Sunday, April 30, 2017
"Losses" in an Expense-Shifting Clause Includes Diverted Staff Time
A recent case out of Maryland, Under Armour, Inc. v. Ziger/Snead, LLP, No. 802 September Term 2016, offers an interpretation of an expense-shifting clause in a contract. The clause in question read:
"If Architect [Ziger/Snead] employs counsel or an agency to enforce this Agreement, Owner [appellant] agrees to pay the attorneys' fees, costs, expenses, and losses incurred by Architect prior to and through any trial, hearing, and/or subsequent proceeding, relating to such enforcement."
Following a legal dispute and a jury verdict in the architect's favor, the architect moved for attorneys' fees, costs, expenses, and losses, pursuant to the contractual clause above. Under Armour refused to pay the amount characterized as "losses," which seem to have been mainly diverted employee time. Under Armour's stance was that "losses" was too vague a term to cover "staff time." Rather, Under Armour claimed that "losses" was the equivalent of the attorneys' fees, costs, and expenses that had already been listed.
The court, however, pointed out that "losses" was a term that had been negotiated by two sophisticated parties, and so must have some meaning. Other courts have held that diverted staff time can be included in losses. Therefore, where the contract did not mention staff time one way or the other, the court held it was permissible to conclude that the term "losses" meant to cover for diverted staff time.
April 30, 2017 in Recent Cases, True Contracts | Permalink | Comments (0)
Thursday, April 27, 2017
Weekly Top Ten SSRN Contracts and Commercial Law Downloads (April 27, 2017)
SSRN Top Downloads For
Contracts & Commercial Law eJournal
RECENT TOP PAPERS for all papers first announced in the last 60 days
26 Feb 2017 through 27 Apr 2017
| Rank | Downloads | Paper Title |
|---|---|---|
| 1 | 278 | Notice and Takedown in the Domain Name System: ICANN's Ambivalent Drift into Online Content Regulation Annemarie Bridy University of Idaho College of Law |
| 2 | 254 | Choice of Law in the American Courts in 2016: Thirtieth Annual Survey Symeon C. Symeonides Willamette University - College of Law |
| 3 | 232 | Copyright Survives: Rethinking the Copyright-Contracts Conflict Guy A. Rub Ohio State University (OSU) - Michael E. Moritz College of Law |
| 4 | 205 | 'No Money Down' Bankruptcy Pamela Foohey, Robert M. Lawless, Katherine M. Porter and Deborah Thorne Indiana University Maurer School of Law, University of Illinois College of Law, University of California - Irvine School of Law and Ohio University - Department of Sociology |
| 5 | 199 | Understanding the Consumer Review Fairness Act of 2016 Eric Goldman Santa Clara University - School of Law |
| 6 | 174 | Massively Discretionary Trusts Lionel Smith McGill University, Faculty of Law, Paul-André Crépeau Centre for Private and Comparative Law |
| 7 | 164 | Self-Driving Contracts Anthony J. Casey and Anthony Niblett University of Chicago Law School and University of Toronto - Faculty of Law |
| 8 | 157 | Contracts Ex Machina Kevin D. Werbach and Nicolas Cornell University of Pennsylvania, The Wharton School, Legal Studies & Business Ethics Department and University of Pennsylvania - The Wharton School, Legal Studies & Business Ethics Department |
| 9 | 154 | Once Upon a Car: A Tale of Three Ambiguities Mark Cooney Western Michigan University Cooley Law School |
| 10 | 136 | A New Perspective on FRAND Royalties: Unwired Planet v. Huawei Jorge L. Contreras University of Utah - S.J. Quinney College of Law |
SSRN Top Downloads For
Law & Society: Private Law - Contracts eJournal
RECENT TOP PAPERS for all papers first announced in the last 60 days
26 Feb 2017 through 27 Apr 2017
April 27, 2017 in Recent Scholarship | Permalink
Tuesday, April 25, 2017
Contractual Rights to Prince's "Vault"
On April 14, the Wall Street Journal reported that Universal Music Group has won the licensing rights to late pop/rock star Prince's music in the "vault" he apparently kept on his property. The price tag was $30 million. Now, however, Warner Music Group, the singer's first record label, claims that it has conflicting rights in the material.
That turn of events is hardly surprising, but what is is the fact that Universal "hadn't seen a copy of Prince's 2014 contract with Warner, so it asked [a relevant party] to clarify the details afters signing the deal and running into roadblocks as it tried to move forward."
Of course, legal disputes also arose as Prince did not leave a will, thus ceding his entire estate to his sister and five half-siblings.
Textbook lessons of what NOT to do in the contracts and wills and estates areas of the law.
April 25, 2017 in Celebrity Contracts, Commentary, Famous Cases, In the News, Music | Permalink | Comments (0)
Monday, April 24, 2017
New edition: Principles of Contractual Interpretation by Richard Calnan
From our friends at Oxford University Press:
"Written with the busy practitioner in mind, Richard Calnan’s Principles of Contractual Interpretation is a concise and insightful book that sets out the principles that guide the courts in interpreting contracts. Each principle is covered in its own dedicated chapter, supported by case law which illustrates how the principle works in practice and in its wider context. In addition to interpretation of contracts, the book also considers the implication of terms, rectification, and estoppel by convention.
This new edition is fully updated to include new case law. It considers the implications of key decisions of the Supreme Court in Arnold v Britton and Marks & Spencer v BNP Paribas, and BNY Mellon v LBG Capital. As well as a discussion of the Makdessi v Cavendish Supreme Court case on penalties. This book provides an invaluable reference for lawyers drafting, interpreting and litigating on contracts."
April 24, 2017 | Permalink
Scholarship Spotlight: "What Did They Know and When Did They Know it? Pretesting and Assessing Learning Outcomes" (Jeffrey Harrison - Florida)
How far does the teaching of contract doctrine take students beyond their initial intuitive view of the applicable legal rules? Jeffrey Lynch Harrison of the University of Florida - Levin College of Law recently posted "What Did They Know and When Did They Know it? Pretesting and Assessing Learning Outcomes," an article that should be of interest to anyone teaching the first-year Contracts course. Here is the abstract:
Abstract
Are legal rules intuitive or, at least, consistent with common sense? In this study, 260 law students at five law schools who had not taken contract law, were presented with eight questions based on specific contracts cases or common contracts issues. They were asked what they felt was the fair or right answer to each question and to formulate the rule they would apply. The purposes of the study were to 1) determine whether contract law is what the untrained person believes it is or should be and 2) experiment with a strategy of pretesting to determine what topics within any course deserve special attention during a semester.
Outside of its classroom implications, Harrison's article also provides some interesting fodder on the issue of the extent to which legal rules in general are--or must be--dependent on given zones of societal norms. "What Did They Know and When Did They Know it? Pretesting and Assessing Learning Outcomes" is available for SSRN download here.
April 24, 2017 in Recent Scholarship, Teaching | Permalink | Comments (0)
Sunday, April 23, 2017
Clever Price Interpretation Issue
Take a look at the below quote for “calendered” fabric by weight and consider what you think is the total price for the fabric (“tire cords”) including the calendering process by which rubber is compressed into the fabric sheets. There is no dispute that the “Polyester Tire Cord Only” line refers to fabric sheets purchased by Obermeyer from CSI and that the “Calendering, Compound & Poly Only” line refers to the calendering. Consider also that to get one pound of calendered fabric, Obermeyer would buy one half pound of fabric sheet at $1.87 and pay $2.23 to have that amount calendered into one pound of fabric.
Should the total price be $4.10 or $5.97? Buyer says $4.10. Seller, of course, insists on $5.97; an almost 50% price increase above the buyer’s expectations. How would that be possible? Consider this:
“The increase is a consequence of the fact that calendering doubles the weight of the fabric. To obtain one pound of calendered fabric under the [above] pricing, Obermeyer would purchase one-half pound of fabric sheet (for $1.87) and pay $2.23 for that half pound to be calendered into one pound of calendered fabric. That came to $4.10 per pound of calendered fabric. Under CSI's interpretation of the January quote, however, Obermeyer would pay $5.97 for the same product. The essence of the parties' dispute is whether the $3.74/lb price of the fabric sheets is based on the weight of the untreated sheets (the untreated pricing) or the weight of the calendered product (the treated pricing).”
A motion for summary judgment was granted in favor of CSI. A Tenth Circuit Court of Appeals Court reversed and remanded for further proceedings to, among other things, allow the lower court to find out what the course of dealing between these parties had been. Said the court:
“CSI cautions that a decision against it would inject untenable uncertainty into commercial transactions by encouraging contracting parties to remain ignorant of the prices they pay. We disagree. There is a strong policy interest in encouraging trust between parties to commercial transactions. Commerce is not enhanced if buyers and sellers must always treat each other as adversaries, auditing every transaction as it occurs to be sure the other party is not cheating. If the jury finds that Obermeyer had been misled by an unscrupulous supplier on which it had relied in good faith, we do not think that the world of commerce will suffer from a verdict in favor of Obermeyer.
The case shows the importance of sufficiently elaborate contract drafting. Sometimes, less is more, but at other times, such as here, more detail would have been helpful. After the fact, it is much more difficult to ascertain whether fraud was at issue from the outset, at the end, or whether the buyer simply misunderstood the situation… the latter is a little hard to accept on the given facts, but on remand, hopefully the truth will come out.
The case is Obermeyer Hydro Accessories, Inc. v. CSI Calendering, Inc., 2017 WL 1174350, No. 16-1083 (March 30, 2017).
April 23, 2017 in True Contracts | Permalink | Comments (0)
Thursday, April 20, 2017
Weekly Top Ten SSRN Contracts and Commercial Law Downloads (April 20, 2017)
SSRN Top Downloads For
Contracts & Commercial Law eJournal
RECENT TOP PAPERS for all papers first announced in the last 60 days
19 Feb 2017 through 20 Apr 2017
| Rank | Downloads | Paper Title |
|---|---|---|
| 1 | 271 | Notice and Takedown in the Domain Name System: ICANN's Ambivalent Drift into Online Content Regulation Annemarie Bridy University of Idaho College of Law |
| 2 | 245 | Choice of Law in the American Courts in 2016: Thirtieth Annual Survey Symeon C. Symeonides Willamette University - College of Law |
| 3 | 224 | Copyright Survives: Rethinking the Copyright-Contracts Conflict Guy A. Rub Ohio State University (OSU) - Michael E. Moritz College of Law |
| 4 | 207 | Interpretation and Construction in Contract Law Gregory Klass Georgetown University Law Center |
| 5 | 191 | Understanding the Consumer Review Fairness Act of 2016 Eric Goldman Santa Clara University - School of Law |
| 6 | 188 | 'No Money Down' Bankruptcy Pamela Foohey, Robert M. Lawless, Katherine M. Porter and Deborah Thorne Indiana University Maurer School of Law, University of Illinois College of Law, University of California - Irvine School of Law and Ohio University - Department of Sociology |
| 7 | 161 | Massively Discretionary Trusts Lionel Smith McGill University, Faculty of Law, Paul-André Crépeau Centre for Private and Comparative Law |
| 8 | 160 | Conceptualizing Cryptolaw Carla L. Reyes Stetson University College of Law |
| 9 | 146 | Self-Driving Contracts Anthony J. Casey and Anthony Niblett University of Chicago Law School and University of Toronto - Faculty of Law |
| 10 | 141 | Once Upon a Car: A Tale of Three Ambiguities Mark Cooney Western Michigan University Cooley Law School |
SSRN Top Downloads For
Law & Society: Private Law - Contracts eJournal
RECENT TOP PAPERS for all papers first announced in the last 60 days
19 Feb 2017 through 20 Apr 2017
April 20, 2017 in Recent Scholarship | Permalink | Comments (0)
Saturday, April 15, 2017
A False Advertising Case Isn't Covered by "Personal and Advertising Injury" Insurance
A recent case out of the Sixth Circuit, Vitamin Health, Inc. v. Hartford Casualty Insurance Co., No. 16-1724, settled a dispute between Vitamin Health and its insurance company over Vitamin Health's expenses defending against a false advertising suit. Bausch & Lomb alleged that Vitamin Health was making false statements about its own products in its advertisements. Vitmain Health sought coverage from Hartford as "personal and advertising injury," but Hartford denied defense.
The court agreed with Hartford. The "personal and advertising injury" covered under Hartford's policy was defined in the policy as disparagement of other people's goods or services. At issue in the false advertising case was Vitamin Health's statements about its own products, which were not disparaging. There was no "disparagement."
Vitamin Health's theory was that its statement about its products disparaged its competitors' products by implication. The Sixth Circuit didn't buy that theory, though. Vitamin Health's statements did not make claims about the superiority of its product compared to its competitors, so even if disparagement-by-implication were a valid doctrine. The case was simply about false advertising, not disparagement, and hence not covered by Hartford's insurance policy.
April 15, 2017 in Recent Cases, True Contracts | Permalink | Comments (0)
Friday, April 14, 2017
A Copyright Claim References Contracts, But Doesn't Bind Copyright Holder to Those Contracts
A recent case out of the Eastern District of Pennsylvania, Krist v. Pearson Education, Inc., Civil Action No. 16-6178, deals with whether a copyright holder's lawsuit can be governed by a contract between sublicensees with regard to forum selection. The answer: No.
In the case, a photographer, Krist, licensed hundreds of his photograph to a stock photography agency, Corbis. Corbis then sublicensed the photographs to third parties. Corbis and Krist had agreements permitting this sublicensing; Corbis also entered into agreements with the sublicensees, including Pearson.
Krist's allegations were that Pearson was using photographs outside of the terms of its contract with Corbis, resulting in copyright infringement. Pearson sought to transfer venue to the Southern District of New York, based on its forum selection clause in its agreements with Corbis. Although Krist was not a party to those contracts, Pearson argued that Krist's lawsuit was based on the contracts; Krist was a beneficiary of the contracts; and Corbis was acting as Krist's agent in entering into the contracts.
But the court noted that Krist had not asserted any contract claims. His claims were entirely copyright-based. While the case would require "consideration" of the Corbis-Pearson contracts, that was not enough to bind Krist to the forum selection clause in a contract that Krist was not a party to. Krist had no continuing control over Corbis's activities, and so had not had the ability to comment on or affect or influence Corbis's acceptance of the forum selection clause.
April 14, 2017 in Recent Cases, True Contracts | Permalink | Comments (0)
Thursday, April 13, 2017
Weekly Top Ten SSRN Contracts and Commercial Law Downloads (April 13, 2017)
SSRN Top Downloads For
Contracts & Commercial Law eJournal
RECENT TOP PAPERS for all papers first announced in the last 60 days
12 Feb 2017 through 13 Apr 2017
| Rank | Downloads | Paper Title |
|---|---|---|
| 1 | 262 | Notice and Takedown in the Domain Name System: ICANN's Ambivalent Drift into Online Content Regulation Annemarie Bridy University of Idaho College of Law |
| 2 | 232 | Choice of Law in the American Courts in 2016: Thirtieth Annual Survey Symeon C. Symeonides Willamette University - College of Law |
| 3 | 221 | Copyright Survives: Rethinking the Copyright-Contracts Conflict Guy A. Rub Ohio State University (OSU) - Michael E. Moritz College of Law |
| 4 | 194 | Interpretation and Construction in Contract Law Gregory Klass Georgetown University Law Center |
| 5 | 185 | 'No Money Down' Bankruptcy Pamela Foohey, Robert M. Lawless, Katherine M. Porter and Deborah Thorne Indiana University Maurer School of Law, University of Illinois College of Law, University of California - Irvine School of Law and Ohio University - Department of Sociology |
| 6 | 184 | Understanding the Consumer Review Fairness Act of 2016 Eric Goldman Santa Clara University - School of Law |
| 7 | 178 | The Deformation of Contract in the Information Society Margaret Jane Radin University of Michigan Law School |
| 8 | 151 | Massively Discretionary Trusts Lionel Smith McGill University, Faculty of Law, Paul-André Crépeau Centre for Private and Comparative Law |
| 9 | 142 | Conceptualizing Cryptolaw Carla L. Reyes Stetson University College of Law |
| 10 | 131 | Self-Driving Contracts Anthony J. Casey and Anthony Niblett University of Chicago Law School and University of Toronto - Faculty of Law |
SSRN Top Downloads For
Law & Society: Private Law - Contracts eJournal
RECENT TOP PAPERS for all papers first announced in the last 60 days
12 Feb 2017 through 13 Apr 2017
April 13, 2017 in Recent Scholarship | Permalink | Comments (0)
Wednesday, April 12, 2017
United Airlines and Unequal Bargaining Positions
It's by now common knowledge that United Airlines finally fessed up to its mistakes and promised not to use police to drag paying customers who held valid contracts and thus tickets with the airline off the planes anymore. That seems like, uhm, a reasonable policy.
Now, as I have said before: when are we as a society going to wake up to and thus call for, yes, REGULATORY change in relation to the clearly dysfunctional contractual relationship between the few remaining American airlines and paying customers? This recent debacle with the Asian doctor bloodied while being physically dragged away from a valid contractual situation (I know, I know, the airline had a right to oversell and so forth) shows the results of a clearly unequal bargaining position.
Let's call it what it is: unacceptable and abusively unequal commercial practice. What, for example, if YOU want to change your ticket? Good luck trying to do that unless you paid ten or so times what a regular ticket would be. As I have also mentioned before: how about price gouging, or whatever we as attorneys may label the following: buying an airline ticket from point A to B in Europe with some low cost carriers will cost you very, very little. Here, "low cost" carriers still charge you hundreds and hundreds of dollars. I agree, the market place and capitalist system is better than the alternative, but it is far from perfect. For what alternative do we have? Take the train? Drive?! Right... in a country of this size, you just cannot reasonably do that.
Or how about this: my elderly mother can fly to Los Angeles from Copenhagen and back on KLM/Delta Airlines for less than half of what I would have to pay on the VERY SAME AIRLINE, DATES, etc. Yes, I've checked it. Same route, you name it. That's not "market forces," then, that's cheating customers because one can.
Airlines are great and provide a great and necessary service to many of us. In fact, so necessary that they have, for all intents and purposes, become the "bus companies" or railroads of today. Just as railroad companies and bus service providers were and are, to the best of my non-native knowledge, subject to quite some regulations, so would it not be unreasonable to look into the modern practices of airlines today. Airlines around the world make a good living while facing quite a bit more regulation than American carriers do. We are often being played for fools here. We just put up with it too much.
April 12, 2017 in Commentary | Permalink
Tuesday, April 11, 2017
Flying the Friendly Skies after the Suffering Through the Violent Boarding Process?
Everyone is surely, by now, aware of the (most recent) United Airlines scandal. Numerous questions abound: Was the airline racist in asking a non-white person to give up his seat or was the selection of which passenger to bump truly random? If the latter, was the airline racist in pursing this action after seeing that the selected passenger was not white whereas it might have given up taking such drastic action if it the passenger had been white? Equally importantly, what in the world is going on when law enforcement officers act as they did in this situation?! Is it fair to consider United Airlines responsible for actions that were, after all, not taken by its employees, but rather by the authorities?
While these questions are being addressed in many other locations, I find it interesting that several news sources correctly point out that United was legally entitled to bump a passenger, but that several sources seem to incorrectly state that under Department of Transportation rules, airlines may only pay passengers “up to a” $1,350 limit for delays of more than two hours. I have not had the time to fully research this rule, but as I read the rules, there is nothing saying that there is a limit to how much airlines may choose to pay, only what the DOT rules guarantee a pay-out (that one can, incidentally, insist on getting as payment, not a voucher) of $1,350, not more under the federal rules. The DOT guideline states as follows (from a website version only, admittedly):
“If the substitute transportation is scheduled to get you to your destination more than two hours later (four hours internationally), or if the airline does not make any substitute travel arrangements for you, the compensation doubles (400% of your one-way fare, $1350 maximum).”
If my understanding is correct, United could have chosen to voluntarily pay out a lot more than what they reportedly did ($800-1,000) and, as many correctly point out, most likely found some taker. Surely, the rules do not prohibit this. Instead, however, United chose to do what seems to increasingly be the order of the day: stand on their own rights and disregard the interests of their customers in the name of making a few extra dollars. Why am I not surprised?
April 11, 2017 in Commentary, Contract Profs, Current Affairs, Famous Cases, In the News, Travel | Permalink | Comments (0)
Thursday, April 6, 2017
Cyberattack liability
“Fees, fines or penalties” do not cover fraudulent charges incurred on commercial parties during a cyberattack. So ruled the Eight Circuit Court of Appeals in Schnuck Markets, Inc., v. First Data Merchant Serivces Corp., et al., (No. 15-3804, Jan. 13, 2017).
Schnuck is a retail supermarket chain. First Data served as its credit card processor and Citicorp as its “acquiring bank.” Such a bank is one that pays the merchant and is reimbursed by the issuing bank. The acquiring bank sponsors the merchant into credit card association networks, in this case VISA and MasterCard. It also vouches for the merchant’s compliance with the associations’ rules.
Schnuck signed a contract with First Data and Citicorp for the credit card arrangement. Among other things, the agreement stated that liability under the relevant section of the contract “shall not apply to Schnucks’ liability for chargebacks, servicers’ fees, third party fees, and fees, fines or penalties … by the Association or any other card or debit card provide under this [agreement].”
In March 2013, a cyberattack against Schnucks compromised cardholder data. First Data and Citicorps subsequently withheld not only the fees and costs that MasterCard assessed against these corporations from payments to Schnucks, but also the fraudulent charges from the cyberattack itself. Schnuck filed suit, alleging breach of contract. At bottom, Schnucks agreed that it was liable for only actual fees and fines, but not the actual losses incurred by the issuing banks.
The court agreed. The payment of a “fee” is a payment for a service, not reimbursement for another party’s losses. Furthermore, since the contract does not mention anything about reimbursement for data compromise events, the banks were not in a legal position to get reimbursed for those. “Fines” and “punishment” describe, more narrowly, only sums imposed as a punishment and not data compromise losses.
Supermarket wins; banks lose. Good thing that the card holders were not involved here. The bigger loss is, of course, that shared by all of us; financiers, vendors, and card users when internet-based losses such as this happen. Another cost that undoubtedly will be built into the pricing scheme will result, but apparently, such is the nature of electronic transactions these days.
April 6, 2017 in Current Affairs, Web/Tech | Permalink | Comments (0)
Weekly Top Ten SSRN Contracts and Commercial Law Downloads (April 6, 2017)
SSRN Top Downloads For
Contracts & Commercial Law eJournal
RECENT TOP PAPERS for all papers first announced in the last 60 days
5 Feb 2017 through 6 Apr 2017
SSRN Top Downloads For
Law & Society: Private Law - Contracts eJournal
RECENT TOP PAPERS for all papers first announced in the last 60 days
5 Feb 2017 through 6 Apr 2017
April 6, 2017 in Recent Scholarship | Permalink | Comments (0)
Wednesday, April 5, 2017
Nevada Court: There Was No Oral Contract, and It Needed to Be in Writing Anyway
A recent case out of the District of Nevada, Greenstein v. Wells Fargo Bank, Case No. 2:14-cv-01457-APG-CWH (behind paywall), reminds us of the importance of the statute of frauds as a useful doctrine that can clarify when parties have entered into a contract and when they haven't. Greenstein contended that he and Wells Fargo had entered into an oral contract regarding modifying his existing home loan. However, Wells Fargo disputed that. The court agreed with Wells Fargo that there was no contract, because Greenstein at best had alleged that, during multiple telephone calls, Wells Fargo had represented that it "might" agree later to a modification. Wells Fargo did tell Greenstein that he needed to reduce his principal to qualify for a modification, but that was not the same thing as saying that he definitely would qualify for a modification if he paid down the principal (which, in any case, he did not do).
Greenstein apparently misinterpreted these conversations with Wells Fargo, none of which amounted to an offer or acceptance or even any material terms. This is precisely the sort of situation that the statute of frauds exists to try to alleviate: Because the contract involved land, it needed to be in writing. It never was, and surely any writing between the parties would have cleared up at least some of the misunderstanding between the parties. Oral contracts (alleged or existing) lend themselves easily to mistaken conclusions; making the land contract be in writing at least sometimes saves confusion and disagreement over these all-important terms.
April 5, 2017 in Commentary, Recent Cases, True Contracts | Permalink | Comments (0)
Monday, April 3, 2017
University Decisions on Disciplinary Procedures Receive Deference; Cannot Be Arbitrary, Capricious, or in Bad Faith
A recent case out of the District of Nevada, Janati v. University of Nevada, Las Vegas School of Dental Medicine, Case No. 2:15-cv-01367-APG-CWH (behind paywall), discusses the leeway universities have in enforcing the policies in their student manuals. The student was suspended from UNLV Dental School for plagiarism, and, in addition to raising constitutional due process and First Amendment issues, she contended that UNLV breached its Student Policy Manual and as such was in breach of contract. UNLV agreed that the Student Policy Manual constituted a binding contract between the school and the student but contended that its decisions on disciplinary procedures under the manual were entitled to "significant deference."
The court agreed. The standard for determining if the university had violated its disciplinary procedure was "arbitrary, capricious, or bad faith," "without any discernable rational basis." The university's actions did not rise to that level in this case. The complaint concerning the student's Honor Code violations was required by the manual to "include specifics" of the conduct at issue, including any witnesses to the conduct. The complaint against the student here neglected to name two of the faculty members involved and left off the names of some of the witnesses, but the student admitted that she knew who everyone involved with the complaint was, even prior to its filing. There was also some confusion about whether the university failed to solicit information from one of the witnesses during the first Honor Council proceeding, but all of the parties agreed that, to the extent that witness was overlooked, he did provide information during the second proceeding the parties held.
The court found that none of those rose to the high bar of violation of the disciplinary procedures and therefore the student could not sustain a breach of contract claim.
April 3, 2017 in Current Affairs, In the News, Recent Cases, Teaching, True Contracts | Permalink | Comments (0)
Saturday, April 1, 2017
"Discovery Rule" Doesn't Apply to Entertainment Company's Failure to Investigate a Known Breach
Here are the logos together, in happier times, from one of the movies at issue in this case, Henry Poole Is Here
A recent case out of California, Camelot Pictures LLC v. Lakeshore Entertainment Group, LLC, B269430, gives us a nice run-down on statute of limitations in contracts cases, in that state at least. The case involves breaches of "Equity Term Sheets" between two entertainment companies involved in making together the movies Pathology and Henry Poole Is Here. Unfortunately for Camelot in this case, it raised the issue of these breaches by Lakeshore too late.
Camelot sued Lakeshore in November 2013 and eventually won an award in excess of $300,000. The problem, though, was, as Lakeshore argued on appeals, Camelot's claim was outside the four-year statute of limitations governing breaches of contract in California. And the appellate court agreed.
The appellate court provided a summary of how the statute of limitations works for breaches of contract in California. Generally, the cause of action is considered to have accrued at the time of the breach, "regardless of whether any substantial damage is apparent or ascertainable." However, in "certain, limited circumstances," the accrual-on-breach rule can be replaced by the "discovery rule," which provides that breaches that are "committed in secret" and whose harm is not "reasonably discoverable" will be considered to have accrued on the date of the discovery of the breach, not the date the breach occurred.
The trial court found that the discovery rule applied, and that Camelot had not discovered Lakeshore's breaches until the summer of 2011, within the statute of limitations period. That date was the date on which Camelot was advised by a consultant that Lakeshore's alternate accounting methodology was not beneficial to Camelot. However, Camelot had known that Lakeshore was using an alternate accounting methodology--in violation of the Equity Term Sheets--since December 2008. On that date, Camelot explicitly raised the fact that Lakeshore was not complying with the terms of the Equity Term Sheets. Camelot simply failed to pursue this lack of compliance for several years. Lakeshore's breach was therefore not "committed in secret" such that the discovery rule should apply. Indeed, Camelot admitted that it knew about the breach as soon as Lakeshore committed it; Lakeshore made no efforts to conceal it. Camelot did not know the impact of that breach until much later, but it could have discovered the impact much sooner, had it employed a consultant sooner than three years later to look into Lakeshore's conduct. Therefore, the trial court's judgment for Camelot was reversed.
April 1, 2017 in Film, Recent Cases, True Contracts | Permalink | Comments (1)
