ContractsProf Blog

23andMe decides to exercise its right to do pretty much whatever it wants with your DNA

23andMe, one of the services that takes your saliva and analyzes your DNA for you, has announced a partnership with GlaxoSmithKline to use its DNA database to develop targeted drugs. I've written before about the fairly broad consent Ancestry.com's similar home DNA service elicited under its terms and conditions, which 23andMe also enjoyed. According to the article, 23andMe considers itself to have gained consent from its users, and is allowing users to opt out if you wish. 

I think most of us have little problem with our DNA being used to find cures for terrible diseases and afflictions. If my DNA could be used to cure cancer, I am happy to line right up. (And, in fact, when my father had cancer, we did provide express consent to his doctors for us to assist in their DNA research.) But I think most of us, if asked, would have said something like, "I want my DNA to be used to cure cancer so people with cancer can be cured." 

However, the way the pharmaceutical industry works in this country, that's not exactly what happens. The cure, as we know because we talk about health insurance A LOT, is then available to those who can afford it. Many of Wikipedia's drug entries keep track of the cost of pharmaceuticals in the U.S. against the cost of producing the drug, as can be seen here. So I don't want to sound like a terrible person trying to stall progress, but, well, the users in the database paid to use 23andMe, and now their DNA is being sold to a pharmaceutical company, so 23andMe has now made money off of the DNA twice, and then it's going to get used to develop into medications that will then be sold again, back to the people who need the medications, who may be the same people whose DNA was used to develop the drug. At that point your DNA has been profited off of three times, and never by you, and possibly twice at your own personal expense. And, if history is anything to go by, that pharmaceutical is your DNA coming back to you at a tremendous mark-up. So you could find yourself in a position where you paid to have a pharmaceutical company take your DNA, turn it into the drug that could save your life, and then ask you to pay, again, much more money than you have, to gain access to the drug. You paid to donate your DNA so they could charge you for the benefits it provides. And, according to the terms and conditions, you consented to that. 

Waiver as a shield, not a sword

It's the time of year when I start thinking about the fact that I should be thinking about my fall classes, and right on cue, here's a case out of the Seventh Circuit, Knopick v. Jayco, Inc., No. 17-2285, that's thoughtful about how waiver works and the policy underlying it. (You can listen to the oral argument here.)

The waiver portion of the case (there was also a jurisdictional issue) involved a warranty that stated it did not apply to RVs purchased by LLCs. The RV in question was purchased by an LLC. Therefore, under the unambiguous language of the warranty, the RV was not covered. However, Knopick argued that Jayco waived this exclusionary language of the warranty when it voluntarily performed some repairs to the RV as if the warranty applied. The warranty, though, had an additional clause stating that such "good will" repairs would not alter the exclusionary language of the warranty. 

Even without that language, the court was skeptical that waiver could be used to achieve what Knopick wanted here. The court noted that waiver is ordinarily used as a "shield" to excuse non-performance. It's used so that a party cannot be "lulled" into a belief that its compliance is sufficient to fulfill a contractual obligation only to be surprised by a lawsuit for inadequate compliance later. Knopick, the court said, was trying to use waiver as a "sword." Rather than protecting himself, he wished to use it to compel performance by Jayco. The court, wary of expanding waiver because of how greatly it would damage the predictability of contracts, stated that it was unwilling to use the doctrine of waiver to compel Jayco, as such an action would have the effect of discouraging parties from "good faith" actions such as that undertaken by Jayco for fear of opening themselves up to expanded liability. 

h/t to Timothy Murray of Murray, Hogue & Lannis for passing this one along!

 

Weekly Top Ten SSRN Contracts & Commercial Law Downloads (July 21, 2018)

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 22 May 2018 - 21 Jul 2018

Rank	Paper	Downloads
1.	Data Pollution Omri Ben-Shahar University of Chicago Law School	218
2.	Legal Engineering on the Blockchain: 'Smart Contracts' as Legal Conduct Jake Goldenfein and Andrea Leiter Swinburne University of Technology - Swinburne Law School and University of Melbourne, Law School	195
3.	The Persistence of 'Dumb' Contracts Jeffrey M. Lipshaw Suffolk University Law School	166
4.	Not-So-Smart Blockchain Contracts and Artificial Responsibility Adam J. Kolber Brooklyn Law School	110
5.	Equity as Supplemental Law Paul B. Miller Notre Dame Law School	101
6.	Force Majeure and Excuses in Smart Contracts Eric Tjong Tjin Tai Tilburg Law School	100
7.	Behavioral Law and Economics - Introduction Eyal Zamir and Doron Teichman Hebrew University of Jerusalem - Faculty of Law and Hebrew University of Jerusalem - Faculty of Law	96
8.	Granular Legal Norms: Big Data and the Personalization of Private Law Christoph Busch and Alberto De Franceschi University of Osnabrück - European Legal Studies Institute and University of Ferrara - Faculty of Law	92
9.	Personalizing Mandatory Rules in Contract Law Omri Ben-Shahar and Ariel Porat University of Chicago Law School and Tel Aviv University	90
10.	The Impact of the French Doctrine of Significant Imbalance on International Business Transactions David Restrepo-Amariles, Eva Mouial Bassilana and Matteo Winkler HEC Paris - Tax & Law, Université Côte d'Azur and HEC Paris	79

 

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 22 May 2018 - 21 Jul 2018

Rank	Paper	Downloads
1.	Data Pollution Omri Ben-Shahar University of Chicago Law School	218
2.	The Persistence of 'Dumb' Contracts Jeffrey M. Lipshaw Suffolk University Law School	166
3.	Force Majeure and Excuses in Smart Contracts Eric Tjong Tjin Tai Tilburg Law School	100
4.	The Evolution of Good Faith in Western Contract Law Samuel Martin Yeshiva University, Benjamin N. Cardozo School of Law, Students	91
5.	Personalizing Mandatory Rules in Contract Law Omri Ben-Shahar and Ariel Porat University of Chicago Law School and Tel Aviv University	90
6.	The Impact of the French Doctrine of Significant Imbalance on International Business Transactions David Restrepo-Amariles, Eva Mouial Bassilana and Matteo Winkler HEC Paris - Tax & Law, Université Côte d'Azur and HEC Paris	79
7.	Freedom, Choice, and Contracts Hanoch Dagan and Michael Heller Tel Aviv University - Buchmann Faculty of Law and Columbia University - Columbia Law School	79
8.	Contract Law and the Common Good Brian Bix University of Minnesota Law School	73
9.	Breach of Contract and Damages for Non-Pecuniary Loss Katarzyna Kryla-Cudna Tilburg University - Private Law Department	62
10.	Why the Equity of Redemption? D.P. Waddilove Harvard Law School	59

Court finds a no-media clause contrary to public policy

A recent case out of the Southern District of New York, Garcia v. Good for Life by 81, Inc., 17-CV-07228 (BCM) (behind paywall), is an examination of a settlement agreement implicating the Fair Labor Standards Act ("FLSA"). It's interesting for the language it's willing to approve vs. the language it says should not be contained in the agreement. 

First, the court expresses concern about the contract's releases being overly broad and rewrites them, concerned that the language as written would have attempted to bar claims by a "second cousin once removed." Upon revision, the court is comfortable with the releases, but the court declares unenforceable the no-assistance and no-media provisions. The court finds it a violation of the FLSA to bar the plaintiff from assisting other individuals who might have a claim against the employer. The court also states that the effective "partial confidentiality clause" preventing the plaintiff from contacting the media is "contrary to well-established public policy." I found this last ruling especially interesting in our age of widepsread NDAs, which I've blogged about a bunch. I agree that such a clause would "prevent the spread of information" in a way that would be harmful to other wronged victims trying to vindicate their rights; we should keep talking about that when it comes to NDAs. 

Surprise Charges for Emergency Room Services… Once Again

I blogged about the issue of emergency room and hospital “surprise charges” before, but this important issue is well worth re-addressing in the context of a new case.  Many court decisions and articles are still generated about the topic, but with no good solution yet from a patient/consumer point of view.

Here is the classic scenario: A person receives urgent medical care in an emergency room.  Upon admission, he or she is presented with a contract stating, for example, that he or she will pay for the services “in accordance with the regular rates and terms” of the hospital or emergency room.  But how does one ever know what those charges will be?  Does that make them an open price term?  If so, is the medical provider under an obligation to pay only the reasonable value of the services provided or can they charge pre-posted list rates?  Who decides what is “reasonable” and not in a market marked by, for most of us, very high prices?  If the provider charges what appears to be a very high amount, is the entire contract void for unconscionability?

A current case I came across addresses these issues (class certification was granted).  The uninsured “self-pay” patient, Mr. Cesar Solorio, signed a three-page admissions contract stating the above.  Once released, he got an un-itemized bill for $7,812.  He filed suit for breach of contract asking the court to, among other things, clarify how the contractual language “in accordance with the regular rates and terms of  [medical center] should be interpreted and applied.  Mr. Solorio alleges that the language constitutes an open price term that, under applicable law, is an agreement to pay only the reasonable value of the items received and not the posted rates by the medical center. Solorio also alleges that the medical charges were artificially inflated and more than four times higher than the actual fees and charges collected by the medical center. 

I still find these types of contracts highly problematic seen from a consumer/patient point of view. I have myself been subjected to a similar treatment (so to speak) by an emergency room that also, after the fact, sent me a much higher bill than what I was initially “promised” (orally and probably non-binding, but still).  Several items were double if not triple billed.  Patients can complain and complain, but what can we really do?  Not much, it seems, as these types of cases keep re-appearing. 

Yes, of course we want urgent medical treatment if we need it.  Yes, that is expensive.  But clearly, we also have a contractual (and moral) right notto be ripped off.  And maybe some services that might initially seem urgent could actually wait… In my own case and, I know, that of many others, medical providers are very eager to promote their treatment as highly necessary and urgent/”a good idea.”  That may, I hate to say, simply be a way for the medical providers to make more money.

As it is now, the burden seems to be on the patient seeking services to bargain for and document having received a promise that is limited in scope to … what?  Is this just an impossible issue to solve from a contractual point of view?  It seems to be.  That’s where health insurance comes into play, but reality remains that not everyone has that.  The “free market” takes over, but, in my opinion, that is far from optimum in this particular context.

The case is Cesar Solorio v. Fresno Community Hospital and Medical Center, Ca. Super. Ct. NO. 15CECG03165, 2018 WL 3373411. 

Termination for any reason at all means that you can terminate for, well, any reason at all

A recent decision out of Ohio, Whitt v. The Vindicator Printing Company, Case No. 15 MA 0168, discusses the limits of the implied covenant of good faith and fair dealing. In the case, the contract contained a provision permitting termination of the contract for "malfeasance . . . , or at the will of either party for any reason or no reason" upon thirty days written notice. Vindicator terminated the contract with Whitt after an altercation between Whitt and a temp employee working for Vindicator. Whitt sued for, among other things, breach of contract, complaining that Vindictor had wrongfully terminated the contract only seven months into its three-year term. Whitt alleged that Vindictor violated the implied covenant of good faith and fair dealing because it terminated the contract after Whitt was a victim of criminal assault at the hands of Vindicator's employee. 

The court noted, though, that the requirement of good faith should not give a court the ability to second-guess decisions made within the context of the contract. The termination provision of the contract did not require just cause, which was what Whitt was trying to read in. Rather, the contract permitted Vindicator to terminate it for no reason whatsoever, so the exact circumstances of the termination did not matter. 

I think many people assume that contracts provide a level of reliability and predictability that doesn't exist if those contracts permit termination for any reason, or for no reason. I think Whitt assumed that this contract would stay in effect unless he did something terrible, but that's not how the termination clause was worded. 

(h/t to D. C. Toedt for the free link!)

A dispute along the shores of Lake George

We went to Lake George on vacation a couple of times when I was a kid, so I am blogging this recent case out of New York, Edscott Realty Corp. v. LaPlante Enterprises, Inc., 61356, out of a sense of nostalgia. Also it's another ambiguity case, and I always find those interesting and instructive for thinking about things to watch out for. 

The parties operate two adjacent hotels on the shores of Lake George. In 1999, the parties had a dispute over water access that was eventually resolved in 2002 by dividing up the water according to a fence line "continued out into the waters of Lake George in an easterly direction along said course." The waters north of the fence line were reserved for the plaintiff and the waters south for the defendant. 

The parties are now disputing, among other things, the meaning of this division. The plaintiff alleged that it limits both the actual berthing of boats on the wrong side of this line plus ingress and egress to navigate into those berths. The defendant alleged that it pertains only to the berthing of boats and does not limit the navigation of boats on Lake George. The court found that there was an ambiguity as to how far out into Lake George the parties had stipulated their rights to extend, and so refused to award summary judgment on the issue. 

How does a "deemed effective" date affect a non-compete?

A recent case out of New York, Niznick v. Sybron Canada Holdings, Inc., 650726/2018, illustrates how ambiguity can crop up anywhere, sometimes no matter how careful you are; it's difficult to plan for every eventuality. 

The parties had a contract that included a non-competition clause that prohibited competition for five years after Niznick ceased to own any units in the company. Sybron tried to exercise an option to purchase Niznick's units in the company in 2014, but Niznick disputed the validity of Sybron's actions, and the parties engaged in litigation. Eventually, a court concluded that Sybron was permitted to exercise the option and that Niznick's ownership interest terminated as of the 2014 date when Sybron had attempted to exercise its option. After this decision, in 2017, the parties entered into a purchase and sale agreement "deemed to be effective as if the transfer" had occurred in 2014. Niznick also asserted that, therefore, the non-competition clause would expire in 2019--five years after the 2014 date. Sybron contested that reading. 

The parties' previous contracts had referred to the non-compete as "a material part of the consideration" of the agreement. The court, therefore, did not allow Niznick's attempt to minimize its importance. The purchase and sale agreement executed in 2017 stated that Niznick "is the owner" of the units in question (emphasis added). The "deemed to be effective" date was not considered to alter the language of the non-compete, which stated that it would commence when Niznick ceased to own units, which did not happen until the 2017 purchase and sale agreement, regardless of the "deemed effective" date. 

At the time of drafting the non-compete, it was probably thought that it would be pretty clear when Niznick ceased to own the units. Sybron probably did not anticipate that they would have a dispute about the operative date this way. 

 

Weekly Top Ten SSRN Contracts & Commercial Law Downloads for July 12, 2018

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 13 May 2018 - 12 Jul 2018

Rank	Paper	Downloads
1.	Data Pollution Omri Ben-Shahar University of Chicago Law School	204
2.	Legal Engineering on the Blockchain: 'Smart Contracts' as Legal Conduct Jake Goldenfein and Andrea Leiter Swinburne University of Technology - Swinburne Law School and University of Melbourne, Law School	184
3.	The Stakes of Smart Contracts Mark Verstraete University of Arizona - James E. Rogers College of Law	176
4.	The Persistence of 'Dumb' Contracts Jeffrey M. Lipshaw Suffolk University Law School	132
5.	Force Majeure and Excuses in Smart Contracts Eric Tjong Tjin Tai Tilburg Law School	96
6.	Equity as Supplemental Law Paul B. Miller Notre Dame Law School	94
7.	Not-So-Smart Blockchain Contracts and Artificial Responsibility Adam J. Kolber Brooklyn Law School	90
8.	Personalizing Mandatory Rules in Contract Law Omri Ben-Shahar and Ariel Porat University of Chicago Law School and Tel Aviv University	86
9.	Granular Legal Norms: Big Data and the Personalization of Private Law Christoph Busch and Alberto De Franceschi University of Osnabrück - European Legal Studies Institute and University of Ferrara - Faculty of Law	80
10.	The Impact of the French Doctrine of Significant Imbalance on International Business Transactions David Restrepo-Amariles, Eva Mouial Bassilana and Matteo Winkler HEC Paris - Tax & Law, Université Côte d'Azur and HEC Paris	74

 

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 13 May 2018 - 12 Jul 2018

Rank	Paper	Downloads
1.	Data Pollution Omri Ben-Shahar University of Chicago Law School	204
2.	The Stakes of Smart Contracts Mark Verstraete University of Arizona - James E. Rogers College of Law	176
3.	The Persistence of 'Dumb' Contracts Jeffrey M. Lipshaw Suffolk University Law School	133
4.	Force Majeure and Excuses in Smart Contracts Eric Tjong Tjin Tai Tilburg Law School	96
5.	The Evolution of Good Faith in Western Contract Law Samuel Martin Yeshiva University, Benjamin N. Cardozo School of Law, Students	89
6.	Personalizing Mandatory Rules in Contract Law Omri Ben-Shahar and Ariel Porat University of Chicago Law School and Tel Aviv University	86
7.	The Impact of the French Doctrine of Significant Imbalance on International Business Transactions David Restrepo-Amariles, Eva Mouial Bassilana and Matteo Winkler HEC Paris - Tax & Law, Université Côte d'Azur and HEC Paris	74
8.	Contract Law and the Common Good Brian Bix University of Minnesota Law School	70
9.	The Mistake About Mistakes: Rethinking Partial Restitution Maytal Gilboa and Yotam Kaplan Tel Aviv University and Bar-Ilan University - Faculty of Law	65
10.	Breach of Contract and Damages for Non-Pecuniary Loss Katarzyna Kryla-Cudna Tilburg University - Private Law Department	61

 

14th Annual International Conference on Contracts (KCON XIV)

As you may recall, the 14th Annual International Conference on Contracts (KCON XIV) will be held at Tulane University Law School on March 8 and 9, 2019.  The conference website is now active, although we will not start accepting conference registrations and payments until August.  The website does, however, contain a call for papers and proposals, as well as a variety of general information (including information on accommodations).  To reach the website, click here.  

If you have questions or encounter problems, please e-mail me (off list) at [email protected].  We look forward to seeing you in New Orleans next March.

Passport Issuance Not a Contractual Activity

Perhaps unsurprisingly, the Seventh Circuit Court of Appeals has held that a nation state issuing a passport to one of its citizens cannot be sued for breach of contracts or a tort, for that matter.

Chinyere Nwoke sued the a consulate of Nigeria after paying $500 for passports for her and her son that she never received.  Arguing breach of contract, the district court dismissed her claim under the Foreign Services Immunity Act.  On appeal, Ms. Nwoke invoked the exception for acts “based upon a commercial activity.” 

A foreign state is immune for federal jurisdiction for its “sovereign or public acts,” but not its acts that are “private or commercial in nature.”  Ms. Nwoke argued that the consulate’s actions were commercial because it was “making a profit from a fraudulent activity” (presumably charging for passports never actually issued).  However, courts do not consider a nation state’s motivation in determining whether an activity is sovereign or commercial.  Because private persons cannot issue passports, the consulate’s activities were of a sovereign nature and immunity thus applied.

This case makes sense, but is of course nonetheless unfortunate for Ms. Nwoke, whose only channel of complaint now seems to be to the government of Nigeria; a case of complaining to the very wrongdoer that oversaw the wrong. Government corruption remains a serious issue around the world.  

The case is Nwoke v. Consulate of Nigeria, 2018 WL 3216888

Weekly Top Ten SSRN Contracts & Commercial Law Downloads for July 6, 2018

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 07 May 2018 - 06 Jul 2018

Rank	Paper	Downloads
1.	Data Pollution Omri Ben-Shahar University of Chicago Law School	196
2.	Legal Engineering on the Blockchain: 'Smart Contracts' as Legal Conduct Jake Goldenfein and Andrea Leiter Swinburne University of Technology - Swinburne Law School and University of Melbourne, Law School	173
3.	The Stakes of Smart Contracts Mark Verstraete University of Arizona - James E. Rogers College of Law	164
4.	Teaching Fairness to Artificial Intelligence: Existing and Novel Strategies Against Algorithmic Discrimination Under EU Law Philipp Hacker Humboldt University of Berlin	154
5.	Secured Transactions and IP Licenses: Comparative Observations and Reform Suggestions Andrea Tosato University of Nottingham - School of Law	150
6.	The Interpretation and Effect of Permissive Forum Selection Clauses Under U.S. Law Hannah L. Buxbaum Indiana University Bloomington Maurer School of Law	135
7.	Force Majeure and Excuses in Smart Contracts Eric Tjong Tjin Tai Tilburg Law School	92
8.	Equity as Supplemental Law Paul B. Miller Notre Dame Law School	90
9.	Collateral Damage: Brexit's Negative Effects on Regulatory Competition and Legal Innovation in Private Law Horst Eidenmueller University of Oxford	88
10.	Contract and Consumer Law Vanessa Mak Tilburg Law School	83

 

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 07 May 2018 - 06 Jul 2018

Rank	Paper	Downloads
1.	Data Pollution Omri Ben-Shahar University of Chicago Law School	196
2.	The Stakes of Smart Contracts Mark Verstraete University of Arizona - James E. Rogers College of Law	164
3.	Secured Transactions and IP Licenses: Comparative Observations and Reform Suggestions Andrea Tosato University of Nottingham - School of Law	150
4.	A Duty to ‘Save’ Seemingly Non-Compliant Tenders for Public Contracts? - Comments on Art 72 of the 2017 Portuguese Code of Public Contracts Albert Sanchez-Graells University of Bristol - School of Law	146
5.	The Interpretation and Effect of Permissive Forum Selection Clauses Under U.S. Law Hannah L. Buxbaum Indiana University Bloomington Maurer School of Law	135
6.	Force Majeure and Excuses in Smart Contracts Eric Tjong Tjin Tai Tilburg Law School	92
7.	The Evolution of Good Faith in Western Contract Law Samuel Martin Yeshiva University, Benjamin N. Cardozo School of Law, Students	86
8.	Contract and Consumer Law Vanessa Mak Tilburg Law School	83
9.	Personalizing Mandatory Rules in Contract Law Omri Ben-Shahar and Ariel Porat University of Chicago Law School and Tel Aviv University	81
10.	The Impact of the French Doctrine of Significant Imbalance on International Business Transactions David Restrepo-Amariles, Eva Mouial Bassilana and Matteo Winkler HEC Paris - Tax & Law, Université Côte d'Azur and HEC Paris	73

Classic Case on Choice of UCC or Common Law

A recent Indiana case demonstrates the continued necessity of distinguishing between the common law and the UCC.  Nothing too new in the case legally as I see it, but it lends itself well to classroom use.

A medical center entered into two contracts with a medical billing services company for records-management software and related services.  In Indiana and elsewhere, “where a contract involves the purchase of preexisting, standardized software, courts treat it as a contract for the sale of goods governed by the UCC.  However, to determine whether the UCC applies to a mixed contract for both goods and services, Indiana uses the “predominant thrust test.”  Courts ask whether the predominant thrust of the transaction is the performance of services with goods incidentally involved or the sale of goods with services incidentally involved. Id. To determine whether services or goods predominate, the test considers (1) the language of the contract; (2) the circumstances of the parties and the primary reason they entered into the contract; and (3) the relative costs of the goods and services.

In the case, the contractual language was neutral.  Next, the primary reason for executing the agreements was to obtain billing services.  The software was merely a conduit to transfer claims data to the billing services company in order to allow it to perform those services.  The goods – the software – were incidental.  The third and final factor—the relative cost of the goods and services—also pointed toward that conclusion.  As the Indiana Supreme Court has explained, “[i]f the cost of the goods is but a small portion of the overall contract price, such fact would increase the likelihood that the services portion predominates.”  Under the agreement, the medical center paid a one-time licensing fee of $8,000 for software; a one-time training fee of $2,000; and $224.95 each month for services and support for about nine years.  Thus, for the life of the Practice Manager agreement, the services totaled approximately $26,294—more than three times the $8,000 licensing fee for the software.  Under the agreement, the medical center also paid a one-time licensing fee of $23,275 for the software; a one-time training fee of $4,000; and $284 per month for services and support for about six years.  Thus, the services totaled about $24,448—slightly more than the $23,275 software licensing fee. The relative-cost factor reinforces the conclusion that services predominated.  Thus, the ten-year common-law statute of limitations and not the four years under the UCC applied.

Interestingly, the case also shows that because the UCC did not apply, plaintiff’s claim for good faith performance under the UCC dropped out too.  In Indiana, a common-law duty of good faith and fair dealing arises “only in limited circumstances, such as when a fiduciary relationship exists,” which was not the case here.  The parties were thus not under a duty to conduct their business in good faith. Yikes!  This should allow for some good classroom discussions.

The case is Pain Center of SE Indiana LLC v. Origin Healthcare Solutions LLC. 

Pleading breach of contract adequately

Here's a short case out of the District of New Jersey, Hall v. Revolt Media & TV, LLC, Civil Action No. 17-2217 (JMV) (MF), in which the plaintiff failed to adequately plead his breach of contract claim. I'm blogging it because I don't spend a lot of time teaching my students about complaint-drafting; there are always just so many other things I'm quickly trying to discuss. But this case strikes me as a nice straightforward way to talk about it. The claim fails because all of the plaintiff's allegations were about contract negotiations: He contacted the defendant to discuss a contract, he sent the defendant a contract that was never signed, he continued to attempt to contact the defendant to negotiate the contract, etc. The court said there was never an allegation that any contract had actually been finalized. Nor did the complaint contain any details about the terms of the contract, such that the court could not tell what had allegedly been breached. I think this can be used as a way to focus the students on what they do need to be sure to include in breach of contract allegations. 

And being sure to also plead promissory estoppel would be a good idea. The complaint did adequately plead unjust enrichment, so this case can act as a good way to teach the distinctions of that cause of action as well. 

An "exceedingly rare" case where a court discounted testimony, relying in part on the witness's admitted "habit of routinely lying" in the course of business

A recent case out of Michigan, Strategy and Execution Inc. v. LXR Biotech LLC, No. 337105, speaks to the perils of not putting agreements in writing (or doing so and subsequently losing the writing). The parties had a written contract that stated that they would arrive at performance criteria at a later time. But the parties disputed ever entering into a later agreement over the performance criteria. No party produced any written document. LXR's principal testified that the parties reached an oral agreement that he memorialized in writing but the writing was later lost. However, this testimony was not corroborated by any other witness except for one who gave "conflicting testimony" regarding the document. LXR's principal had admitted to "routinely lying" because he apparently thought it to be "good business practice." Furthermore, none of the "voluminous" emails exchanged between the parties ever referenced any agreement on the performance criteria. The court therefore agreed that "this is one of the exceedingly rare cases in which a witness's testimony is insufficient to find a jury question." Despite the testimony, the court was permitted to enter a directed verdict on the breach of contract claim. 

Written contracts are not always required, but this case is an example of why they are often desirable to have, and to keep safe!

(There were other points of appeal in the case relating to other clauses of  the contract and some jury instruction issues.)