ContractsProf Blog

Editor: Jeremy Telman
Oklahoma City University
School of Law

Tuesday, December 7, 2021

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December 7, 2021 in About this Blog | Permalink

Netflix Tries to Hire Fox Employees For (a lot) More Money But California Court Says No.

California is generally known as a state that takes a dim view of restrictive employment contracts so I was surprised to learn that a three-judge panel of the California Second District Court of Appeals recently upheld a trial court order enjoining Netflix from soliciting Fox employees.

There were two particularly striking facts about the case.  First, the employees that Netflix approached  had fixed term written employment agreements.  The term of these agreements was initially two years, but gave Fox a “unilateral option” to extend the contracts for additional two-year terms.  They also allowed Fox to pursue equitable relief, including an injunction, to prevent breach.

The second notable fact was that the Fox employees were paid substantially below market salaries -- approximately in the 25th percentile for their positions.  That’s an “F” grade for salary, Fox! No wonder they wanted to leave.

It sounded as though Fox used some rather un-employee friendly practices, including the inclusion of a “no-shop” clause that prohibited employees from seeking new employment more than 90 days before their Fox employment agreement expired.  Fox also told its employees that they could “work for Fox (and no one else) through the term of their agreements” and sent employees and prospective employers cease and desist letters.  Fox, by contrast, had a contract payout policy where it could terminate employees prior to the end of their fixed term employment agreements.  The company also exercised their bargaining power  and “frequently offered employees new fixed-term agreements while they had significant time remaining on their existing contracts” and “made raises and promotions contingent on signing a fixed-term agreement.”  According to Netflix, “at least 127 Fox employees had entered into sequential fixed-term contracts that, together, provided an employment term that was longer than seven years.” 

Fox sued Netflix alleging unfair competition and tortious interference with contracts and sought compensatory and punitive damages and a permanent injunction.  Netflix responded that Fox’s fixed term agreements were void as against public policy and that they were unconscionable.

The court sided with Fox, finding that “the undisputed evidence” showed that it intentionally interfered with the agreements of the Fox employees and that the

“undisputed evidence also showed that both employees’ salaries from Fox were below market, at least for most of the years of the employees’ employment with Fox, and that Netflix specifically targeted both of them, offering to double their salary and to defend and indemnify them against any claims brought by Fox.”

In other words, Netflix tried to hire Fox's underpaid employees by offering fair compensation but the court wouldn't let them. 

To all this, I say - Are you kidding me, California Second District Court of Appeals?  

Hopefully, Netflix will appeal.  Better still, maybe the state legislature will pass a law prohibiting some of Fox’s nasty employment practices, such as the no-shop for 90 days provision.

Law 360 has a summary here and the court’s opinion here.

December 7, 2021 in Current Affairs, Labor Contracts, True Contracts | Permalink | Comments (0)

More On Compensation Inequity: College Football Edition

Yesterday, I ranted about executive compensation.  Today, I will rant about compensation paid to college football head coaches.  If you think that college football coaches deserve to be, in most states, the highest paid public employees, feel free to tune out.

Recently, a friend recommended that I listen to a story at the start of this Advisory Opinions podcast.  I don't want to ruin the story, I've put it below the fold.   If you want to listen, it just takes up the first two or three minutes of the podcast, which I do not otherwise recommend.

I bring up the story in this context because I recently was conversing with a neighbor who had various criticisms of Dr. Fauci.  Among Dr. Fauci's misdeeds, according to my neighbor, is that he is the highest-paid employee of the federal government.  It's true.  According to Forbes, Dr. Fauci's annual compensation is now over $400,000, and in the decade between 2010 and 2019, he earned $3.6 million.  Okay, so let's use football coaches' salaries to put that in perspective.  

First, according to the New York Times, Louisiana State University (LSU), a public institution, is paying its new coach $9 million/year.  That is well over twice what Dr. Fauci made over ten years.  At the same time, it is paying its former coach $17 million to step aside, so that former coach will be paid nearly five times what Dr. Fauci made over ten years, and he will make it for doing precisely nothing. 

LSU
Second, and this is crucial, Dr. Fauci is the highest paid federal employee because people who understand his role (that is, not Senator Rand Paul), know that he is an incredibly dedicated, effective public servant who has provided unparalleled leadership since the AIDS crisis.  If Dr. Fauci were to leave public service and work in the for-profit bio-tech sector, he could easily command salaries akin to what we pay corporate executives in those fields -- that is, many multiples of what he makes as a public servant.  Before one criticizes Dr. Fauci for making $400,000 a year, consider that the opportunity cost for him to do so by working as public employee is likely $1-2 million/year.

LSU's new coach, on the other hand, is guaranteed a bonus of $500,000 if LSU manages to win half its games, which would be a pretty unimpressive accomplishment for a team that has won three national championships since 2003.  That's right, on top of his salary, which is already twenty-two times higher than Dr. Fauci's, LSU's coach will get a bonus in excess of Dr. Fauci's salary if the team underperforms during his first year as badly as it did this year.

For my money, an Anthony Fauci is worth more than the best football coach in the country.  For my money, investing in great scientists who can guide our country through catastrophic health crises makes more sense than investing in men who can win college football games.  I would also venture to guess that the secondary effects of investing in science, in terms of gains in useful knowledge that can be applied to future medical challenges, greatly outweigh the benefits of having a successful college football team in the state.   As this story from the Guardian makes clear, most college sports programs operate at a loss.  Mad about the high tuition and fees you are paying for your child's education at a public university?  Maybe you should talk to your legislators about the high costs of college sports programs.  And those costs could be cut very easily if every state paid its coaching staff a decent but not excessive wage.  Salaries in line with what full professors in competitive fields like, law, business, medicine, or engineering, seem about right to me.  University presidents are also absurdly overcompensated, given that they take on no downside risk, but that can be a subject for some other post.

And since anybody who disagrees with me probably stopped reading a long time ago, let me add that the United States is the only country in the world that operates this way, and it is wholly irrational.  Universities are primarily about education and research.  Young people who are primarily interested in athletics can pursue that dream through developmental leagues, like the rest of the world has.  Teams in those leagues could be located in or near college towns, and universities that want to create a connection between the teams and their institutions can offer scholarships to the athletes who play on those teams.  Those students may have to attend part-time, as athletics is their day job.  Still, universities could provide support so that those students can succeed either as athletes, or as students, or as both, if they have the requisite aptitudes in both areas.  Given that very few students athletes become professional athletes, and professional athletic careers are very short on average, very little is lost if students choose to try their luck in the lottery of professional sports and then pursue college eduction at the age of 25 or 29.

Continue reading

December 7, 2021 in Celebrity Contracts, Commentary, Sports, True Contracts | Permalink | Comments (0)

Monday, December 6, 2021

Sid DeLong, Against Settlement

AGAINST SETTLEMENT? CHOPPING THE POT, SPLITTING THE GOLD, AND OTHER GENTLEMEN’S AGREEMENTS
Sidney W. DeLong

Our society is ambivalent about competition and cooperation, and that ambivalence is reflected in the law. In some domains, such as antitrust, competition is a virtue, and cooperation (e.g., price-fixing) is a vice. In other domains, such as labor law, anti-competitive agreements (collective bargaining) are encouraged, and free-market competition (strike-breaking) is a sin. Contractual agreements between competitors may be conciliatory or collusive.

The sports world too reflects ambivalence about cooperation and competition, which is perhaps more relevant now that professional sports is in many ways just another commercial activity. And as usual, sports can reveal much about law.

Olympic_rings_without_rims.svgIt is the finals of the Olympics men’s high jump on August 1, 2021. At the end of the competition, Tamberi of Italy and Barshim of Qatar are tied on height and on misses. An official makes them an offer: Either a jump-off with one winning first (gold) and the other second (silver) or an agreement to share (two golds). Both athletes had to agree to the share option. The exact opposite of a prisoner’s dilemma! Of course, they voted to share. Two gold medals were awarded for the first time in the Olympic high jump. On T.V., their deal induced an explosion of Italian joy, no detectable expostulations from Qatar, and widespread encomiums to sportsmanship.

Was this Olympic moment What Sports is All About? The lion lying down with the lamb in a paradise of alternative dispute resolution? Or was it a betrayal of the Holy Spirit of Competition, a cowardly concession motivated by risk-aversion and satisficing and collectivist thinking?

Contrast the high jump ruling with the disqualification of eight badminton players from the 2012 Olympics after it was discovered that they intentionally lost matches so that they could face weaker opponents in the second round of a multi-round elimination tournament. While the spectacle of a player trying to lose a match makes a mockery of the sport, strategic losing was at least a tactic rationally aimed at winning overall. The disgrace belongs not with the players but with the organizers of the event, for devising a competition in which dumping was a rational strategy.

Bridge_declarerThe problem of dumping is not unique to badminton. International contract bridge competitions have also been afflicted with identical problems because of the design of multi-round, elimination tournaments in which second round matches are determined by first round results. It is easier to conceal an intentional loss in bridge than in badminton. In an earlier time, Bobby Fischer famously accused Soviet chess players of intentionally losing or drawing games with each other in order to give one of them a record that would defeat Fischer in international chess tournaments.

But deliberately losing is not the same as deliberately tying. Unlike the rules of Olympic jumping events, most sports rules do not permit the splitting of the top prize if the players are tied. In the Masters golf tournament as in Highlander: “There can be only One” and playoff holes will decide the winner if two or more players are tied after 72 holes.  

And this accords with the spirit of sport, in which the public rarely applauds a collusive tie. The spectacle of two gasping palookas waltzing through the closing rounds of a bout on the undercard, serenaded by the catcalls and whistles of angry bettors and bloodthirsty ticketholders is not only a trope of 1930’s cinema but a prototype of competitive shame.

But professional athletes have a time-honored if unpublicized practice of blunting the edges of winner-take-all. In his work on the history of distance running, Five Kings of Distance, Peter Lovesey reports on the practice known as a “penny all around” in which professional runners in 19th Century England would agree before their races to split the prize money so that no one went unpaid.

But the timing of the deal is critical. An agreement to share a prize after the competition has stalled is one thing; an ex-ante agreement to make the competition a sham is quite another.

James_Garner_Bret_Maverick_Jack_Kelly_Bart_MaverickWhich brings us to tournament poker and the practice of chopping the pot. Consider the following (very common) situation. It is the final table at the World Series of Poker. Several thousand players have bet $10,000 each to play a multi-day, freeze-out tournament of Hold’em Poker. The winner, the player who ends up with all the chips, wins 10 million dollars (aptly known in the trade as “life-changing money.”) Second place gets 6 million (Also L.C.M), Third gets $4 million etc.

After several days of competition, only four players are left. They all meet in a hotel room the evening before the final day. They have chip stacks that give each of them theoretical odds of winning that are roughly proportional to the sizes of their stacks. (Vegas is booking bets on each of them.) But tomorrow could bring any outcome. Luck plays a big role in Hold’em: In an “all-in” hand, any two cards can win all the chips.[1] The four competitors, risk-averse as are we all in the presence of such large amounts of money, have a friendly, familiar discussion: they agree that regardless of the final day’s outcome (regardless of who wins all the chips, who is the last remaining opponent, who finishes third, etc.) they will split the chips according to an agreed formula that is more equitable that that contained in the contest rules. Pushing “all-in” is less risky than it seems when the pusher has financial security.

Suppose you are a poker fan: would learning of this deal distress you? Make you cynical? Make you demand your money back if you paid to watch the event?

Rich_Uncle_1946_CoverIn response to early antitrust challenges to contracts between competitors, the tycoons running the colluding businesses often referred to “gentlemen’s agreements”, by which they presumably meant that properly brought-up aristocrats would (true to the ethic of their class) agree amongst themselves not to compete in the seamy struggle over price and instead to divide the spoils of their commerce in a reasonable way, incidentally extracting more money from the hoi polloi who purchased their goods. Richards v Nielsen Freight Lines, 810 F.2d 898 (9th Cir. 1987) suggests that unenforceable gentlemen’s agreements are still in use. Thanks to the antitrust law’s enshrinement of the ideal of competition, we should be above all that now, or at least we should express our illegal contracts, combinations, and conspiracies in a gender-neutral way.

But competition can be a hard ideal. In the economic blood sport known as civil litigation, the temptation to settle, to avoid the risk of loss and split the spoils, is powerful. In earlier days, litigation was a blood sport. When trial by combat was used to determine title to land, the champion who, instead of fighting to the death, resigned from the fight by shouting the word “Craven!” was despised and outlawed. 3 Blackstone Commentaries on the Laws of England (1765) 340.

Today, in less sanguinary times, attorneys usually advise their clients take half a loaf or a bird in the hand rather than to roll the dice. But is it always the right thing to do? In Against Settlement, Owen W. Fiss rejected settlements of public interest class action litigation. He argued that settlement of civil rights class actions deprived the public of a definitive adjudication of important legal issues. The informational value of victory and defeat are public goods extinguished by private settlement.

Of course, Against Settlement appeared at a time when its author could expect the judicial resolution to favor civil rights. Today, given the radical re-shaping of the federal courts, authoritative adjudications about civil rights are likely to be the last thing their proponents would seek.

Even in civil litigation that has no public interest dimension, a settlement agreement may not always be the ethical thing to do. At the mundane level of the everyday lawsuit, the prospect of an early settlement of a civil claim can expose structural conflicts of interest inherent in all attorney-client fee agreements. Because of the different kinds of risk that attorneys bear under different agreements, for example, it may be that hourly-rate attorneys have a financial interest in prolonging the litigation (when it should settle) while contingency fee attorneys often have a financial interest in a quick settlement (when they should hold out for more). Neither may be incentivized to obtain the best client outcome.

Nevertheless, we seem to have arrived at a consensus that most civil litigation should settle promptly. Today, Fiss’s concern, the informational value of adjudication lost by settlement, has become trivial because the public information goods resulting from litigation have been largely erased by arbitration, a process does not yield opinions from which the public can discern the shape of contemporary law or from which it can obtain precedent for future guidance.

[1] It is a cliché’ in Hold’em that “Any two cards can win.” The theoretically-weakest Hold-em hand, 7-2 off-suit will beat the theoretically-strongest Hold’em hand, A-A about 15% of the time if both players stay to the river. For example, 7-2 will beat Aces if the flop is 777Q and the next two cards are not aces. There are many others. Don’t bet your life on the aces, especially if your opponent has a pointed tail.

December 6, 2021 in Commentary, Sports | Permalink | Comments (0)

Executive Compensation at Softbank

Early in my career as a legal academic, I wrote about the suits over Michael Ovitz's compensation as President of the Disney Company.  In that Article, I argued that there was no reason to allow the business judgment rule to protect decisions to pay outrageous salaries and benefits to corporate executives.  For states that follow Delaware's model, there are already other mechanisms that insulate directors from personal liability, and so there is no reason to make shareholders foot the bill when board members, who are part of the community that benefits from inflated executive compensation, structure a compensation package so that even someone who completely fails as an executive can just pull the rip cord on their nine-figure golden parachute, as did Mr. Ovitz. 

In the Disney case, the corporation was contractually obligated to pay Mr. Ovitz $140 million in severance after he had served only fourteen months.  That turned out to be a far higher rate of compensation than he could have earned had he been a success at Disney.  Mr. Ovitz was giving up a very lucrative Hollywood career to join Disney, so he needed downside protection.  But who was giving the company's shareholder's downside protection should Mr. Ovitz's tenure be a bust, as it manifestly was?

Softbank HQ$140 million you say?  Peanuts.  According to The New York Times,  Marcelo Claure, the Chief Operating Officer of Softbank, is demanding $2 billion in compensation over the next several years.  He was paid $17 million last year, but now Mr. Claure apparently thinks that's chump change.  He claims responsibility for having extricated Softbank from some messy investments, including in WeWork and Uber.  The $2 billion apparently represents his estimate of the future value he could bring to Softbank.  What kind of person associates that kind of figure with the value of their work?  I know, there are answers.  But those are the people who spend their money on rocket rollercoaster rides for celebrities and the ultra-rich while scoffing at those trying to address quotidian terrestrial inconveniences, like millions on the brink of starvation.  

But the larger point is that if Mr. Claure brought value to the company, he did so by cleaning up his predecessors' messes, and I'm guessing that the costs of those messes were largely born by Softbank's shareholders and creditors and not by the people responsible for creating the messes.  My high school physics teacher taught me that all objects in the universe are either heading towards or coming from an imperfect inelastic collision.  That is, things bump into each other, and there are costs involved.  Mr. Claure's career is unlikely to escape this fundamental rule of the physical universe.  But because of the way executive compensation is structured, he will not bear the costs of that collision.  A new Mr. Claure will step in to clean up his mess, and that Mr. Claure will then demand $10 billion, building on the Claure precedent.

The Times story also explores some of the conflicts of interest that arise form Mr. Claure's personal investments in ventures in which Softbank also invests.  It's astonishing stuff.  It also seems like he is behind some of the hype involving non-fungible tokens as investment vehicles.  

To paraphrase Hegel, when finance paints its green in virtual form, a way of life has grown old, and it cannot, by means of its habitual green, be rejuvenated; it can only be recognized.  The dusk is coming, and it is time for this old bird to take its flight.

December 6, 2021 in Commentary, True Contracts | Permalink | Comments (0)

Friday, December 3, 2021

Law Prof Takes Hertz for a Ride

It's a familiar story.  Customer reserves a car with a rental agency.  The rental agency takes the reservation, but they don't hold the reservation, and that's really the most important part, the holding part.  

Well, this bit is so old, nothing to see here.

But wait, imagine if Jerry Seinfeld were not a mere comedian but, I don't know, some, kind of superhero, like a law professor!  

KlonickSt. John's Law's Kate Klonick (right) booked a car through Hertz, but Hertz did not have a car for her.  Eventually, they provided her with a faulty economy car (no rear-view camera, but Professor Klonick was fine with that) and then tried to charge her an extra $500 for the rental.  Professor Klonick, her husband, and their aged dog made it to Western New York to visit her mother and had a Thanksgiving that couldn't be beat.  

But Professor Klonick wrote to Hertz about her experience, and then she posted her letter on Twitter.  Did I mention that Professor Klonick writes about social media?  She followed up with an issue spotter for us contracts profs about possible damages arising from Hertz's breach of contract, but I won't post it here.  I'll save it for next semester when  I cover damages.

Professor Klonick has 35,000 Twitter followers.  Hertz, you messed with the wrong law professor.  The post went viral and was picked up by many mainstream media outlets.  You can read about her experience on Bloomberg here.

On a personal note, I am visiting my mother over Winter Break.  I've booked a car with Hertz.  But the blog only has 450 Twitter followers.  Professor Klonick, I may be retaining you in the near future.

December 3, 2021 in Current Affairs, In the News, True Contracts | Permalink | Comments (2)

Wednesday, December 1, 2021

Google Sued for Being Evil

On Monday, NPR reported here on a lawsuit brought by three former employees, all software engineers, who organized workers at Google to protest Google's work for the  U.S. Customs and Border Protection during the Trump administration.  That work, the employees claimed and claim, was evil and violated Google's motto, "Don't be evil." Google eventually fired the plaintiffs and one other employee, alleging that they had accessed and leaked confidential documents, an allegation the plaintiffs deny.

Google_logo_(2013-2015).svg
The case is reminiscent of other suits brought against corporate giants.  In 2017, Nike employees alleged that the company was missing opportunities to "Just do it."  There was a day this year when Facebook was down, and employees sued corporate leadership because the website was "moving slow and not really breaking anything for the moment."  Back in the 1960s, Volkswagen got into a lot of trouble for thinking big.  

But according to the complaint, "Don't be evil" is not just a motto.  It is part of Google's Code of Conduct and incorporated by reference into its employment contracts.  Plaintiffs allege that they were contractually obligated to protest when Google or its employees violated the motto.  They did so, and the company retaliated.  If one is inclined to invest contracts law with moral weight, one might say that what Google did was evil.  For plaintiffs' purposes and ours, it's enough if it was a breach of Google's contractual obligations.  Moral philosophers and theologians can ponder the rest.

The key provision from the Code of Conduct reads as follows:

So please do read the Code, and follow it, always bearing in mind that each of us has a personal responsibility to incorporate. and to encourage other Googlers to incorporate, the principles of the Code into our work. - And if you have a question or ever think that one of your fellow Googlers or the company as a whole may be falling short of our commitment, don’t be silent. We want ~ and need — to hear from you.

According to the complaint, failure to know and follow the Code can result in disciplinary action, including termination.  

Plaintiffs allege that they engaged in precisely the activities that the Code encouraged.  Indeed, the complaint recites several projects that Google decided to turn down, citing its "Don't be evil" motto as a ground for refusing to work with the Chinese government on a censored search engine and with the U.S. government to deploy artificial intelligence in the analysis of drone footage.  Google cited the motto in joining its employees in denouncing the Trump administration's travel ban.  

Deploying the "Don't be evil" motto is a great hook for getting publicity for the suit, but I can't see how anything turns on that.  Plaintiffs allege that they were wrongfully terminated.  Google alleged that they wrongfully accessed and disclosed information.  They claim that everything they used in their activism was publicly available.  Google can be held accountable for being evil (wrongful termination), whether or not it is legally bound by its motto.

NLRBThe lawsuit may be after something other than victory in a court of law.  According to NPR, the National Labor Relations Board is investigating the matter and reached a tentative conclusion in May that Google "may have violated" federal law by firing the plaintiffs.  This suit may be an attempt to increase pressure on Google, to get the NLRB to move the case off the back burner, or to extract a settlement from Google on a timetable less glacial than that of justice as effectuated through administrative agencies.  Or the lawsuit might just be another instance of the plaintiffs' activism.  Google retains its "Don't be evil," policy.  But given its tentacular reach, Google may find doing evil hard to avoid, and these plaintiffs are well-positioned to shed some sunlight on those occasions when it does.

H/T loyal reader and commentator @kotodama

December 1, 2021 in Recent Cases, Web/Tech | Permalink | Comments (0)

Tuesday, November 30, 2021

Tuesday Top Ten - Contracts & Commercial Law Downloads for November 30, 2021

Top Ten Tuesday beach

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 01 Oct 2021 - 30 Nov 2021
Rank Paper Downloads
1.

The Property Law of Tokens

Widener University - Commonwealth Law School and University of Iowa - College of Law
651
2.

Shocking Business Bankruptcy Law

University of North Carolina School of Law
408
3.

Should Gatekeepers Be Allowed to Combine Data? - Ideas for Art. 5(a) of the Draft Digital Markets Act

Heinrich Heine University Dusseldorf - Faculty of Law
297
4.

The Rise of Plain Language Laws

Pennsylvania State University, Dickinson Law
185
5.

Private Law Theory: The State of the Art

University College Cork
162
6.

Contractual Depth

University of Virginia School of Law and Brigham Young University - J. Reuben Clark Law School
125
7.

Artificial Intelligence and Agents

Director, Centre for Technology, Robotics, AI and the Law, Faculty of Law, National University of Singapore and City University of Hong Kong (CityU) – School of Law; Centre for Public Affairs and Law; Centre for Chinese and Comparative Law
122
8.

Advertising Injustices: Marketing Race and Credit in America

University of Houston Law Center and University of Houston, Law Center
106
9.

The “Code Adjudicator” Model: The Pubs Code, Statutory Arbitration and the Tied Lease

University of York, York Law School and University of York
99
10.

International Negotiable Instruments (Introduction)

York University - Osgoode Hall Law School and The University of Western Australia
73

 

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 01 Oct 2021 - 30 Nov 2021
Rank Paper Downloads
1.

The Rise of Plain Language Laws

Pennsylvania State University, Dickinson Law
185
2.

Artificial Intelligence and Agents

Director, Centre for Technology, Robotics, AI and the Law, Faculty of Law, National University of Singapore and City University of Hong Kong (CityU) – School of Law; Centre for Public Affairs and Law; Centre for Chinese and Comparative Law
122
3.

The “Code Adjudicator” Model: The Pubs Code, Statutory Arbitration and the Tied Lease

University of York, York Law School and University of York
99
4.

The Law of Haunted Houses: A Comment on Stigmatized Properties following Wang v Shao

Law Society of Upper Canada - Smart & Biggar
43
5.

Is Insisting on Specific Performance under Smart Contracts Desirable? Inflexibilities of Smart Contracts and Potential Solutions

KU Leuven - Centre for IT & IP Law (CiTiP)
27

 

November 30, 2021 in Recent Scholarship | Permalink

Monday, November 29, 2021

Jokes and Their Relationship to Teaching

Humor plays a large role in my classroom.  I get a great deal of pleasure out of making people laugh.  Recently,  I sat in a chair as a man got down on one knee to administer my third COVID-19 vaccine.  I asked him why they didn't at least give him a chair as well, and he told me that he preferred to kneel because it gave him the best angle.  As he furrowed his brow in concentration, I asked him if anybody had jumped up from the chair and accepted his marriage proposal before he got a chance to administer the injection.  I didn't think it was my best material, but he exploded with laughter.  As he had been so serious up until then, it caught me off guard.  He regained his composure, administered the shot, and then returned to chuckling a bit before reverting to his wonted professional demeanor and calling his next customer.  I was happy about getting vaccinated and happy to see my fellow Oklahomans doing the same, but his laughter was what really made my day.  

Laughter also serves a pedagogical purpose.  My attempts at humor or humorous exchanges with students break up the tedium of a 75-minute class session.  Humor also creates a sense of community.  If we all are in on the joke, we have common sense of reference, and building a sense of community is an important thing to do in the 1L classroom.  I've read that singing together is a great way to build community.  I wish I could get my students to sing together.  Some day.  Jokes have the added benefit that a joke related to thematic material can help the students remember the material, just as a case with colorful facts helps tether the legal rule to the facts out of which it arose.  Song lyrics that help students remember doctrine could be a real boon.  Some day.

However, I have learned from hard experience that jokes have no place in law exams.  Humor can create a sense of community, but it can also make students who don't get the joke feel isolated.  That feeling should be transient in the classroom, as students can always ask their neighbors "What's so funny?" and in any case, the stakes are low.  Still, the humor should arise organically from the conversation and assume as few points of reference outside of the classroom as possible.   I used to routinely refer to my favorite comedies in the classroom, but I can no longer assume that my students and I will share the same frame of reference. 

But on an exam, where students are trained to think that every word in the fact pattern is there for a reason, making a joke is not a good reason to include words in a fact pattern.  In class, I make a joke about the relationship between UCC § 2-201 and UCC § 2-207.  I tell the students that in § 2-207, we assume that parties do not routinely read forms.  In § 2-201's merchant exception, we assume that they do, and so merchants cannot rely on the Statute of Frauds to get out of an oral agreement if they received written confirmation of that agreement and did not respond within ten days.  "How do we explain the tension between these two provisions?" I ask.  One possible answer, I suggest, is that Karl Llewellyn had two heads, and I then show this image and try to persuade the students that it is a picture of Karl Llewellyn:

A-two-headed-man.-600x669

Well, I used to use it.  Now I use an image from The Matrix in which Neo is fighting with an Agent and it looks like they only have one torso between them.  I allow myself the reference to outside materials because the image is amusing whether or not you've seen the movie.

And we all have a good laugh/I break out in flop sweat and wait for the awkward silence to dissipate into confused murmurings.  But then I explain that no, Karl Llewellyn did not have two heads, and there is no contradiction between § 2-201 and § 2-207.  Merchants read forms.  They need to know what orders they have to fill and when those orders are due to be filled.  They check quantity, and they might check price.  But they don't look at the non-salient terms that are the stuff of § 2-207 fights, or so Karl Llewellyn plausibly reasoned.  

On an end-of-term set of practice multiple-choice questions, I included the following:

Which of the following is (are) true?

  1. The UCC’s Statute of Frauds provision (§ 2-201) seems to assume that merchants read confirmations.
  2. The UCC’s Battle of the Forms provision (§ 2-207) seems to assume that merchants do not read form contracts
  3. I and II are both true because Karl Llewellyn had two heads.
  1. Only I
  2. Only II
  3. I and II
  4. I, II and III

The answer I was looking for was c.  The most popular answer by far was d.  I don't think my students think that Karl Llewellyn had two heads.  I think they think I want them to pick that answer, but I'm not sure why they think that.  This question is now officially retired.  

November 29, 2021 in Teaching | Permalink | Comments (7)

Wednesday, November 24, 2021

Thanksgiving Frivolity: The Arthur Murray Cases and Malcolm in the Middle

This Thanksgiving, I am grateful for students who provide me blog fodder, in addition to a sense of professional purpose.

Somehow I was unaware that Malcolm in the Middle had an episode, Poker, back in 2002 that plays on the theme of the Arthur Murray Dance Studio cases previously discussed here.

Those cases generally involve an elderly woman (sometimes an elderly man) who pays an absurd amount of dance lessons.  Arthur Murray had a strategy to entice such investments: instructors would flatter and seduce until the marks came to believe themselves uniquely gifted.  They would buy scores of lessons, followed by packages, followed by lifetime memberships and, in some cases, multiple lifetime memberships.  It was all a con. However, as Deborah Threedy has argued, the "victims" of the con might have complicit in the scheme.  They enjoyed themselves, rode the tiger, and then sued once the ride had lost its appeal.

Jane_Kaczmarek_September_2014_(cropped)
Mingle Media TV, CC BY-SA 2.0, via Wikimedia Commons

Bryan CranstonIn the Malcolm in the Middle episode, far too little space is given, IMHO, to the plot line of the Lois character (the mother), played by the wonderful (left).  The incomparable Bryan Cranston (right), who plays her husband Hal, has bought her dance lessons as a birthday present.  But he is invited to a poker game and has to back out.  Lois goes alone, and the dance instructor pulls the usual schtick with her, complimenting her on her talent, her grace, her dancer's ankles.  It's all very convincing, because we see it all as Lois experiences it.  She performs a charming little dance number with her instructor that we get to see both in her imagination and from the more objective perspective of her son's video recorder.  The veil lifted, Lois abandons (for now) her dreams of advanced dance lessons and seems content to romp around the kitchen (gracefully or clumsily) with Hal.

Meanwhile, her oldest son is showing that Deborah Threedy was right: the women at the dance studios willingly pay to dance with Lois's oldest son, who happily accepts their payments and observes that a lot of people save up money all their lives and then end up with nothing to spend it on.  So why not spend it on dance?

H/T to my former (and future?) student Francisco Herrera Chinchilla.

November 24, 2021 in Commentary, Famous Cases, Teaching, Television | Permalink | Comments (0)

Tuesday, November 23, 2021

Return of the Tuesday Top Ten - Contracts & Commercial Law Downloads for November 23, 2021

After an unexpected week in the November void last week, the Tuesday Top Ten makes its triumphal return. Let's see what's happening the world of contracts-adjacent downloads, shall we? We should note, however, that Juliet Moringiello & Chris Odinet's The Property Law of Tokens continues its adverse possession of the top spot on the Contracts & Commercial Law list. Yeah, just like some Property types to do that. 

 

Top10 Storm Troopers

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 24 Sep 2021 - 23 Nov 2021
Rank Paper Downloads
1.

The Property Law of Tokens

Widener University - Commonwealth Law School and University of Iowa - College of Law
621
2.

Shocking Business Bankruptcy Law

University of North Carolina School of Law
394
3.

Should Gatekeepers Be Allowed to Combine Data? - Ideas for Art. 5(a) of the Draft Digital Markets Act

Heinrich Heine University Dusseldorf - Faculty of Law
293
4.

The Rise of Plain Language Laws

Pennsylvania State University, Dickinson Law
179
5.

Private Law Theory: The State of the Art

University College Cork
159
6.

Artificial Intelligence and Agents

Director, Centre for Technology, Robotics, AI and the Law, Faculty of Law, National University of Singapore and City University of Hong Kong (CityU) – School of Law; Centre for Public Affairs and Law; Centre for Chinese and Comparative Law
120
7.

Advertising Injustices: Marketing Race and Credit in America

University of Houston Law Center and University of Houston, Law Center
104
8.

The “Code Adjudicator” Model: The Pubs Code, Statutory Arbitration and the Tied Lease

University of York, York Law School and University of York
98
9.

Contractual Depth

University of Virginia School of Law and Brigham Young University - J. Reuben Clark Law School
94
10.

Digital Technology, Future Lawyers and the Computable Contract Designer of Tomorrow

Centre for Advanced Studies in Biomedical Innovation Law (CeBIL), Faculty of Law, University of Copenhagen, Kyushu University - Graduate School of Law and University of Vaasa, School of Accounting and Finance, Business Law
84

 

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 24 Sep 2021 - 23 Nov 2021
Rank Paper Downloads
1.

The Rise of Plain Language Laws

Pennsylvania State University, Dickinson Law
179
2.

Artificial Intelligence and Agents

Director, Centre for Technology, Robotics, AI and the Law, Faculty of Law, National University of Singapore and City University of Hong Kong (CityU) – School of Law; Centre for Public Affairs and Law; Centre for Chinese and Comparative Law
120
3.

The “Code Adjudicator” Model: The Pubs Code, Statutory Arbitration and the Tied Lease

University of York, York Law School and University of York
98
4.

Diversity, ESG, and Latent Board Power

University of Iowa College of Law and University of Iowa, College of Law
92
5.

Pirate Arbitration

University of California, Davis - School of Law
39
6.

Is Insisting on Specific Performance under Smart Contracts Desirable? Inflexibilities of Smart Contracts and Potential Solutions

KU Leuven - Centre for IT & IP Law (CiTiP)
18

 

November 23, 2021 in Recent Scholarship | Permalink | Comments (0)

Squid Game and "Opportunity"

Last month, Nancy Kim introduced me to Squid Game with this post.  I read the post and thought, "I'm glad Nancy watched that so I don't have to.  Ultra-violent sadistic television show that portrays our current economy as a savage murderous game engineered to extinguish the hopes and dreams of ordinary folks?  Who needs that?  I have my life."  Meanwhile, unbeknownst to me, my bloodthirsty wife was reading up on the series and getting the popcorn ready.  I'll do anything to put off for a time my promise to my students to listen to Taylor Swift's music, so we watched the first episode.  Unlike Ms. Swift, the show is holding my interest, and then some.  It's a really smart, well-conceived series.  I could use a little less violence and sadism, and I could have passed on the strobe effects in episode 3 (or was it  4?), but maybe that's just me.

Squid Game
In any case, right at the beginning of Episode 2, "Hell," there's an interesting contracts moment.  After the first game, the players are begging to be allowed to leave.  The guards/men in pink tell the players that they have been given an opportunity.  The situation presents a variation of a classic riddle of the law of coercion.  The coercing party claims to be making an offer: e.g., I'm offering you, desperate, insolvent business, an opportunity to get paid off early.  In exchange, all I ask is that you accept my payment of 35% of what you claim I owe you as payment in full.  Or, in a situation that's a little closer to the Squid Game situation, "Hey, shipwreck, I'm offering to save you; all I ask in return is that you surrender your cargo to me."

The law does not turn on the formal aspects of the "offer."  The law of coercion does not turn on whether the offer is posed as an opportunity or a threat.  I offer my students the opportunity to hear me sing.  They know a threat when they hear one.  But in the context of economic coercion, it can be very difficult to differentiate opportunities from threats.

Without giving away too much of the plot, I would venture that the problem with the agreement at the heart of Squid Game is not so much coercion as illegality.

November 23, 2021 in Commentary, Television | Permalink | Comments (5)

Monday, November 22, 2021

Sid DeLong on Restitution and the Case of Andrew Cuomo

More Restitutionary Pitfalls for Aspiring Authors (Who Serve in Government)

Sidney W. DeLong

A recent dispute involving the former Governor of New York raises interesting questions about disgorgement as a remedy for breach of fiduciary duty by government officials. It also dramatically illustrates the financial risks that liability for disgorgement poses to defendants who may not have realized that they were acting wrongfully and who have received and disposed of funds before learning that they must turn them over to the plaintiff.

Disgorgement is often the only effective remedy in cases in which a breach of fiduciary duty causes harm to the plaintiff that is difficult to prove or impossible to calculate, making an award of compensatory damages measured by the plaintiff’s loss unfeasible. If plaintiff can prove that defendant was enriched by the breach, the defendant must disgorge to the plaintiff any net gains it obtained as a result of the breach, regardless of their source. Such a claim for disgorgement is entirely unrelated to any harm the plaintiff may have suffered from the wrongdoing and may give plaintiff a windfall. But disgorgement of the wrongdoer’s entire gain from the breach is thought to be necessary to prevent defendant’s unjust enrichment from the wrong and has the virtue of completely removing the incentive for wrongdoing. The same rule applies to breaches of statutory duties and other tortious wrongs.

Bolton bookAn earlier post suggested the potential liability of John Bolton for disgorgement of the proceeds of his book, In the Room Where it Happened, on the theory that his publication of the book violated federal law and his employment contract with the government. 

Perhaps inspired by Bolton’s dispute, as reported in The New York Times, the State of New York has recently announced that it will seek disgorgement of the proceeds of former Governor Andrew Cuomo’s book American Crisis: Leadership Lessons from the Covid-19 Pandemic on the grounds that, in obtaining legally-necessary permission from the Joint Commission of Public Ethics (JCOPE) to publish the book, Cuomo wrongfully failed to disclose that he had illegally used government resources, including employee time, to produce the book.  Cuomo denies wrongdoing and says that publication was not wrongful because he received permission from the Commission for the publication. The State seeks recovery (disgorgement) of all amounts paid or to be paid to Cuomo by his publisher.

According to news reports, Cuomo received an advance of over $3 million with $2 million more to be paid over the next two years. The latter payment is unlikely to come due because of poor sales of the book. Cuomo’s attorneys have stated that after payment of expenses and taxes, he donated $500,000 of the proceeds to charity and placed the $1.5 million remainder in a trust for his children.

Cuomo BookAs an accounting detail, disgorgement usually reaches only the net amount of unjust enrichment after deducting the wrongdoer’s out of pocket costs of obtaining it. But the amounts that Cuomo claims to have spent on income taxes should not reduce his duty to disgorge the entire sum. If he is forced to disgorge the publisher’s pre-tax payment his only remedy is to file an amended tax return and seek recovery of the tax overpayment from the U.S. Government. Of course, he would be required to disgorge the amounts of his gifts to charity and to his children’s trust.

In cases such as Cuomo’s in which the defendant’s violation of law is unclear or unintentional, disgorgement may seem draconian, conferring a windfall on the plaintiff out of proportion to any harm it may have suffered and sandbagging defendant with unexpected liabilities that it may be in no position to pay. This is a stiff price to pay for the deterrent

Restitutionary claims over identifiable proceeds of wrongdoing may sometimes even reach beyond the wrongdoer to innocent transferees of the proceeds. If Cuomo is unable to pay back the full $3 million, the State may seek to claw back the money from the charity or the children’s trust, using the legal theory of fraudulent conveyance. These claims seem unlikely to succeed, however, because there is no indication that the transfers were made to hinder, delay, or defraud Cuomo’s creditors. But if Cuomo becomes insolvent, his bankruptcy trustee might be able to recover the payments as fraudulent transfers without having to prove that they were made with such intent.

As cautionary tales for government-employed authors, the Bolton and Cuomo cases can be distinguished. Assuming in each case that the government’s allegations are correct, Bolton’s wrong was in breaching his statutory and contractual duties of pre-clearance and non-disclosure, security breaches that could potentially harm the government in ways that were incalculable. As in Snepp, disgorgement of all the author’s gains from such breaches was the only feasible remedy.

By contrast, Cuomo’s initial wrong seemingly consisted only in misappropriating or misusing government resources for his private benefit, trivial misbehavior that  harmed the government in ways that are easily calculable by reference to the wages of governmental employees and the costs of office supplies.

However, JCOPE’s main complaint is that his concealment of this misuse might also have constituted an ethical breach or even a breach of fiduciary duty. This would have breached his legal duties as governor as well, in which case, perhaps New York did not ask for enough. It is, after all, it is hornbook law that a faithless fiduciary forfeits his fee in addition to any profits he may have made by breaching his trust. See Restatement (Third) Restitution § 43. The theory is that the fiduciary did not earn the compensation because he did not fulfill his duties. On this theory, attorneys have forfeited their legal fees when they breached duties to their clients. One can see great revenue-raising potential in an aggressive use of this theory. Perhaps the State of New York should seek restitution of the salary and benefits of every state official who has been shown to breach his or her fiduciary duty to the State.  It’s not likely to happen, but if it does, remember you read it here first!

November 22, 2021 in Commentary, Current Affairs, Government Contracting, In the News, Recent Cases | Permalink | Comments (0)

Friday, November 19, 2021

Are Fridgewrap Arbitration Clauses Enforceable

Contracts Prof Alan Hyde shared this image of the lovely surprise his student received upon opening the door of a new refrigerator.

Screen Shot 2021-11-19 at 7.58.55 AM
As I read the draft Restatement of Consumer Contract Law § 2(b)(3), such terms would only become a part of the contract if "after the standard contract term is made available for review, the consumer has a reasonable opportunity to terminate the transaction without unreasonable cost, loss of value, or personal burden, and does not exercise that power."  Does that mean that the arbitration clause is not part of the contract if the student had to pay a non-refundable delivery/installation clause and could not return the fridge without cost?  

November 19, 2021 in Contract Profs, True Contracts | Permalink | Comments (1)

Thursday, November 18, 2021

On the Connection Between Workplace Harassment and Compulsory Arbitration

The New York Times reported on Tuesday on women who gave congressional testimony, recounting how compelled arbitration had prevented from from going public with allegations of workplace sexual misconduct.  Their testimony came in the context of Congress's consideration of legislation that would ban mandatory arbitration of workplace sexual assault and harassment.  I wish I had more faith in Congress's ability to pass targeted legislation outside of the context of omnibus, must-pass spending bills.

BoilerplateYesterday, I got some pushback on Twitter when I suggested that part of the problem was boilerplate.  Twitter is not a forum for precision.  I intended the word to capture the distinction Peggy Radin explored in her book, Boilerplate, which was the subject of an online symposium on the blog soon after its publication (links to the posts can be found at the bottom of this post).

Radin distinguishes between the realm of contracts we mostly teach about in the first-year contracts course, which involve negotiations and mutual consent, and modern contracting, which involves form contracts and do not provide an opportunity for the offeree to give meaningful consent to the terms.  Radin speaks of the former as World A contracts, which we can think of as contracts that entail mutual assent.  But most contracts exist in World B, the world of boilerplate that I was referencing, far too cryptically, in my Tweet from yesterday.

For example, one women who testified was 23-years-old when she was offered $60,000/year to work for a company owned by a family friend.  That very family friend then commenced a campaign of harassing e-mails and later sexually assaulted her.  Upon beginning employment, she had signed papers that required arbitration of all claims relating to her employment as well as strict confidentiality with respect to such claims.  The woman had no idea of what what she was signing, focusing more on the prospects of starting a career.  She did not give meaningful assent to the terms that bound her, both because she likely was not given adequate time to read and consider them, and because the terms were non-negotiable.  She would have needed legal advice to understand them, but given her market position, even a lawyer would not have been able to help her negotiate more favorable terms.  In such circumstances, which are the usual circumstances for almost all of us in almost all contractual settings, signing and hoping for the best is the rational thing to do.

Sarah Parshall Perry, a legal fellow at the Heritage Foundation, testified against the legislation, while likely means that it is doomed in the Senate.  She argued that the problem is not arbitration but confidentiality agreements.  It's really both.  Arbitration can be a way to protect bad actors from negative publicity and the binding nature of precedential decisions. Ms. Parshall Perry is quoted in the Times as saying, “Curtailing access to arbitration would injure, in the end, the very people that Congress has sought for nearly a century to protect.”  Statements like this give me fits. 

Ms. Parshall Perry's statement is both misleading and condescending.  It is misleading because nobody is talking about curtailing access to arbitration.  They are talking about restoring access to courts.  Parties can still choose arbitration when it suits their needs.  Consequently, Ms Parshall Perry's statement is also condescending, because it assumes that plaintiffs are incapable of determining what is in their best interests.  Arbitration has many advantages -- it is faster and cheaper, and in most situations, a plaintiff is likely to get at least  some sort of relief through arbitration, even on claims that might get dismissed for non-substantive reasons in courts.  Plaintiffs aren't idiots.  They should be free to choose, in consultation with their legal counsel,  the venue that best suits their needs.

November 18, 2021 in Commentary, In the News | Permalink | Comments (0)

Wednesday, November 17, 2021

CALL FOR PAPERS: 6th Annual Penn-NYU Empirical Contracts Workshop (June 2, 2022)

HoffProfPaper Submission Deadline: March 1, 2022

The 6th Annual Penn-NYU Empirical Contracts Workshop is scheduled to place in person at the University of Pennsylvania Carey School of Law on June 2, 2022.  

Florencia_Marotta-WurglerThe Workshop is a forum for the presentation and discussion of early and mid-stage projects analyzing contract law and practice from a variety of empirical perspectives. Papers are selected through a peer review process.  Attendees of the conference are expected to cover their own travel and lodging costs, but there are no conference fees.  

Wilkinson-RyanSubmitted papers must be unpublished (and expected to be unpublished at the time of the conference). If accepted, authors will have an opportunity to submit a revised draft prior to the conference for presentation and discussion. Please note that accepted papers will be made available to all conference participants.  

Organizing committee:  Dave Hoffman (top left, Penn); Florencia Marotta-Wurgler (right, NYU) and Tess Wilkinson-Ryan (bottom left, Penn).  Please email submissions to dhoffman@law.upenn.edu

November 17, 2021 in Conferences, Contract Profs | Permalink | Comments (0)

Jay-Z Convinces a Jury that the Jay-Z-Branded Fragrance Stinks!

Beginning in 2009, Jay-Z, entered into a series of agreements with Parlux Fragrance and parent company Perfumania (Plaintiffs).  The agreements granting them an exclusive license to use the Jay-Z trademark for manufacture, promotion, distribution, and sale of fragrances and related products.

According to the Complaint, the parties agreed that Plaintiffs could use the Jay-Z trademark on certain products and that Jay-Z (right, in a 1988 photo Jay-Z_1988) would not unreasonably withhold permission to use the trademark.   In 2013, Plaintiffs launched Gold Jay Z fragrance.  Plaintiffs maintain that, in order for a celebrity fragrance to succeed, the celebrity has to actively promote it, and they allege that Jay-Z was obligated under a licensing agreement to do so but breached those contractual obligations.

Plaintiffs claim multiple breaches by Jay-Z including: (i) declining to be interviewed, (ii) failing to provide a quote for an upcoming Women's Wear Daily article, (iii) failing to make various promotional appearances at Macy's in support of the product, (iv) declining to provide a quote or statement for the press release in connection with the product launch, (v) or to provide quotes or complete "Q & As" for Elle, Glamour, or Cosmopolitan, and (vi) rejecting five different concepts for a promotional contest involving a giveaway of an 18-carat gold bottle of GOLD JAY-Z created by Jacob the Jeweler valued at $20,000, and instead keeping the prototype gold bottle.

In the litigation, Jay-Z contended that Parlux proceeded with the launch despite knowing these promotional events conflicted with Mr. Carter’s Magna Carta World Tour, which made him unavailable for these promotional events.  In his testimony, according to Allhiphop.com, Jay-Z did not like the promotional work that Plaintiffs put together for the branded fragrances, calling it "B-rate" and called their efforts "crappy, lazy work."

Gold Jay-ZAfter the initial launch, Plaintiffs began developing concepts for additional products for the brand but it was unclear whether these additional requests were included in the original product development plan. Jay-Z and his people felt under no contractual obligation to approve new products under the agreements.  Plaintiffs argued that Jay-Z's refusal to aid them in the development of new products was a breach of his obligations.

Jay-Z and his attorneys broadly argued that Plaintiffs failed to understand how to properly market his luxury brand and protect his products from being sold "on the shelves of Walmart between hand sanitizer and Tic-Tacs," as his attorney said in his opening statement.  Jay-Z counterclaimed, seeking $2.7 million in unpaid licensing fees.

On November 10, 2021, a New York jury, after a three-week trial, took only two hours to reject both parties' breach of contract claims.

Thanks to my research assistant, Alyssa Cross, for helping me with this stinky assignment.

November 17, 2021 in Celebrity Contracts, Recent Cases | Permalink | Comments (0)

Tuesday, November 16, 2021

Two Yale Law Students Sue Yale for Breach of Contract

Yale-Law-School-Judge-OrnamentYale Law School (YLS) gets a bad wrap for being too theoretical.  Outside of the clinics, so that saying goes, one hardly learns doctrine at all during one's three years in law school.  A famous alum once said to me that practicing law with a degree from YLS and nothing else is a recipe for malpractice.  He may have proved himself right.

But two YLS students have figured out a way to immerse themselves in the practicalities of litigation: they are suing their law school!  The anonymous students, styled John Doe and Jane Doe in the complaint, allege that YLS's Dean and Associate Dean (the Deans) conspired to "blackball" the plaintiffs and cut them off from career opportunities in retaliation for their refusal to lie in support of the YLS's investigation of Amy Chua.

The allegations involve the YLS Dean's attempt to discipline Chua or alleged inappropriate conduct involving social gatherings at her home and advice relating to how to dress for success in the context of clerkships.  Both plaintiffs describe themselves as persons of color, and they reached out to Professor Chua, one of YLS's few faculty members of color, to discuss the peculiar obstacles they faced as students of color at YLS.  Two such meetings took place at Chua's home, allegedly in violation of a "no-socializing" agreement that Chua had entered into with YLS.  Word of these assignations somehow got to a third YLS student, who assembled the 20-page "Dossier" and turned it over to the YLS administration. 

Plaintiffs allege that the Deans approached a professor of constitutional law and pressured him to not hire the plaintiffs as Coker Fellows (teaching assistants) in retaliation for their refusal to lie about Amy Chua.  Given the lack of grades at YLS, a Coker Fellowship is a way for a Yale student to evidence their achievement.  As a result of the Deans' actions, plaintiffs were not hired as Coker Fellows, nor did they even apply for judicial clerkships because, they allege, the Deans threatened to share with any judges who might hire them Dossier detailing plaintiffs' alleged misconduct with Professor Chua.  Plaintiffs allege that the Deans violated the University’s Policy Against Discrimination and Harassment (the Handbook), which they say is a contract "by its own terms" that prohibits the administration from "retaliating against students who report a concern, file a complaint, and/or participate in an investigation."

 According to the complaint, the Deans and the YLS Director of Equity, Diversity and Inclusion, hounded the plaintiffs and pressured them on a daily basis to testify against Professor Chua.  When they refused to do so, retaliation ensued.  Both plaintiffs have been deeply affected by the incident.  Jane has taken a leave of absence; John has resigned as the Dean's speechwriter.  Both have physical symptoms brought on by the harassment to which they have been subjected.

The complaint alleges causes of action sounding in breach of contract and promissory estoppel, plus the torts of intentional interference with prospective business relations, defamation, unreasonable publicity, false light, and intentional infliction of emotional distress.

I will be very interested to see in what sense the Handbook is a contract "by its own terms."  The Complaint does not cite to any place in the Handbook where it so self-identifies, and most such handbooks are not contracts and sometimes explicitly say that they are not contracts.  But YLS is a unique institution, so who knows?

November 16, 2021 in In the News, Law Schools, Recent Cases | Permalink | Comments (0)

Monday, November 15, 2021

Nancy Kim, OpEd on Holding Facebook Accountable

Nancy-kimPeople familiar with the blog know Nancy Kim as one of our contributing editors, author of books and books and books, including her recent novel, as well as law review articles too numerous to list.  Now, Nancy has also published an OpEd in the L.A. Times, showing that she is now a well-rounded public intellectual.

As Nancy explains, one obstacle to holding Facebook accountable for the well-documented harms it causes is Section 230 of the Communications Decency Act.   However, Section 230 should not shield Facebook from liability for the intentional harms it causes or for the misleading ways in which it markets its platforms.  Pointing out that Facebook is addictive by design and noting its suppression of its own research indicating the psychological harms it inflicts on its users, Nancy argues:

Facebook’s products and what the company says about them should be fair game for product liability lawsuits. People who suffer physical or emotional harm from those products — especially teenagers and young adults who are particularly vulnerable to the site’s features — should be able to sue the company without getting bogged down by Section 230.

Part of the solution would be a legislative fix, clarifying the limited scope of Section 230 protections for platforms like Facebook.  However, we should not limit ourselves to playing Waiting for Godot game with our feckless legislators.  For now, lawsuits might be the best way to shed some sunlight on Facebook's practices.

November 15, 2021 in Contract Profs, Current Affairs, In the News, Web/Tech | Permalink | Comments (0)

Thursday, November 11, 2021

Richard Craswell's Allegheny College Suite

We are indebted to Richard Craswell for a great deal of contracts scholarship as well as quite a few musical compositions on the subject of contracts law.  We posted many of them back in 2012.  This one came later:

It is worth reading Professor Craswell's notes after the case.  They explain, among other things, why Judge Cardozo raises promissory estoppel but never rules on whether the College could enforce the charitable pledge on that basis. 

Judge Cardozo could not really rule on that basis, because the College never claimed any reliance.  Or could he?  He's Cardozo!  He could persuade me of just about anything.  Because he did not write it (but concurred in the decision), I will never understand the reasoning in Mitchill v. Lath.

H/T my student, Tom Taylor.

November 11, 2021 in Contract Profs, Famous Cases, Music | Permalink | Comments (1)