorker article on the proper role of translators. 

(As an unabashed fan of Sorkin's writing, as soon as I read the first paragraph of the article, I have to admit my reaction was: "Let me guess, the script sounds like Aaron Sorkin instead of Harper Lee." I haven't seen the script, of course, but there are few writers in my experience whose style is as instantly recognizable as Sorkin's.)

Using Contract Law to Address Climate Change

I have the great honor and pleasure of posting the below guest blog written by noted environmental scholar Dan Farber, the Sho Sato Professor Of Law and the Faculty Director of the Center For Law, Energy, & The Environment at UC Berkeley.

---

There has been increasing interest in the environmental law community in the role that private firms can play in sustainability. For example, many major corporations bemoaned Trump’s withdrawal from the Paris Agreement and pledged to continue their own environmental efforts. In fact, as a recent book by Michael Vandenbergh and Jonathan Gillian documents, these firms already have their own programs to cut emissions. It’s worth thinking about the ways in which contracts between these companies could serve some of the same functions as government action.

Group action, based on contracting, could be a way of amplifying these efforts by individual firms. One possibility would stick pretty close to the structure of the Paris Climate Agreement. Under the Paris Agreement, nations agree to engage in certain types of monitoring and to implement emissions cuts that they set themselves. There are already ways that corporations can publicly register their climate commitments. The next step would be to
enter into contracts to engage in specified monitoring activities and report on emissions. The goal would be to make commitments more credible and discourage companies from advertising more emissions efforts than they actually undertake.

The contracts could be structured in different ways. One possibility is for each company to contract separately with a nonprofit running a register of climate commitments. The consideration would be the nonprofit’s agreement to include the company in the register and require the same monitoring from other registered companies. An alternative structure would be for the companies making the pledge to contract with each other, ensuring that there would be multiple entities with incentives to enforce the agreement against noncompliant firms. The biggest contract law issue is probably remedial. It would be difficult to prove damages, so a liquidated damage clause might be useful, assuming the court could be persuaded that significant liquidated damages are reasonable. An alternative set up would be to require representations by the company about compliance with monitoring protocols at they make their reports, providing a basis for a misrepresentation action.

We can also imagine something like a private carbon tax in which companies pledge to pay a nonprofit a fixed amount based on their carbon emissions. The nonprofit would use the funds to finance renewable energy projects, promote sustainability research, or fund energy efficiency projects such as helping to weatherize houses. Such pledges would probably be enforceable even without consideration under Cardozo’s opinion in Allegheny College. Damages would presumably be based simply on the amount of unpaid “taxes.”

It’s also possible to think in terms of a private cap-and-trade scheme, something like the ones used by California and by the Northeastern states. In these markets, governments set caps on total emissions and auction or otherwise distribution allowances, each one giving the owner the right to emit a single ton of carbon. In the contractual version, firms would agree to create a market in carbon allowances and to buy as many allowances as they need to cover their emissions. For instance, firms could agree to cut their emissions on a schedule of, say, 2% per year for five years. Every year, they would get allowances equal to their current target, which could be traded. Firms that were able to cut their emissions more than 2% could recoup the cost by selling permits to firms that found it too expensive to make their own cuts. Each firm would have to be bound contractually to pay for purchased allowances coupled with an enforceable obligation to achieve the target. If firms fail to buy the needed allowances, the measure of expectation damages seems to be the market price of the allowances the contract required them to purchase from other firms.

One advantage of government regulation is that the government can assess penalties, while contract law does not enforce penalties. For that reason, arguments for substantial compensatory damages will be crucial to provide an incentive for compliance. There will also be questions about how to structure the contracts (between firms or only between each firm and the nonprofit administering the scheme). And of course, all the usual issues of contract interpretation, materiality of breach, etc., will surface. (If nothing else, this could be the basis for an interesting exam question.)

Whether any of this is practical remains to be seen. There are also potential antitrust problems to contend with. But it is intriguing to think about ways that private contracting could be used to address societal issues such as climate change, particularly in situations where the government seems unlikely to act. There might be real gains from using private-law tools like contract to address public-law problems.

Trump’s Sexual History; a Cause for Concern?

Donald Trump is famous, or maybe infamous, for his candor and seeming lack of filter when speaking. Recently, a story about the president and a pornographic actress, who uses the moniker Stormy Daniels, having an affair surfaced. While Trump and his staff denied the affair ever occurred, Trump’s lawyer did admit to paying Ms. Daniels $130,000 of his own money. Trump’s lawyer stated that he only paid Ms. Daniels to “protect Mr. Trump” and that “just because something isn’t true doesn’t mean it can’t cause harm.” And while that story has since gone cold, another woman has come forward alleging a similar affair with Mr. Trump.

Former Playboy playmate Karren McDougal has come forward alleging that she had a nine-month long affair with Mr. Trump, shortly after the birth of his son Barron. And while Mr. Trump and his administration have denied this affair, there is another suspect money trail attached. In 2016 American Media, Inc., the parent company of the National Enquirer, paid to acquire the rights in that story. AMI contracted with Ms. McDougal for an undisclosed amount of money and an agreement to publish columns, provide her a publicist, assist in the development of a skin care line, and assist her in a documentary on a medical issue. Ms. McDougal asserts that for the most part, AMI did not follow through on their end, but once the Stormy Daniels story came out, they were much more receptive to her.

By releasing the story, the former playmate and model has breached the contract she signed with AMI. While arguments can be made about Ms. McDougal’s understanding of the contract and the vague language used in it, they are unlikely to get her off the hook for the breach. However, barring a massive liquidated damages clause, Ms. McDougal is likely to only lose out on the money that AMI paid her. Should the Trump administration seek legal action, it would be tantamount to admitting that there is something that needs to stay private. As for AMI, they only have the contract to fall back on in seeking damages from Ms. McDougal, which will limit their ability to recover. Ms. McDougal seems to have the President in the palm of her hand, which should create concern by the American public.

More than fifteen women have accused Mr. Trump of sexual misconduct. While I can’t make any claims as to Mr. Trump’s sexual history, if the last month is any indication, more women are likely to come forward with claims. This presents an issue for the national security of the country. If the president can be blackmailed into paying to keep certain stories quiet, whether true or not, then where does it end? If, as Mr. Trump’s lawyer asserts, they will pay to keep false stories quiet, what will stop legitimate or false claims from coming forward?

https://www.cnn.com/2018/02/13/politics/michael-cohen-stormy-daniels-payment/index.html

https://www.salon.com/2018/02/16/playboy-playmates-alleged-9-month-affair-with-trump-raises-serious-security-concerns/