Wednesday, July 31, 2013
One-Day Contracts
Today's New York Times features an article on a relatively recent sports phenomenon -- the one-day contract. In a nutshell, the one-days permit a retired player to re-sign with the team he played for in his prime, so that he can retire as a member of that team. The player then shows up at the stadium and the fans can cheer him one last time (until the next opportunity comes around). The team may benefit from the one-day contract in that fans may show up to cheer a retired star and re-experience a team's glory days. The Times charaterizes these contracts as effecting for the players "a meaningless return to a team so they can reflect on how meaningful that team was to them."
This characterization strikes me as unfortunate. The return is far from meaningless. In fact, the contract is all about meaning and not at all about playing a particular sport or even about money for the athlete. San Francisco 49er star Jerry Rice (pictured) was given a one-day contract that actually specified an amount, consisting of his rookie year (1985), his number (80), his retirement year ('06) and then 49, totaling $1,985,806.49. But according to the Times (and Wikipedia), the amount was ceremonial. Rice was not actually paid anything when he re-signed with the 49ers. In baseball, the actual contracts are with farm teams, as teams cannot afford to give up a roster spot during the season -- even for one day. This too is evidence that the contracts are not meaningless.
One blogger thinks the one-day contract phenomenon has gone too far, arguing both that it is meaningless and trivial and that it is an attempt at revisionist history. These players did not actually end their careers with the teams that meant the most to those careers, and so the one-day contracts perpetrate a fraud.
Another way to look at it is that sports is imitating art, at least if the television series Lost is art. Like the characters on Lost, these players get to return to a virtual reality in which they share experiences with the people who meant the most to them at the time in their lives when they had their biggest impact.
[JT]
July 31, 2013 in Celebrity Contracts, In the News, Sports | Permalink | Comments (0) | TrackBack (0)
Tuesday, July 30, 2013
Still Mystified by Long-Term Baseball Contracts
Today's New York Times features a lengthy article about the Los Angeles Angels' contract with Albert Pujols, the once-mighty St. Louis Cardinals slugger to whom the Times now refers as a faded star. Between now and 2021, the Angels are contractually obligated to Pujols to the tune of $212 million. In the last year of his contract, when Pujols will be 41, he is scheduled to earn $30 million. The article explores the reasoning behind these contracts to some extent. The Angels found that they could not compete with teams like the Yankees in the post-season without the marquee players whom one could only attract with hefty long-term contracts.
But the Yankees' model of buying up the top players in the league does not look so effective right now. They won the World Series in 2009, and they have been contenders most years, but the 1996-2000 glory days are long behind them. The Times article on Pujols notes that the Yankees may well be secretly hoping to get out of their comparable contract with Alex Rodriguez through the deus ex machina of a life-time ban due to Rodriguez alleged involvement in the Biogenesis doping scandal.
The Times implies that the Yankees at least got their money's worth out of Rodriguez, whom the Times credits with "leading" the Yankees to a championship in 2009. But baseball doesn't work that way. Rodriguez was a part of an extremely strong team. Just on the offensive side, arguably, Rodriguez was about the middle of the pack among the Yankees' starters that year, who included: Derek Jeter, who hit .334 and had 30 stolen bases; Robinson Cano, who hit .320, with 25 home runs; and Mark Teixeira, who hit 39 home runs, drove in 122 and batted .292. Johnny Damon, Hideki Matsui and Jorge Posada all posted offensive numbers not too different from Rodriguez's highly respectable ones. Given their offense, the Yankee' didn't really need great pitching, but C.C. Sabathia won 19 games, and Mariano Rivera saved 44, while posting an E.R.A. of 1.76. The only category in which Rodriguez led the Yankees that year was salary.
Pujols career is far from over. He is suffering from a foot injury that has hampered his performance this year. But has there ever been a Pujols-like power hitter (other than the tainted Barry Bonds) who continued to perform at All-Star levels after age 35? Does it make sense to pay a designated hitter a top salary?
As we have argued over and over again, to no avail, the solution is to design contracts that pay players for performance (rather than rewarding them for past performance). Alfonso Soriano got hot at just the right point in the season, and now he is wearing the Yankee pinstripes again. But Cubs fans should just be overjoyed to have been relieved of about $7 million of the psychotic $24.5 million the Cubs would otherwise have had to pay a guy who will struggle to hit .250 for the rest of the year. I would love to like Soriano, but his salary has hurt his team more than he can help it.
[JT]
July 30, 2013 in In the News, Sports | Permalink | Comments (0) | TrackBack (0)
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
May 31, 2013 to July 30, 2013
RECENT HITS (for all papers announced in the last 60 days)
TOP 10 Papers for Journal of LSN: Contracts (Topic) 
May 31, 2013 to July 30, 2013
| Rank | Downloads | Paper Title |
|---|---|---|
| 1 | 166 | A Psychology of Choice of Laws Gary Low, Singapore Management University - School of Law, Maastricht European Private Law Institute |
| 2 | 90 | Contracts as Technology Kevin E. Davis, New York University (NYU) - School of Law |
| 3 | 79 | Interpreting Investment Treaties as Incomplete Contracts: Lessons from Contract Theory Wolfgang Alschner, Graduate Institute of International and Development Studies |
| 4 | 61 | Disclosing Corporate Disclosure Policies Victoria L. Schwartz, Pepperdine University School of Law, University of Chicago - Law School |
| 5 | 54 | An Analytical Framework for Legal Evaluation of Boilerplate Margaret Jane Radin, University of Michigan Law School |
| 6 | 50 | Mediation at the Intersection with Contract Law: The Settlement Agreement Anna Giordano Ciancio, Unaffiliated Authors - Independent |
| 7 | 49 | Sticky Covenants Gus De Franco, Florin P. Vasvari, Regina Wittenberg Moerman, Dushyantkumar Vyas, University of Toronto - Rotman School of Management, London Business School, University of Toronto - Rotman School of Management, University of Chicago - Booth School of Business |
| 8 | 34 | Revisiting the Efficiency Theory of Non-Contemplated Contingencies in Contract Law Yuval Procaccia, IDC Herzliya - Radzyner School of Law |
| 9 | 32 | State Contract Law and Debt Contracting Gil Sadka, Sharon P. Katz, Colleen Honigsberg, Columbia University - Columbia Business School, Columbia University - Accounting, Business Law & Taxation, Columbia University - Accounting, Business Law & Taxation |
| 10 | 30 | In Defense of Surrogacy Agreements: A Modern Contract Law Perspective Yehezkel Margalit, Tel-Aviv University |
[JT]
July 30, 2013 in Recent Scholarship | Permalink | TrackBack (0)
Friday, July 26, 2013
Away (again)!
Dear Readers,
Next week might be a bit slower than usual on the blog. As you read this, I am pedaling my way (for the second time) from Chicago to Michigan. It's not that long a ride for a serious bike rider, but I'm a law prof. . . . If I survive, my posts should start showing up again some time in the middle of the week.
[JT]
July 26, 2013 in About this Blog | Permalink | Comments (1) | TrackBack (0)
Thursday, July 25, 2013
10th Circuit Rules Settlement Agreement Effects Waiver of State Sovereign Immunity
In Pettigrew v. State of Oklahoma, the Tenth Circuit addressed the issue of whether "a settlement agreement between Thomas Trent Pettigrew (Pettigrew) and the Oklahoma Department of Public Safety (DPS) waived the state’s 'Eleventh Amendment' right not to be sued in federal court." The Court found that it did, for reasons to be explaned below, but first we note the scare quotes around "Eleventh Amendment" in the quotaiton from the Court.
We can only assume that the scare quotes denote the Court's awareness that the Eleventh Amendment protects states only against suits commenced of prosecuted in federal courts by "Citizens of another State" or by Citizens or Subjects of any Foreign State." Pettigrew, presumably, is neither. Still, courts have held that state sovereign immunity also protects states from suits by their own citizens. The scare quoates may indicate that, in the Court's view, that outcome is a product of a customary rule of state sovereignty and does not derive directly from the Eleventh Amendment itself. But if that were so, one would think that Congress could, pursuant to its Article I powers, override state sovereign immunity with respect to federal suits brought by a state's own citizens. Post Seminole Tribe, it cannot do so. So, if we read the scare quotes correctly, and we may not, what we have here is a very understated (and irrelevant to the case at hand) protest against incoherent Eleventh Amendment jurisprudence, to which we say, Amen. OVERRULE HANS!
Now back to the matter at hand. Pettigrew believed that he was improperly passed over for a promotion at DPS in 2009. He filed administrative grievances, and in October of that year, he was placed on administrative leave on suspicion of unauthorized leaks to the media in an unrelated claim against DPS. He filed suit in 2010 alleging that DPS had retaliated against him in violation of Title VII of the 1964 Civil Rights Act and had negligently trained and retained employees. The parties settled in December 2010. They entered into a settlement agreement that provided that any litigation relating to the settlement agreement "will be brought in the appropriate Oklahoma court having jurisdiction, either state or federal . . . "
By 2012, the partis were back in court. Pettigrew alleges that DPS has retaliated against him in various ways. He alleged new Title VII violations as well as breach of the agreement. DPS moved to dismiss Pettigrew's breach claim, as well as his claim for declaratory judgment, as barred by sovereign immunity doctrine. As Title VII was enacted pursuant to Congress powers under § 5 of the 14th Amendment, it is not subject to a sovereign immunity defense. The District Court denied the motion.
The Tenth Circuit noted that, but for the sovereign immunity defense, a court could exercsie supplementary jurisdiction over the claims subject to DPS's motion to dismiss. Although the language of the settlement agreement suggests that suit could be brought in a federal court, DPS stressed that suit must be brought in an "appropriate" court, and if sovereign immunity bars a suit from being brought in federal court, then such a court is not "appropriate." The Tenth Circuit rejected this reading of the settlement agreement on the ground that no rational drafter would have written the agreement that way if she meant to bar, on Eleventh Amendment grounds, suits in federal court to enforce the agreement. The Tenth Circuit's reasoning largely followed that of the Supreme Court in Port Auth. Trans-Hudson Corp. v. Feeney, 495 U.S. 299 (1990).
[JT]
July 25, 2013 in Commentary, Recent Cases | Permalink | TrackBack (0)
Wednesday, July 24, 2013
Fox Broadcasting v. Dish Network - let's hop to the contract issues
The Ninth Circuit recently decided an interesting case involving video on demand – or is the Hopper a DVR? That was one of the questions at the heart of Fox Broadcasting Company v. Dish Network. (Jeremy Telman had previously blogged about the case when the complaint was first filed a year ago). At issue was the Dish Network’s PrimeTime Anytime service which only works with the Hopper, a set top box with digital video recorder and video on demand functionalities. PrimeTime Anytime records Fox (and other) network shows and stores the recordings for a certain number of days (typically eight) on the Dish customer’s Hopper. Dish does not offer video on demand from Fox (but see discussion below). Dish started to offer a new feature called “AutoHop” that allows users to skip commercials on shows recorded on PrimeTime Anytime (although it doesn’t delete the commercials, the user can press a button to skip them). Fox sued Dish for copyright infringement and breach of contract and sought a preliminary injunction. The Ninth Circuit upheld the district court’s denial of the motion. The copyright issues are interesting, but I’m going to skip over them using this blog’s virtual AutoHop feature and get right to the contract issues, which are much more interesting to readers of this blog.
There were two agreements at issue here. There was a 2002 license agreement and a subsequent 2010 letter agreement (there were others but these were the two relevant ones). Pursuant to the 2002
agreement, Fox granted Dish a limited right to retransmit Fox’s broadcast signal to Dish’s subscribers. It also contained several restrictions and conditions and prohibited video on demand. A 2010 letter agreement, however, agreed to video on demand provided that Dish agreed to certain conditions, the primary one being that it couldn’t show the content without commercials.
So the basic questions (overly simplified for blog purposes) were – did Dish distribute Fox video on demand content? If so, did it comply with the terms of the 2010 letter? (Okay, that’s not exactly how the court or the parties put it, but those were the issues stripped down to their essence).
Fox argued that Dish breached this provision of the 2002 contract:
“EchoStar acknowledges andagrees that it shall have no right to distribute all or any portion of the
programming contained in any Analog Signal on an interactive, time-delayed, video-on-demand
or similar basis; provided that Fox acknowledges that the foregoing shall not restrict EchoStar’s practice of connecting its Subscribers’ video replay equipment.”
The district court construed the word “distribute” as requiring a copyright work to “change hands” (analogous to under the Copyright Act). Because the copies remained in users’ homes,they did not change hands and there was no distribution. Fox challenged this construction and argued that the prohibition against distribution meant that Dish would not make Fox programming available to its subscribers on the aforementioned basis. The Ninth Circuit found both Fox’s and the district court’s constructions plausible (yes I realize there’s a distinction between interpretation and construction but I don’t want to go there right now, although you may).
The Ninth Circuit withheld judgment on which construction was better but stated that “in the proceedings below, the parties did not argue about the meaning of ‘distribute.’ We express no view on whether, after a fully developed record and arguments, the district court’s construction of ‘distribute’ will prove to be the correct one.”
The court did, however, express skepticism that PrimeTime Anytime was not “similar” to video-on- demand (remember, the 2002 contract prohibited “video-on-demand or similar basis”)(emphasis added by yours truly). The “distribution” of that, therefore, would violate the 2002 contract. Dish argued that its service was not “identical” to VOD but, as the Ninth Circuit noted, did not explain why it was not “similar.” (Note: I hope all you contracts profs are feeling ever more relevant! And our students thought we were just making mountains out of molehills when we focused on the importance of contract language). The addition of that word “similar” might just save Fox when the case goes to trial. Especially since, as even the district court held, if PrimeTime Anytime is VOD, then Dish clearly breached the contract which prohibited skipping commercials. The district court, however, wasn’t convinced that it was VOD. Rather, the district court concluded that it was a hybrid of DVR and VOD and “more akin” to DVR than VOD.
In other words, the district court’s analysis went along these lines – the 2002 contract was not breached because there was no distribution of VOD (or similar) content. The 2010 contract was not breached because this was not VOD but DVR. In short, this was not VOD and there was no distribution of a VOD-like service.
Query if the 2010 amendment had adopted the “VOD or similar” language instead of just “VOD”; in other words, what if it permitted Dish to offer Fox’s programming as VOD or “similar” service? My guess is that they specifically drafted it narrowly to include just “VOD” to limit the scope of the license – but that it ended up backfiring to exclude the conditions on “similar” services. Funny how drafting rules of thumb can sometimes come back to bite you. Note the problem was created because the definitions were not consistent in the 2002 and 2010 agreements – it created a gap regarding a service (a “VOD similar service”) which required judicial construction. Distribution of VOD or similar services was prohibited under the 2002 contract but VOD was permitted under the 2010 provided commercials were not skipped. And what happens to showing (not distributing) "similar services to VOD"? Mind the gap!
There was a final issue regarding a “good faith” in performance type clause. The Ninth Circuit concluded that there was no evidence that Dish launched PrimeTime Anytime “because it was unwilling to comply with the requirements to offer Fox’s licensed video on demand service, rather than because Dish lacked the technological capability to do so.” Frankly, I’m not sure why this was not a bigger issue since it seems, at least to me, that Dish is trying to get around the “no commercial skipping” restriction in the 2010 agreement by using the Hopper.
The Ninth Circuit noted a few times that it was applying a “deferential standard of review” given the request for a preliminary injunction so I don’t think Dish can rest easy just yet. I think Fox’s case will eventually hinge upon how the contract issues are resolved. What is the meaning of “distribute”? (I don’t know enough about how Dish technology works to determine whether distribution occurred. Even under the district court’s definition, could it have occurred? Does rebeaming signals constitute distribution? Is the service analogous to a lease? I think there’s room here). Is the PrimeTime Anytime service VOD or not? And isn’t that 2002 agreement relevant in determining what the meaning of VOD is under the 2010 amendment? Finally, why did the court give the “good faith in performance of contract” such short shrift?
I didn't get to review the actual agreements, but I would look at what exactly is being licensed under the 2002 agreement. Does it exclude the VOD-like service or include it? The gap seems odd to me - it must be addressed in one of the agreements. What exactly does Dish have the right to do? That seems to me one of the keys to unlocking the "correct" interpretation of the contract - and help determine whether the obligation of good faith is being fulfilled.
The real hammer here is going to be contract renewal - if Dish pisses off Fox and the other networks then it may kiss its business goodbye if they don't renew their contracts. (As I mentioned, I haven't seen the contracts so don't know what the terms are).
As the court notes, the parties probably didn’t contemplate a hybrid DVR and VOD (this is the old “anticipating the future and new technologies” problem that contract drafters have to which I’ve previously referred) I think the copyright issues weigh more heavily in favor of Dish whereas Fox has the better argument re the contract issues. Of course, the much larger policy issue is how to strike the balance between contract and copyright – a recurring issue since the late eighties…Generally, it's been advantage contracts.
[Nancy Kim]
July 24, 2013 in Current Affairs, In the News, Miscellaneous, Web/Tech | Permalink | Comments (0) | TrackBack (0)
Eleventh Circuit Upholds Arbitrator's Decision to Permit Class Arbitration & to Certify the Class
That headline is not a typo! The Eleventh Circuit has actually issued a ruling favorable to plaintiffs in an arbitration case. Earlier this month, the Eleventh Circuit issued its opinion in Southern Communications Services, Inc. v. Thomas in which it upheld a District Court's order denying a motion by Southern Communications Servcies (Southern) to vacate two arbitration awards, one construing the arbitration clause so as to allow for class litigation, the other certifying a class.
Thomas contracted for three lines of service with Southern, covering cell phones for him, his wife, and his son. With respect to each line, he agreed to Southern's terms of service which included a $200 termination fee per line and an arbitration clause. Thomas eventually cancelled all three lines and was charged three termination fees. Southern excused the first fee; Thomas paid the second fee, and the third he challenged. He filed a demand for class arbitration, alleging that Southern's fees were unlawful penalties under Georgia law The arbitrator certified the class.
Southern challenged the certification, and then challenged it again after the Supreme Court decided Stolt-Nielsen. The arbitrator reconsidered but found that his original decision was consistent with Stolt-Nielsen becasue it was based "on a rule of law or rule of decision as Stolt-Nielsen requires.”
But perhaps the got that wrong. Once again, there is a SCOTUS decision on point. In Sutter, the Court held that a court must uphold an arbitrator's decision, even if clearly erroneous, so long as the arbitrator is even arguably construing the parties' agreement. Under that standard, the arbitral award could be vacated only if it lacks any contractual basis. The Eleventh Circuit found that the arbitrator engaged with the contract's language and the parties' intent and thus did not stray from his delegated task fo interpreting the parties' agreement.
Finding that the arbitrator had not exceeded his authority, the Eleventh Circuit affirmed the decision of the District Court.
For those interested in learning more about Stolt-Nielsen and Sutter, we recommend Jack Graves' post from June.
[JT]
July 24, 2013 in Recent Cases | Permalink | Comments (0) | TrackBack (0)
Tuesday, July 23, 2013
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
May 24, 2013 to July 23, 2013
RECENT HITS (for all papers announced in the last 60 days)
TOP 10 Papers for Journal of LSN: Contracts (Topic)
May 24, 2013 to July 23, 2013
| Rank | Downloads | Paper Title |
|---|---|---|
| 1 | 159 | A Psychology of Choice of Laws Gary Low, Singapore Management University - School of Law, Maastricht European Private Law Institute, |
| 2 | 87 | Contracts as Technology Kevin E. Davis, New York University (NYU) - School of Law |
| 3 | 77 | Interpreting Investment Treaties as Incomplete Contracts: Lessons from Contract Theory Wolfgang Alschner, Graduate Institute of International and Development Studies |
| 4 | 61 | The No Reading Problem in Consumer Contract Law Ian Ayres, Alan Schwartz, Yale University - Yale Law School, Yale Law School |
| 5 | 61 | Disclosing Corporate Disclosure Policies Victoria L. Schwartz, Pepperdine University School of Law, University of Chicago - Law School |
| 6 | 56 | Dispute Resolution in Public Contracts: Lessons from Select International Best Practices Sandeep Verma, Ministry of Defence, Government of India |
| 7 | 52 | Sex Matters: Considering Gender in Consumer Contracts Amy Schmitz, University of Colorado at Boulder - School of Law |
| 8 | 50 | An Analytical Framework for Legal Evaluation of Boilerplate Margaret Jane Radin, University of Michigan Law School |
| 9 | 49 | Mediation at the Intersection with Contract Law: The Settlement Agreement Anna Giordano Ciancio, Unaffiliated Authors - Independent |
| 10 | 47 | Sticky Covenants Gus De Franco, Florin P. Vasvari, Regina Wittenberg Moerman, Dushyantkumar Vyas, University of Toronto - Rotman School of Management, London Business School, University of Toronto - Rotman School of Management, University of Chicago - Booth School of Business |
[JT]
July 23, 2013 in Recent Scholarship | Permalink | TrackBack (0)
Monday, July 22, 2013
Unjust Enrichment in South African Law: A Special Price for Our Readers
Hart Publishing has asked us to share the following book announcement with our readers:
Unjust Enrichment in South African Law
Rethinking Enrichment by Transfer
By Helen Scott
Conventional thinking teaches that the absence of liability-in particular contractual invalidity - is itself the reason for the restitution of transfers in the South African law of unjustified enrichment. However, this book argues that while the absence of a relationship of indebtedness is a necessary condition for restitution in such cases, it is not a sufficient condition. The book takes as its focus those instances in which the invalidity thesis is strongest, namely, those traditionally classified as instances of the condictio indebiti, the claim to recover undue transfers. It seeks to demonstrate that in all such instances it is necessary for the plaintiff to show not only the absence of his liability to transfer but also a specific reason for restitution, such as mistake, compulsion or incapacity. Furthermore, this book explores the reasons for the rise of unjust factors in South African law, attributing this development in part to the influence of the Roman-Dutch restitutio in integrum, an extraordinary, equitable remedy that has historically operated independently of the established enrichment remedies of the civilian tradition, and which even now remains imperfectly integrated into the substantive law of enrichment. Finally, the book seeks to defend in principled terms the mixed approach to enrichment by transfer (an approach based both on unjust factors and on the absence of a legal ground) which appears to characterise modern South African law. It advocates the rationalisation of the causes of action comprised within the condictio indebiti, many of which are subject to additional historically-determined requirements, in light of this mixed analysis.
The Author
Helen Scott is an Associate Professor in the Department of Private Law at the University of Cape Town.
July 2013 250pp Hbk 9781849462235
RSP: £55 / €71.50 / US$110
20% DISCOUNT PRICE: £44 / €57.20 / US $88
Order Online in the US
If you would like to place an order you can do so through the Hart Publishing website (link below). To receive the discount please mention ref:‘CONTRACTSPROFBLOG’ in the special instructions field. Please note that the discount will not be shown on your order but will be applied when your order is processed.
US website: http://www.hartpublishingusa.com/books/details.asp?ISBN=9781849462235
Order Online in the UK, EU and Rest of World
If you would like to place an order you can do so through the Hart Publishing website (link below). To receive the discount please type the reference‘CONTRACTSPROFBLOG’ in the voucher code field and click ‘apply’.
UK, EU and ROW website: http://www.hartpub.co.uk/BookDetails.aspx?ISBN=9781849462235
If you have any questions please contact Hart Publishing
Hart Publishing Ltd, 16C Worcester Place, Oxford, OX1 2JW
Telephone Number: 01865 517 530
Fax Number: 01865 510 710
Website: http://www.hartpub.co.uk
Hart Publishing Ltd. is registered in England No. 3307205
[JT]
July 22, 2013 in Books, Recent Scholarship | Permalink | TrackBack (0)
Friday, July 19, 2013
Where do MFN clauses stand after Apple Price-Fixing Decision?
A “most-favored-nation” (MFN) clause requires the seller to
provide the buyer the lowest price offered to any rival purchaser. (The clause takes its name from the arena of international trade).
Apple had a MFN clause in its contracts with five major book publishers. Last week, Judge Denise Cote (SDNY) held that this clause was part of a conspiracy to fix e-book prices. The contracts required the publishers to give Apple’s iTunes store the best deal in the marketplace on e-books.
What does this decision mean for MFN clauses, which are used in a number of industry contracts? The WSJ took up this topic in a recent article:
Defendants in antitrust cases have liked to have the sound bite that no court has found an MFN to be anticompetitive," said Mark Botti, a former Justice Department antitrust lawyer now in private practice. "They can no longer say that."
Apple, meanwhile, has strongly denied that it conspired to fix prices, and has said it will appeal the decision.
Judge Cote avoided a broad denunciation of MFN clauses, but her decision could haunt contract negotiations in industries as diverse as entertainment and health care, legal experts said. In recent years, the Justice Department has sued a few companies over the use of MFN clauses and is investigating others.
"While most favored-nation clauses can be competitively benign, when they are used as a tool to engage in anticompetitive conduct that harms consumers, the Antitrust Division will take enforcement action," said Assistant Attorney General Bill Baer, who oversees the division at the Justice Department.
MFN clauses guarantee the recipient the lowest prices or rates charged to any buyer. While in theory that could encourage competition and lower prices for consumers, in practice such agreements sometimes end up establishing a minimum price, according to antitrust lawyers and government officials.
***
Apple said the provisions guaranteed its customers would get the lowest price for new and popular e-books. But Judge Cote offered a less-flattering interpretation.
"[The MFN] eliminated any risk that Apple would ever have to compete on price when selling e-books, while as a practical matter forcing the publishers to adopt the agency model across the board," she wrote in her 160-page ruling.
The article reports that the Justice Department is expected to request that the court “impose a variety of conditions on Apple's business, including barring the company from using MFN clauses,” sending the viability of MFN clauses into doubt.
More of the article here on the WSJ site (subscription required).
[Meredith R. Miller]
July 19, 2013 in E-commerce, In the News, Recent Cases | Permalink | Comments (0) | TrackBack (0)
Maybe He Had Too Much Sun....
In the Style section of yesterday's NYT, there was an article about recent law school grads studying for the bar exam in some pretty nice places. It sounds much nicer than when I did it - which was stuffed in a cubicle at the law school library. But I was a bit puzzled towards the end of the article when one recent grad indicated that he uses mnemonics to remember "the elements of a contract — offer, acceptance, termination, consideration, excuses and defenses." I don't teach contracts as "elements," but rather in terms of phases - e.g. formation, performance, breach, remedies --. and I certainly wouldn't include "termination excuses and defenses" as elements. Does anyone?
[Nancy Kim]
July 19, 2013 | Permalink | Comments (1) | TrackBack (0)
Thursday, July 18, 2013
Another Tragic Story of Lost Air Miles
We reported in May here about Northwest Inc. v. Ginsberg, a case on which the U.S. Supreme Court granted cert. so that it can decide "Whether the court of appeals erred in holding, in contrast with the decisions of other circuits, that respondent’s implied covenant of good faith and fair dealing was not preempted under the Airline Deregulation Act because such claims are categorically unrelated to a price, route, or service, notwithstanding that respondent’s claim arises out of a frequent-flyer program (the precise context of American Airlines, Inc. v. Wolens ) and manifestly enlarged the terms of the parties’ undertakings, which allowed termination in Northwest’s sole discretion."
Stephen Colbert reports on another tragic case of lost air miles, this time involving a frequent-flying cello. The report is provided below:
The Colbert Report
Get More: Colbert Report Full Episodes,Indecision Political Humor,Video Archive
[JT]
July 18, 2013 in In the News, Travel, True Contracts | Permalink | Comments (0) | TrackBack (0)
Wednesday, July 17, 2013
Wisconsin Supreme Court Orders Enforcement of a Surrogacy Agreement
Twenty-five years after the Baby M case, some states (including one shaped liked a mitten), still have not passed legislation addressing the legality of surrogacy contracts. So it is that the Wisconsin Supreme Court just last week upheld a surrogacy contract much like the one at issue in Baby M in a case called In re Paternity of F.T.R.: Rosecky v. Schissel.
The contract at issue was called a parentage agreement (PA). The PA provided that the Rosecky's would become the parents of the child that resulted from Monica Schissel's pregnancy. The child was the product of Ms. Schissel's egg and Mr. Rosecky's sperm. The Court concluded that the PA was enforceable except for two things. Termination of Ms. Schissel's parental rights could not occur automatically by contract, and the contract would not be enforceable if such enforcement was deemed not to be in the best interests of the child. The Court reversed the lower court's decision, which set aside the PA, and remanded for proceedings in which the terms of the PA are to be enforced unless at odds with the best interests of the child.
Chief Justice Abrahamson, joined by Justice Bradley, filed a lengthy concurrance in which she made two points: First, while she would not hold surrogacy agreements to be per se invalid, Chief Justice Abrahamson stresseed the need for courts to scrutinize them closely, given that they are contracts for the use of human bodies for altruistic or commercial purposes, which also are designed to create a child and to establish custody of that child. Second, Chief Justice Abrahamson criticized the majority opinion for treating the case as a contract dispute when actually the posture of the case made such an analysis inappropriate. The case began as a petition for recognition of paternity rights, custody and placement brought by Mr. Rosecky. As a result, according to the Chief Justice policy considerations relevant to family law should prevail. She agreed with the main opinion that the lower court erred in setting aside the PA, but she was equally critical of the main opinion, which in her view did not give adequate wait to statutory provisions relevant to a determination of the best interests of the child.
It just happens that a new article on this subject by Yehezkel Margalit has just gone up. It is called In Defense of Surrogacy Agreements: A Modern Contract Law Perspective. Here is the abstract from SSRN.
[JT]The American public’s attention was first exposed to the practice of surrogacy in 1988 with the drama and verdict of the Baby M case. Over the last twenty-five years the practice of surrogacy has slowly but surely become increasingly socially accepted and even welcomed. This evolution serves to emphasize the bizarre judicial and legislative silence regarding surrogacy that exists today in the vast majority of U.S. jurisdictions. In this article I describe and trace the dramatic revolution that took place during the recent decades as the surrogacy practice has totally changed from one viewed as problematic and rejected to a socially widespread and accepted practice. As set forth below, this recent shift demands increasing legal recognition of the legality of surrogacy contracts and moderate regulation of their enforcement. In doing so, this article explores the various intrinsic contractual problems of surrogacy contracts - the problem of unequal power of the contracting parties, the problem of change of heart and the problem of changed circumstances. As presented the preliminary normative claim regarding those contractual problems was not properly addressed by classical contract law, however, with the development of modern contract law we are now supplied with a well-equipped framework and doctrines appropriate for dealing with such problems. In order to demonstrate my innovation I will represent one main solution that the modern contract law gives us for each given contractual problem. The article then concludes with an appeal to the legislature and judiciary for a legal framework and a suggested outline of the practical administrative-legal mechanisms for accomplishing the complete legal and social recognition of surrogacy contracts.
July 17, 2013 in Recent Cases | Permalink | Comments (0) | TrackBack (0)
Tuesday, July 16, 2013
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
May 17, 2013 to July 16, 2013
RECENT HITS (for all papers announced in the last 60 days)
TOP 10 Papers for Journal of LSN: Contracts (Topic)
May 17, 2013 to July 16, 2013
[JT]
July 16, 2013 in Recent Scholarship | Permalink | TrackBack (0)
Monday, July 15, 2013
Tracking and Data Collection - Coming to a Store Near You!
As Jeremy Telman noted in his post, the OUP website which sells my forthcoming book on wrap contracts contains a wrap contract that requires users to the site to accept cookies. This type of wrap is what I refer to as "contract as notice", and much better than what most websites do, which is implement a "notice as contract". The OUP website requires specific assent to a particular term which raises the salience of the term. My guess is that OUP provides this because its parents company is based in the U.K. which has better laws about this kind of stuff. Most US corporate websites throw a bunch of terms into a browse wrap to which the user is deemed to have given blanket assent. Visitors to OUP's website -- which requires specific assent -- are made aware of the cookies, whereas most visitors to other sites aren't even aware that a contract governs. This is the difference between effective notice and ineffective notice, aka contracts that nobody reads but that courts deem are still enforceable via constructive assent.
The real problem with not reading is the nature of the terms that go unread--if you don't read terms, what's to stop a company from piling them on, adding more intrusive privacy stripping terms and rights deleting provisions ( to use a Radin-esque term). According to case law, not much.
I set my browser to alert me when I visit a website with cookies and I just couldn't visit any site without having to press the "allow" icon several times. Now I allow first party cookies, and ask for a "prompt" from third parties. I wouldn't be able to use my computer otherwise.
And now, we have the pleasure of being tracked in person. This morning, the NYT reported that some physical stores have started testing technology that allows tracking of customers' movements by using their smart phone signals. Nordstrom tried the old "Notice as Contract" method, by posting a sign telling customers they were being tracked. Those customers who saw the sign were creeped out. How long before we get used to these notices - and start to ignore them? How long before they are so ubiquitous that we have as little choice as we do online to stop a company from tracking and collecting information about us?
BTW, you can't read the NYT article unless your browser is set to allow cookies.....
[Nancy Kim]
July 15, 2013 in In the News, Miscellaneous, Web/Tech | Permalink | Comments (0) | TrackBack (0)
Thursday, July 11, 2013
Website for Law Professor's Book about Wrap Contracts Contains a Wrap Contract!
Those of you who read the previous post and clicked on the link to get a sneak peak at Nancy Kim's forthcoming book, Wrap Contracts, may have noticed the banner at the top of the screen, which reads:
We use cookies to enhance your experience on our website. By clicking 'continue' or by continuing to use our website, you are agreeing to our use of cookies. You can change your cookie settings at any time.
There may be some irony in this situation, or perhaps it is strategic: the website performs, and makes one of Nancy's points for her. Wrap contracts are everywhere and have become an unavoidable fact of life for the computer literate.
[JT]
July 11, 2013 in About this Blog, Books, Web/Tech | Permalink | Comments (2) | TrackBack (0)
Documentary on Terms of Use
There's a new documentary about...wait for it....contracts! Well, if you want to call terms of use "contracts" - which courts seem to want to do. Here's a link to an article in USA Today and a link to the the official trailer on YouTube (yes, I get the irony of posting a trailer to YouTube which you can't do without agreeing to their terms of use....). The clip contains some infuriating quotes from self-interested folks who want to perpetuate consumer ignorance of privacy looting. One of my favorites-to-hate is the lie that people don't care about privacy - if they did they would do something about it. But contracts profs know about bounded rationality and the limits of cognition - and we also know about lack of choice, the importance of contract design and effective v. ineffective notice.
I cover all of this ground (and more) in my forthcoming book but more on that later....
[Nancy Kim]
July 11, 2013 in In the News, Miscellaneous, Web/Tech | Permalink | Comments (0) | TrackBack (0)
Tuesday, July 9, 2013
When Non-Competes Attack
Over at Balkinization, University of Maryland Law Prof Frank Pasquale (pictured) has a post about a recent article by Alana Samuels in the L.A. Times. Samuels' article begins with the now-familiar story of a janitor owed back wages who was forced into an arbitral forum that favored employers. His arbitration agreement, which was among the papers he signed without reading (and likely without being given the opportunity to read) on the first day of work, also included a class action waiver. Employers are also emboldened by the pro-business climate engendered by recent SCOTUS decisions to throw in attorneys' fees provisions, thus increasing the risks to employees who seek redress.
The story then proceeds to detail the plight of relatively low-wage workers, such as limo drivers and hair stylists, whose employers force them to sign non-compete clauses, even if they are part-time, meaning that they cannot find work with other businesses, even if they are not getting enough hours from their current employers. Pasquale reports that non-competes are now starting to kick in at the job application stage. He reports that at some job fairs, employers will not look at your application unless you sign a "letter of intent," which prevents the applicant from applying elsewhere whie the current application is pending.
It is not clear to me that such a letter would be or could be enforceable. What is the company's remedy if a potential employee violates the letter of intent? Presumably, the only remedy would be to refuse to hire, but if the employer is otherwise inclined to hire someone, would that person's failure to abide by the company's b.s. letter of intent really deter the company from hiring? And if the company does not decide to hire the person, there is obviously no harm to the company and so no way to enfore the letter of intent. The issue could arise, perhaps, if the company hired someone and then learned that the employee had violated the letter of intent. But since the employment is almost certainly at-will, what difference does the letter of intent issue make? The employer still is free to fire or not fire.
[JT]
July 9, 2013 in Commentary, In the News, True Contracts | Permalink | Comments (3) | TrackBack (0)
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
May 10, 2013 to July 9, 2013
RECENT HITS (for all papers announced in the last 60 days)
TOP 10 Papers for Journal of LSN: Contracts (Topic)
May 10, 2013 to July 9, 2013
[JT]
July 9, 2013 in Recent Scholarship | Permalink | TrackBack (0)
Monday, July 8, 2013
Are Contracts Enforceable in Nirvana?
My colleague, David Herzig, called my attention to this weekend's New York Times Magazine, which featured an article about Jason Everman, who was briefly a member of two very successful bands, Nirvana (pictured) and Soundgarden. According to the article, Everman was too introverted to make it on tour, and he was fired from both bands for being moody. He bounced around with other bands for a while and eventually enlisted with the armed forces. He is now a decorated war hero and veteran of the Special Forces, where, according to the article, moodiness is not a big problem.
The part that piqued David's interest was early on, when Everman first joined Nirvana. According to the Times, Nirvana had just recorded its first album, Bleach, but they owed their producer money. Everman paid $606.17 to cover the debt, and the record eventually sold over 2 million copies. Kurt Cobain bragged that the band never even reimbursed Everman his $600. David thought maybe there would be some contractual angle that would lead to a recovery for Everman. The article suggests that Everman has moved on, and that's probably the right move both for the sake peace of mind and from the legal perspective, at least based on the facts as reported in the Times.
There is no suggestion in the article of a contract. It seems like Everman was just being a good guy and giving his friends some money. At best, he might have expected to be paid back, so a legal case would entitle him to $606.17 plus interest. Or he might have just been helping his bandmates in the expectation that the record's success would enable them to tour and to profit from being Nirvana, a privilege that Everman enjoyed for a while, before his bandmates discovered that he wasn't the person with whom they wanted to be stuck in a tour van.
[JT]
July 8, 2013 in Commentary, In the News | Permalink | Comments (0) | TrackBack (0)
