ContractsProf Blog

Cycling Contracts News

Lighter posting for the next fortnight as I am engrossed in the 2021 Tour de France.

But, I am so impressed with the range of New York Contract Law Decisions, who has directed me to a decision of the Antwerp labor court, I had to make time to report on the Wout van Aert case. 

Who is Wout van Aert?  Well, he's a talented cyclist

He is currently third in the general classification of the Tour de France after finishing 20th last year, and although he did not finish the 2019 edition, he won two stages (one was a team time trial, but still) before crashing into some fencing in a time trial.  Before becoming a road cyclist, he was a dominant cyclo-cross rider.  I'm not sure what that is exactly, but it seems to involve getting dirty and sometimes having to carry your bike up stairs and also ride it down stairs and just about anything else.

As recounted here, in 2018, van Aert rode with team Verandas Willems-Crelan (Verandas), but he was dissatisfied on that team and was due to transfer to Jumbo-Visma in 2020.  Jumbo was willing to take van Aert a year early, and so he jumped ship and began riding with Jumbo in March 2019.   Verandas sued, seeking $1.3 million in damages relating to lost sponsorships once the team lost its star rider.  van Aert alleges that the team had defaulted on the agreement.  It's not clear how.  He won in the first round in 2019.  Somehow, the case wound up back in court, and the Belgian court has now sided with Verandas, awarding just over $800,000. 

An appeal is expected.  Stay tuned.

Tuesday Top Ten - Contracts & Commercial Law Downloads for June 29, 2021

What's trending in contract and commercial law on SSRN? You picked the right day to ask. We proudly present to you this week's Tuesday Top Ten!

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 30 Apr 2021 - 29 Jun 2021

Rank	Paper	Downloads
1.	Tokenized: The Law of Non-Fungible Tokens and Unique Digital Property Joshua Fairfield Washington and Lee University - School of Law	1,314
2.	Justice in Arbitration: The Consumer Perspective Farshad Ghodoosi and Monica Sharif David Nazarian School of Business & Economics, California State University, Northridge and California State University, Los Angeles	547
3.	The Eye in the Sky Delivers (and Influences) What You Buy Hadar Yoana Jabotinsky and Michal Lavi Tel Aviv University - Cegla Center for Interdisciplinary Research of the Law and Hebrew University of Jerusalem - Faculty of Law	307
4.	Predicting Consumer Contracts Noam Kolt University of Toronto	174
5.	Manipulation by Algorithms. Exploring the Triangle of Unfair Commercial Practice, Data Protection, and Privacy Law Philipp Hacker European University Viadrina Frankfurt (Oder) - European New School of Digital Studies	137
6.	Taking Stock of Chapter 11 David A. Skeel University of Pennsylvania Law School	133
7.	Six Levels of Contract Automation: The Evolution to Smart Legal Contracts - Further Analysis Susannah Wilkinson and Jacques Giuffre Herbert Smith Freehills and Herbert Smith Freehills	126
8.	Default Rules: Theoretical Foundations Eyal Zamir Hebrew University of Jerusalem - Faculty of Law	118
9.	The Moral Obligation to Perform Contracts Brian Bix University of Minnesota Law School	116
10.	Private Law Theory and the Past Stephen James Bogle University of Glasgow - School of Law	112

 

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 30 Apr 2021 - 29 Jun 2021

Rank	Paper	Downloads
1.	Justice in Arbitration: The Consumer Perspective Farshad Ghodoosi and Monica Sharif David Nazarian School of Business & Economics, California State University, Northridge and California State University, Los Angeles	547
2.	An Elusive Finality: The Illusive Standard for the Modification of Confirmed Chapter 13 Plans Amir Shachmurove Harvard Law School	535
3.	A Troublesome Prospect: Section 1322(b)(2) and a New Generation of Mixed-Use Developments Amir Shachmurove Harvard Law School	446
4.	Predicting Consumer Contracts Noam Kolt University of Toronto	174
5.	Six Levels of Contract Automation: The Evolution to Smart Legal Contracts - Further Analysis Susannah Wilkinson and Jacques Giuffre Herbert Smith Freehills and Herbert Smith Freehills	126
6.	Default Rules: Theoretical Foundations Eyal Zamir Hebrew University of Jerusalem - Faculty of Law	118
7.	The Moral Obligation to Perform Contracts Brian Bix University of Minnesota Law School	116
8.	Justice in Contracts Hanoch Dagan and Avihay Dorfman Tel Aviv University - Buchmann Faculty of Law and Tel Aviv University - Buchmann Faculty of Law	97
9.	The Code of Data Capital: A Distributional Analysis of Law in the Global Data Economy Roxana Vatanparast Harvard Kennedy School	90
10.	The Liberal Promise of Contract Hanoch Dagan Tel Aviv University - Buchmann Faculty of Law	83

Rich Paul and the Role of Sports Agents in the NBA

As reported in Isaac Chotiner's New Yorker article, Lebron James’s Agent Is Transforming the Business of Basketball, Rich Paul has been changing the way athletes and agents negotiate with teams. Paul, the agent for LeBron James and other N.B.A all-stars, started his agency, Klutch, nine years ago.

Paul and James became friends in 2002 when James -- only seventeen—was expected to be N.B.A.’s No.1 draft pick. When the two first met, Paul was twenty-one and selling vintage jerseys out of his trunk. James took an interest in one of the jerseys, the two struck up a friendship and stayed in touch. They bonded over being Black kids who grew up in the inner city and the difficulties that come with that.  That background has given Paul a unique advantage when advising young players with similar experiences growing up.  Paul's mother struggled with drug addiction.  His father died of cancer while he was in college. He would have finished, he said, because it was important to his father.  But after his father died, Paul's business ambitions took over.

Photo by Keith Allison

Their contractual relationship began the summer of 2003, when James signed with the Cleveland Cavaliers. James began paying Paul a salary of $48,000. According to Chotiner, James regarded the payments as “an investment in what the relationship could become.” A few years later, Paul began working for James then-agent Leon Rose, at Creative Artists Agency (CAA).

Paul left CAA and formed Klutch Sports Group in 2010 after the controversial announcement made by James on “The Decision” —an  ESPN live broadcast—in which he declared he was leaving the Cavaliers. James declared “I’m going to take my talents to South Beach and join the Miami Heat.”  The press took a very dim view of "The Decision," but James has no regrets (or will admit to none), and his move from Cleveland to Miami became the model for later moves by star players who want to dictate where they play and with whom they play.  

Paul began to develop powerful influence in the N.B.A with James as his star client. They have become associated with “player empowerment.” Player empowerment is the influence that athletes wield as they change teams and build new fan bases. The argument in favor of player empowerment is that too much control has been in the hands of teams who can trade a player on a whim. Players should have some say in where they work and live. This philosophy allows the league’s best athletes to have the most leverage because they bring in the fans, jersey sales, and general revenue. Paul believes players should have more power over who and where they sign with.

The dynamic between the league, athletes, and player empowerment, is intertwined with race. Historically, basketball—a majority Black sport—has always been run by white owners. As players have become increasingly more outspoken about politics, the league has had to follow suit, like embracing the Black Lives Matter movement.

The dynamic in NBA player contracts has certainly changed, at least at the top of the NBA food chain.  The game used to be that owners would lock in young players to multi-year contracts.  If the players underperformed or became injury-prone, the owners retained the ability to trade them.  If the players exceeded expectations, they were systematically underpaid until their contract came up for re-negotiation.  Sorry Scottie Pippen.  Now, the star players can reverse the option.  With Paul's help, they star prospects can now negotiate generous contracts but retain some contractual flexibility to move to different teams, and the league and the owners seem relatively powerless to prevent them from doing so.

Critics of player empowerment say it has put too much power in the hands of players. Bomani Jones, a sports journalist for ESPN state that player empowerment is a catchall for the fact that the league has done a terrible job empowering team, and that the N.B.A. has a problem with real estate; they have teams in places where young Black men do not want to live.

Although Paul is proud and willing to fight for his clients, he struggles with the impression that he is constantly battling with teams. He said that perception is all wrong. “What I am focused on was how to educate the athletes. It’s one thing to be a black man in America it’s a totally different thing to be a black athlete.”

For Black athletes, Paul explained, the sudden wealth of an NBA contract comes with a ‘black tax.’ Black tax is the difference in experience black athletes face compared to that of white athletes. For some Black athletes, their number of dependents is higher, their education may be lower, their financial literacy lower, and their family infrastructure is lesser. Paul and others at Klutch say they see their job not only as making money for players, but also teaching them how to spend it. Furthermore, family members of young athletes historically have only seen White men in a position of agent or head coach, so that is who they tend to seek out and listen to. It is difficult for Paul to represent White athletes because they do not seek him out and they do not expect or trust Black agents.

Photo by All-Pro Reels

Klutch became known for driving hard bargains, especially for James. Paul's reputation was cemented when James joined the Lakers in 2018. The following year, Paul pressured New Orleans Pelicans to trade Anthony Davis to the Lakers—which cemented the roster that enabled the Lakers to win the NBA championship in 2020.  Paul's strategy has aggressive:  he let it be known David was demanding a trade and that the he really wanted to be traded to the Lakers.  Davis's value to the Pelicans dipped precipitously.  He didn't want to play for the team and he didn't want to risk injury.  Paul effectively called the bluff of the owners.  They disapproved of the tactics, but Paul forced them to recognize the market power their star players wield.   The N.B.A. fined Davis fifty thousand dollars for the trade demand.   Why even bother?

Paul’s success has led to debate about what it takes to be a good agent. Paul cannot match his rivals in formal education.  Most other agents are lawyers or have lawyers. But Paul understands the business, and he understands the psychology of the players, the agents, and the "Euro men in their fifties" who still make the decisions for teams. Now for Paul’s star clients, the job is about finding new ways to wield power, including using the media. In 2018 Paul negotiated an unconventional deal for NBA prospect Darius Bazley. Bazley reneged on a commitment to play for Syracuse University but was later paid $1 million for an internship at new balance. The next year the NCAA announced a new rule: agents could not represent college athletes unless they themselves had a college degree. Then James took to Twitter and dubbed the new regulation #TheRichPaulRule. Within a week the NCAA rescinded the rule.

Chotiner's article provides a behind-the-scenes look at how Paul recruits clients.  He recounts a Zoom call between Paul and an NBA-prospect's mother.  Paul encourages the young athlete to talk about his teammates and his team mentality, about his enthusiasm for playing defense and being a play-maker rather than just a scorer or showboater.  The mother quickly grasps that the strategy is to spout cliches to counteract the prejudices about young Black athletes her son is likely to encounter.  But to her, it sounds like forcing her son to repress his personality and bow before these new White masters.  Paul is playing the long game.  For him, it is not about bowing down to anyone.  it's about achieving a balance that enables young stars to rise.   

Once players rise to stardom, they have more freedom to speak for themselves.  Klutch has athletes speak out on political or social issues. Michael Jordan would not even say whether he preferred classic Coca-Cola or new Coke.  James has spoken out on the killing of George Floyd, police brutality, and Georgia’s restrictive voting laws. Paul said that however the players decide to involve themselves is up to them, and that they should not be tone-deaf to things happening around them. 

Photo by Keith Allison 

The new model works well for the star players, but does it improve the sport?  From my perspective in Oklahoma City, I still hear complaints about Kevin Durant's abandonment of the Thunder.  I hear this from White fans, and I suspect that, while the NBA's popularity bridges racial gaps in the U.S., the people buying (unbelievably expensive) seats in stadiums and (unbelievably expensive NBA gear) are mostly White. 

I've only been here a year, and with COVID, people aren't thinking much about attending sporting events (other than college football, which never stopped here), but nobody has ever brought up the Thunder in conversation with me since I arrived.  I follow basketball a little, but I can't name a single Thunder player.  I follow the Bulls, but I know at the start of every season that the Bulls do not have three all-stars, so they will not be in serious competition for the championship.  Seems like a doomed model for small-market cities like New Orleans, Oklahoma City, and the New York Knicks.

Still, it seems preferable to baseball contracts where, for some reason, owners lock themselves in to multi-year contracts valued in the hundreds of millions of dollars with players who are nearing their peaks and will be paid tens of millions late in their careers.  Such older players often are of limited value to the club, often relegated to the roll of designated hitter.   I wonder whether, for that reason, the average age on American League teams is a bit higher than on National League teams.  On the one hand, perhaps it is nice that these players get to enjoy the riches denied them in their primes.  On the other hand, it must frustrate elite athletes to compete and under-perform.  It also hurts their teams, because salary caps prevent baseball teams with older, expensive players from trading for top players still in their prime.

Thanks to ContractsProf Blog Intern, Alyssa Cross, for her research assistance!

Trump Organization Sues New York City for Breach of Bronx Golf Course Contract

Soon after the January 6th assault on the Capitol Building in Washington, DC,  New York City attempted to terminate contracts with the Trump Organization to operate two ice skating rinks and a carousel in Central Park (left).  It seemed like that would result in an early end to the ice skating season during a pandemic.  New York parents were desperate for ways to divert their children and fend off boredom.  They delighted in an opportunity to ponder whom they found more despicable: their former President or their current mayor. The City blinked on that one.  Those contracts with the Trump Organization were due to lapse in April in any case, so the City chose to let them run their course and not renew them.

Now, according to the New York Times, the Trump Organization is suing New York City for allegedly wrongfully terminating a 20-year contract the organization had with the city. The lawsuit centers around the city-owned course in the Ferry Point section of the Bronx, called Trump Golf Links at Ferry Point. The Trump Organization was in the sixth year of operating the course since its opening in 2015.  

The Trump Organization alleges  that “Mayor de Blasio had a pre-existing, politically-based predisposition to terminate Trump-related contracts, and the city used the events of January 6, 2021 as a pretext to do so.” A spokesman for the mayor, Bill Neidhardt, responded, saying: “Donald Trump directly incited a deadly insurrection at the U.S. Capitol. You do that, and you lose the privilege of doing business with the City of New York.”  Oooh.  That's a new wrinkle on a morals clause!

Actually, the mayor's spokesman should leave the lawyering to the lawyers.  They claim that the Trump Organization defaulted on its contracts when it failed to attract a major tournament to the course.  It is unlikely to do so in the future. The woke PGA has recently announced it would no longer be allowing a Trump-owned course in New Jersey host one of its major Tournaments.

The Trump organization claims it had no obligation to attract a major tournament. Rather, its only obligations was to maintain “a first class tournament quality daily fee golf course.”  It's legal papers include statements from professional golfers, including Dustin Johnson and Bryson DeChambeau, describing the course as “tournament quality” and  “first class.”  Not bad, but if they really wanted to impress, they should have characterized the course as "astonishingly excellent".

Thanks to ContractsProf Blog Intern, Sydney Scott, for her research assistance!

How Money Laundering Deals Work, From Matt Levine

Jason Bateman plays a money launderer in Ozark.
Photo by Georges Biard, CC BY-SA 3.0 via Wikimedia Commons

I LOVE Matt Levine's column on Bloomberg.  He's very knowledgeable about money stuff, so I learn a lot, but he's also incredibly funny, so I laugh a lot.  It's the best possible combination.  I can introduce topics relating to financial transactions to my students, imitate Levine's way of storytelling, and trick my students into thinking financial transactions are interesting.  They go into investment banking, make millions before realizing it was all a trick, and just before retiring, they donate to my law school, and I get an endowed chair!

Anyway, this is how Matt Levine describes a contract for money-laundering. 

You are an art dealer. A woman walks into your gallery and says, enunciating very clearly, “hello, I am a drug dealer, I have a lot of money and would like to launder it using art. Can you help me?” You explain to her the basics of art-based money laundering: She can use her drug money to buy art from you, with no real record of the transaction; later, she can say that she inherited the art or bought it cheap at a yard sale, and sell it for a lot of clean taxable money. She says “ah great thank you very much, I will be back with some drug money that I have earned by dealing drugs.” Later she comes back and says “hello, it’s me again, remember, the drug dealer?” She hands you a bag of money and says: “I would like to buy some art with this money, which smells like drugs. Smell it, see? Drugs. I guess I need to launder it, ha ha ha. To get the smell out. Because it smells like drugs. Because I got it from selling drugs. Because I am a drug dealer.” 

The question is: What does this woman do for a living?

If you answered “she’s a drug dealer” you are definitely in prison right now because the only possible answer is “she’s a police officer.”

The great thing about Matt Levine's columns is that they are absurd but they are also close enough to being true that they are absurdly illuminating.  His version is only a slight exaggeration of the story reported in this article in the New York Times.

New York Case Law Review: When Anti-Vaxers Divorce & the Return of the Dumbest Argument Ever in a Contracts Dispute

Nifty little case: parents entered into a separation agreement in 2017 which, as modified in 2019, included a provision that "[s]o long as the [father] maintains a residence in [a certain school district,] the children shall continue to attend school within [that school district] unless both parties expressly agree in writing to change the schools of the children."  But the mother refused to get the children vaccinated, and so they could no longer attend their school, and she home-schooled them.  The father sought an order compelling the mother to get the children vaccinated and enroll them in the public school.  In Matter of John U. v. Sara U, the Supreme Court, App. Div. (3rd Dept.) found that the family court erred in dismissing the petition.  The provision in question was ambiguous and the parties were encouraged to work out a quick solution.   

The mother had relied on a religious exemption from the vaccination requirement until the 2019 school year.  State law changed in June 2019 and eliminated the exemption.  Given recent SCOTUS decisions in Tandon v. Newsom and Fulton v. City of Philadelphia, it seems likely that New York is going to have to revive its religious exemption, and the former couple's darling little vectors of disease can magically transform the drudgery of ordinary school days into thrilling super-spreader events.

Bernard v. Citibank amuses me because I litigated a similar case when I was in practice. Our client had created a revolving credit facility for the CEO of a now-bankrupt corporation.  His loan was secured with now-worthless shares of the corporation.  When our client tried to recover, defendant claimed that he had never signed the agreement on which his notarized signature appeared.  But he had taken the money.  The judge called it the dumbest argument he'd ever heard. 

Well, here it is again.  In Bernard, Citibank loaned Bernard $1 million in 2007 secured by a mortgage on a Brooklyn property.  Plaintiff now contends that his signature does not appear on the recorded mortgage, and the mortgage is thus unenforceable.  Never mind that, Citibank responded, plaintiff had ratified the loan because his "own banking statements demonstrated that he had accepted and retained loan advances in the total sum of $996,648.85, which were deposited into his account pursuant to the loan agreement on June 27, 2007.   New York's Supreme Court, App. Div. (2nd Dept.) found that plaintiff was equitably estopped to deny the validity of the mortgage and remitted the case to the Supreme Court for entry of judgment.

H/T The New York Contracts Law Twitter Feed

New in Print: International Negotiable Instruments

Sagi Peari (left), of the University of Western Australia, and Benjamin Geva (right) of Osgoode Hall Law School, have published International Negotiable Instruments.

Here is the concise abstract:

For centuries, negotiable instruments have played a vital role in the smooth operation of domestic and international commerce. The payment mechanisms have been subject to rapid technological progress and law has needed to adapt and respond to ensure that the legal framework remains relevant and effective. This 
book provides a comprehensive and thorough analysis of the question of applicable law to negotiable instruments. Specifically, the authors challenge the conventional view according to which the fundamentals of negotiable instruments law are excluded from the scope and insights of general contract and property law doctrines and as such not subject to the general conflict of laws rules governing them. The authors make concrete suggestions for reform and contemplate on the nature of the conflict of laws rules that can also be applied in the digital age of communication.

Stacy-Ann Elvy's new book on the Internet of Things

Last week, a Senate panel met to discuss the growing dominance of tech giants, Amazon and Google, over the Internet of  Things (IOT) and how that might allow them to accumulate even more power.  The control of Big Tech companies through the use of IOT devices is an important topic that Professor Stacy-Ann Elvy (UC Davis) addresses in her timely new book, A COMMERCIAL LAW OF PRIVACY AND SECURITY FOR THE INTERNET OF THINGS (Cambridge University Press, forthcoming July 2021).  I had the good fortune to read an advance copy and I highly recommend it.  The book is a deep dive into the legal and consumer implications of the Internet of Things and those companies that make and control these devices.  The book is filled with intriguing and alarming stories of how networked “things” affect society, including how they can be used to spy on us and condition us (or our loved ones) to behave in ways that are not always in our best interest.  Prof. Elvy takes a comprehensive approach from a broad, commercial law perspective.  Thus, the book should appeal to readers of this blog who might not think IOT concerns contracts because as the book explains, it most certainly does.

From the publisher’s website:

In the Internet of Things (IoT) era, online activities are no longer limited to desktop or laptop computers, smartphones and tablets. Instead, these activities now include ordinary tasks, such as using an internet-connected refrigerator or washing machine. At the same time, the IoT provides unlimited opportunities for household objects to serve as surveillance devices that continually monitor, collect and process vast quantities of our data. In this work, Stacy-Ann Elvy critically examines the consumer ramifications of the IoT through the lens of commercial law and privacy and security law. The book provides concrete legal solutions to remedy inadequacies in the law that will help usher in a more robust commercial law of privacy and security that protects consumer interests.

The book isn’t officially out until July 2021, but you can be the first one on your block to get one and pre-order your copy here.

Tuesday Top Ten - Contracts & Commercial Law Downloads for June 22, 2021

It's Tuesday, and you know what that means 'round these here parts.

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 23 Apr 2021 - 22 Jun 2021

Rank	Paper	Downloads
1.	Tokenized: The Law of Non-Fungible Tokens and Unique Digital Property Joshua Fairfield Washington and Lee University - School of Law	1,244
2.	Justice in Arbitration: The Consumer Perspective Farshad Ghodoosi and Monica Sharif David Nazarian School of Business & Economics, California State University, Northridge and California State University, Los Angeles	442
3.	The Eye in the Sky Delivers (and Influences) What You Buy Hadar Yoana Jabotinsky and Michal Lavi Tel Aviv University - Cegla Center for Interdisciplinary Research of the Law and Hebrew University of Jerusalem - Faculty of Law	277
4.	Predicting Consumer Contracts Noam Kolt University of Toronto	151
5.	Taking Stock of Chapter 11 David A. Skeel University of Pennsylvania Law School	131
6.	Six Levels of Contract Automation: The Evolution to Smart Legal Contracts - Further Analysis Susannah Wilkinson and Jacques Giuffre Herbert Smith Freehills and Herbert Smith Freehills	123
7.	Manipulation by Algorithms. Exploring the Triangle of Unfair Commercial Practice, Data Protection, and Privacy Law Philipp Hacker European University Viadrina Frankfurt (Oder) - European New School of Digital Studies	122
8.	Private Law Theory and the Past Stephen James Bogle University of Glasgow - School of Law	110
9.	Contractual Stakeholderism Kish Parella Washington and Lee University - School of Law	109
10.	The Moral Obligation to Perform Contracts Brian Bix University of Minnesota Law School	108

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 23 Apr 2021 - 22 Jun 2021

Rank	Paper	Downloads
1.	An Elusive Finality: The Illusive Standard for the Modification of Confirmed Chapter 13 Plans Amir Shachmurove Harvard Law School	535
2.	A Troublesome Prospect: Section 1322(b)(2) and a New Generation of Mixed-Use Developments Amir Shachmurove Harvard Law School	446
3.	Justice in Arbitration: The Consumer Perspective Farshad Ghodoosi and Monica Sharif David Nazarian School of Business & Economics, California State University, Northridge and California State University, Los Angeles	442
4.	Predicting Consumer Contracts Noam Kolt University of Toronto	151
5.	Six Levels of Contract Automation: The Evolution to Smart Legal Contracts - Further Analysis Susannah Wilkinson and Jacques Giuffre Herbert Smith Freehills and Herbert Smith Freehills	123
6.	Contractual Stakeholderism Kish Parella Washington and Lee University - School of Law	109
7.	The Moral Obligation to Perform Contracts Brian Bix University of Minnesota Law School	108
8.	Default Rules: Theoretical Foundations Eyal Zamir Hebrew University of Jerusalem - Faculty of Law	101
9.	Digital Infrastructure Integrity Protocol for Smart and Legal Contracts DIIP 2021 Ariane Garside, Susannah Wilkinson, Natasha Blycha and Mark Staples Herbert Smith Freehills, Herbert Smith Freehills, Herbert Smith Freehills and CSIRO Data61	92
10.	The Code of Data Capital: A Distributional Analysis of Law in the Global Data Economy Roxana Vatanparast Harvard Kennedy School	90

 

Forum Selection Clause Concealed by Management Held Unconscionable as Applied to Employee/Shareholder

Kathaleen McCormick (left) was sworn in last month to be the first woman Chancellor in the 230-year history of Delaware's Chancery Court.  Just before she was nominated to that post, she issued a letter opinion in UBEO Holdings, LLC et al. v. Drakulic, indicating that the decision is of little precedential value and of interest mostly to the parties.  Ah, Chancellor McCormick, you underestimate our interest!

Michael Drakulic worked for Ray Morgan, a copier and printer company.  In 2018, UBEO Holdings (UBEO) acquired Ray Morgan.  Because Drakulic owned a fraction of a Class B share, he was a stockholder/signatory to the merger agreement, which bound all such stockholder signatories to a five-year non-compete.  All other individuals in that category retired, having made between $2 million and $22 million on the transaction.  Drakulic, a mid-level manager, made the equivalent of nine-months' pay, and he continued to work.  Two years later, Drakulic wanted to go to work for one of UBEO's competitors.  UBEO filed suit in Delaware's Chancery Court to enforce its non-compete clause.  Drakulic challenged the court's jurisdiction. 

The issue in the case was whether Drakulic, having signed a signature page but never having seen the merger agreement to which it related, could be bound by a choice of forum clause in that agreement.  (Then Vice-) Chancellor McCormick noted that parties are routinely bound by agreements that they have not read.   But she found that Drakulic was not so bound, because: "the agreement was negotiated by people to whom Drakulic reported and who harbored undisclosed conflicts of interest; Drakulic was never provided a copy of the merger agreement and was not informed of the agreement’s forum selection provision or other provisions restricting his livelihood; and Drakulic was intentionally kept in the dark of the contents of the agreement."  She granted Drakulic's motion to dismiss without prejudice to UBEO's right to file its claims in an appropriate forum.

The details of the merger negotiations are idiosyncratic but interesting.  Drakulic was the only Ray Morgan shareholder who was not part of the negotiating team.  The other members of the team considered the non-compete immaterial, given how much they stood to make from the transaction and their ability to obtain an equity interest in UBEO.  The non-compete was not immaterial to Drakulic.  During the negotiations, despite Drakulic's unique position, he was not apprised of the terms of the merger.  In fact, when some details of the merger leaked out and Drakulic made requests for changes that would benefit him, the negotiating team decided to keep further information relating to the merger "close to the vest." 

DE Court of Chancery

Actually, the negotiating team went a bit beyond that.  They never shared the merger agreement with Drakulic, despite sending him a signature page, and they sent out a misleading message to employees, including Drakulic stating that there would not be “any negative impact to [them] due to this strategic financial investment.”  Even after informing Drakulic of the non-compete in July 2020, UBEO did not share the agreement with him, and he only saw the the forum selection clause when UBEO attached it to its complaint. 

Court's routinely enforce forum selection clauses attached to contracts that parties do not read.  However, in this case, the court found that enforcement of the clause would be unconscionable.  The company intentionally withheld information from Drakulic.  Even in the run-up to litigation, when Drakulic requested to see the merger agreement, UBEO provided only excerpts and did not include the forum selection clause.

H/T Eric Chiappinelli

Tulsa's Juneteenth Commemoration!

As captured by ContractsProf Blog Intern, Sydney Scott:

 

Multi-Talented Contracts Prof Co-Authors Book on Courtroom Moview

Contracts Prof Michael Asimow has teamed up with Paul Bergman to publish Real to Reel: Truth and Trickery in Courtroom Movies.  

The best courtroom movies combine great storytelling with conflict and suspense.  We never know whether the jury will send the defendants to the chair or let them walk out the courtroom door to freedom.  Courtroom films wrestle with the eternal conflicts between law and justice and between truth and falsehood. The movies have delved deeply into hot-button issues, like the death penalty, inter-racial adoption, political protest, military justice, or discrimination based on race or gender.

The book reviews almost 200 courtroom movies, going back to the early 1930s and continuing to the present.  It covers older classics like To Kill a Mockingbird, Witness for the Prosecution, and 12 Angry Men as well as excellent current movies like The Trial of the Chicago 7, Denial, and Woman in Gold. The book also includes courtroom comedies like My Cousin Vinny and musicals like Chicago. 

The book can help you discover trial films you haven’t seen and rediscover the ones you have.  To help you make your selection, the book assigns gavel ratings to each film, with four gavels reserved for the very best . 

The book also answers the questions that you might ask after seeing the film.  If the film is based on a true story, is it true to the historical facts?  What is hearsay evidence, manslaughter, libel, community property, or consideration? Can lawyers get away with dramatic courtroom stunts?  Did they commit ethical violations? Do adversarial trials promote the search for truth and justice?  Or just the opposite? 

We recommend Real to Reel for the lawyers and film fans in your life—or for my wife, so that she will see that I am not the only one who pauses movies so that I can explain how what just happened would never happen in a real courtroom.

If You Believe This, I Have an Invisible Sculpture to Sell You

According to this story on moneycontrol.com, Italian artist Salvatore Garau sold an invisible sculpture at auction for $18,300.  The piece, according to moneycontrol.com, is titled Lo sono, which translates as I am.   According to hypebeat.com, the piece is titled Io sono, which also translates as I am.  Either way, is it?  Is there an "I"?  Is it the invisible sculpture or the very visible "sculptor" pocketing his earnings.  The buyer, who has chosen to remain anonymous, if not invisible, will receive a certificate of authentication, signed and stamped by Salvatore Garau, as proof of the purchase and that the purchaser, and only the purchaser, owns this non-existent work of art.

One nice thing about buying invisible art, it is easy to store and display, or so one would think.  But Garau specifies that it is to be displayed in a 5×5-foot square  "private space free from obstructions, where lighting and climate control are not required."  One can imagine it, for example, adorning the space featured at left.  Actually, it was there.  But then it was stolen!  Imagine explaining that to the insurance adjuster.

Unsophisticated people might think that the sculpture is actually nothing.  Nothing at all.  Garau disagrees: It is a vacuum, and he elaborates, “The vacuum is nothing more than a space full of energy, and even if we empty it and there is nothing left, according to the Heisenberg uncertainty principle, that 'nothing' has a weight…Therefore, it has an energy that is condensed and transformed into particles, that is, into us.”

You might be thinking something along the lines of "That's not how the Heisenberg uncertainty principle works."  But you are not a conceptual artist.  I am not a conceptual artist. And Garau knows what he is doing.  He previously installed "Buddha in Contemplation" in the Piazza Della Scala in Milan, Italy, and you can see it there if you check him out on Instagram,  Well, you can't see it exactly, because it's invisible, but according to the video, it exists and will remain in that place forever.

I pity the poor lawyer who has to depose the artist in an attempt to determine whether or not the sculpture is a good that should be governed by the UCC or the CISG.

Garau might have some concern that his buyer, experiencing remorse, might complain, "Hey, you promised to deliver an invisible sculpture, but you have delivered nothing."  Garau's response might be that in delivering nothing, or at least nothing tangible, he had performed as promised.  The promise to deliver something equivalent to nothing might seem illusory.  Presumably, Garau promised to deliver not only an invisible sculpture but also a certificate of the authenticity of that unique piece of art.  Garau's obligation to deliver the certificate, I think, saves the contract from being illusory.

Garau also installed another invisible sculpture, "Aphrodite Crying" in front of the New York Stock Exchange.  

This seems appropriate, although I don't know what Aphrodite has to do with anything.  But Wall Street does involve making something out of nothing: witness Dogecoin.  And I think the phenomenon of someone paying $18,000 for an invisible sculpture may have a connection to Bitcoin, Dogecoin, NFTs, Gamestop, AMC, and other extreme investing schemes.  There seems to be a lot of money lying around with nowhere to go, so it goes into stuff that makes no sense.  I think I've seen this movie before.  It's called The Big Short.

Thanks to Alyssa Cross for her research assistance.

Weekend Frivolity: New Publication (Not on Contracts)

I've been working on a jurisprudential critique of the positivist originalism of Will Baude (left) and Stephen Sachs (right)  for a couple of years.  It turns out, student editors are not very interested in a critique of positivist originalism -- or at least, not in mine.  I have presented the piece in a number of venues, shared it with Baude and Sachs, and sent it to a number of colleagues who know their jurisprudence.  Something is missing, but I'm not sure what.  So I have uploaded it to SSRN in the hopes that some person interested in the subject will give me the inspiration to work it into a more digestible form.  Here is the very dry, just-the-facts, ma'am abstract:

Will Baude and Stephen Sachs have argued that originalism should bind courts because originalism is “our law.” This Article attempts to specify, from the perspective of positive law, what part of our law originalism could be. It does so by identifying three challenges that Baude and Sachs face: a Kelsenian problem, a Hartian problem, and an empirical problem. The Article next considers Andrew Coan’s hypothetical constitutional amendment as a solution. The Article concludes that Baude and Sachs’s argument that originalism is our law remains deficient from the perspective of positive law.

Will Baude is in the process of providing a lengthy defense of his perspective on his podcast, Dissenting Opinions, in conversation with Adam Chilton.  I highly recommend it.  In fact, it may be the best podcast on originalism I've heard.  In Episode 5, Will sets out certain originalist principles, and Adam pushes back.  Then, in Episode 6, Adam sets out certain counter-arguments, and Will pushes back.  In Episode 7, Will lays out his positivist theory of originalism, and in Episode 8, not yet released, they promise to work through some applications.

A few comments on the series so far, from the perspective of my critique.  I have long suspected that Baude and Sachs are not really committed to positivism.  In the podcast, Will suggests that he was a convinced originalist on normative grounds but was both dissatisfied with normative defenses of originalism and concerned that the value of returning to originalism might not offset the disruption in settled expectations that such a return would entail.  He then surveyed the history of our jurisprudence and became persuaded that, with a few exceptions immediately after the Civil War, during the Progressive Era, and during the Warren Court, our jurisprudence is largely originalist, in his sense of "inclusive originalism" (what it includes is mostly some non-originalist precedent).  He and Sachs concluded that originalism would not effect great changes in our law because it already is our law.

Most of my article is about why I think Baude and Sachs do positivism wrong.  I did not spend a lot of time on the empirical argument, because that's a huge hill to climb, and I thought that Richard Primus had already made the most important point in his Is Theocracy Our Politics. Baude and Sachs focus too much on rhetoric and not enough on substance.  Based on the podcast, it seems like there are three additional problems with Baude and Sachs's empirical claims about our law.  First, whole swaths of our constitutional law (especially in the realm of the First Amendment) reference originalism in only the most attenuated ways.  Second, when both sides reference original meaning (or intent or method or whatever), one side is often doing so strategically in order to establish that original meaning settles nothing and so we are on our own.  It's not clear to me that Baude and Sachs think that original meaning ever runs out.  I suppose that issue is of less moment to them because the question for them is not original meaning but original law.  But original law is, if anything, less likely than original meaning to settle meaning definitively.  Original law is the law of the Founders arrived at  using methods of interpretation available at the Founding.  As I have argued here and here, courts in the early Republic were methodologically pluralistic.  A judge could pick among numerous valid methodologies to arrive at a legal conclusion, and nobody could claim that what the judge was doing was methodologically impermissible or outside "our law."

Third, Baude and Sachs insist that originalism is our law because all judges appeal to original meaning, and precedent is no more important to the liberal Justices than to the conservatives.  But that argument is still all on the rhetorical level.  In order to show that originalism really binds us and should be given more weight than precedent, Baude and Sachs need to find examples of Justices, committed to originalism, saying something along these lines: "In a prior case, I surveyed materials from the Founding and concluded X.  I have since read through the originalist criticisms of my reasoning in that case, and I have concluded that I was wrong as a matter of original meaning.  The correct originalist interpretation is Y." 

I have never seen a Justice reverse their position in this way.  Indeed, I can think of no originalist who thinks that Justice Scalia's opinion in Heller was well-reasoned from an originalist perspective.  Most originalists think that Justice Scalia reached the right conclusion, but his reasoning was unsound in ways that could have ramifications for other cases.  That was already clear by McDonald, but not a single Justice paid any mind to the originalist critiques of Heller.

I could go on. But enough for now.

Orit Gan's review of Gendered Prices

Over at the contracts section of Jotwell, Orit Gan has a review of Renée B. Adams, Roman Kräussl, Marco A. Navone, and Patrick Verwijmeren, Gendered Prices (at SSRN) which explores gendered pricing in artwork.  The review is a great summary of the article and Prof. Gan also discusses three possible legal responses (including the contract law one) to this systematic gender discrimination.  What are they and what’s her take?  Read the review and find out.

Skateboarding Law Professor Seeks Twitter Followers

According to the New York Post, the go-to source for really important breaking news, a woman  infiltrated a Hialeah, Florida high school disguised as a student. 

Her purpose: to hand out leaflets to students encouraging them to follow her on Instagram.

Her disguise: she wore a backpack and carried a skateboard and could easily have been mistaken for a high student, except that she was handing out leaflets, and high school students are unfamiliar with words written on a piece of paper.

Her downfall: although she escaped arrest by campus security by not stopping when they asked her to, they were able to track her down using:

1. DNA evidence
2. the microchip injected into her arm with her COVID vaccine
3. "pings" from telecommunications towers (like in "Serial) and advanced triangulation techniques
4. the Instagram account that they found on the leaflets she was passing out. 

If you guessed d, you have earned yourself a free affiliation with the ContractsProf Blog.  All you have to do to collect your reward is follow us on Twitter (and following us on Twitter is the reward)!

She was arrested, most likely for creating a hazardous learning environment -- her leaflets could have given students a paper cut!  But one person's crime spree is another's inspiration for a marketing ploy.

Anyway, if any young readers are out there, we want you to know that all contributors to the blog totally skateboard all the time.  See the picture?  That's totally us in Grants Pass, Oregon.  Or it may be Wisconsin Neal, who claims to have taken this picture of himself, but how believable is that?  After all, if it's in Oregon, why is his name Wisconsin.  Seems a bit sus.  Also, how did we know it was Grants Pass?  Yup, it pretty much has to be us, the blog editors just freestylin' it on our board there. 

The point is, we real cool, and you all should follow the blog on Twitter.  

Tuesday Top Ten - Contracts & Commercial Law Downloads for June 15, 2021

The Tuesday Top Ten is back after an "out-of-office" experience last week, so let's see what's hot on those SSRN download presses!

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 16 Apr 2021 - 15 Jun 2021

Rank	Paper	Downloads
1.	Tokenized: The Law of Non-Fungible Tokens and Unique Digital Property Joshua Fairfield Washington and Lee University - School of Law	1,168
2.	Content Moderation Remedies Eric Goldman Santa Clara University - School of Law	1,070
3.	Privacy in the Clouds, Revisited: An Analysis of the Privacy Policies of 40 Cloud Computing Services Felicity Turton, Dimitra Kamarinou, Johan David Michels and Christopher Millard Queen Mary University of London, School of Law - Centre for Commercial Law Studies, Queen Mary University of London, School of Law - Centre for Commercial Law Studies, Queen Mary University of London, School of Law - Centre for Commercial Law Studies and Queen Mary University of London, School of Law - Centre for Commercial Law Studies	375
4.	Justice in Arbitration: The Consumer Perspective Farshad Ghodoosi and Monica Sharif David Nazarian School of Business & Economics, California State University, Northridge and California State University, Los Angeles	288
5.	The Eye in the Sky Delivers (and Influences) What You Buy Hadar Yoana Jabotinsky and Michal Lavi Tel Aviv University - Cegla Center for Interdisciplinary Research of the Law and Hebrew University of Jerusalem - Faculty of Law	241
6.	Novel Issues in Canadian Labour Arbitration Related to COVID-19 Richard A. Bales Ohio Northern University - Pettit College of Law	149
7.	Taking Stock of Chapter 11 David A. Skeel University of Pennsylvania Law School	130
8.	Six Levels of Contract Automation: The Evolution to Smart Legal Contracts - Further Analysis Susannah Wilkinson and Jacques Giuffre Herbert Smith Freehills and Herbert Smith Freehills	120
9.	Private Law Theory and the Past Stephen James Bogle University of Glasgow - School of Law	108
10.	Contractual Stakeholderism Kish Parella Washington and Lee University - School of Law	106

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 16 Apr 2021 - 15 Jun 2021

Rank	Paper	Downloads
1.	Content Moderation Remedies Eric Goldman Santa Clara University - School of Law	1,070
2.	An Elusive Finality: The Illusive Standard for the Modification of Confirmed Chapter 13 Plans Amir Shachmurove Harvard Law School	535
3.	A Troublesome Prospect: Section 1322(b)(2) and a New Generation of Mixed-Use Developments Amir Shachmurove Harvard Law School	446
4.	Justice in Arbitration: The Consumer Perspective Farshad Ghodoosi and Monica Sharif David Nazarian School of Business & Economics, California State University, Northridge and California State University, Los Angeles	288
5.	Novel Issues in Canadian Labour Arbitration Related to COVID-19 Richard A. Bales Ohio Northern University - Pettit College of Law	149
6.	Six Levels of Contract Automation: The Evolution to Smart Legal Contracts - Further Analysis Susannah Wilkinson and Jacques Giuffre Herbert Smith Freehills and Herbert Smith Freehills	120
7.	Contractual Stakeholderism Kish Parella Washington and Lee University - School of Law	106
8.	Social Media as Contractual Networks: A Bottom up Check on Content Moderation Maayan Perel (Filmar), Niva Elkin-Koren and Giovanni De Gregorio Netanya Academic College, Tel-Aviv University - Faculty of Law and Centre for Socio-Legal Studies, University of Oxford	98
9.	Default Rules: Theoretical Foundations Eyal Zamir Hebrew University of Jerusalem - Faculty of Law	95
10.	Digital Infrastructure Integrity Protocol for Smart and Legal Contracts DIIP 2021 Ariane Garside, Susannah Wilkinson, Natasha Blycha and Mark Staples Herbert Smith Freehills, Herbert Smith Freehills, Herbert Smith Freehills and CSIRO Data61	89

 

Keeping with our Martial Arts Theme: Influencer Wins A Technical Knock-out in SDNY

Yesterday, we posted about a boxing match.   Today, we move on to mixed martial arts.

Have you ever wanted a behind-the-scenes look at how YouTuber "influencers" make money?  I certainly have.  I asked my daughter what seemed to me the obvious question: Why would anybody take seriously an endorsement from an "influencer" when you know that influencers get paid to endorse products and that their endorsement is thus effectively meaningless?  Her shrug, accompanied by an eye-roll spoke volumes.  

Fortunately, Jed Rakoff, of the Southern District of New York, just decided an influencer case, Brueckner v. You Can Beam, LLC,  that reveals quite a few details about how these deals work (H/T New York Contract Decisions Twitter Feed), although I admit I still don't really understand the premise behind these deals.

Josh Brueckner (Brueckner), for those who don't know, is a professional mixed martial arts athlete and influencer.   On February 1, 2020, he entered into an agreement with You Can Beam LLC (Beam), a nutritional supplements company.  The agreement provided that Brueckner would post (i) at least six promotional Instagram posts a year about Beam's nutritional supplements, (ii) at least one Instagram story per week mentioning a Beam product, and (iii) at least one YouTube video a month on Brueckner's YouTube channel, including Brueckner's coupon code and a link to the You Can Beam website in any YouTube videos. Even if the video was not about Beam’s products, Brueckner was required to link his coupon code in the description box. In exchange, he was to be paid a monthly fixed rate of $15,000 and a commission of $4 per unit sold using Brueckner's coupon code or link.  Wow, so that's how that works.  Thanks, Judge Rakoff!

The initial term of the agreement was one year, but then came COVID.  On March 17, Beam told Brueckner to “hold off” on the posting due to COVID-19 restrictions, because "everything with this virus has put us on hold unfortunately.” Beam still paid Brueckner his $15,000 for March, but they also sent him a termination notice dated April 8, 2020.  Contending that the termination was not in accordance with the contract terms, Brueckner filed suit on April 28th.  I'll say this for him, he's quick.  Beam counterpunched, alleging that Brueckner had been in breach of the agreement since February 28th, when Beam had sent him notice that he had failed to include a link and discount code in his YouTube videos as required under the parties' agreement.  Beam's counterpunch failed to land.

Brueckner moved for summary judgment, and he won.  Beam's sent its February 28 notice to the wrong address.  As a result, Brueckner was never properly put on notice that he was in breach.  Moreover, Brueckner clearly cured the alleged breach within the 10-day period provided for in the agreement.  As a result, he was not in breach when Beam instructed him to "hold off" on his influencing activities, and it was thus Beam, not Brueckner that was in breach. The Court granted Brueckner’s motion for summary judgment, finding Beam liable on Brueckner's breach of contract claim and dismissing Beam's breach of contract counterclaim.

Brueckner sought an additional $75,000 for the five months on the contract.  It is not clear if he could also seek to recover the $4 per sale he would have been entitled to but for Beam's breach.  As a side note, if you can offer reductions on each sale via coupon and pay an influencer $4 per sale, doesn't it seem like your product is overpriced?  Or is it common that most of what we pay for goes to marketing and not product.  Do I pay more for Progressive Insurance than Geico because Progressive has to pay Flo, while Geico stiffs its gecko?

H/T to ContractsProf Blog Intern Sydney Scott (left) for research on this post.

A Reason to Be Interested in the Mayweather/Logan Paul Fight

If you watched boxing legend Floyd Mayweather's exhibition bout against YouTuber Logan Paul, you should not have been disappointed.  That's because your expectations should have been very low.  I know very little about boxing, but I learned in researching this piece that Mayweather is a boxer, not a puncher, so he was unlikely to injure Logan Paul dramatically.  Logan Paul, on the other hand, although nearly twenty years younger and far bigger, was unlikely to land any clean blows on Mayweather.  And that is what ensued.  Mayweather landed nearly twice as many punches while throwing about half as many.  Paul demonstrated that he could take a punch and that he, quite literally, has thick skin, which likely serves him well in his line of work.

Dubai, Jumeirah Beach by pe-sa

But there is one area in which the exhibition match delivered quite the wallop: contractual controversy.  This fight, after all, was about making money.  According to legalreader.com, Mayweather sued the fight's promoter, PAC Entertainment Worldwide, when he did not  receive an initial payment of $30 million, a portion of his guaranteed $100 million take, which was due in March.  The fight was supposed to take place in Dubai, but PAC could not pull that off. Mayweather claimed that PAC's breach meant that he no longer had to perform and he was owed $122.6 million.  For that amount of money, I too would be willing to not fight Logan Paul.  The fight occurred in Miami last week, organized by a different promoter.  

Image by Brian W. Schaller

Whether and how much Mayweather can recover may turn on his take from the June 6th event.  Presumably Mayweather was only going to fight Logan Paul once.  Whatever he made will be subtracted from his provable damages as mitigation.  We'll see if we hear more about this in the coming months.

H/T to ContractsProf Blog Intern Alyssa Cross (left) for research on this post.

Subway's In-Store Ad and Website Terms and Conditions

The Second Circuit recently upheld a lower court decision that a customer that had seen Subway’s print ad in a store was not bound by the referenced terms and conditions on Subway’s website.  The plaintiff, Marina Soliman, was in a Subway sandwich shop when she saw an in-store, print advertisement offering special deals if she texted a keyword to a provided code.  She did and Subway began to send her text messages with a link to an electronic coupon.  She alleged that she texted Subway to stop sending her more messages but that she continued to receive them so she sued, claiming a violation of the Telephone Consumer Protection Act (“TCPA”).  Subway moved to compel arbitration pursuant to its website terms and conditions.  It claimed that because it’s in-store advertisement included a reference to its website terms and conditions which contained an arbitration clause, that Soliman was bound to bring any disputes in an arbitral forum. 

The Second Circuit, applying California law, said, “Nonsense!  This madness must stop!”  Actually, it said,

Soliman is not bound by the arbitration clause contained in the terms and conditions at issue.  More specifically, Subway has failed to demonstrate that such terms and conditions would be clear and conspicuous to a reasonable person in Soliman’s position for the following reasons:  (1) Subway failed to provide evidence regarding the size of the advertisement at issue, or the print size contained within that advertisement; (2) the reference to ‘[t]erms and conditions’ was buried on the advertisement in a paragraph that was printed in significantly smaller font relative to the other text on the advertisement, and the reference itself was surrounded by a substantial amount of unrelated information; (3) the advertisement only vaguely referenced ‘[t]erms and conditions,’ and did not state that a consumer would be agreeing to those terms if she sent a text message to Subway’s short code, nor did it otherwise direct the consumer to such terms; (4) access to the terms and conditions on the Subway website required Soliman to type in the URL text provided on the hard copy print advertisement into an internet browser on her cell phone or some other device with internet browsing capabilities; and (5) once linked to the Subway website, the heading stated that it contained ‘terms of use for this website,’ thus potentially suggesting to a reasonable person (searching for conditions of the promotional offer) that the website did not contain any terms or conditions beyond those relevant to the use of the website.”

The court concluded that this “combination of barriers” led it to conclude that the terms and conditions were not “reasonably conspicuous under the totality of the circumstances and that a reasonable person would not realize she was being bound to them by texting Subway to receive promotional offers.

 

The opinion is informative – providing insight into what makes notice conspicuous (or not) - it even contains a colorful image of the actual print advertisement (see above.  Can you see the reference to the Terms and Conditions?).  The case is another example of how courts have become much more realistic about how a “reasonable” person interacts with T&Cs.