Tuesday, June 30, 2020
Tuesday Top Ten - Contracts & Commercial Law Downloads for June 30, 2020
Top Downloads For:
Contracts & Commercial Law eJournalRecent Top Papers (60 days)
As of: 01 May 2020 - 30 Jun 2020| Rank | Paper | Downloads |
|---|---|---|
| 1. | 2,166 | |
| 2. | 533 | |
| 3. | 377 | |
| 4. | 282 | |
| 5. | 229 | |
| 6. | 164 | |
| 7. | 156 | |
| 8. | 152 | |
| 9. | 132 | |
| 10. | 130 |
Top Downloads For:
Law & Society: Private Law - Contracts eJournalRecent Top Papers (60 days)
As of: 01 May 2020 - 30 Jun 2020| Rank | Paper | Downloads |
|---|---|---|
| 1. | 377 | |
| 2. | 282 | |
| 3. | 229 | |
| 4. | 132 | |
| 5. | 130 | |
| 6. | 123 | |
| 7. | 98 | |
| 8. | 94 | |
| 9. | 78 | |
| 10. | 78 |
June 30, 2020 in Recent Scholarship | Permalink | Comments (0)
Are the User Contracts of Google and Facebook Illegal? - Guest Post by Preston Torbert
Today we have a guest post by Preston Torbert, Lecturer at the University of Chicago Law School and Visiting Professor at the Peking University School of Transnational Law. This is an excerpt from a much longer article, “Because It Is Wrong: An Essay on the Immorality and Illegality of the Online Service Contracts of Google and Facebook” available here.
Are the user contracts of Google and Facebook illegal?
June 30, 2020 in Commentary, Miscellaneous | Permalink | Comments (0)
Monday, June 29, 2020
Hoffman and Hwang on The Social Cost of Contracts
Professors David Hoffman and Cathy Hwang have posted a new article, The Social Cost of Contracts, which argues that the current pandemic may pose certain special problems for contract law:
Sometimes, private parties’ performance of their contracts greatly increases the negative externalities borne by the public, in ways no one contemplated when the contract was formed. In the past, when the public’s share of the burden has increased dramatically, particularly in the case of disease, courts have sometimes declined to enforce contracts as written. Instead, courts have reformed contracts to ensure that the burden borne by society is acceptable. The coronavirus pandemic is another moment when ordinary contracts may become extraordinarily risky for the public. Gatherings—which some contractng parties have not canceled due to a fear of lost deposits, for instance—have caused clusters of viral spread in many communities. Now infamous examples include a corporate conference in Massachusetts a funeral and subsequent birthday party in Chicago, a church service in a suburb of Seoul, and a choir practice in Washington state, which have all been identified as events that caused widespread disease. Contracts for future performance—like the residential housing agreements signed by many college students today—would bring people together into close proximity and could spread disease.
This Essay makes two contributions to the literature. The first is theoretical. Building on literature in contracts, contract design, and other fields, it shows how the public participates in private contracting. It focuses particularly on the final gatekeeping function of courts, which usually enforce—but can reform—contracts.
The second contribution is practical. In extraordinary times, courts sometimes do not enforce contracts as written, in an effort to protect public health. Instead, courts turn to half-loaf and compromise solutions, including contract reformation and more equitable damage remedies. When deciding whether to perform contracts—or to hold counterparties to performance— parties should realize that previous courts can and have embraced compromise, rather than rote enforcement. Newly dominant modes of dispute resolution make such solutions more likely than ever.
The article is full of interesting cases and examples and – unusual for a law review article – fun to read! With references to Dave Sedaris, how could it not be fun?
I think the authors are spot on at least if this case is any indication, although I think that the “social cost” calculus will change as the situation (public health and economic) evolves.
June 29, 2020 in Recent Scholarship | Permalink | Comments (0)
Supreme Court of Canada Finds Uber's Arbitration Agreement Unconscionable
David Heller, the plaintiff in Uber Technologies, Inc. v. Heller is an Uber driver who provides food delivery services in Toronto. When he signed up to work for Uber, Mr. Heller was required to sign Uber's services agreement, which provided for dispute resolution through mediation and arbitration in the Netherlands. We looked it up. The Netherlands is far away from Toronto. It's a different country entirely. In addition, in order to participate in the Dutch arbitration process, Mr. Heller would have to pay administrative and filing fees of US$14,500, plus whatever other costs he would incur in connection with the proceeding. The fees alone would come to about 2/3 of Mr. Heller's annual income. The arbitration fee might as well be $1 million.
In 2017, Mr. Heller initiated a class action suit against Uber (right), alleging violation of Canadas Employment Standards Act (ESA). Uber moved to stay the litigation in favor of Dutch Arbitration. Mr. Heller responded that the arbitration provision was unconscionable and that it attempts to contract around mandatory provisions of the ESA. The trial court granted Uber's motion, leaving it to the Dutch arbiter to determine the issue of unconscionability. The Court of Appeal reversed, noting that Mr. Heller would never get such a determination if he could not afford the cost of the arbitration. By a vote of 8-1, the Supreme Court of Canada agreed wit the Court of Appeal.
The Court's finding of unconscionability focused on two aspects of Uber's services agreement. First, the agreement imposes prohibitive fees for initiating arbitration. Second, those fees are hidden in the fine print of a complex contract of adhesion.
Speaking of hidden terms, the Court buries in paragraph 50 of its 100-paragraph majority opinion the following hint to future corporate litigators:
If Uber had adduced evidence of Dutch law, then under the two exceptions to arbitral referral recognized in Dell, this Court would have had to grant the stay in favour of an arbitrator determining the unconscionability argument.
If I am reading this correctly, Uber would have won if it had insisted on its choice of law clause, which specified that its services agreement applicable in Toronto is to be governed by Dutch law. Welcome to the gig economy, Mr. Heller.
The Court then proceeded to apply Canada's law of unconscionability to the agreement between Uber and Mr. Heller. The Court found that both elements of the Canadian test for unconscionability were met. There was a clear inequality of bargaining power, and the arbitration clause was clearly improvident.
The lone dissent sounded in theories of freedom of contract.
June 29, 2020 in Labor Contracts, Recent Cases | Permalink | Comments (0)
Sunday, June 28, 2020
Weekend Frivolity: Private Ordering and Threats of Violence at Trader Joe's
Is there a market in line holding that could be exploited here?
June 28, 2020 in Miscellaneous | Permalink | Comments (0)
Friday, June 26, 2020
Concluding Guest Post by Joshua Silverstein on Bostock
HOUGHTS REGARDING BOSTOCK V. CLAYTON COUNTY, THE U.S. SUPREME COURT DECISION HOLDING THAT TITLE VII PROHIBITS DISCRIMINATION BASED ON SEXUAL ORIENTATION AND TRANSGENDER STATUS.
Final Guest Post (for now) by Joshua Silverstein (left)
Part I is here.
Part II is here.
Part III is here.
Part IV is here.
Part V: Textualism vs. Original Expected Application and Some Concluding Thoughts.
There is one other argument in Bostock that warrants analysis. The defendants and Justice Alito (below, right) contend that no person in 1964 and for many years after anticipated that Title VII bars employment discrimination based on sexual orientation and transgender status. Maj. Op. at 23, 26; Alito Dis. at 4, 6, 33, 35. But statutes (and constitutional provisions) are regularly applied beyond the scope of circumstances “expressly anticipated” by the enactors, especially when the statute is broadly written, as is the case with most civil rights laws. Maj. Op. at 24, 30. And Title VII in particular “has repeatedly produced unexpected applications,” including results that were long rejected by the courts before being accepted. Maj. Op. at 29-30. For example, courts denied claims of sexual harassment brought under Title VII for years before finally concluding that sexual harassment in indeed unlawful under the statute. There is thus nothing that unusual about federal courts finally realizing today that Title VII bans discrimination based on sexual orientation and transgender status as forms of sex discrimination after rejecting that position for more than five decades. And to find otherwise by relying on the expectations of the enactors and/or the public at large “seeks to displace the plain meaning of the law in favor of something lying beyond it,” Maj. Op. at 26, which is improper under textualist statutory interpretation.
The idea that a law can apply in ways that a legislature could never have intended or in ways the public could not have foreseen strikes some people as surprising. But it is a natural feature of any practice employing general rules of conduct, including both law and games.
Consider a very simple example. Suppose a state legislature passes a law saying that all buildings made of concrete are entitled to a tax break. Suppose further that the legislature and every citizen in the state is absolutely convinced at the time of enactment that there are only fifteen concrete buildings in the state. Thus, they all expect the tax break to apply exclusively to the fifteen existing concrete buildings. Five years after the law is passed, another building is discovered that was made of concrete. Everyone missed it previously because the building was constructed decades ago and the concrete was covered by a metal sheath that was subsequently removed. Under the language of the statute, the owners of that building are entitled to the tax break. And the fact that the legislature and the populace never expected any other concrete buildings to receive the tax break is simply irrelevant.
Here is a more sophisticated example. The 14th amendment to the U.S. Constitution, which provides that all persons are entitled to equal protection of the laws, generally bars racial discrimination. But the drafters of the amendment believed that this prohibition did not bar racially segregated schools. Indeed, the very same Congress that drafted the 14th Amendment, segregated the schools in Washington DC. This reflected the general understanding of the equal protection clause held throughout the country in 1868. And thirty years later in 1896, the Supreme Court ruled that racial segregation was constitutional in Plessy v. Ferguson. But the Court reversed this decision in Brown v. Board of Education in 1954. Living constitutionalists have no trouble explaining that result because they believe that constitutional text can change in meaning over time. But even originalists, who contend that the meaning of each constitutional provision is fixed at the time of its adoption (much like a statute), generally accept that Brown was correctly decided.
While originalists have developed a number of arguments for why Brown is right under their theory, the one I find most persuasive is analogous to my concrete building example. The drafters of the 14th Amendment, the general American citizenry in the late 1860s, and the Supreme Court in 1896, all believed that the 14th amendment allowed segregated schools not because of the meaning of the words “equal protection of the laws,” but because they believed as an empirical matter that it was possible for racially segregated schools to be equal. How can segregated schools violate equal protection if the schools are in fact equal? By 1954, however, we had learned that, as an empirical matter, racially segregated schools are essentially always unequal. And the Supreme Court expressly relied on social science evidence in arriving at this conclusion in the Brown opinion. The meaning of “equal protection” did not change between 1868 and 1954. Rather, our factual understanding changed, just as in my concrete building example. In the case of racially segregated schools, we learned that separate-but-equal schools are effectively an impossibility. And thus, to treat people of all races equally, as required by the Fourteenth Amendment, segregated schools must be outlawed. Likewise, in the case of tax breaks for concrete houses, we learned that another concrete building existed. Thus, to comply with the law as written, the sixteenth building that no one believed existed must receive the tax break.
The concrete building example and Brown v. Board demonstrate a basic point about statutory and constitutional interpretation: laws can apply in ways never contemplated by the enactors and society at large because those persons were mistaken about key facts relating to the law. In these types of cases, the meaning of the law doesn’t change. The ordinary meaning of the words is exactly the same at the point of enactment and the subsequent point of application. What changes in the intervening period is our understanding of the facts. Put simply, unchanged legal meaning combined with changed facts often leads to different and unanticipated legal results.
This analysis extends to Bostock and discrimination based on sexual orientation and transgender status discrimination. The mistake Congress, lawyers, judges, and most everyone else made in 1964 (and for decades afterwards) was that we failed to appreciate that, as a conceptual matter, it is impossible to discriminate on the basis of sexual orientation or transgender status without also discriminating on the basis of sex. That is a conceptual mistake rather than an empirical mistake. But a mistake is a mistake, and the impact on legal analysis generally will be the same regardless of the precise type of mistake. To use phrasing that parallels what I wrote in the last paragraph, unchanged legal meaning combined with changed concepts often leads to different and unanticipated legal results. Hence the holding in Bostock.
One might ask in response, how could so many people have missed a conceptual problem like this for so long? See Kav. Dis. at 20 (“Did the Court in all of those sexual orientation cases just miss the obvious answer—and overlook the fact that sexual orientation is actually a form of sex discrimination? That seems implausible.”). The answer is that we make mistakes all the time as a society generally and within the legal system specifically, including over points we now deem obvious. Isn’t it now clear that racially segregated schools can never be equal? We got that one wrong for 90 years. Isn’t it now obvious that sexual harassment is a form of sex discrimination? We got that one wrong for several years too. Universal or nearly universal mistakes are all too common in our culture, particularly when it comes to outsider groups, such as racial minorities and sexual minorities that have faced striking levels of discrimination throughout history.
Indeed, Justice Alito explained that the concept of “gender identity . . . was essentially unknown” in 1964. Alito Dis. at 3. Likewise, he wrote that “in 1964, homosexuality was thought to be a mental disorder, and homosexual conduct was regarded as morally culpable and worthy of punishment.” Alito Dis. at 28; see also Alito Dis. at 28-33 (offering multiple examples of the poor treatment homosexuals have faced in America). Given these points, it would be surprising if America of the last 50 years was not critically mistaken about numerous aspects of sexual orientation and gender identity, including their relationship to sex. And because our understanding of sexual orientation and transgender status is constantly and rapidly evolving, we should expect that many more “obvious” factual and conceptual beliefs concerning these subjects will be overturned in the coming years.
June 26, 2020 in Commentary, Contract Profs, Current Affairs, In the News, Labor Contracts, Recent Cases | Permalink | Comments (0)
Thursday, June 25, 2020
Guest Post by Joshua Silverstein on Bostock, Part IV
THOUGHTS REGARDING BOSTOCK V. CLAYTON COUNTY, THE U.S. SUPREME COURT DECISION HOLDING THAT TITLE VII PROHIBITS DISCRIMINATION BASED ON SEXUAL ORIENTATION AND TRANSGENDER STATUS.
A Guest Post by Joshua Silverstein (left)
Part I is here.
Part II is here.
Part III is here.
Part IV: Supplemental Thoughts Regarding the Majority’s Conceptual Claim About Discrimination Based on Sexual Orientation or Transgender Status.
This post sets forth my own analysis designed to bolster the majority conceptual claim in Bostock that discrimination based on sexual orientation or transgender status necessarily involves discrimination based on sex. To keep today’s discussion to a manageable length, I focus on sexual orientation and largely set aside transgender status.
Let’s start by returning to Justice Gorsuch’s key example. Recall that the defendants and Justice Alito objected to that example by contending that proper analysis requires changing the sex of the employee (from male to female), while preserving the sexual orientation of the employee (homosexual), so that only one characteristic of the employee has been altered rather than two. That means that we must shift from a male attracted to men to a female attracted to women. Notice that while this does keep sexual orientation constant when altering the employee’s sex, it still results in a second change to the employee: the sex of the people the employee is attracted to is different. Under the initial facts, the employee is attracted to men. In the revised facts that we shift to in order to test for but-for causation, the employee is attracted to women. This is an extremely important factual change.
The defendants and Justice Alito assert that changing the sex of the employee in the key example but not changing the sex of the people the employee is attracted to alters two things—both the employee’s sex and the employee’s sexual orientation. The but-for causation test asks whether sex standing alone makes a difference, so we must only change one thing—the sex of the employee. In addition to the majority’s response discussed yesterday, which I find persuasive, my point today is that changing the sex of the employee and keeping sexual orientation constant also alters two things—the employee’s sex and the sex of the people the employee is attracted to.
On the surface this suggests that we have to decide which alteration enables us to better apply the but-for test: (1) change the employee’s sex, but keep the employee’s sexual orientation constant (homosexual), as the defendants and Justice Alito argue, which necessarily also changes the sex of the people the employee is attracted to; or (2) change the employee’s sex, but keep the sex of the people the employee is attracted to constant (men), as the majority initially argues, which necessarily also changes the employee’s sexual orientation. How do we decide? In my view, there is no logical way to do so. But it doesn’t matter. That is because the lack of grounds to decide which way to alter the hypo itself further demonstrates the unavoidable conceptual connection of sex and sexual orientation (and transgender status).
Think about it this way. It is logically impossible to change the sex of the employee in the majority’s key example without changing either the employee’s sexual orientation or the sex of the people the employee is attracted to. In other words, it is impossible to change only the sex of the employee in a hypo that attempts to test whether sex or sexual orientation is the but-for cause of an adverse employment decision. We must also change either the employee’s sexual orientation (and thus not change the sex of the people the employee is attracted to) or the sex of the people the employee is attracted to (and thus not change the sexual orientation of the employee). If sex is that closely connected to sexual orientation—if it is literally impossible to construct an employment discrimination hypothetical involving sex and sexual orientation in which the only fact that gets changed is the sex of the employee—then it should not be surprising that discrimination based on sexual orientation necessarily involves discrimination based on sex. To once again use the majority’s language, sex is “inextricably bound up” with sexual orientation (and transgender status).
Note that I agree with the majority’s concession that “homosexuality and transgender status are distinct concepts from sex.” Maj. Op. at 19. And there certainly isn’t a perfect overlap between the various types of discrimination. Most obviously, not all types of sex discrimination involve sexual orientation or transgender status discrimination. But the majority’s point—correct in my view—is that even though you can have sex discrimination without sexual orientation or transgender status discrimination, you cannot have sexual orientation or transgender discrimination without having sex discrimination. (Think Venn diagrams where discrimination based on sexual orientation or transgender status are circles inside the circle that constitutes sex discrimination.)
Tomorrow’s final post addresses why Title VII can prohibit discrimination based on sexual orientation and transgender status even though no one in 1964 believed that the statute would have this impact.
June 25, 2020 in Commentary, Contract Profs, Current Affairs, In the News, Labor Contracts, Recent Cases | Permalink | Comments (0)
Wednesday, June 24, 2020
Guest Post by Joshua Silverstein on Bostock, Part III
THOUGHTS REGARDING BOSTOCK V. CLAYTON COUNTY, THE U.S. SUPREME COURT DECISION HOLDING THAT TITLE VII PROHIBITS DISCRIMINATION BASED ON SEXUAL ORIENTATION AND TRANSGENDER STATUS.
A Guest Post by Joshua Silverstein (left)
Part I is here.
Part II is here.
Part III: The Dissents’ Response to the Majority’s Conceptual Claim About Discrimination Based on Sexual Orientation or Transgender Status, and the Majority’s Reply.
Unsurprisingly, the defendant-employers in Bostock and both dissents challenge the majority’s conceptual claim that discrimination based on a person being homosexual or transgender is always based on sex as well. Justice Kavanaugh says very little on this point, so between the two dissents, I focus here on Justice Alito’s. Justice Alito (right) offers a number of arguments that sexual orientation and transgender status discrimination do not inherently involve sex discrimination, nearly all of which I find completely unpersuasive (see, e.g., Alito Dis. at 9-10). But one argument has some merit, and it is the same argument offered by the defendants and implied by Justice Kavanaugh. Alito and the defendants assert that the majority’s key example that I discussed in yesterday’s post is invalid. Recall that the majority stated that there is only one difference between the two employees in the hypo: sex. The majority further stated that if we change only the sex of the employee from male to female, the employee would not be terminated, showing that sex is the but-for cause of the dismissal.
The defendants and Justice Alito respond that this is not so; there are actually two differences between the male and female employees in the hypo: (1) sex, and (2) sexual orientation. Alito Dis. at 14-15. Because both employees are attracted to men, the male is homosexual and the female is heterosexual. And if we change the male employee into a female, but leave the employee attracted to men, we are not just changing the employee’s sex from male to female. We are also changing the employee’s sexual orientation from homosexual to heterosexual. “If the aim is to isolate whether a plaintiff’s sex caused the dismissal, the employers stress, we must hold sexual orientation constant—meaning we need to change both his sex and the sex to which he is attracted.” (emphasis added)). Maj. Op. at 21. And if we change the employee from a man attracted to men to a woman attracted to women, the employee would still be fired due to the employee’s sexual orientation. It follows, the defendants and Justice Alito claim, that only sexual orientation, and not sex, plays a causal role in the termination. After all, “[h]ow could sex be necessary to the result if a member of the opposite sex . . . [would] face the same outcome from the same policy?” Maj. Op. at 21-22. Put another way, firing employees based on sexual orientation or transgender status results in men and women being treated exactly the same; such policies, the defendants assert, “have the same adverse consequences for men and women. Maj. Op. at 21; accord Alito Dis. at 15-17, 40 (“An employer who discriminates equally on the basis of sexual orientation or gender identity applies the same criterion to every affected individual regardless of sex.”); see also Kav. Dis. at 12-13 (implying the same point). Ergo, no sex discrimination.
The majority replies principally with a reductio ad absurdum argument—an argument that the premises of one’s opponents lead to an absurd conclusion that all would reject. The structure of the argument is as follows: The reasoning of the defendants and Justice Alito necessarily results in sex not being a but-for cause when an employer makes adverse employment decisions based on traditional gender roles. But since no one believes that to be the case, no one could accept the argument of the defendants and Justice Alito that sex is not a but-for cause when an employer makes an adverse employment decision based on sexual orientation or transgender status. Let me explain.
The central piece of the majority’s reply is the following example: Suppose an employer wants to “revive workplace gender roles of the 1950s. He enforces a policy that he will hire only men as mechanics and only women as secretaries.” Maj. Op. at 22. If the employer denies a qualified woman a position as a mechanic, sex discrimination is clear under the but-for standard of Title VII since a qualified man would have received that job. The same is true if the employer denies a qualified man a position as a secretary. The reasoning of the defendants and Justice Alito with respect to sexual orientation and transgender status commits them to respond that there is a problem with this conclusion, just as they contend there is a problem with the majority’s key example discussed yesterday. “By comparing the woman who applied to be a mechanic to a man who applied to be a mechanic, we’ve quietly changed two things: the applicant’s sex and her trait of failing to conform to 1950s gender roles.” After all, a man applying to be a mechanic is actually following 1950s gender roles. Maj. Op. at 22-23. A proper comparison, under the reasoning of the defendants and Justice Alito, thus requires changing both sex and gender non-conformity. This means that “[i]nstead of comparing a disappointed female applicant to a man who applied for the same [mechanic] position, the employer would say, we should compare her to a man who applied to be a secretary. And because that jobseeker would be refused too, this must not be sex discrimination,” but rather only discrimination based on failing to conform to traditional gender roles. Maj. Op. at 23. More precisely, the defendants and Justice Alito are logically committed to the proposition that sex was not a but-for cause of the decision not to hire the female who sought to be a mechanic (or the male who sought to be a secretary); the only cause was non-compliance with traditional gender roles. Maj. Op. at 23.
But, the majority observes, “[n]o one thinks” that termination based on traditional gender roles is permitted by Title VII. Maj. Op. at 23. To the contrary, everyone admits that sex is a but-for cause when an adverse employment decision is based on traditional gender roles. Termination based on either sexual orientation or transgender status is indistinguishable from termination based on traditional gender roles. Therefore, sex must be a but for cause in all three circumstances. And thus Title VII legally bars all three types of dismissal—again, those based on gender non-conformity, sexual orientation, and transgender status—for precisely the same reason.
Note that the majority’s analysis here is grounded, in part, on the fact that Title VII is concerned with discrimination against individual men and women on the basis of sex. Even if an employer treats men as a class the same as women as a class, the employer can still be unlawfully discriminating on the basis of sex. Maj. Op. at 7-8, 11-12. To illustrate, “an employer who fires a woman, Hannah, because she is insufficiently feminine and also fires a man, Bob, for being insufficiently masculine may treat men and women as groups more or less equally. But in both cases the employer fires an individual in part because of sex. Instead of avoiding Title VII exposure, this employer doubles it.” Maj. Op. at 9. That helps to explain why it is no defense to liability for sex discrimination that an employer treats homosexual (or transgender) men and women in exactly the same manner. Maj. Op. at 11-12. An employer that fires both men and women due to sexual orientation (or transgender status) has doubled its liability rather than eliminated it. Maj. Op. at 12.
In tomorrow’s post, I will supplement the majority’s reasoning with some of my own thoughts regarding the conceptual connection between discrimination based on sex and discrimination based on sexual orientation and transgender status.
June 24, 2020 in Commentary, Contract Profs, Current Affairs, In the News, Labor Contracts, Recent Cases | Permalink | Comments (0)
Sid DeLong, The Room Where it Happened: Bolton’s Pyrrhic Victory and the Ironies of Disgorgement
To update the previous post by Hila Keren, District Court Judge Royce Lamberth denied the government’s motion for a preliminary injunction enjoining John Bolton (below left), who formerly served as National Security Advisor in both the George W. Bush administration and the Donald Trump administration, from publishing The Room Where it Happened: A White House Memoir. Applying the four-part test announced by the Supreme Court in Winter v Natural Resources Defense Inc., 555 U.S. 7 (2008), following an in camera review, the court found that Bolton breached his contract by disclosing classified information and by failing to obtain pre-publication approval. But it also found that granting the injunction would not prevent irreparable injury, not because the injury was not irreparable but because it had already been suffered. So the first irony is that the government might have obtained the preliminary injunction if only its lawyers had filed a timely motion.
Bolton’s victory at the injunction hearing may prove to be Pyrrhic, however, because of Judge Lamberth’s findings that he breached his contract and that some of the information he disclosed was classified. These findings would support the government’s far more significant claim against Bolton, which is for disgorgement of all of his proceeds from the publication, including his $2 million advance and all the future royalties on the thousands of books that will be sold. Bolton signed a contract assigning to the U.S. all publication rights to any work that did not receive pre-approval as provided in the contract. If the court’s finding that he lacked pre-approval applies at the trial of the disgorgement claim, then under this theory, the U.S. would have an ordinary claim for “money had and received.”
The more interesting ground for restitution, based either on contract or statutory grounds, would seek disgorgement of the same money on the theory of unjust enrichment. Modern conceptualizations of unjust enrichment see it as eliminating a wrongdoer’s incentives rather than as rectifying the effects of a past injustice. Restitution does not require calculation of harm to the plaintiff, which can be difficult or impossible in cases of disclosure of classified or otherwise confidential information, whether in a commercial or governmental context.
For these reasons, the Supreme Court recognized the disgorgement remedy in cases like Bolton’s in Snepp v United States, 444 U.S. 507 (1980). An ex-CIA agent, bound by a contract requiring agency prepublication clearance of any publication of information about his work, published Decent Interval, a whistle-blower account of some aspects of the Vietnam War, without securing the required approval. For purposes of the lawsuit, the U.S. conceded that the book did not disclose any classified information and that it would have received agency approval if it had been submitted. Snepp argued that publication caused the government no harm, a position taken by the dissent.
The majority, however, found that the publication was a breach of fiduciary duty as well as a breach of contract. It also found that disgorgement of all the proceeds of the publication of Decent Interval was the only way to deter breach without being disproportionately punitive. The court’s order was limited to Snepp’s profits and did not prevent his publisher from selling them. Ironically, the order thus entitled the government to Snepp’s future royalties, making Decent Interval a source of revenue for the U.S.
Unbowed by this defeat, Snepp later obtained the necessary pre-approval for several other books and, showing admirable resourcefulness, also published Irreparable Harm, giving an account of his lawsuit over Decent Interval. Details may be found in Douglas Laycock’s Modern American Remedies 539-43 (Concise 5th Edition).
For purposes of the appeal, the government conceded that Snepp had not disclosed classified or harmful information and that it would have approved his book had it been submitted. The Court found that the government nevertheless suffered reputational harm to the CIA resulting from its failure to enforce its policies. By contrast, Judge Lamberth found that Bolton disclosed some classified information and deliberately breached his contract by publishing before receiving final approval. If these findings are upheld at trial, the government’s case for disgorgement of his past and future revenues from publication will be stronger than the case was against Snepp.
Meanwhile, Bolton’s profits from the sale of The Room Where it Happened will mount up, profits to which the government will assert a claim. What can it do to secure that claim? The Snepp court awarded the government a constructive trust over Snepp’s proceeds, although as Laycock pointed out, there was no identifiable fund on which to impose the trust. In Snepp, therefore, a simple damages award would have been sufficient to effect disgorgement.
But in Bolton, the government might seek a constructive trust over his future royalties as they are paid, which would constitute an identifiable fund. Why would it do so if it would be entitled to a damages award in any event? Because a constructive trust would give the government an equitable ownership interest in these funds and priority over competing, unsecured creditors of Bolton, such as his civil and criminal attorneys. Ironic, no?
In addition to the Snepp theory of disgorgement for breach of a contract-based fiduciary duty, disgorgement of Bolton’s publication proceeds would also be appropriate under Restatement (Third) of Restitution § 39, which authorizes the contract remedy of disgorgement of a breaching party’s gains from breach. Disgorgement is warranted when the damages remedy for breach would be “inadequate,” which it would be in Bolton, and when the breach is “opportunistic”, meaning that it is more profitable for defendant to breach and pay damages than to perform. Section 39 applies to cases that would have justified an order of specific performance if it had been timely, which is precisely Bolton’s case.
Thus, the Bolton remedy may be yet another example of the perils of efficient breach of contract: Bolton not only loses all profits from his breach but incurs very significant expenses of attorneys’ fees, not to mention potential criminal liability if the disclosures also violate federal law. It may be that he needed better legal advice from a lawyer familiar with contract law rather than national security or the First Amendment, but that is just my opinion.
In a final irony, because the government was dilatory and failed to enjoin the sale and distribution of The Room Where it Happened, then if it obtains the disgorgement remedy, the U.S. will receive a windfall from the book’s sales that would not have occurred if the injunction had entered. Indeed, the more the book sells, the more money the Government makes. Since all the harm of disclosure has already been suffered and the U.S. may as well maximize the fruits of Bolton’s labor. Is it inequitable for the government to profits from its attorneys’ delay if it resulted from incompetence rather than design? Inequitable, maybe: ironic certainly.
Did I say “final irony”? The publisher was not enjoined and will presumably maximize sales of the book. But after the publisher has received its percentage of the net proceeds of the sale of The Room Where it Happened, it should expect the government to file an action seeking disgorgement of its profits because of the tortious inducement of Bolton’s breach of contract. Here, however, the windfall from Bolton will surely mitigate the tort damages.
Bad lawyering all around.
Quelles ironies.
June 24, 2020 in Commentary, Current Affairs, In the News, Recent Cases | Permalink | Comments (0)
Tuesday, June 23, 2020
Guest Post by Joshua Silverstein on Bostock, Part II
THOUGHTS REGARDING BOSTOCK V. CLAYTON COUNTY, THE U.S. SUPREME COURT DECISION HOLDING THAT TITLE VII PROHIBITS DISCRIMINATION BASED ON SEXUAL ORIENTATION AND TRANSGENDER STATUS.
A Guest Post by Joshua Silverstein (left)
Part I is here.
Part II: Exploring the Majority’s Conceptual Claim about Discrimination Based on Sexual Orientation or Transgender Status.
To see why the Bostock majority concluded that adverse employment decisions based on sexual orientation or transgender status are necessarily also based on sex, start by returning to the language of Title VII. The statute bars adverse employment actions “because of” various characteristics, including race and sex. “Because of” is understood to establish a “but-for” causation standard. Maj. Op. at 5. “[A] but-for test directs us to change one thing at a time and see if the outcome changes. If it does, we have found a but-for cause.” Maj. Op. at 5. In other words, if changing a person’s sex and nothing else would reverse an adverse employment decision, then the employee’s sex was a but-for cause of the decision. To illustrate, if employer A would not have fired employee X if X were a man rather than a woman—and no other facts are changed—then X’s sex was a “but-for cause” of the dismissal. The employer fired X “because of” X’s sex in violation of Title VII. Maj. Op. at 9.
Two notes of elaboration are in order. First, sex need not be the sole basis for an adverse employment decision. Indeed, sex (or any other characteristic identified in Title VII) need not be the primary cause. As long as sex is a but-for cause of the decision, then the decision is barred under Title VII. Maj. Op. at 5-6, 10-11. Second, an employer need not specifically intend to discriminate based on sex. It is thus irrelevant that an employer was consciously concerned only with homosexual or transgender status when terminating an employee. Once again, if sex is a but-for cause of a decision, then Title VII makes the decision unlawful. Maj. Op. at 17-18.
In light of this analysis, here is how Justice Gorsuch (right) described the requirements of Title VII: “[A]n employer who intentionally treats a person worse because of sex—such as by firing the person for actions or attributes it would tolerate in an individual of another sex—discriminates against that person in violation of Title VII.” Maj. Op. at 7; accord Maj. Op. at 9 (“An employer violates Title VII when it intentionally fires an individual employee based in part on sex.”). Under that rule, Justice Gorsuch continued, “it is impossible to discriminate against a person for being homosexual or transgender without discriminating against that individual based on sex.” Maj. Op. at 9. Gorsuch demonstrates this point with an example that is the heart of the entire majority opinion, and thus I will refer to it as the “key example” throughout the rest of these posts.
“Consider, for example, an employer with two employees, both of whom are attracted to men. The two individuals are, to the employer’s mind, materially identical in all respects, except that one is a man and the other a woman. If the employer fires the male employee for no reason other than the fact he is attracted to men [i.e., on grounds of sexual orientation], the employer discriminates against him for traits or actions it tolerates in his female colleague [i.e., attraction to men]. Put differently, the employer intentionally singles out an employee to fire based in part on the employee’s sex, and the affected employee’s sex is a but-for cause of his discharge.” Maj. at 9-10 (bracketed language added). (The majority offers another essentially identical example involving a transgender person at the same location in the opinion.)
To unpack this, the only distinguishing feature between the two employees in this hypothetical, the majority argues, is their sex. The two individuals have comparable abilities, skills, and other traits, including that both are sexually attracted to men. If the employer fires the man for being attracted to other men, but not the woman for being attracted to the exact same people (men), then the employer has necessarily taken adverse employment action against the man “because of such individual’s . . . sex.” The man’s sex is a “but-for cause” of his termination because if we changed his sex and nothing else—if we changed the man into a woman and left everything else constant, including who the employee is attracted to—he would not have been fired. That violates Title VII.
According to the majority, this example demonstrates that “homosexuality and transgender status are inextricably bound up with sex.” Maj. Op. at 10. Any time an employer makes an adverse employment decision based on sexual orientation or transgender status, the employer is inherently making the decision, at least in part, based on sex; sex is at least one but-for cause of the decision. And adverse employment decisions based on sex are forbidden by the plain language of Title VII.
Note that the crucial point here is not one of linguistic meaning. As I said yesterday, there is no dispute between the majority and the dissenters over the meaning of the word “sex.” Nor is there any dispute over the meaning of any other term in Title VII. Maj. Op. at 25 (“[T]he employers agree with our understanding of all the statutory language . . . . Nor do the dissents offer an alternative account about what these terms mean.”). The majority’s claim is conceptual. Discrimination on the basis of sexual orientation or transgender status is conceptually tied to discrimination on the basis of sex. To repeat, the majority’s point is that “it is impossible to discriminate against a person for being homosexual or transgender without discriminating against the individual based on sex.” Maj. Op. at 9 (emphasis added); accord Maj. Op. at 10 (“[T]o discriminate on these grounds [sexual orientation and transgender status] requires an employer to intentionally treat individual employees differently because of their sex.”) (emphasis added). And that is not a claim about the meaning of Title VII. The two dissents spend many pages challenging the majority as to the meaning of various terms in the statute. See, e.g., Alito Dis. at 4-5, 21-28, 33, 35; Kav. Dis. at 5-21, 24-25. But all of that analysis is irrelevant if the majority is correct about the conceptual connection between (1) sex discrimination, and (2) sexual orientation and transgender status discrimination.
One final note for today: One might plausibly conceptualize the dispute in the case as being about the meaning of “because of” in Title VII, or about the nature of the “but-for cause” test. But there really is no disagreement about the meaning of “because of,” nor any dispute over what constitutes but-for causation. Instead, I think the case is best understood as concerning whether but-for causation is actually satisfied when a person is fired because of homosexuality or transgender status. The majority claims the answer is yes, and does so for conceptual reasons. The defendants and the dissent, as I will explain in tomorrow’s post, claim otherwise.
June 23, 2020 in Commentary, Contract Profs, Current Affairs, In the News, Labor Contracts, Recent Cases | Permalink | Comments (0)
Monday, June 22, 2020
Guest Post by Joshua Silverstein on Bostock, Part I
THOUGHTS REGARDING BOSTOCK V. CLAYTON COUNTY, THE U.S. SUPREME COURT DECISION HOLDING THAT TITLE VII PROHIBITS DISCRIMINATION BASED ON SEXUAL ORIENTATION AND TRANSGENDER STATUS.
A Guest Post by Joshua Silverstein (left)
Part I: Justice Gorsuch’s Textualism and the Critical Conceptual Issue in Bostock.
In Bostock v. Clayton County, the U.S. Supreme Court held that Title VII, the principal federal employment discrimination statute, bars discrimination on the basis of sexual orientation and transgender status. In this and the following posts, I provide rather detailed comments regarding the legal analysis in the case as a supplement to articles and blog posts I’ve seen across the web that focus on other aspects of the decision.
Title VII makes it “unlawful . . . for an employer to . . . to discriminate against any individual with respect to his compensation, terms, conditions or privileges of employment, because of such individual’s race, color, religion, sex, or national origin.” (Emphasis added.) The plaintiffs in the various lawsuits that constitute the Bostock case argued that the prohibition on discrimination based on “sex” also bars discrimination based on sexual orientation and transgender status. The Supreme Court agreed by a 6-3 margin, with the four liberals and Chief Justice Roberts joining the majority opinion written by Justice Gorsuch (pictured, right). Justice Alito wrote a dissent, joined by Justice Thomas, and Justice Kavanaugh wrote a separate dissent. I think the majority’s position is more persuasive and thus I believe the case was correctly decided.
In this first post, I lay out some basic principles of statutory interpretation and provide an overview of the critical conceptual issue at the center of Bostock.
Justice Gorsuch adopts a textualist approach to the construction of statutes in the majority opinion. Under textualism, courts interpret “a statute in accord with the ordinary public meaning of its terms at the time of its enactment.” Maj. Op. at 4. Legislative history regarding (1) what the adopters of the law intended it to mean, (2) what they sought to accomplish in passing the law, and (3) how they understood the scope of the law (i.e., to what cases they expected it to apply), is not controlling. Indeed, legislative history isn’t even relevant if the statutory language is clear. It is “the provisions of our laws rather than the principal concerns of our legislators by which we are governed.” Maj. Op. at 14.
The primary justification for textualism is that it advances the rule of law. An essential feature of the rule of law is that people are governed by the rules of law, and not by something else that may be undiscoverable by the citizenry, such as what legislators think about the rules. “The people are entitled to rely on the law as written, without fearing that courts might disregard its plain terms based on some extratextual consideration.” Maj. Op. at 24 (emphasis added).
Note that this doesn’t mean that legislative history is always irrelevant. If a law is ambiguous, many judges believe that legislative history can be used to assist in resolving the ambiguity. Maj. Op. at 24. This history can, for instance, explain how at least some competent users of English understood the words of a statute. See Kav. Dis. at 16. But what legislative history cannot do, among other things, is override clear statutory language.
The principles of textualism required the Supreme Court in Bostock to determine the ordinary public meaning of Title VII in 1964, the year the statute was adopted. Maj. Op. at 4. And if the statute’s language is unambiguous, then what members of Congress intended or expected Title VII to accomplish (or not accomplish) by including “sex” in the law is irrelevant to the analysis.
Critically, however, the central issue in the case is not the ordinary meaning of “sex” in the mid 1960s. All nine of the justices agreed with the defendants that the word “sex” does not include sexual orientation and transgender status as a matter of linguistic meaning. See Maj. Op. at 5 (“[W]e proceed on the assumption that ‘sex’ . . . refer[s] only to biological distinctions between male and female.”); Alito Dissent at 5; Kavanaugh Dissent at 11.
Instead, the case primarily turns on the conceptual relationship of discrimination based on sex to discrimination based on sexual orientation and transgender status. In the majority’s view, sex discrimination is necessarily connected to both sexual orientation discrimination and transgender status discrimination. More specifically, the majority found that it is impossible to discriminate on the basis of sexual orientation or transgender status without also discriminating on the basis of sex. Here is one of Justice Gorsuch’s statements of this point: “An employer who fires an individual for being homosexual or transgender fires that person for traits or actions it would not have questioned in members of a different sex. Sex plays a necessary and undisguisable role in the decision, exactly what Title VII forbids.” Maj. Op. at 2 (emphasis added). Accordingly, when an employer makes an adverse employment decision because of an employee’s sexual orientation or transgender status, the employer has discriminated against the employee “because of such individual’s . . . sex,” in violation of Title VII.
Tomorrow’s post explores the reasoning underlying Justice Gorsuch’s claim that discrimination based on sexual orientation or transgender status necessarily involves discrimination based on sex.
June 22, 2020 in Commentary, Contract Profs, Current Affairs, In the News, Labor Contracts, Recent Cases | Permalink | Comments (0)
Introducing Guest Blogger, Joshua Silverstein
Today, we welcome guest blogger Joshua Silverstein (pictured at left) who has taught since 2004 at the William H. Bowen School of Law in Little Rock Arkansas. Josh graduated magna cum laude from the New York University School of Law and was named to the Order of the Coif. He also served as the Legal Theory Editor for the New York University Review of Law and Social Change while a student. After graduation, he was a law clerk to the Honorable Suzanne B. Conlon, United States District Judge for the Northern District of Illinois. Josh then served as a litigation associate at two Chicago law firms—Mayer Brown and Freeborn & Peters. At those firms, he worked on a wide variety of cases, including products liability, bankruptcy, antitrust, and business tort disputes.
Josh’s most recent publication is an empirical study of contextualism versus textualism in connection with contract interpretation enforcement costs published in the Hofstra Law Review in 2019. That publication positions him well for this week’s deep dive into Justice Gorsuch’s textualism in last week’s decision in the Bostock case which recognized that Title VII prohibits workplace discrimination based on sexual orientation or transgender status.
We are grateful to Josh for his careful exposition of the reasoning in Bostock and delighted to be able to share his insights into the case with our readers. Welcome Josh!
June 22, 2020 in About this Blog, Contract Profs | Permalink | Comments (0)
Teaching Assistants: Dagan and Somech on Excuses from Rose 2d to COVID-19
Hanoch Dagan (left) and Ohad Somech (below, right), both of Tel Aviv University's Buchman Faculty of Law, have posted on SSRN their Article, When Contracts Basic Assumptions Fail: From Rose 2d to COVID-19. Their core argument is that these excuses of contractual obligations are best understood if we appreciate the liberal, that is, autonomy-enhancing goals of contracts law. The law allows us to bind ourselves to contracts conditionally so as not to encumber our future selves with legal obligations that have become onerous in ways the parties did not anticipate.
I recommend this Article as a handy exploration of theoretical perspectives underpinning the affirmative defense of mutual mistake and the excuses of impossibility, impracticability, and frustration of purpose. Collectively, the authors refer to these as FBA doctrines, because all require a failure of a basic assumption. In addition to that timeless quality, the Article also possesses timeliness because of its concluding case study dedicated to the interplay of these FBA doctrines and the COVID-19 pandemic.
These doctrines are not vital because they play a pivotal role in a lot of litigation. Rather, their existence illustrates the flexibility baked into the common law to enhance autonomy by permitting people to enlist others into their plans while also allowing them to escape obligations that can no longer be justified in light of the failure of a basic assumption.
After an introduction, the authors explain why their liberal autonomy theory bests other accounts of FBA doctrines: Charles Fried's sharing theory; reconceptualizing FBA doctrines as majoritarian default rules; and accounts that view FBA doctrines as a species of implied-in-fact rules. Fried's account reaches out to external principles to explain FBA doctrines that are better understood as a product of liberal contracts theory. The other two rival theories treat FBA doctrines them as mere applications of other doctrines and thus miss the opportunity to appreciate how these doctrines illuminate the purposes underlying contract law doctrine.
As explained in Parts III and IV of the paper, choice theory, developed by Dagan and Michael Heller, provides a more satisfying account of FBA doctrines. The authors contend that this account appeals both on the normative and the explanatory level. That is, choice theory helps us to understand how contracts law enhances people's capacity for self-determination, and it also explains the main features of FBA doctrine.
The Article concludes with a discussion of whether COVID-19 triggers FBA doctrines and what should happen if it does. The authors consider different contractual contexts; residential rental agreements, commercial rental agreements, manufacturing of industrial equipment and machinery, loans, and car insurance. While COVID could trigger FBA doctrines, allocation of risk will determine whether an FBA defense can be asserted. Moreover, in determining the materiality of the FBA, one must also consider the mitigation effects of government programs, such as the Paycheck Protection Program, which is supposed to cover precisely the sorts of costs at issue in potential cases in which COVID could factor as an an FBA. Finally, all of this must be viewed within the relational contracts, in which the goal is to achieve the parties' general contractual goals rather than give one party a windfall.
Contracts entail an obligation to perform. However, the authors stress, contracts do not entail a duty to perform "come what may." The authors provide a theoretical model that helps explain how courts determine when performance ought to be excused in light of a failure of a basic assumption, an issue that will arise with increasing frequency as we experience the fallout of this global pandemic.
June 22, 2020 in Contract Profs, Current Affairs, Recent Scholarship, Teaching | Permalink | Comments (0)
Friday, June 19, 2020
What Should a Court Do in Response to Racist Contractual Threats? Wolf v. Marlton Corp.
This post is part of a series devoted to introducing critical perspectives, including critical race theory, into contracts and commercial-law teaching. Links to other posts in the series can be found at the bottom of this post.
Thanks to César F. Rosado Marzán for sharing with the contracts listserv the facts of Wolf v. Marlton Corp. and for offering suggestions as to how to teach the case. Wolf is a 1959 case. I think that it is an especially challenging and thus perhaps useful teaching vehicle. It presented questions of racial justice in 1959 to which the common law of contracts still may not provide good answers.
Rather than teach the case, I would use it as the basis of a hypothetical. Imagine that a developer (Marlton) sells a house to a family, the Wolfs. The Wolfs put down a 10% deposit but then want to back out. In order to avoid losing their deposit, the Wolfs tell Marlton that they intend to flip their house. Immediately after closing, they will sell the house to a registered sex offender. The idea is that having a registered sex offender living in the house will decrease the value of the other homes in the development. Marlton will back out of the deal, and the Wolfs recover their deposit.
But Marlton plays hard ball. It sells the house to another buyer but refuses to return the Wolf's deposit, claiming that they attempted to use duress to back out of the contract. In this hypothetical, we will assume that having a registered sex offender in the neighborhood has a negative impact on home values and that potential buyers would easily discover the presence of the sex offender. With those givens, the hypo is a useful vehicle for teaching the doctrine of economic duress. The Wolf case adopts the First Restatement's definition of duress:
Acts or threats cannot constitute duress unless they are wrongful, even though they exert such pressure as to preclude the exercise of free judgment. But acts may be wrongful within the meaning of this rule though they are not criminal or tortious or in violation of a contractual duty. Just as acts contracted for may be against public policy and the contract vitiated for that reason, though the law imposes no penalty for doing them, so acts that involve abuse of legal remedies or that are wrongful in a moral sense, if made use of as a means of causing fear vitiate a transaction induced by that fear, though they may not in themselves be legal wrongs.
It could be valuable to introduce that standard and compare it to the Restatement 2d's definition of duress. But that may take up more time than necessary.
At some point, students might raise the question of whether courts should recognize the Wolf's threatened sale to a registered sex offender as an improper threat. It would be a nice opportunity to explore some non-contracts issues regarding criminal justice and rehabilitation. Such a discussion can provide a segue to a discussion of the facts of the 1959 case.
In the actual case, Marlton gave the following reason for refusing to return the deposit:
Buyers breached the agreement of sale by preventing its performance through threats to resell the house to an undesirable purchaser and to ruin defendants' building business if defendants carried out the contract.
Other threats followed, and there were negotiations, but we can keep the hypo simple by limiting the issue to the threat to sell to an "undesirable purchaser," which in 1959 probably meant a Black family. The court was willing to accept Marlton's claim that the Wolfs had made an improper threat.
The sale of a development home to an "undesirable purchaser" is, of course, a perfectly legal act regardless of any adverse effect it may have on the fortunes of the developer's enterprise. But where a party for purely malicious and unconscionable motives threatens to resell such a home to a purchaser, specially selected because he would be undesirable, for the sole purpose of injuring the builder's business, fundamental fairness requires the conclusion that his conduct in making this threat be deemed "wrongful," as the term is used in the law of duress. In our judgment, wrongful pressure was brought to bear on the defendant; he was thereby compelled to forego the right to hold plaintiffs to the contract they voluntarily signed.
That feels right. The Wolfs should not be permitted to weaponize racism. It might be useful to discuss whether we think it matters whether the Wolfs are themselves racist or if they are just taking advantage of structural racism to get out of a contract. But once we go there, it seems clear that Marlton is also operating against the background of structural racism, which the court then reifies by permitting Marlton's economic duress claim to succeed. There seems to be no right answer. We should not let the Wolfs weaponize racism, but thwarting their attempt means that the law protects the position that Black families are "undesirable purchasers."
Is it naive to think that the threat, perhaps more artfully disguised, would not be effective in 2020?
- Guest Post by Charles Calleros: Raising Issues of Race, Ethnicity, and Culture in 1L Contracts: Language Barriers
- Guest Post by Charles Calleros, Talking about Race in the Contracts Course: Interface with Civil Rights Laws, Part II – Consideration
- Guest Post by Charles Calleros, Talking about Race in the Contracts Course: Interface with Civil Rights Laws, Part I – Mutual Assent
- Teaching Assistants, Emily Houh's Redemptive Theory of Contract Law
June 19, 2020 in Commentary, Contract Profs, Famous Cases, Teaching | Permalink | Comments (0)
Thursday, June 18, 2020
COVID-19 Waivers and the Tort-Contract Intersection
As businesses start to open up, they will be greeting their customers with smiles beneath their masks and, in some cases, COVID-19 waivers. The Walt Disney World Resort, for example, states on their website that visitors “voluntarily assume all risks related to exposure to COVID-19.” I don’t think a waiver on its website would be effective since most people won’t visit their website (or scroll down to read the waiver). A signed waiver might be more effective from a contractual standpoint, but equally undesirable from a social standpoint. President Trump, for example, is requiring COVID-19 waivers for those who plan to attend his rally. The waiver states:
“By clicking register below, you are acknowledging that an inherent risk of exposure to COVID-19 exists in any public place where people are present. By attending the Rally, you and any guests voluntarily assume all risks related to exposure to COVID-19 and agree not to hold Donald J. Trump for President, Inc.; BOK Center; ASM Global; or any of their affiliates, directors, officers, employees, agents, contractors, or volunteers liable for any illness or injury."
In the two examples above, I'm not convinced the waivers would be effective given the lack of assent. In the Disneyland case, visitors are not required to view the website and the statement would not constitute reasonable notice. I doubt any court would find the notice to be an effective waiver. The Trump rally waiver is a closer call. That waiver requires a manifestation (a click on a “Register” icon) but it’s not clear whether that would be effective to constitute assent to the waiver terms. The button states “Register” and not “I agree” ; however, given its proximity to the language indicating the waiver language, at least some courts would find constructive notice. The language of the waiver itself is not great and seems too general. Yet, given how much media attention the waiver has received, it might be difficult for an attendee to claim they did not have actual notice. The waiver, however, would only apply to those who registered for the event. Even if the requirements of contract formation are met with respect to the registrant, they wouldn’t bind anyone who did not register. I’m not sure how they plan to exclude those who did not register from the rally – are they going to take tickets and physically bar those who don’t have one?
In any event, even if a COVID-19 waiver is deemed validly formed doesn’t mean that it will be enforceable in all cases and against all potential plaintiffs. It would not be effective, for example, to shield a business from gross negligence or recklessness. It may also not be effective where the public interest is involved if the business/rally organizer is in the best position to protect against the harm. It also wouldn’t be effective against anyone who didn’t attend the rally who got sick from someone who did attend, although causation will be difficult to prove (as it likely will be in most tort cases involving liability for spreading the virus).
Given the social interests involved, a waiver shouldn't free anyone from the duty to make sure that the premises are safe whether those premises are an amusement park, a clothing store, or a field where a rally is behind held. There should at least be enough space for people to spread out, although I’m not sure at a rally, that they will. I suspect that at a Trump rally, a good number of people won’t be inclined to wear masks and the odds of contaminated droplets and aerosols floating around is fairly high. Holding a large rally without enforcing minimum requirements (mask, social distancing) seems at least irresponsible and probably even reckless to me and a signed waiver shouldn’t let anyone off the hook, especially those who are supposed to be setting an example for the rest of the country.
June 18, 2020 in Commentary, Current Affairs | Permalink | Comments (0)
Wednesday, June 17, 2020
Guest Poster Hila Keren, Should What Happened in the Room Stay in the Room? Contract Law Has the Answer
Finally, contract law is in taking the lead in national news. As reported yesterday by the New York Times, the Trump administration has just sued the former national security adviser John R. Bolton using the argument of breach of contract in an effort “to delay the publication of his highly anticipated memoir about his time in the White House.” The book, titled The Room Where it Happened, is supposed to be released next week. , 2020. In fact, it is already available for advance purchase. Amazon, for example, offers Kindle users to buy it immediately, promising that it will be auto-delivered on June 23, 2020. But now, in a lawsuit against Mr. Bolton filed yesterday in federal court in Washington, the Justice Department seeks to prevent the upcoming publication, and both the leading cause of action and the primary remedy are contractual.
According to the lawsuit, Mr. Bolton signed a series of nondisclosure agreements (NDAs) that required him to complete a prepublication review process and receive written authorization from the US government before publishing his book, an obligation that he is now breaching “knowingly, willfully, and deliberately.” And, due to this alleged breach of contract, the DOJ “seeks an order directing [Mr. Bolton] to specifically perform his contractual obligations.” Perhaps out of awareness of the limits of the remedy of specific performance in our system, especially when “the book has already been printed and bound and has shipped to warehouses,” the DOJ further asks the court to “impose a constructive trust for the benefit of the United States over…all monies, gains, profits, royalties, and other advantages” that Mr. Bolton and others will derive from the publication of the book.
The New York Times reports that Mr. Bolton’s lawyer has counter-argued that “his client acted in good faith and that the Trump administration is abusing a standard review process to prevent Mr. Bolton from revealing information that is merely embarrassing to President Trump, but not a threat to national security.” Reading the lawsuit, one learns that Mr. Bolton submitted his manuscript for review back in January, and—due to the duration of the review process—already postponed once the date of publication. In light of these facts, it may be a good idea to turn next to section 205 of the Restatement (Second) of Contracts that, as we all know, states: “Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.” (emphasis added). Does the lawsuit present a good faith attempt of the US Government to enforce on Mr. Bolton his obligations under the NDAs?
[Editorial addition: who knew that Bolton (a/k/a Deep 'Stache) was such a Randy Rainbow fan?]
June 17, 2020 in Commentary, Current Affairs, Law Schools, Recent Cases, True Contracts | Permalink | Comments (3)
Introducing Guest Blogger, Hila Keren
Today, we introduce a new guest blogger, Hila Keren (left). Hila is the Associate Dean for Research and a Professor of Law at the Southwestern Law School, where she has taught since 2010. Hila’s primary areas of teaching are contracts and business law. Her primary areas of scholarship are contract law, feminist jurisprudence, critical race theory, law and the emotions, and the rising approach of law and political economy. Her book, Contract Law from a Feminist Perspective, was published in Hebrew by Sacher Institute for Legislative Research and Comparative Law (2005), and she is the author or co-author of numerous articles that have appeared in the California Law Review, Harvard Law Review, Minnesota Law Review, and Michigan Journal of Race and Law, among others.
Prior to joining Southwestern, Hila was a faculty member at the Hebrew University in Jerusalem. We look forward to her contributions to the blog and are delighted to welcome her to this virtual space.
June 17, 2020 in About this Blog, Contract Profs | Permalink | Comments (0)
Guest Post by Charles Calleros: Raising Issues of Race, Ethnicity, and Culture in 1L Contracts: Language Barriers
This is the third guest post by Charles Calleros (right). We at the blog are grateful to Charles for stopping by.
One of my favorite students over forty years of teaching, whom I will call “M,” crossed the border from Mexico at the age of 5 with his family in a harrowing trip that he remembers vividly. M learned English in elementary school and soon was translating leases and other agreements for his parents, who took longer to learn a new language. So began M’s journey to citizenship and eventually to law school and success as an associate attorney in a law firm.
But immigrants who have yet to master English seldom have a precocious child at their side to translate terms proposed to them, even assuming the terms would be comprehensible if translated. One such case is Morales v. Sun Constructors, Inc., 541 F.3d 218 (3d Cir. 2008), an extreme example of the unrealistic assumptions that frequently underlie mutual assent.
We are all familiar with the unforgiving standards for mutual assent: So long as the offeror objectively conveyed proposed terms to the offeree, the offeree’s expression of assent binds the parties regardless whether the offeree read or understood the terms,Upton v. Tribilcock, 91 U.S. 45, 50 (1875), or secured a translation of terms conveyed in a foreign language, Paper Express v. Pfankuch Maschinen GmbH, 972 F.2d 753 (7th Cir. 1992) (commercial contract); Mohamed v. Uber Technologies, Inc., 109 F. Supp. 3d 1185, 1197-98 (N.D. Cal. 2015) (applying Paper Express to employment contract), rev’d on other grounds, 836 F.3d 1102 (9th Cir. 2016).
Accordingly, in Morales, when a monolingual Spanish-speaking employee signed an English language employment agreement, we shouldn’t be surprised that courts would bind the employee to an arbitration clause that the employee was unable to read or understand. But Morales comes with a twist that should cause even the most jaded students to furrow their brows: the employer arranged for a fellow employee to translate the terms, but that employee failed to translate the arbitration clause.
The majority and dissent concisely serve up conflicting perspectives that can spur discussion and debate in the classroom, perhaps spilling over into the hallways. The majority implicitly places the burden on the employee to arrange for, or confirm the provision of, a complete translation:
Morales, in essence, requests that this Court create an exception to the objective theory of contract formation where a party is ignorant of the language in which a contract is written. We decline to do so. In the absence of fraud, the fact that an offeree cannot read, write, speak, or understand the English language is immaterial to whether an English-language agreement the offeree executes is enforceable.
Morales, 541 F.3d at 222. The dissent opined that the omission by the translator appointed by the employer materially distinguished this case from the precedents on mutual assent. Id. at 224 (Fuentes, J., dissenting).
In my casebook, I locate a summary of Morales in a section after our main exploration of unconscionability, addressing ways in which unconscionability claims can overlap with issues of mutual assent and of public policy violation. In Morales, for example, even if the majority could find mutual assent in a faulty translation of a non-negotiated contract in a language foreign to the employee, surely those factors would add up to a solid showing of procedural unconscionability, thus inviting scrutiny of the arbitration clause for substantive problems. Did Morales’s attorneys argue unconscionability? What kinds of asymmetry or other unfairness in the arbitration clause might support a finding of substantive unconscionability?
Whether covered as a main case or summarized in notes, Morales facilitates several pedagogic goals, because it:
- shines an especially bright light on the difficulty of challenging mutual assent;
- shows how facts that fall short of undermining mutual assent can nonetheless establish one branch of unconscionability;
- invites student debate about whether precedent should stretch to encompass the unusual facts of this case or whether the dissent correctly finds a basis for distinguishing this case;
- starts with an uneven playing field for an employee who did not draft the contract, has little bargaining power, and might not fully understand the arbitration clause even if translated, and then it reveals how a language barrier further tilts the field against the employee; and
- invites discussion about possible legislative intervention to soften the precedent on mutual assent in the face of language barriers, g., Cal. Civ. Code § 1632 (requiring translation of consumer contracts in certain circumstances).
June 17, 2020 in Commentary, Contract Profs, Famous Cases, Teaching | Permalink | Comments (0)
Tuesday, June 16, 2020
Tuesday Top Ten - Contracts & Commercial Law Downloads for June 16, 2020
Top Downloads For:
Contracts & Commercial Law eJournalRecent Top Papers (60 days)
As of: 17 Apr 2020 - 16 Jun 2020| Rank | Paper | Downloads |
|---|---|---|
| 1. | 1,233 | |
| 2. | 319 | |
| 3. | 200 | |
| 4. | 196 | |
| 5. | 150 | |
| 6. | 149 | |
| 7. | 140 | |
| 8. | 140 | |
| 9. | 134 | |
| 10. | 117 |
Top Downloads For:
Law & Society: Private Law - Contracts eJournalRecent Top Papers (60 days)
As of: 17 Apr 2020 - 16 Jun 2020| Rank | Paper | Downloads |
|---|---|---|
| 1. | 1,234 | |
| 2. | 319 | |
| 3. | 264 | |
| 4. | 200 | |
| 5. | 134 | |
| 6. | 117 | |
| 7. | 116 | |
| 8. | 99 | |
| 9. | 90 | |
| 10. | 71 |
June 16, 2020 in Recent Scholarship | Permalink | Comments (0)
Guest Post by Charles Calleros, Talking about Race in the Contracts Course: Interface with Civil Rights Laws, Part II – Consideration
In my previous post, I outlined the background for 42 U.S.C § 1981, the Reconstruction Era statute providing that “[a]ll persons . . . shall have the right to make and enforce contracts . . . as is enjoyed by White citizens.” The common law of mutual assent permitted racial discrimination in offer and acceptance, necessitating corrective legislation. But section 1981 imposes liability only if the defendant thwarted an attempt to “make” a contract, which requirement is not satisfied if someone is harassed for “shopping while Black” to the point of leaving the store before trying to make a purchase. The majority and dissent in Gregory v. Dillard’s, Inc., 565 F.3d 464 (8th Cir. 2009), discuss this issue in detail.
In another case applying section 1981, the court analyzed a different element of contract formation: consideration. Barfield v. Commerce Bank, N.A., 484 F.3d 1276 (2007). Thwarting mutual assent was not in question because Barfield, a Black man, entered a bank and offered to exchange his large bill for smaller bills. The bank refused this service on the pretext that Barfield did not have an account with the bank, a requirement not imposed on White passersby who asked to change a large bill. The court describes how Barfield confirmed the bank’s discriminatory policy by running tests with his father, a White friend, and a White reporter.
Notwithstanding this proof, the court could not apply section 1981 unless Barfield was offering to make a “contract,” which would require consideration. The element of consideration in question, it seems, was reciprocal inducement, specifically whether the bank was induced or whether the bank was simply performing a gratuitous service. Barfield was certainly induced by the prospect of giving up a large bill in exchange for the equivalent in several smaller bills, which are easier to use in most transactions. But was the bank induced to give up smaller bills in exchange for a large one from someone not holding an account? Although the court does not discuss this, is it possible that ending up with fewer, larger bills at the end of the day makes for easier storage and accounting? The court adopts a more interesting explanation: the bank is induced by the prospect that some non-account-holders, stopping initially only to get change, will be impressed with the bank and decide to open accounts and pay the accompanying fees. The Bank apparently didn’t have the nerve to argue that the prospect of attracting Black customers did not provide the same inducement as did foot traffic by White customers, and the court found it unnecessary to parse inducement to that degree. If not for Barfield’s race, Barfield’s offer would have resulted in a contract.
I like to teach Barfield for several reasons:
- It is short – much shorter than Gregory v. Dillard’s – and thus easily assigned and discussed.
- It reveals racial discrimination in what should be a common, perfunctory transaction. (How many times have we heard a shopkeeper, when asked to change a bill, respond, “We’re not a bank,” as though a bank is indisputably the right place to get change?).
- The racial discrimination appears in a legal context – consideration – that infrequently addresses race and thus injects some additional relevance to our study of that arcane subject.
- The racial discrimination is so clearly confirmed by Barfield and so explicitly set forth in the opinion that one does not need additional materials or inference to find racial discrimination.
- The case is relatively recent, so the discrimination cannot be dismissed by any student as a relic of the past but is a reminder of persistent and pervasive discrimination in our society, from commercial dealings to criminal justice.
June 16, 2020 in Commentary, Famous Cases, Teaching | Permalink | Comments (3)
