ContractsProf Blog

Supreme Court to Decide Contractor Liability for Bivens Actions

On May 16, the Supreme Court granted cert. in Minneci v. Pollard.  The Ninth Circuit opinion and a dissent from the denial of rehearing en banc can be found here.

Pollard was incarcerated at a federal prison that had, for several years by then, been operated by an independent contractor, now known as The GEO Group (GEO).  Pollard alleges that he was mistreated by GEO personnel after he fell over a cart in the prison and may have fractured both his elbows.  The GEO employees allegedly put Pollard in restraints that caused him great pain, did not get him the bilateral slings prescribed for his injuries, failed to properly attend to him while he was injured and forced him to return to work before his injuries had healed.  He sued GEO, seven GEO employees, and a doctor employed by another entity, alleging violations of his 8th Amendment rights and seeking damages pursuant to Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, 403 U.S. 388 (1971).

GEO was not subject to suit, due to a prior ruling that private entities that run prisons are not subject to Bivens actions.  The District Court dismissed his action in its entirety.  A divided panel of the 9th Circuit reversed.  The majority ruled that: 1) private contractors running a federal prison act under color of federal law; and 2) the availability of state remedies does not foreclose Pollard's Bivens action.  In so ruling, the 9th Circuit acknowledged that it was creating a split between its law and the laws of the 4th and 11th Circuits.

Over at SCOTUSblog, Lyle Denniston predicts that the Supreme Court granted the petition in order to curb any attempts by the lower courts to expand the availability of the Bivens action.  I wouldn't wager against him.

[JT] 

NY Appellate Division Upholds Dismissal of Franchisee's Claims

In 2003, Jeffrey Yamin and others (Yamin) entered into an agreement with Moe's Southwest Grill (Moe's -- see official logo at left) to open up to three restaurants in Albany County by 2005.  This establishment is not to be confused with Moe's Tavern, which has only one location in Springfield and is operated by the gentleman at right.  After that agreement terminated, and only one restaurant had been established, the parties entered into a second agreement permitting Yamin to establish two more restaurants by the end of 2006.  Moe's rejected one location, as it was permitted to do under the agreement, but a second restaurant opened in December 2006.  Negotiations continued as to whether the parties would negotiate a new agreement.

Meanwhile, Moe's had entered into a separate agreement with Jonathan Trager permitting Trager to open restaurants nearby.  In 2007, Moe's and Trager renewed their agreement, this time granting Trager exclusive rights to open restaurants within a five-mile radiius of his area of responsibility.  Under this agreement, Trager opened a restaurant on the same street (although at a different place on that street) as the location Moe's had rejected when Yamin had suggested it.  Yamin sued for breach of contract and for bad faith in refusing to approve his proposed location.  

Applying Georgia law, the court had to determine what constituted "bad faith" in rejecting a proposed restaurant site where the agreement provided that the decision: 1) was in Moe's "sole discretion" and 2) was to be made in accordance with Moe's "then-current site selection policies and procedures."  The court's gloss on this language is that Moe's retained discretion to reject a site based on virtually any reason.  Moe's provided some factual justifications for its decision, and as those facts were undisputed, the trial court found no breach of the duty of good faith, and the Appellate Division affirmed.  

The Appellate Division also affirmed the trial court's ruling that Moe's did not breach its agreement with Yamin by entering into an exclusive agreement with Trager because the former agreement had expired at the time that Moe's entered into the latter agreement.

The opinion is Yamin v. Moe's Southwest Grill, LLC.

[JT & Jared Vasiliauskas]

Weekly Top Tens from the Social Science Research Network

RECENT HITS (for all papers announced in the last 60 days) 
TOP 10 Papers for Journal of Contracts & Commercial Law eJournal  
April 28, 2011 to June 27, 2011

Rank	Downloads	Paper Title
1	804	Economic Analysis of Claims in Support of the ‘Durbin Amendment’ to Regulate Debit Card Interchange Fees  David S. Evans, Howard H. Chang, Margaret Morgan Weichert
2	413	What Lessons for Economic Development Can We Draw from the Champagne Fairs?  Jeremy Edwards, Sheilagh Ogilvie
3	206	Res Judicata in International Arbitral Awards  Luca G. Radicati di Brozolo
4	130	Dead Contractors: The Un-Examined Effect of Surrogates on the Public’s Casualty Sensitivity  Steven L. Schooner, Collin D. Swan,
5	96	Fixing Unfair Contracts  Omri Ben-Shahar
6	87	The Impact of Human Rights Law on Contract Law in Europe  Hugh Collins
7	75	Two Culture Problems in Law and Economics  Alan Schwartz
8	74	The Murky Mess of MERS: The Complications of Collecting on Promissory Notes When MERS is Around  David P. Weber,
9	67	The Rise and Possible Fall of Investor-State Arbitration in Asia: A Skeptic’s View of Australia’s ‘Gillard Government Trade Policy Statement’  Luke R. Nottage
10	66	The Promise Principle and Contract Interpretation  Juliet P. Kostritsky

RECENT HITS (for all papers announced in the last 60 days) 
TOP 10 Papers for Journal of LSN: Contracts (Topic)  
April 28, 2011 to June 27, 2011

Rank	Downloads	Paper Title
1	142	Property Law as the Infrastructure of Democracy  Joseph William Singer
2	96	Fixing Unfair Contracts  Omri Ben-Shahar
3	66	The Promise Principle and Contract Interpretation  Juliet P. Kostritsky
4	57	Off Contract Harms: The Real Effect of Liberal Rescission Rights on Contract Price  Michael Aikins
5	56	Too Big to Exist  Barak Orbach, Grace E. Campbell
6	55	The Public Speaks: An Empirical Study of Legal Communication  Christopher R. Trudeau
7	52	Commercializing Property Rights in Inventions: Lessons for Modern Patent Theory from Classic Patent Doctrine  Adam Mossof
8	48	Rethinking the Laws of Good Faith Purchase  Alan Schwartz, Robert E. Scott
9	36	Pluralism and Perfectionism in Private Law  Hanoch Dagan
10	34	Cross Purposes & Unintended Consequences - Karl Llewellyn, Legal Realism and the Limits of Social Transformation  Danielle Kie Hart,

[JT]

Professional Gambler's Suit Reinstated in the 9th Circuit

In 2009, Cycalona (Clonie) Gowen brought suit in the United States District Court for the District of Nevada against Tiltware and related entities, alleging breach of contract among other things, and sought specific performance.  We reported on this suit previously in this horribly pun-filled post.  Gowen alleged breach of an oral contract made over the phone between herself and Tiltware CEO Raymond Bitar.  Gowen alleged that the contract would pay her 1% of Tiltware’s profits once it became profitable if she would agree to be a celebrity representative for the company and promote Full Tilt Poker, the company’s online poker website.  When Gowen did not receive any compensation for her promotion, she sued.The district court granted defendant Tiltware’s motion to dismiss. 

In a short, unpublished opinion, the 9^th Circuit Court of Appeals affirmed in part and reversed in part, dismissing the related entities but reinstating Gowen's claims against Tiltware.  In granting Tiltware’s motion to dismiss the claim, the district court found that Gowen failed to state with specificity the terms of contract she was claiming was breached.  The district court ruled that the claim could not proceed because Gowen did not state her obligations or the terms of the contract in her complaint.  In addition she was not specific about the 1% share in Tiltware she was allegedly supposed to receive.  She did not state when it was calculated from and what other entities of Tiltware would be included in the calculation.

While the 9^th Circuit affirmed parts of the District Courts ruling, the panel reversed the dismissal of the breach of contract claim against Tiltware.  The court ruled that there was sufficient information in the pleading to make a breach of contract claim.  The court rejected the Tiltware’s claim that this contract would be barred by the statute of frauds.  Even though this was an oral contract the terms did not preclude performance within one year and therefore the alleged contract would be enforceable.  

The 9^th Circuit also reinstated the claims for promissory estoppel and unjust unenrichment, since Gowen alleged that she supported Full Tilt poker and did so relying on the promise of a 1% interest in the company.  The court held that, since Gowen alleged an enforceable contract, the district court erred in dismissing the claim as well as the claims for breach of implied duty of good faith and fair dealing and specific performance.

[JT & Jared Vasiliauskas]

 

Summer Slow Down

Readers of the blog can expect our posts to be somewhat intermittent for the next month or so.  Our regular contributors are less regular during the summers, as the academic calendar takes us away from teaching and therefore often away from thinking about blogworthy contracts issues.  

In addition, I will be teaching in he Valparaiso University School of Law's Summer Program in Cambridge, so you may detect some unusual flavours in my posts over the next two fortnights.

[JT]

Virginia Supreme Court on Tortious Interference (or Why Academia Is Where You Want to Be)

Earlier this month, the Virginia Supreme Court decided Lewis-Gale Medical Center, LLC v. Allredge.  Karen Allredge was an emergency physician employed by Southwest Emergency Physicians (SWEP) to work in Lewis-Gale's emergency room.  She worked there from 2005 until she was terminate in 2008.  She sued, alleging that Lewis-Gale tortiously interfered with her contract with SWEP.  The facts, as recounted by the Virginia Supreme Court are as follows:

Dr. Allredge attended a dinner in the company of some of Lewis-Gale's nurses.  The nurses griped about their work conditions and mentioned a letter they had drafted addressed to the hospital administration.  A few weeks later, the nurses showed the letter to Dr. Allredge, but she did not sign it.  After the chief nurse received the letter, she was apparently displeased.  She also learned that Dr. Allredge was associating with the authors of the letter and informed the hospital's management of her view that Dr. Allredge was involving herself in the hospital's personnel matters.  Armed with this information (and nothing else that the Court found worthy of mention), Lewis-Gale's COO denounced Dr. Allredge as an "organizational terrorist" to SWEP's Board of Directors.  Not long thereafter, SWEP terminated Dr. Allredge.  

Dr. Allredge sued, alleging that Lewis-Gale had made improper threats to terminate its agreement with SWEP and thus forced SWEP to terminate her.   Lewis-Gale moved to dismiss, arguing among other things that Dr. Allredge was an employee-at-will and thus could be terminate on any grounds.  In addition, Lewis-Gale's contract with SWEP could also be terminated without cause.  The trial court rejected these arguments as irrelevant to the question of whether Lewis-Gale had used improper methods and thus tortiously interfered with Dr. Allredge's contract with SWEP.  The case proceeded to trial, and a jury awarded Dr. Allredge $900,000 in compensatory damages.

Virginia's Supreme Court determined that Dr. Allredge was indeed an at-will employee and thus bore the burden of establishing that Lewis-Gale had used improper tactics in its dealings with SWEP.  The Supreme Court was not persuaded that Dr. Allredge had made any showing of improper conduct.  The key language is as follows:

Dr. Alldredge did not allege or present any evidence tending to prove that Lewis-Gale’s actions were “illegal or independently tortious.” Nor was there any fiduciary duty owed to Dr. Alldredge that Lewis-Gale could have violated. 

Dr. Alldredge did not assert that Lewis-Gale’s motivation in seeking to have SWEP terminate her employment involved a desire to gain some competitive advantage, violated an established standard of the dealings between hospitals and their independent medical contractors, or involved unethical conduct in the form of sharp dealing, overreaching, or unfair competition. 

Rather, Dr. Alldredge maintains that Lewis-Gale’s actions were improper in that it used intimidation, duress, and undue influence based upon Lewis-Gale’s ability to bring “financial ruin” on SWEP by canceling its contract to provide emergency room services to Lewis-Gale, which was SWEP’s principal source of revenue. However, while the evidence supported the inference that SWEP was concerned about the continuation of its contract with Lewis-Gale, the at-will contract between Lewis-Gale and SWEP allowed termination of the contract upon due notice and without cause at any time. This status required that SWEP be continually sensitive to the possibility of termination for any reason or no reason, regardless of any specific action or comment made by Lewis-Gale officers or personnel. Thus, the inherent intimidation or duress experienced as a result of the very nature of this at-will contract cannot rise to the level of improper methods necessary to establish a cause of action for tortious interference with contract expectancy. 

In short, although Lewis-Gale's administrators' conduct was "harsh " and "unsavory," it was not actionable.  The Supreme Court therefore reversed the trial court's judgment affirming the jury verdict and entered a final verdict in favor of Lewis-Gale.  

No doubt, there is more here than meets the eye, but based on this opinion, it seems that Dr. Allredge could have been fired for doing nothing other than listening sympathetically to the nurses' complaints about their working conditions.  

[JT]

Wisconsin Supreme Court on the Stand-Alone Claim of Breach of the Duty of Good Faith

In an issue of first impression for the Wisconsin Supreme Court, Wanda Brethorst sued Allstate Insurance for first party bad faith without a breach of contract claim reports the State Bar of Wisconsin.

In December 2006  Brethorst was injured in a collision caused by an uninsured motorist driving under the influence.  Brethorst's Allstate policy covered injury by an uninsured motorist as well as $5,000 in medical expenses.  However, when the claim was submitted for the nearly $10,000 in medical bills Brethorst had incurred due to the uninsured motorist, Allstate offered a settlement well below $10,000. Brethorst filed a suit against Allstate for first party bad faith.  Allstate asserted that the bad faith claim should be stayed until all other claims are resolved and filed a motion to bifurcate the breach of contract claim from the bad faith claim.  In response to this, Brethorst alleged that there was nothing to bifurcate because she had only asserted one claim, bad faith. The circuit court denied the motion, stating that bifurcation is not necessary when the parties elect to bring only bad faith claims.

The Supreme Court of Wisconsin was charged with deciding whether a party must prove breach of contract prior to moving forward with a bad faith claim in a suit against an insurer even if that party is not claiming breach of contract.  The opinion can be found here.  The issue is important because a plaintiff can get extensive discovery on a bad faith claim that might not be available on a straight breach of contract claim.

The Court set forth its conclusions as follows:

(A) Some breach of contract is a fundamental prerequisite for a first-party bad faith claim against an insurer.

(B) Breach of contract and first-party bad faith are separate claims.

(C) An insured may file a bad faith claim without also filing a breach of contract claim. The policies articulated in Dahmen v. American Family Mutual Insurance Co., 2001 WI App 198, 247 Wis. 2d 541, 635 N.W.2d 1, which require bifurcation when both bad faith and breach of contract claims are brought together, are only partially applicable when a party has chosen to plead only a bad faith claim.

(D) The insured may not proceed with discovery on a first party bad faith claim until she has:

(1) pleaded a breach of contract by the insurer as part of a separate bad faith claim, and

(2) satisfied the court that she has established such a breach or will be able to prove such a breach in the future.

(E) In this case, Brethorst has supplied the insurer and the court with sufficient evidence of a breach of contract by the insurer that she may proceed with discovery on her bad faith claim. On the facts before us, Brethorst has shown uncontradicted evidence that she incurred $9,789 in medical expense for treatment from injuries she suffered in an automobile accident caused by an uninsured motorist. The insurer's failure to pay all these expenses without submitting any reasonable basis in law or fact (as opposed to theory) for its failure to do so justifies Brethorst going forward with discovery on her bad faith claim.

In reaching this conclusion the Court began by looking to the history of bad faith claims in Wisconsin which have long recognized that bad faith is a tort theory separate and distinct from breach of contract. In analyzing this issue of first impression, the Court looked to the question of whether a court can allow discovery under a bad faith claim without any showing by the plaintiff that the insurance company wrongfully denied benefits due under the contract.  

The Court concluded that breach by an insurer is a fundamental prerequisite for first-party bad faith claims of this type. Therefore, an insured person must plead that she was entitled to payment under the contract and there was no reasonable basis for not honoring the contract to allege the separate claim of bad faith.

As applied to the facts of the case, the Court determined that Brethorst had pleaded breach of contract, and the Circuit Court had not abused its discretion in determining the claims did not need to be bifurcated. 

Two Justices concurred, stating that they would simply have followed the reasoning of the Circuit Court.  Allstate sought to bifurcate the case, but there is only one claim, so there is nothing to bifurcate.  The concurring Justices criticized the majority for departing from established case law and for needlessly complicating the pleading standards for the tort of bad faith.

[JT & Katherine Freeman]

New York City Police on Consent

Today's New York Times has an interesting story about passengers of livery car services who have been pulled out of the cars and searched by police.  According to the Times, the practice is a product of the Taxi/Livery Robbery Inspection Program.  That program permits drivers to join the program and thus to allow police to "inspect their car at anytime in order to ensure the driver’s safety."  Drivers indicate their participation in the program by affixing a decal to their rear and side windows.

When passengers asked why they were being instructed to step out of the back seat of their livery or cab and be searched, the police informed them, according to the Times, that they had consented to be searched when they got into a car displaying decals indicating that the driver was part of the Inspection Program.  The Times story focuses on the question of whether the police were acting within the law in searching passengers -- and also searching their bags -- when the purpose of the law seems to be driver safety.  If the latter is the purpose, the police might take the more direct route of inquiring whether the driver felt threatened by the passenger and then doing whatever was necessary to neutralize the threat.  One such passenger was informed that he was searched because he fit the description of a person wanted in connection with a series of robberies.  The man in question, who is a 6'5", 280-pound African American, may well fit the description of a number of suspects, but if that is all the police have to go on, we are getting close to pulling people over for taking a cab ride while black.  

In any case, as a contracts blog, we are most concerned with the notion of consent deployed by the police in this context.  The decals displayed on the cabs that join the inspection program signal only that the drivers have consented to having their cars searched by police.  The decals do not provide notice to passengers that they have consented to anything.  We have reported before on restaurants that try to bind all customers to arbitration by posting a sign to that effect on their doors.  The enforceability of such notices is subject question.  What would it take to put passengers sufficiently on notice in this case?  I would think the decals should have language something like this:

WARNING: BY ENTERING THIS CAR, YOU KNOWINGLY FORFEIT YOUR RIGHTS UNDER FEDERAL AND STATE LAW TO BE FREE FROM UNREASONABLE SEARCHES

Ian Ayres has suggested that consumers sport the LiabiliT, which reads: 

Any disclaimer of liability notwithstanding, management, by serving me, accepts legal responsibility for any losses to my person or property that result from my use of this establishment. 

One could design a similar T-shirt for cab passengers:

WARNING: NOTWITHSTANDING ANY AGREEMENT BETWEEN THE DRIVER OF THIS CAR AND ANY LAW ENFORCEMENT AGENCY, FEDERAL AND STATE LAWS STILL PROTECT MY RIGHT TO BE FREE FROM UNREASONABLE SEARCHES

[JT]

Must See TV: Hot Coffee Premieres on HBO on Monday 6/27

Trust me when I tell you that it is very difficult to get friends, family, students and acquaintances engaged in a meaningful discussion of "mandatory arbitration."  Trust me further that there is now a wonderful documentary that manages to make this and other civil justice topics interesting and engaging for everyone.  (Indeed, my viewing companion, proudly not a lawyer, turned to me at one point in the movie and whispered "didn't you write a paper about something like that?")

Last night, I was fortunate enough to invite myself via twitter get invited to a screening of Hot Coffee at HBO.  Hot Coffee is a must see documentary about the way that business interests, "tort reform," judicial elections and "mandatory arbitration" have systematically worked in concert to deny plaintiffs access to civil justice.  It is the work of the energetic and passionate director Susan Saladoff who spent 25 years as a trial lawyer before becoming a filmmaker.  The documentary is well-conceived and thought provoking.  It takes some very complex topics and organizes them and presents them through compelling personal stories.  

The title "Hot Coffee" refers to the iconic case that is ubiquitous in pop culture as a symbol of the frivolous lawsuit: the woman who sued McDonalds because she was served a coffee that was too hot.  The film starts very strong by retelling this story through interviews with the plaintiff's family.  This challenged me (and from the gasps in the theater, I suspect everyone else viewing the film) to see the case in an entirely different light.  With that strong start, the viewer is engaged and ready to hear about damage caps, judicial elections and mandatory arbitration in consumer and employment contracts.

Here's the trailer:

After the film, there was a Q&A session moderated by Jeffrey Toobin.  He appeared to receive the movie very favorably, noting that the fine print in a cell phone contract is not one of the sexy topics that CNN hires him to discuss on the evening news segments (which reminded me of this Dahlia Lithwick piece in Slate, which seemed to begrudgingly report on AT&T v Concepcion).  

Toobin did mention one frustration, which could be leveled as a critique of the film -- that it only presents one point of view.  Notably absent and/or unwilling to participate were voices from the "other side," i.e., those in favor of damage caps and mandatory arbitration.  Saladoff's response, I thought, hit the nail on the head: in so many words, she said that she wanted to tell this side of the story, and the voices in favor of these reforms already had a well-financed platform (and, indeed, overtaken the public consciousness).  Perhaps I am partial to her response because her film paints a picture in line with my world view, and I am just so thrilled to finally see an engaging and accessible presentation explaining the systematic erosion of civil justice at the behest of corporate interests.

Our students come to law school generally ignorant of or misinformed about tort reform, mandatory arbitration and many of the other topics presented in this film.  However, they do at least know of handful of cases -- OJ, Bush v Gore and, of course, the hot coffee case.  I have no doubt that this film will be used in the classroom.  It is masterfully done and captivates those uninitiated with these topics as well as those who have studied them (and even includes a few clips of interviews with George Lakoff).  Please tune in to HBO on Monday night.

[Meredith R. Miller]

Weekly Top Tens from the Social Science Research Network

RECENT HITS (for all papers announced in the last 60 days) 
TOP 10 Papers for Journal of Contracts & Commercial Law eJournal  
April 21, 2011 to June 20, 2011

Rank	Downloads	Paper Title
1	793	Economic Analysis of Claims in Support of the ‘Durbin Amendment’ to Regulate Debit Card Interchange Fees  David S. Evans, Howard H. Chang, Margaret Morgan Weichert
2	377	What Lessons for Economic Development Can We Draw from the Champagne Fairs?  Jeremy Edwards, Sheilagh Ogilvie
3	284	FCPA Sanctions: Too Big to Debar?  Drury D. Stevenson, Nicholas J. Wagoner
4	199	Res Judicata in International Arbitral Awards  Luca G. Radicati di Brozolo
5	179	The Morality of Jingle Mail: Moral Myths about Strategic Default  Curtis Bridgeman, Florida State Univ. Submitter
6	140	The Myth of Efficient Breach: New Defenses of the Expectation Interest  Daniel Markovits, Alan Schwartz
7	126	Dead Contractors: The Un-Examined Effect of Surrogates on the Public’s Casualty Sensitivity  Steven L. Schooner, Collin D. Swan,
8	91	Fixing Unfair Contracts  Omri Ben-Shahar
9	83	Techniques to Teach Substance and Skill in Contract Drafting: In-Office Meetings and Analytical Memos  Lyman Johnson
10	79	The Impact of Human Rights Law on Contract Law in Europe  Hugh Collins

RECENT HITS (for all papers announced in the last 60 days) 
TOP 10 Papers for Journal of LSN: Contracts (Topic)  
April 21, 2011 to June 20, 2011

Rank	Downloads	Paper Title
1	140	The Myth of Efficient Breach: New Defenses of the Expectation Interest  Daniel Markovits, Alan Schwartz
2	138	Property Law as the Infrastructure of Democracy  Joseph William Singer
3	91	Fixing Unfair Contracts  Omri Ben-Shahar
4	65	The Promise Principle and Contract Interpretation  Juliet P. Kostritsky
5	57	The Sacred and the Profane Contracts Machine: The Complex Morality of Contract Law in Action  Jean Braucher
6	56	Off Contract Harms: The Real Effect of Liberal Rescission Rights on Contract Price  Michael Aikins
7	50	The Public Speaks: An Empirical Study of Legal Communication  Christopher R. Trudeau
8	50	Too Big to Exist  Barak Orbach, Grace E. Campbell
9	46	Rethinking the Laws of Good Faith Purchase  Alan Schwartz, Robert E. Scott
10	34	Cross Purposes & Unintended Consequences - Karl Llewellyn, Legal Realism and the Limits of Social Transformation  Danielle Kie Hart

[JT]

Contracts Law and the Ethicist

The New York Times Magazine's "The Ethicist" column is occasionally the source of blog fodder.  This week, both entires in the column raise potential contracts issue.  The Times' Ethicist is now Ariel Kaminer, and she does a fine job of not confusing legal and ethical rules.  Still, in these two cases, it is interesting to ponder whether law and ethics do and should correspond.

The first letter to which Kaminer responds is from a patient who is required by a physician to wait 30 minutes after receiving an injection before leaving the clinic.  This requirement is the product of new guidelines, apparently related to concerns over a potentially fatal side-effect of the injection that necessitates a ready dose of epinephrine.  The letter-writer thinks the doctor is being coercive by enforcing the new guidelines.  The situation is basically "stay here for 30 minutes or you cannot receive this injection that you need."  Kaminer has no difficulty determining that it is not unethical for the doctor to enforce the guidelines, as the doctor is also bound by the same guideline whether or not he sees the need for it.  

The law would undoubtedly concur in this case, as being required to wait in a clinic for 30 minutes after receiving a treatment for a chronic medical condition does not rise to the legally cognizable level of coercion.  But it is interesting to tweak the hypo a bit.  One obvious alternative comes to mind: Imagine a doctor who is required by her legislature to inform her patients of the psychological consequences to the mother of abortion.  Imagine that the doctor, having read all the relevant studies, does not believe that there are demonstrable psychological consequences or that those consequences are far less significant than the psychological harms associated with, for example, becoming a mother at age 15.  Assuming a paramount ethical duty for a doctor to give sound medical advice, it seems like the tension between ethics and law is quite clear in this case.  It would be interesting to imagine actual situations that doctors could face where the relationship between legal and ethical requirements would be more ambiguous.

The second letter is from a tenant/roommate who wonders whether s/he can withhold rent after being informed that her landlord/roommate has decided to default on the mortgage.  Kaminer says the answer is probably no.  The landlord's decision to breach his agreement with the lender has no bearing on the separate agreement between landlord and tenant.  So far, so good on the contracts side as well.  Kaminer then explores the possibility that the purpose of the rent was to defray the costs of the mortgage, and if that were the sole purpose of the rent, the tenant might be off the hook as an ethical matter.  However, Kaminer concludes that there are likely other costs associated with the residence to which the landlord remains subject and hence the ethical duty to pay rent continues.

Here again, the contracts analysis and the ethical analysis seem to correspond.  The agreement in question is described an "informal."  If there were some express, formal arrangement linking the payment or rent to the mortgage obligation, one might have an argument that the purpose of the agreement had been frustrated by the landlord's decision to stop making mortgage payments.  But given that the arrangement was open-ended, the landlord would have equal grounds to evict the tenant.  The landlord might have reasoned thus: I took your rent to help defray the costs of the mortgage.  Now I have no mortgage, and I just prefer to have my space, so get out.  

Of course, evictions do not occur at the snap of the fingers.  However, from a legal perspective, if the consideration was tied to the existence of a mortgage, and the mortgage ceased to exist, it is hard to see why the result should be a free room rather than an empty one.

[JT]

CRS on Presidential Authority to Impose Requirements on Contractors

Thanks to the Federal of American Scientists' Secrecy News Blog, we are able to link to this new report form the Congressional Research Service, authored by Vanessa K. Burrows & Kate M. Manuel,  "Presidential Authority to Impose Requirements on Federal Contractors." 

Here is the executive summary:

Executive orders requiring agencies to impose certain conditions on federal contractors as terms of their contracts have raised questions about presidential authority to issue such orders. Recently, the Obama Administration circulated, but did not issue, a draft executive order directing “every contracting department and agency” to require contractors to “disclose certain political contributions and expenditures.” The draft order cites the President’s constitutional authority, as well as his authority pursuant to the Federal Property and Administrative Services Act of 1949 (FPASA), which authorizes the President to prescribe any policies or directives that he considers necessary to promote “economy” or “efficiency” in federal procurement. The draft executive order refers to FPASA’s goals in that it directs actions “to ensure the integrity of the federal contracting system in order to produce the most economical and efficient results for the American people.” The draft order has been characterized by some as an “abuse of executive branch authority” because it resembles the Democracy is Strengthened by Casting Light on Spending in Elections (DISCLOSE) Act that the 111th Congress considered, but did not pass. If issued, the draft order may face legal challenge.

The outcome of legal challenges to particular executive orders pertaining to federal contractors generally depends upon the authority under which the order was issued and whether the order is consistent with or conflicts with other statutes. Courts will generally uphold orders issued under the authority of FPASA so long as the requisite nexus exists between the challenged executive branch actions and FPASA’s goals of economy and efficiency in procurement. Such a nexus may be present when there is an “attenuated link” between the requirements and economy and efficiency, or when the President offers a “reasonable and rational” explanation for how the executive order at issue relates to economy and efficiency in procurement. However, particular applications of presidential authority under the FPASA have been found to be beyond what Congress contemplated when it granted the President authority to prescribe policies and directives that promote economy and efficiency in federal procurement.

Some courts and commentators also have suggested that Presidents have inherent constitutional authority over procurement. A President’s reliance on his constitutional authority, as opposed to the congressional grant of authority under the FPASA, is more likely to raise separation of powers questions.

In the event that Congress seeks to enlarge or cabin presidential exercises of authority over federal contractors, Congress could amend FPASA to clarify congressional intent to grant the President broader authority over procurement, or limit presidential authority to more narrow “housekeeping” aspects of procurement. Congress also could pass legislation directed at particular requirements of contracting executive orders. For example, in the 112th Congress, legislation has been introduced in response to the draft executive order (e.g., H.R. 1906; H.R. 1540, § 847; H.R. 2017, § 713).

[JT]

Job Opening: Associate Dean for Government Contracts at GW Law

The George Washington University Law School, in Washington, D.C. invites applications for an Associate Dean for Government Contracts Law.

JOB DESCRIPTION: Coordinates the GC LL.M. Program, ensuring that the efforts of the graduate admissions office, the communications office, the career development office, and the government contracts law faculty combine to create an academically strong, well-publicized program that meets students' and the bars' evolving needs. Assists in managing LL.M. degree design and student progress and completion of degrees. Assists in the management and supervision of student research and writing undertaken towards completion of LL.M. theses, relevant journal notes, and papers in related courses; works directly with students to facilitate publication. In conjunction with the government contracts library specialist, develops and administers special educational and research programs in the field of government contracts law. May be appointed to teach or co-teach one or more academic course(s) in government contracts law per year.

Works with the alumni office, the advancement office, and the GC faculty to coordinate GC alumni and advancement outreach, including organizing GC Advisory Board meetings and recruiting new GC Advisory Board members, and organizing alumni programs, lectures, and the annual luncheon (or similar events). Assists with the government contracts colloquia series. Attends bar, organizational, and public meetings to provide and receive feedback on issues that impact the government contracts law offerings of the Law School.

Publicizes the work of program faculty and students. In conjunction with the government contracts faculty and the legal research and writing faculty, assists in the management and supervision of the Public Contract Law Journal and the Federal Circuit Bar Journal. Creates and updates programmatic brochures, periodic newsletters, online information sharing (e.g., blogs) and provides appropriate input to annual law school publications (such as the Bulletin, Graduate admissions brochure, etc.). Engages in research and scholarship on relevant topics.

Works with the Student Bar Association, the Dean of Students Office, and the government contracts faculty to coordinate government contracts law student competitions and awards (including the internal Government Contracts Moot Court Competition and the major external annual writing competitions).

Serves as the principal contact for prospective students, visiting scholars, dignitaries, and other institutions concerning programs, conferences, cooperation agreements, and related activities involving government contract law. Investigates opportunities for international programs (e.g., exchange, summer abroad, fellowships, etc.). Participates in programs - domestically and abroad - that enhance the reputation of the Government Procurement Law Program and the George Washington University Law School.

APPLICATIONS/FURTHER INFORMATION: For applications and further information, please visit: https://www.gwu.jobs/postings/3820

[JT]

Enough is Enough! Variation on a Theme: The Snake House

A timeless topic: bugs and real estate contracts.  More specifically of late: bedbugs and real estate contracts.  A recent variation: a house formerly used as a meth lab.  A new variation: a house with a snake infestation.  In this case, however, the buyers acknowledged the presence of snakes in disclosure form:

And our students think we have overactive imaginations in devising hypotheticals!  Enough is Enough! (edited for TV/ContractsProf Blog): 

[Meredith R. Miller]

 

Madden Coder Sues Electronic Arts for Breach of Contract

Developer Robin Antonick, the man who originally coded the John Madden (pictured at left) football game for Sega Genesis, has brought a suit against Electronic Arts (EA) claiming a breach of contract stemming from EA's failure to pay royalties for use of his work.  According to Gamasutra, Antonick alleges that "all subsequent versions of the series are derivative works based on technologies he developed, specifically his football player behavior AI, the pseudo 'three-dimensional projection' of the field, the original game's instant replay feature, and the concept of a 'positional camera.'" In the suit, Antonick seeks payment for the use of these innovations.

According to this lengthy report in Bright Side of News, under the original contract, which has been amended since its creation in 1986, Antonick was entitled to royalties of 15% on all sales and 5% for derivative works.  Since Madden football was started it has brought EA approximately $4 billion in profits.  Antonick alleges that his work was used by EA in their other games including their NHL game.  Antonick is seeking the past royalties plus interest.  

Gamasutra reports that earlier this month, EA filed a motion to dismiss, claiming that no breach of contract has occurred because the features at issue are non-copyrightable and thus not covered by the contract.  In addition, EA claims that the statute of limitations has already run.  In addition, in response to Antonick's original demand for royalties, EA provided Antonick with the source code for its version of the game to prove that his code was not used.  EA also has submitted five declarations saying the new version of the game was developed without using any of Antonick’s work. 

Gamasutra concludes that, "[i]n order for Antonick to have a case, he will have to convince the court that his work amounted to original expression, rather than computer algorithms, which would make it copyright-protectable work."

[JT and Jared Vasiliauskas]  

 

 

Weekly Top Tens from the Social Science Research Network

RECENT HITS (for all papers announced in the last 60 days) 
TOP 10 Papers for Journal of Contracts & Commercial Law eJournal  
April 15, 2011 to June 14, 2011

Rank	Downloads	Paper Title
1	785	Economic Analysis of Claims in Support of the ‘Durbin Amendment’ to Regulate Debit Card Interchange Fees  David S. Evans, Howard H. Chang, Margaret Morgan Weichert
2	278	FCPA Sanctions: Too Big to Debar?  Drury D. Stevenson, Nicholas J. Wagoner
3	271	Introduction, Rehabilitating Lochner: Defending Individual Rights Against Progressive Reform  David Bernstein
4	249	A Random Walk: The Federal Circuit’s 2010 Government Contracts Decisions  Steven L. Schooner
5	221	Choice of Court Agreements, Coordination of Proceedings and Provisional Measures in the Reform of the Brussels I Regulation  Christian A. Heinze
6	188	Res Judicata in International Arbitral Awards  Luca G. Radicati di Brozolo
7	172	The Morality of Jingle Mail: Moral Myths about Strategic Default  Curtis Bridgeman, Florida State Univ. Submitter
8	135	The Myth of Efficient Breach: New Defenses of the Expectation Interest  Daniel Markovits, Alan Schwartz
9	123	Dead Contractors: The Un-Examined Effect of Surrogates on the Public’s Casualty Sensitivity  Steven L. Schooner, Collin D. Swan
10	122	Rhetoric versus Reality in Arbitration Jurisprudence: How the Supreme Court Flaunts and Flunks Contracts (and Why Contracts Teachers Need Not Teach the Cases)  Lawrence A. Cunningham

RECENT HITS (for all papers announced in the last 60 days) 
TOP 10 Papers for Journal of LSN: Contracts (Topic)  
April 15, 2011 to June 14, 2011

Rank	Downloads	Paper Title
1	135	The Myth of Efficient Breach: New Defenses of the Expectation Interest  Daniel Markovits, Alan Schwartz
2	130	Property Law as the Infrastructure of Democracy  Joseph William Singer
3	89	Fixing Unfair Contracts  Omri Ben-Shahar
4	68	Gambling by Another Name? The Challenge of Purely Speculative Derivatives  Timothy E. Lynch
5	64	The Promise Principle and Contract Interpretation  Juliet P. Kostritsky
6	56	The Sacred and the Profane Contracts Machine: The Complex Morality of Contract Law in Action  Jean Braucher
7	56	Off Contract Harms: The Real Effect of Liberal Rescission Rights on Contract Price  Michael Aikins
8	46	Rethinking the Laws of Good Faith Purchase  Alan Schwartz, Robert E. Scott
9	38	Too Big to Exist  Barak Orbach, Grace E. Campbel
10	34	Cross Purposes & Unintended Consequences - Karl Llewellyn, Legal Realism and the Limits of Social Transformation  Danielle Kie Hart

 

[JT]

Great Discussion of Contracts Teaching

Over at the Glom and featuring contributions from:

Larry Cunningham (George Washington)

 Gillian Hadfield (Univ. of Southern California)

 Claire Hill (Minnesota)

Usha Rodrigues (Georgia) 

Erik Gerding (New Mexico)

[JT, H/T to Alan White]

Is Britney Spears the New Lady Duff-Gordon?

One of my favorite ways to teach a Contract law concept is to introduce it via a dry traditional case and keep the discussion going by mentioning a more exciting modern case involving a similar issue.  Then, I ask students to argue whether the modern case can be distinguished from the traditional case factually, whether the modern case should be decided the same way as the traditional case, etc.  Based on recent events described below, the modern version of Wood v. Lucy, Lady Duff-Gordon I use next fall may just be the one and only Lady Britney Spears. 

It seems that the sometimes-not-so-ladylike Spears, like Duff-Gordon, had an exclusive licensing arrangement in which she would lend her name to certain products in the hopes that her endorsement would increase sales.  The party negotiating those deals for her then would pay her some portion of the licensing royalties.  In Spears's case, the go-between was a company called Brand Sense; for Duff-Gordon, it was, of course, Mr. Wood.  Under one of the endorsement deals negotiated by Brand Sense, with the fragrance arm of Elizabeth Arden, Spears would endorse the fragrance "Radiance."  Brand Sense would collect the royalties from Elizabeth Arden directly, keep its 35% commission, and pass the remaining 65% on to Spears.  Like many long-term contracts, all went well for several years until, well, it didn't.  Earlier this year, at Spears's request, Brand Sense agreed to have the Arden payments sent directly to Spears, who then would send the 35% commission to Brand Sense.  However, no further payments to Brand Sense ever arrived.  According to Brand Sense's complaint, this was because Spears "secretly made a separate deal with Elizabeth Arden in a sneaky underhanded effort to circument and evade its obligations to Brand Sense."  Thus, Brand Sense argues, Spears breached her contract by not paying the commission and by negotiating a new deal with Arden. 

At this early stage, it seems that Spears, like Duff-Gordon, no longer wanted to share royalties with someone she perceived as doing nothing.  For teaching purposes, this one's a bit of a stretch given that the primary legal issues in the two cases are different (Spears turns on a standard breach of express contractual promise while Duff-Gordon typically is used to teach the implied duty of good faith and fair dealing and consideration).  However, both involve an exclusive licensing arrangement gone bad and a controversial female style maven and that's good enough for me.

As for what happens next in the case...Commentators I expect Brand Sense to argue "I'm a Slave 4 U" and Spears to argue "Gimme More."  Earlier this week, Britney fired back with the "Oops!...I Did It Again!" defense and with a cross-complaint in which she alleges improper accounting and delayed payments by Brand Sense.  Results to be determined; hopefully, it won't be too much of a "Circus."   

 

[HR Anderson]

 

Weekly Top Tens from the Social Science Research Network

RECENT HITS (for all papers announced in the last 60 days) 
TOP 10 Papers for Journal of Contracts & Commercial Law eJournal  
April 7, 2011 to June 6, 2011

Rank	Downloads	Paper Title
1	732	Economic Analysis of Claims in Support of the ‘Durbin Amendment’ to Regulate Debit Card Interchange Fees  David S. Evans, Howard H. Chang, Margaret Morgan Weichert
2	271	FCPA Sanctions: Too Big to Debar?  Drury D. Stevenson, Nicholas J. Wagoner
3	269	Introduction, Rehabilitating Lochner: Defending Individual Rights Against Progressive Reform  David Bernstein
4	248	A Random Walk: The Federal Circuit’s 2010 Government Contracts Decisions  Steven L. Schooner
5	215	Choice of Court Agreements, Coordination of Proceedings and Provisional Measures in the Reform of the Brussels I Regulation  Christian A. Heinze
6	165	The Morality of Jingle Mail: Moral Myths about Strategic Default  Curtis Bridgeman
7	130	The Myth of Efficient Breach: New Defenses of the Expectation Interest  Daniel Markovits, Alan Schwartz
8	119	Dead Contractors: The Un-Examined Effect of Surrogates on the Public’s Casualty Sensitivity  Steven L. Schooner, Collin D. Swan
9	116	Rhetoric versus Reality in Arbitration Jurisprudence: How the Supreme Court Flaunts and Flunks Contracts (and Why Contracts Teachers Need Not Teach the Cases)  Lawrence A. Cunningham
10	106	The Boards of Contract Appeals: A Historical Perspective  Jeri Kaylene Somers

RECENT HITS (for all papers announced in the last 60 days) 
TOP 10 Papers for Journal of LSN: Contracts (Topic)  
April 7, 2011 to June 6, 2011

Rank	Downloads	Paper Title
1	129	The Myth of Efficient Breach: New Defenses of the Expectation Interest  Daniel Markovits, Alan Schwartz
2	121	Property Law as the Infrastructure of Democracy  Joseph William Singer
3	83	Fixing Unfair Contracts  Omri Ben-Shahar
4	64	Gambling by Another Name? The Challenge of Purely Speculative Derivatives  Timothy E. Lynch
5	58	The Promise Principle and Contract Interpretation  Juliet P. Kostritsky
6	54	Off Contract Harms: The Real Effect of Liberal Rescission Rights on Contract Price  Michael Aikins
7	53	The Sacred and the Profane Contracts Machine: The Complex Morality of Contract Law in Action  Jean Braucher
8	40	Rethinking the Laws of Good Faith Purchase  Alan Schwartz, Robert E. Scott
9	32	Cross Purposes & Unintended Consequences - Karl Llewellyn, Legal Realism and the Limits of Social Transformation  Danielle Kie Hart
10	17	The American ‘Rule’: Assuring the Lion His Share  James R. Maxeiner

[JT]

Turning the Tables: Florida Couple Forecloses on Bank of America Branch

From AP/law.com:

Warren and Maureen Nyerges bought a foreclosure in Naples with cash in 2009 and never dreamed they would end up in court, fighting foreclosure.

Bank of America mistakenly filed a foreclosure claim against the couple even though they had no mortgage at all. The couple fought the case in court and won, but then asked Bank of America to pay for $2,534 in attorney fees. A Collier County judge ruled the bank should pay, but the bank never did.

On Friday, the couple's lawyer went to a Bank of America branch with two sheriff's deputies. He was prepared to take possession of furniture inside the bank to pay the debt.

One hour later, the bank wrote a check for $5,772.88 to satisfy the original debt plus other fees.

[Meredith R. Miller]