Wednesday, March 31, 2021
Mitigation of Damages in Episodes (the Best SitCom You've Never Heard of)
Episodes is easily on my list of top ten favorite sitcoms of all time. Perhaps top five, but it's crowded at the top. I was thinking about the show and regretting that I wasn't blogging while I was watching it, because there was a lot of blog fodder in that show.
I've got a bone to pick with the show runner who came up with all the material involving Sean's (Stephen Mangan, pictured far left) former writing partner, Tim (Bruce Mackinnon). I don't know about the intellectual property issues between Sean and Tim. Those seem pretty interesting, but the real mess involves Eileen (Andrea Rosen), who acts as agent for Sean and Berverly (Tamsin Greig, near left) but also represents Tim. I would think some sort of fiduciary duty and conflict of interest rules would apply, since their interests are clearly adverse.
But the main issue that I've been thinking about lately is mitigation of damages in a Parker-like context. Sean and Beverly come over from England because the delightfully slimy Merc Lapidus (John Pankow) entices them by promising to let them write an American version of their hit comedy, Lyman's Boys. That show stars a droll English headmaster at a boarding school. Merc represents that the actor who played Lyman in the English series would also star in the American version.
And then the changes roll in. The English bloke is rejected and replaced with Matt LeBlanc, who lacks the headmaster's reserve and urbanity. The boarding school becomes a public school, and the headmaster becomes a hockey coach, which is much more fitting for Matt LeBlanc's character, as played, with bottomless self-effacement, by Matt LeBlanc. Sean and Beverly ride it out, and it's a very bumpy five seasons, mostly because Sean really wants to make it in Hollywood. Beverly sours immediately. But the first season provides a great set of Parker-esque hypos. At what point can Sean and Beverly back out of their contract with the network? How can the network mitigate? Is a show (Pucks) about a crass hockey coach who is constantly hitting on the sexy school librarian a good substitute for a show (Lyman's Boys) about an erudite headmaster at a school with a significant librarian character who happens to be a lesbian?
March 31, 2021 in Commentary, Television | Permalink | Comments (0)
Tuesday, March 30, 2021
Tuesday Top Ten - Contracts & Commercial Law Downloads for March 30, 2021
Top Downloads For:
Contracts & Commercial Law eJournalRecent Top Papers (60 days)
As of: 29 Jan 2021 - 30 Mar 2021Rank | Paper | Downloads |
---|---|---|
1. | 358 | |
2. | 283 | |
3. | 241 | |
4. | 214 | |
5. | 192 | |
6. | 160 | |
7. | 145 | |
8. | 134 | |
9. | 122 | |
10. | 107 |
Top Downloads For:
Law & Society: Private Law - Contracts eJournalRecent Top Papers (60 days)
As of: 29 Jan 2021 - 30 Mar 2021Rank | Paper | Downloads |
---|---|---|
1. | 437 | |
2. | 283 | |
3. | 169 | |
4. | 107 | |
5. | 96 | |
6. | 79 | |
7. | 72 | |
8. | 69 | |
9. | 68 | |
10. | 65 |
March 30, 2021 in Recent Scholarship | Permalink | Comments (0)
Assumption of Risk and the Suez Canal: The Insurance Angle
Whenever I teach Transatlantic Financing, I say something about insurance. Judge Skelly-Wright points out that, if he were to decide the allocation of risk in the case, he would likely find that Transatlantic bore the duty of insuring against the closing of the canal. I hypothesize that the U.S. likely would have insured the cargo, the wheat it was sending to Iran. I'm less certain about the insurance market for detours around the Cape.
The Business Standard provides some insights into the insurance squabbles that lie in the wake of the recently-freed container ship, the Ever Given. There could be some pretty big fights. A Taiwanese company chartered the ship; a Japanese company owns it. It was piloted through the canal by people employed by the canal, but the canal provides pilots subject to a disclaimer of liability. The owners of the cargo aboard the Ever Given likely insured their goods and can seek recovery for whatever costs incurred as a result of the one-week delay. Are such costs a given? Do they constitute a covered claim?
The article anticipates similar claims from the owners of goods aboard the vessels delayed by the bottleneck in Suez. I'm uncertain about those. My first guess was that the economic loss rule would bar recovery, but I suppose it is possible that there is a general insurance policy that covers all events that might delay delivery. Time will tell.
Hat tip, Victor Goldberg.
March 30, 2021 in Commentary, Current Affairs, In the News | Permalink | Comments (7)
Jennifer Martin's Annual Digest of Developments in the Law of Sales
Friend of the blog Jennifer Martin is at again, with her annual survey of new case law relating to the UCC's Article 2, out in Volume 75 of the Business Lawyer.
Cases discussed include:
- NTA Graphics South, Inc. v. Axiom Impressions, LLC, a case involving mixed contracts and the predominant purpose test;
- Back Nine Indoor Golf Ltd. v. Infinity Golf & Sports Simulators LLC, a Statute of Frauds case (spoiler alert -- SoF did not impede enforcement);
- Chr. Hansen, Inc. v. Centrome, Inc., No. 15-CV-150, 2019 WL 1556314 (E.D. Wis. Jan. 11, 2019), and Ultraflex Systems of Florida, Inc. v. Veritev Operating Co., both of which touch on battle of the forms issues, and the latter applies the knock-out rule to different terms (woo hoo!);
- Revere Plastic Systems, LLC v. Plastic Plate, LLC, which addresses formation and modification issues (or failure to modify);
- Mid-American Salt, LLC v. Bob & Dave’s Lawn & Landscape Maintenance, Inc., a parol evidence case (spoiler alert -- parol allowed into evidence) with a post-contractual oral modification issue;
- Simpson v. Champion Petfoods USA, Inc., involving warranty claims and privity;
- Klingenberg v. Vulcan Ladder USA, LLC, and Pyskaty v. Wide World of Cars, LLC, which raise warranty and warranty disclaimer issues;
- State v. Dix, which found that Article 2's rules for title do not apply when the criminal defendant had no intention of paying for the goods;
- BRC Rubber & Plastics, Inc. v. Continental Carbon Co., addressing anticipatory repudiation;
- Accettura v. Vacationland, Inc., which addresses timely revocation;
- SEI Fuel Services, Inc. v. A&J Gas & Convenience, LLC, a lost volume case(!);
- Forage Genetics International, LLC. v. Kelly Green Mexicana, Inc., which decided an action for the price claims;
- Cogan Imports, Inc. v. Dharod, a seller's failed action for specific performance of a contract to sell a car for $2.7 million; and
- Adore Me, Inc. v. NPC Global Corp., a nifty illustration of buyer's remedies.
Thanks, Jennifer, for this wonderful update!
March 30, 2021 in Recent Cases, Recent Scholarship | Permalink | Comments (0)
Monday, March 29, 2021
Contracts and the Rhetoric of Dehumanization
It’s a fundamental tenet of contract law that contracts require consent. Yet, the meaning of consent has been distorted beyond recognition in some cases. In areas of the law other than contracts, consent means a knowing, voluntary act that is intended to manifest agreement (even if not always approval) of an act or activity. In contracts, however, consent has been diminished to a mere construct where the so-called “manifestation of consent” has replaced efforts to assess the existence of consent. In other words, the signfier (the manifestation) replaces what it signifies (consent). There are economic justifications for doing this in most commercial contracting situations.
But where the so-called contract involves services, the economic justifications are outweighed by fairness and policy concerns. This is why courts do not require specific performance of employment contracts. Economic rationales are not the only reason to enforce contracts; there are social, moral and cultural reasons as well. Similarly, there are reasons not to recognize something as a contract. Perhaps the most important reason is if the so-called contract lacks consent. This is precisely why the law makes a distinction between void and voidable contracts. A contract entered into under a threat of imminent physical harm – a gun pointed to the head – is void, meaning that it never existed at all, despite the fact that the victim may have signed a piece of paper with a caption at the top that proclaims that THIS IS A LEGALLY BINDING CONTRACT. The law ignores that piece of paper given the circumstances under which it was made.
So I was puzzled when I heard about a paper written by a certain Harvard law professor, J. Mark Ramseyer, titled “Contracting for Sex in the Pacific War.“ I had heard the paper was about Korean women who had been forced to work in brothels during the 1930s and 1940s. Surely the author of that paper understood that contract law distinguished contracts that parties entered into freely and voluntarily from those which a party was coerced into signing? Not surprisingly, the paper generated controversy and many scholars refuted its dubious assertions. There were several excellent commentaries, including this one from Harvard law professor Jeannie Suk Gersen here and this one by Professors Yong-Shik Lee, Natsu Taylor Saito, and Jonathan Todres here, which address many of the historical and factual inaccuracies in Ramseyer’s account.
To be honest, Ramseyer’s paper is so heartless, arrogant, and just plain distortive that it almost reads like satire. He refers to sex traffickers as “entrepreneurs,” and confuses “rape” for “sex.” He makes claims about contracts even though those contracts don’t seem to have actually existed. Moreover, Ramseyer appears to have invented a universe where there is no such thing as gender violence, racism, colonialism, poverty, war, kidnapping, or deceit. He overlays a not-very good type of “game-theory” analysis on his assailable version of history, and his tone is bloodless and detached, as though he were discussing fungible goods rather than actual people.
Particularly offensive to readers of this blog is Ramseyer’s lazy and flippant use of the word “contract.” He uses the term “contracts” in an attempt to legitimize his outrageous claims, a rhetorical sleight of hand which attempts to transform a heinous international human rights violation into just another commercial exchange. But context matters to contracts and Ramseyer ignores both the identity of the parties and their circumstances. The women he is referring to as “prostitutes” were poverty-stricken Korean women during wartime who were living as colonial subjects stripped of rights by a militaristic, imperial Japan. These young women were tricked into being transported, allegedly for work, miles away from their families, and then they were told that the work they thought they were signing up for – “sex” to Ramseyer, “rape” to most other people - was something entirely different from what they expected. There isn’t a lot of free will or choice involved in this situation. No consent, no contract. There is no bargained for exchange here.
His paper is especially jarring to read in the aftermath of the murders in Atlanta – a tragedy which sparked a nationwide discussion of the intersectional nature of the violence and discrimination faced by Asian and Asian-American women. By ignoring the context, Ramseyer puts forth a particularly disturbing image of Korean women. His paper feeds the sexualized racialized stereotype, the sad and dangerous one that dehumanizes and erases the actual women – women who were desperate, frightened, subjugated, and trapped. To Ramseyer, who they are and what they were experiencing doesn’t matter. But even the most ardent supporter of “freedom of contract” would not go so far as to recognize a bargain in this situation.
Institutions everywhere are talking about the value of diversity in hiring, which is important for reasons of fairness and equity, but also because the work produced by institutions itself will be better with different perspectives and experiences to inform it. Ramseyer’s article is not only tone-deaf and revisionist, it is a perversion of basic contract principles and demonstrates just how far we still have to go.
March 29, 2021 in Commentary, Current Affairs, Miscellaneous, Recent Scholarship | Permalink | Comments (3)
TFW: Terms and Conditions Warn of "Death" and "Permanent Damage"
Last week, we covered the story of a woman who was hit by a baseball and was seriously injured at a Cubs game. At the time she was injured, back in 2018, she was unaware that there was an arbitration clause in the terms and conditions on the back of her ticket. Now we have a story of tickets that warn attendees that if they attend the event (UFC 261), along with 15,000 other people, they are assuming the risk of contracting COVID-19. Buyers are not scared. Tickets are now being sold at 20x face value.
Here's the language:
The story concludes by noting that if somebody gets sick as a result of attendance, UFC President Dana White and the UFC "have more than made sure they are protected legally." Well that depends on whether a boilerplate assumption of risk clause on the back of a ticket is enforceable against somebody who, for example, bought the ticket third-hand at 20x face value.
Hat tip: Stefan Padfield
March 29, 2021 in Current Affairs, In the News, Sports | Permalink | Comments (0)
Saturday, March 27, 2021
Weekend Frivolity: In a Precedented Predicament, the Suez Canal Is Blocked!
According to the New York Times, the most common option for ships that cannot get through the Suez Canal as planned "is to reroute themselves around Africa’s Cape of Good Hope." But you knew that!
However, we have derived some fantastic insights from the most recent blocking of the Suez Canal. E.g.:
From @brcohen95
And this lovely updating of a familiar poem from @Thinkwert
March 27, 2021 in Current Affairs, Famous Cases, In the News | Permalink | Comments (0)
Friday, March 26, 2021
Weekend Frivolity: My Bad Bunny Mask and a Student-Composed Limerick
I am increasingly aware of how dated my attempts at pop-cultural references are. When I started teaching law in 2004, I could assume that Simpsons references and Seinfeld references would be met with some smiles of recognition. That seems to be less the case now. I don't even know who the famous pop stars or movie stars are these days. My students seem to watch a lot of reality television shows, and I am not familiar with any of them. They, for some reason, do not share my enthusiasm for Star Trek or Breaking Bad. We had a moment of shared ground this week having to do with shrimp tails in breakfast cereal, but how long will that last?
Desperate, I asked my students the other day what musicians they liked. Alexis Benitez recommended Bad Bunny. He shared a video, and thus I was not completely ignorant of the young artist when he won a Grammy soon thereafter. Now that I am an unofficial member of the Bad Bunny fan club, Alexis and another 1L Haidee Macedo gifted me a Bad Bunny mask, along with a Limerick commemorating my introduction to Bad Bunnydom. Here they are:
The gift is especially sweet because Alexis and Haidee are in different sections, and in our COVID world, our seven (count 'em!) sections of 1Ls rarely get to interact with one another, and almost never get to meet each other in the flesh. How charming then that a mask of all things should bring together these two 1Ls during this pandemic.
It feels like we are nearing the end of this experience. But until we get there, you can expect to see me in my brand new Bad Bunny mask!
Bad Bunny, can you take us out?
March 26, 2021 in Music, Teaching | Permalink | Comments (6)
Thursday, March 25, 2021
Baseball Fans Aren't As Loyal As They Used to Be
In the classic scope of employment case, Manning v. Grimsley, plaintiff was hit by a fastball presumably thrown into the stands because relief pitcher Ross Grimsley had heard enough comments on his pitching abilities. If you check his stats for that year, you'll find that he was among the league leaders in intentional torts. But the point is, plaintiff, a Red Sox fan, did not sue the Red Sox for failure to maintain the fencing/netting separating players from fans. Plaintiff sued the Baltimore Orioles who employed the irascible Grimsley.
But Laiah Zuniga, injured by a foul ball at Wrigley Field, home to the Chicago Cubs, winners of the 2016 World Series, and, let's assume, many others, sued the home team!
In Zuniga v. Major League Baseball, decided last week, an Illinois Appellate Court upheld a trial court's ruling, denying defendants' (Major League Baseball and the Cubs) motion to compel arbitration. My students in Section 4 will be outraged. They call themselves the back-of-the-ticket readers, and they insist that they always read the fine print and will even take their business elsewhere if they don't like the terms they find there. Ms. Zuniga would not last a day in Section 4. She didn't read the back of her ticket, and so she did not see the warning about the need to stay alert because foul balls could come her way. Nor did she take note of the clause providing for mandatory arbitration of disputes. More shocking still, she did not visit the Cubs' website, where she could have read a more comprehensive version of the team's mandatory arbitration provision. The opinion provides that arbitration agreement in full, but tbh, tl;dr.
The trial court denied defendants' motion to compel arbitration, finding it procedurally unconscionable. Yes, you read that right. In Illinois, a court can strike down a contract or a provision if it is substantively unconscionable, procedurally unconscionable or both. The arbitration clause was in tiny print and thus was too difficult to read and understand, perhaps even for the intrepid members of Section 4.
The Illinois Appellate Court agreed. Its analysis was very context specific and detailed, akin to the "micro-analysis" that courts undertake in the context of wrap contracts, as discussed in Nancy Kim's work, about which we posted yesterday. The court found enough procedural unconscionability in the back-of-the-ticket terms to render the arbitration provision unenforceable. For good measure, the court also found elements of substantive unconscionability, in that plaintiff had inadequate time to opt out of the mandatory arbitration provision. That double-whammy may be enough to deter defendants from appealing to the Illinois Supreme Court.
If they nonetheless do so, I wonder if they have preserved an objection to the Illinois rule accepting either procedural or substantive unconscionability as sufficient to render a contract or some of its provisions unenforceable. If any party would have the wherewithal and motivation to do so, it would be MLB and the Cubs. I can see the argument for refusing to enforce substantively unconcscionable contracts without more, although I think a court would always be able to find some procedural unconscionability if a contract is substantively unconscionable. Why would a party agree to one-sided terms if they had bargaining power? But if your only objection is procedural unconscionability, how are you harmed by terms that are not materially unfair? In this case, it just doesn't seem plausible for plaintiff to argue that, but for the procedural unconscionability, she never would have accepted her ticket if she had known that her claims would be sent to arbitration.
I also wonder why plaintiff thinks she is better off in court than in arbitration. In a court, she might come away with nothing based on assumption of risk, especially if she gets a jury unsympathetic to a plaintiff who failed to bleed Cubbie blue. Can one request a change of venue to the South Side? Moreover, she alleges that she was eating a sandwich that she bought at the stadium when she was hit by the foul ball. To me, eating stadium food goes beyond assumption of risk. It's reckless. An arbitration is more likely to lead to some recovery, at least in my limited experience. Thoughts welcome in the comments.
[Hat Tip to my former student, Don Dechert]
March 25, 2021 in Famous Cases, Recent Cases, Sports | Permalink | Comments (1)
Wednesday, March 24, 2021
Nancy Kim's Annual Wrap Contracts Update
We've got all your contracts needs covered here on the blog. If you need a legal Limerick, we've got them here. If you need to learn about wrap contracts, Nancy Kim's book covers the basics, and her recent article, "New Developments in Digital and Wrap Contracts," forthcoming in The Business Lawyer, keeps you updated on the latest developments.
Last year's update followed courts' articulation and refinement of a reasonable or constructive notice and manifestation of assent requirement. This year's installment features three cases involving Uber which clarify that standard by specifying what indicia of notice and assent must be present and which, if absent, negate consent to a wrap or digital contract. The article then explores the pitfalls that await companies that use multiple versions of their contracts, some electronic, some on paper. Finally, Nancy discusses cases that shows the downside of class action and class representation waivers when a company gets hit with huge filing fees after lots of employees avail themselves of the company's mandatory arbitration provision.
In the Uber cases discussed in Part II of the article, the courts first determine whether the contract terms were “reasonably communicated” to the plaintiff. That part of the test turns on whether the terms are "sufficiently conspicuous." They next evaluate whether the terms were accepted and, if so, how. Courts engage in both a "high-level contextual analysis” and “micro-analysis of particular elements of that context,” and so the outcomes of the cases turn on a very detailed analysis of website/digital design. For example, in one case, an Uber rider was not subject to the company's arbitration clause. When she registered with Uber, she received notice that by registering, she was agreeing to Uber's Terms of Service (ToS), but she was not required to read those ToS or separately agree to them. She was thus unaware that the ToS included an arbitration clause and therefore could not be bound to it. Nancy summarizes the cases:
First, terms accessible only via a hyperlink . . . should be clearly labeled and marked so that the user’s intent to agree to terms is clearly and unambiguously expressed. Furthermore, conspicuousness of terms alone is not sufficient to establish reasonable notice. Rather, conspicuousness is one factor in determining assent. Finally, the reasonableness of notice depends upon the nature of the transaction because the parties may expect certain terms in some transactions but may not expect them in others. Term that are unexpected given the nature of the transaction require specific notice, and blanket assent to terms may not suffice to establish assent to these unexpected terms.
After discussing a few non-Uber cases that raise similar issues, Nancy sums up the recent developments in this area:
Increasingly, courts are incorporating screenshots into their opinions and engaging in micro-level analysis that depends not simply on the color of hyperlinks, but the color of the text and other design elements, the placement of hyperlinks, the text used to attract the user’s attention, and whether there is specific notice of terms that would otherwise be unexpected
March 24, 2021 in Food and Drink, Recent Scholarship | Permalink | Comments (0)
Tuesday, March 23, 2021
Tuesday Top Ten - Contracts & Commercial Law Downloads for March 23, 2021
Welcome back to the blog's weekly excursion into what's happening with recent scholarship in our favorite fields!
Top Downloads For:
Contracts & Commercial Law eJournalRecent Top Papers (60 days)
As of: 22 Jan 2021 - 23 Mar 2021Rank | Paper | Downloads |
---|---|---|
1. | 323 | |
2. | 283 | |
3. | 230 | |
4. | 187 | |
5. | 165 | |
6. | 153 | |
7. | 132 | |
8. | 119 | |
9. | 105 | |
10. | 102 |
Top Downloads For:
Law & Society: Private Law - Contracts eJournalRecent Top Papers (60 days)
As of: 22 Jan 2021 - 23 Mar 2021Rank | Paper | Downloads |
---|---|---|
1. | 283 | |
2. | 153 | |
3. | 102 | |
4. | 97 | |
5. | 94 | |
6. | 93 | |
7. | 92 | |
8. | 83 | |
9. | 72 | |
10. | 70 |
March 23, 2021 in Recent Scholarship | Permalink | Comments (0)
Of Ming Dynasty Bowls and Chelsea Doors
Ever since we broke the news of a man who bought a man who bought a valuable 15th-century bowl for $35 (by linking to stories about the incident), the Internet has picked up on the story and its happy conclusion, with a sale of the bowl for over $700,000 at auction. We posed the non-musical question of whether the doctrine of mistake would apply. Probably not.
Friend of the blog John Wladis reminds us of the similar and yet strikingly different case of the Chelsea doors. According to this account, Jim Georgiou, a former resident of the Chelsea Hotel, went into the hotel as it was being renovated to use the restroom. He noticed that the workers were discarding the old doors, which frankly appear unspectacular. But Georgiou knew that famous artists and celebrities had stayed in the rooms concealed behind those doors, so he rescued them, connected the doors to the celebrities, and then arranged to have them sold at auction, where they fetched over $400,000. Georgiou, who was homeless at the time that he salvaged the doors, shared half the proceeds with City Harvest, which helps feed the indigent in the city.
The New York Times had a fine piece on the unique status of the hotel and the significance of the doors as souvenirs from various cultural moments now swept away by the currents of history. Perhaps the lucky yard-sale enthusiast will be inspired by Georgiou's example and donate some of the proceeds from his find to a worthy cause . . . .
March 23, 2021 in Current Affairs, In the News, Music | Permalink | Comments (1)
New Scholarship: Leases as Forms
David Hoffman (left) and Anton Strezhnev (below, right) have posted Leases as Forms on SSRN. The Article makes use of a database of 170,000 residential leases filed in connection with 200,000 eviction proceedings in Philadelphia between 2005 and 2019. Unsurprisingly, the leases include unenforceable terms and have gotten more pro-landlord recently. Black tenants are more likely to be subject to eviction for crime or drug use on the premises. Surprisingly, unlawful terms are more likely to appear in leases for more expensive rental properties in the richer, Whiter parts of the city.
The authors provide a highly credible explanation for their surprising findings. Leases have gotten worse, especially in affluent neighborhoods, because landlords are availing themselves of form lease agreements that include one-sided and even unenforceable terms. For the most part, apparently with the exception of the special no drugs/no crime addendum for Black tenants, the landlords use the same leases regardless of the tenants. They don't negotiate. Because the authors find strong evidence that landlords prefer to use the same lease form in all of their transactions, the authors are cautiously optimistic that their sample is representative of all leases in the city, even though they only have access to leases that have been filed in connection with eviction proceedings. It seems unlikely that landlords would have one lease form for tenants they might evict and another form for those they wouldn't.
The authors' analysis of "bad" lease terms focuses on three terms they consider unenforceable in most cases and one term that is enforceable but oppressive. The unenforceable terms are: liability waivers, "as is" clauses that purport to waive the implied warranty of habitability, and penalty clauses for holdovers. The oppressive clause waives the standard 15-30 day notice period prior to eviction. Exculpatory clauses and notice waivers are found in the majority of leases. The authors largely attribute the increased prevalence of these "bad" lease terms to the use of shared lease forms, and they note that the lease forms with the most oppressive terms are growing more popular among landlords.
The authors find some significant race-based distinctions. While overall, Black tenants are less likely to be subjected to the types of shared leases that contain oppressive terms, they are nonetheless more likely to be subjected to oppressive terms. The authors think this outcome is likely a result of two factors. First, the shared leases entered into with Black tenants are often the most oppressive. Second, the proprietary leases into which Black tenants enter also include oppressive terms One way to read the narrative is to observe that the oppressive terms once found mostly in proprietary leases used in Black neighborhoods have now found their way into the form contracts now used more heavily in predominantly White neighborhoods. In addition, landlords in majority-White neighborhoods require that their Black tenants agree to lease terms that permit eviction based on crime or drug use on the premises. Here too, a clause that was common in proprietary leases in poorer neighborhoods may have migrated into the form contracts now favored in majority-White districts.
Because landlords rely on a few standard leases that share a limited number of oppressive or unenforceable terms, the authors suggest that a regulatory fix might be relatively easy here. The regulation need not come in the form of legal prohibitions on certain lease provisions. Rather, public pressure on the non-profit organizations that make shared leases available to landlords might suffice.
The paper nicely illustrates how form contracting creates gross inequalities of bargaining power regardless of the wealth or sophistication of the consumer/renter. We might be inclined to think that at least more-well resourced people can negotiate for better terms than form contracts provide: that we might be able to pay more to avoid mandatory arbitration, class-action waivers, disclaimers of liability, limitations on warranties, or even terms less clearly salient provisions such as choice or law or choice of forum clauses. At least in the residential leasing context, the authors' work suggests that the people and entities who stand behind form contracts are not open to negotiation on the terms of those contracts. The playing field has been leveled, but only by decreasing the bargaining power of anyone subjected to boilerplate terms.
And if you can't even negotiate the terms of your lease, often the item that accounts for the largest chunk of your monthly expenditures, what chance do you have to negotiate on smaller contracts? There, the stakes are much smaller for you, but your counter-party is doing a volume business and will not take the time to dicker over the terms of individual contracts. Indeed the person you deal with will often lack authority to change the terms, even if they were willing to do so.
March 23, 2021 in Recent Scholarship | Permalink | Comments (4)
Monday, March 22, 2021
More Student Suits Suing Universities for Breach and Unjust Enrichment
Last week, both Sid DeLong and I posted on the Burt case, consolidating cases against universities in Rhode Island. Those suits did not succeed, at least to the extent that they sought refunds of tuition. Claims relating to fees survived the universities' motion to dismiss.
In the comments on my post, a reader helpfully pointed us to this site, which references two similar claims brought against Boston University and Stonehill College. Those two cases survived motions to dismiss.
In In re: Boston University COVID-19 Refund Litigation, just as in Burt, plaintiffs alleged on behalf of a class of similarly situated students breach of contract and unjust enrichment in connection with BU's decision to close its campus in March 2020 in response to the global COVID-19 pandemic. Students sought recovery of tuition paid for courses in the Spring 2020 semester on the ground that students had paid for in-person instruction and hand not received it.
Drawing all inferences in plaintiffs’ favor, the federal district court on January 7th found that it could not, as a matter of law, "say that no student could have reasonably expected that paying the tuition charged for the Spring semester of 2020 and registering for on-campus courses would entitle them to in-person instruction." The court accordingly denied BU's motion to dismiss as to tuition. It similarly denied BU's motion to dismiss as to fees and access to facilities. Adopting similar language, the court observed that it could not conclude as a matter of law "that plaintiffs could not have reasonably expected that their payment of mandatory fees would grant them access to at least some of the on-campus facilities and resources shut down by BU on March 22, 2020." For the same reason, the court refused to dismiss plaintiffs' unjust enrichment claims. The court only dismissed claims to entitlement to compensation for room and board for the week of March 15th-22nd. BU encouraged students to leave campus during that week, but it did not evict students.
In Moran v. Stonehill College, plaintiff sues on behalf of a proposed class, seeking recovery sounding in breach of contract, unjust enrichment, and statutory deceptive practices claim that was dismissed as inapplicable to a non-profit institution.
Like other schools, Stonehill shut down in mid March. It refunded 42% of students' meal plan payments, but Moran alleges that Stonehill unfairly offered only a credit on room and board to be used towards Spring 2020. Stonehill also allegedly has not refunded 42% of the fees that students paid for services to which they had no access after mid-March. Plaintiff also seeks to recover the difference in value between in-person and online instruction, pointing out the Stonehill charges less for online courses.
Citing the B.U. case and Stonehill's promotional materials in its February 16th opinion, the Massachusetts Superior Court found that it could not dismiss plaintiffs breach of contract claims or unjust enrichment claims at this stage. The court rejected Stonehill's attempt to seek dismissal based on a force majeure clause in its online academic catalogue, the "Hill Book." Force majeure, the court noted, would only excuse performance. It would not entitle Stonehill to payment for services that it had not provided.
It will be interesting to see how the cases proceed from here. I am still skeptical about plaintiffs' chances of success on the merits in their case in chief. If they do succeed, the results will be ruinous to some small colleges that were suffering financially even before the pandemic. Going forward, look for clear language in college recruitment materials stipulating that colleges and universities cannot guarantee that students' actual experiences will correspond to those depicted in marketing materials. But anyone who has ever been drinking a carbonated beverage while watching a commercial for carbonated beverages already knows that such experiences may vary.
March 22, 2021 in Recent Cases | Permalink | Comments (1)
Thursday, March 18, 2021
Sid DeLong on Burt v. Bd. of Trustees
“I Paid for a First-Class Ticket, But They Made Me Fly Coach”: Restitution of Tuition After Switching From In-Person to On-Line Classes
Sidney W. DeLong
In Burt vs Board of Trustees of the University of Rhode Island (D.R.I. 2021) noted by Jeremy Telman, students claimed return of part or all of their tuition for the switched semester on grounds of unjust enrichment, the school having been paid for services and benefits that it did not supply.
Analysis. The court denied on Rule 12 (b) (6) grounds student claims for restitutionary return of tuition paid for in-person classes on three grounds of interest to contract theory.
The first was that, in all the marketing materials by which the schools persuaded students to enroll, the schools never expressly promised to teach on the campus with in person classes, so that a switch to on-line classes did not breach any contract with the students. The court dismissed general references touting on-campus facilities and experiences as “puffery,” implying that no reasonable student would have relied on them as binding promises. It found no breach alleged of the more specific promises made about particular courses.
The court also refused to find any implied promise to conduct in-person, on-campus classes from the visual marketing material picturing such instruction, the course of dealing that had provided such instruction for years, or from the school’s practice of charging higher tuition for in-person classes than it did for on-line classes.
To the students no doubt this was rather like an airline selling first-class tickets, herding the buyers into coach, and then arguing that “We never actually promised to seat you up front in roomier seats, serve you free drinks and goodies, or treat you any different from our coach passengers. Look at your ticket!” Under Article 2, any description of the goods that becomes part of the basis of the bargain creates an express warranty that the goods would conform to the description. U.C.C. § 2-313. The schools’ use of vividly descriptive marketing materials was intended to become part of the basis of the bargain that the credulous students thought they were paying all that money for. The court’s holding that as a matter of law no implied promise of in-person classes resulted from the schools’ recruitment practices evinces a blinkered literalism more appropriate to the eighteenth century than the twenty-first.
Equally formalistic was the second reason the student claims failed. Even if such promises had been made, the schools expressly reserved the discretion to cancel or change any classes offered in the course catalogue, apparently even after students had paid for them and had begun to attend class. It was right there in the fine print. The court held that such discretion was designed precisely to deal with emergencies such as the pandemic. It was unnecessary to hold that the discretion was limited by good faith, a holding that would have been problematic given the court’s ruling on the first issue.
To move to the third issue, denial of restitution, the court failed to explain why the exercise of the discretionary power to shift classes on-line should not entitle students to restitution. If the in-class performance had been completely excused by impracticability, for example, the students should have recovered tuition payments for the excused performance in order to prevent unjust enrichment. See Restatement (Second) of the Law: Contracts § 272. In this case, the court found that retention of tuition was not unjust because the universities provided on-line education and the students earned academic credits, as promised.
As an aside, it may have been difficult to show that the switch to on-line training “enriched” the schools by reducing their costs. At least for schools that were not already offering on-line classes for all subjects, the mid-semester switch significantly increased expenses in technology, lesson-planning, teaching assistants, etc. It is not clear whether the switch saved any variable costs associated with in-person classes. It is also unclear whether ending on-campus housing and student services reduced or increased the associated costs. In any event, it is likely that the schools had already spent the tuition dollars the students were seeking.
Other Reflections.
It is undeniable that many students did not get what they thought they had been promised and had paid for. All the schools had offered on-line courses at lower tuition than what the plaintiffs had paid when they elected the in-person classes. The switch to on-line classes after tuition for in-person classes had been paid feels like a classic bait-and-switch and the fine print disclaimers don’t help.
Was the contract analysis sufficient? Even if the promotional literature did not create enforceable obligations at the time of enrollment, might additional contractual obligations have arisen after the students’ initial decision to enroll? Consider how many different contracts students and colleges might be thought to enter into. There is the enrollment contract, the individual class registration contract, the dormitory lease, the meal plan, the student services contract, health services contract, the scholarship contract, the student conduct code contract, the athletic contract, the privacy and reporting contract. The terms of many of these contracts are not mutually agreed upon or even expressed, but students pay tens of thousands of dollars for them and must enjoy some enforceable rights as a result.
The decision should not obscure the growing public awareness that the relationship between students and institutions of higher learning is contractual. It is simply untenable that, in recruiting persuade students to enroll for four years of education, a college makes no enforceable promises about the nature of the services it will provide, or that all of the descriptions that it proffers are only aspirational puffery which no reasonable person would take literally in making a major financial decision, or that fine-print reservations of discretion effectively render illusory any promises that may be inadvertently made in the literature. Nor is it clear that enforceable contracts were not made when, after matriculation, students registered for specific courses, with specific professors, at specific locations, and paid tuition for those specific courses in advance. While schools may reserve the right to cancel the course without penalty, few would claim they could do so without refunding the tuition. And even after Burt, few would claim the outright privilege of substituting an on-line course for an in-person course without offering a tuition refund.
On the Lighter Side. For the readers of this blog, I think there may be a more unsettling message in growing recognition that the professor-student relationship is contractual. The days of professors bemoaning “consumerist” student perspectives on the business of education are past. There seems to be something about charging students $150,000 for the experience that tends inevitably to commercialize the relationship. Nevertheless, it is sobering to tell a class of first-year contracts students that your law school owes them enforceable contractual obligations and that you will teach them how to enforce them. Especially sobering given that the grim employment market has led law students to sue their alma maters for misrepresentation and fraudulent failure to disclose employment and bar passage data at the time of enrollment.
The situation recalls the story about the Sophist (the law professor of his day) whose contract with his student provided that tuition was due when the student won his first case (a sort of educational contingency fee a modern law professor would not dare propose). When the student failed to win any cases after “graduation,” the Sophist sued for his tuition. The Sophist argued that if he won his suit, the student would owe the tuition by virtue of the court’s judgment, while if he lost his suit, the student (having won his first case) would then owe the tuition under the contract. The student, having been well-taught, made the obvious counter-arguments: “Either the court rules in my favor, meaning I owe you nothing, or the court rules against me, meaning I have not won my first case and again I owe you nothing.”
One hopes that, facing a tight job market, our law graduates do not exercise their newly-minted skills in suing us for return of their tuition. But if they succeed, we can at console ourselves when we write the checks that their legal education was useful after all.
March 18, 2021 in Commentary, Recent Cases, Teaching | Permalink | Comments (0)
Tuesday, March 16, 2021
Tuesday Top Ten - Contracts & Commercial Law Downloads for March 16, 2021
Top Downloads For:
Contracts & Commercial Law eJournalRecent Top Papers (60 days)
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1. | 279 | |
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4. | 192 | |
5. | 181 | |
6. | 150 | |
7. | 143 | |
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10. | 106 |
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Law & Society: Private Law - Contracts eJournalRecent Top Papers (60 days)
As of: 15 Jan 2021 - 16 Mar 2021Rank | Paper | Downloads |
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2. | 145 | |
3. | 114 | |
4. | 96 | |
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10. | 70 |
March 16, 2021 in Recent Scholarship | Permalink | Comments (0)
Monday, March 15, 2021
Students' COVID-Based Breach Claims Rejected in Rhode Island
Plaintiffs in Burt v. Board of Trustees of the University of Rhode Island are students who allege that four Rhode Island universities breached contracts and/or were unjustly enriched when they providing only remote learning rather than the in-person experience the students bargained for. These changes in curriculum delivery followed of course from the advent of the global COVID-19 pandemic.
The U.S. District Court for Rhode Island consolidated five different actions seeking recovery of fees and tuition from the four universities. The court granted defendants motion to dismiss as to the tuition claims, while allowing the fees claims to proceed.
The plaintiffs alleged that the universities assumed contractual obligations through their catalogues and brochures. The court found that none of the materials cited by plaintiffs created contractual obligations. According to the court the materials were "more akin to puffery, rather than enforceable promises." Moreover, "all four universities explicitly reserved the right to unilaterally alter the administration of their academic offerings." In addition, the court noted, that the pandemic created extraordinary circumstances that left the universities will little alternative to the curricular modifications they made.
Plaintiffs' unjust enrichment claims relating to tuition were likewise dismissed, as were claims for conversion and for money had and received.
Plaintiffs' fees claims faired more favorably. In this context, plaintiffs could point to specific representations that the universities made regarding programs and activities that were to be provided to students in exchange for their fee payments. The courts respect for academic discretion did not extend so far as to allow the defendants to flout contractual obligations.
March 15, 2021 in Current Affairs, Recent Cases | Permalink | Comments (2)
Wednesday, March 10, 2021
John Carroll University Rebranding as Humpty Dumpty University
As Colleen Flaherty writes here in Inside Higher Education, John Carroll University, like many small colleges and universities, is having a hard time financially. It has already terminated two tenured professors and eliminated its Art Department. Further cuts would ordinarily require a finding of financial exigency.
But John Carroll gets words to mean whatever it chooses them to mean. Financial exigency now means a projected budget shortfall of six percent or more and a cloudy future. This is termed a "budgetary hardship." You might think that the question is how can words mean so many different things, to which John Carroll (now Humpty Dumpty) responds, "The question is which is to be master -- that's all."
Humpty Dumpty University's administration has proclaimed a new policy permitting termination of tenured faculty upon a determination of a budgetary hardship, and it has issued a new faculty handbook that eliminates a right of appeal from such terminations. The old handbook, Humpty Dumpty says, was outdated. The new policies, on the other hand, "prioritize the retention of tenured positions and the preservation of academic freedom, to which the board is fully committed.”
Faculty members are impressed. They had no idea that words like "tenure" and "academic freedom" were consistent with policies that permit the non-appealable termination of full-time faculty members based on unilateral declarations of economic hardship.
"That's a great deal to make words mean so many different things," the faculty ventured in a thoughtful tone.
"When I make a word do a lot of work like that," said Humpty Dumpty, "I always pay it extra. Ah, you should see 'em come round me of a Saturday night," Humpty Dumpty went on, wagging his head gravely from side to side, "for to get their wages, you know."
Well, at least somebody is getting paid.
March 10, 2021 in Commentary, Current Affairs, Labor Contracts | Permalink | Comments (1)
Tuesday, March 9, 2021
Tuesday Top Ten - Contracts & Commercial Law Downloads for March 9, 2021
Welcome to this week's edition of the Tuesday Top Ten, where ContractsProf Blog checks out what is trending in new scholarship on SSRN in our favorite fields. Enjoy!
Top Downloads For:
Contracts & Commercial Law eJournalRecent Top Papers (60 days)
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1. | 278 | |
2. | 208 | |
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4. | 173 | |
5. | 135 | |
6. | 134 | |
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10. | 102 |
Top Downloads For:
Law & Society: Private Law - Contracts eJournalRecent Top Papers (60 days)
As of: 08 Jan 2021 - 09 Mar 2021Rank | Paper | Downloads |
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1. | 278 | |
2. | 135 | |
3. | 125 | |
4. | 102 | |
5. | 94 | |
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7. | 82 | |
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10. | 75 |
March 9, 2021 in Recent Scholarship | Permalink | Comments (0)
Monday, March 8, 2021
Promises, Promises on Cardozo, Barry Manilow, and Van Halen
I am teaching Jacob & Youngs v. Kent this week, which makes me happy. I am always happy when I get to teach a Cardozo opinion just like I would be happy if I were teaching in the humanities, and this was the week we get to discuss James Joyce's "The Dead." Always happy to have new insights on the case, and the Promises, Promises episode on the case is full of them.
For one thing, the hosts point out, in passing, that Kent might have had a special yearning for Reading pipe, because it had a special status. He longed to shower every morning in water coming through his Reading pipes, the Manolo Blahnik of pipes. Knowing that the water he was using was flowing through the high-status Reading pipes delighted him, and he so he would sing Barry Manilow's "Looks Like We Made It" every morning as he exfoliated. Yes, I know, that's totally not what that song is about. It doesn't help. The hosts' brief, anachronistic mention of the Manilow song planted an earworm, leaving me no choice but to exorcise it by sharing it with you.
In the alternative, Professors Wilkinson-Ryan and Hoffman entertain the possibility that the Reading pipes were Kent's brown M&Ms, a topic on which we have previously posted. If that were the case, however, the time to object to the Reading pipes was before completion. If the building is otherwise sound, the lack of Reading pipe does not serve the purpose that the brown M&Ms allegedly served.
March 8, 2021 in Commentary, Contract Profs, Famous Cases, Music, Teaching | Permalink | Comments (2)