ContractsProf Blog

Airlines Required to Pay Refunds to Stranded Passengers

With my favorite airline, Southwest, in the news for a complete meltdown in the face of the Christmas blizzard, it is good to be reminded how much the other airlines suck.  We have two stories.  

First, Judge Jesse Furman approved a class-action settlement in which British Airways agreed to pay 100% refunds to over 26,000 class members whose flights were canceled due to COVID.  The settlement also included $1.26 million in attorneys' fees.  According to TopClassActions,

The settlement benefits consumers who purchased a ticket for a British Airways flight that was canceled between March 1, 2020, and Dec. 31, 2021, where the customer did not cancel the flight or fail to show up, the customer did not receive a refund or rebooking and the customer received a voucher from British Airways that they have not used.

Second, on November 14th, the U.S. Department of Transportation announced that airlines were required to refund $600 million to customers due to COVID cancellations.  In addition, six airlines had to pay fines of $7.25 million for their failure to provide timely refunds.  To nobody's surprise, Frontier Airlines led the way.

Buzzfeed Does Not Have to Arbitrate Claims Brought by Employees

The litigation arose out of a SPAC acquisition of Buzzfeed by a special purpose entity, 890 5th Avenue Partners, Inc. (890).  The Court refers to 890 as "New Buzzfeed" and to the acquired company as "Old Buzzfeed."  Defendants in the litigation are 91 employees of Buzzfeed (both Old and New) who claim that they were excluded from an IPO conducted by New Buzzfeed that created a new class of stock that the employees could not acquire because they could not timely convert their Old Buzzfeed stock.  Pursuant to their employment agreements with Old Buzzfeed, they sought to arbitrate their claims.  In Buzzfeed, Inc. v. Anderson, the Delaware Chancery Court held that defendants' claims are not subject to arbitration.  There are lots of interesting aspects to this litigation, and I refer readers to excellent posts by Ann Lipton on our sister blog, the Business LawProf Blog here and here.

The merger, completed in December 2021, which the Court refers to as "the Combination," involved four entities and resulted in two surviving entities, New Buzzfeed, now a subsidiary of Operating Co., which assumed Old Buzzfeed's liabilities.  Defendants owned Class B stock in Old Buzzfeed pursuant to their Option Plan, and after the Combination, that stock was converted into Class B stock in New Buzzfeed.  But problems with conversion made it impossible for defendants to buy the new class of stock in New Buzzfeed in time to profitably participate in the IPO.  They filed what the Chancery Court calls two "mass arbitrations."  I'm not sure what that means and the Corut doesn't explain, but given that Buzzfeed was required to pay filing fees of $300 per claimant, I assume that it means that attorneys filed the same claim for each defendant, with each claim differing only in the name of the claimant and perhaps in some particulars about how they acquired their shares and the number of shares held.

Defendants claimed that the question of jurisdiction had to be sent to arbitration under Delaware's Willie Gary test.  That test requires courts to decide questions of arbitrability absent "clear and unmistakable evidence" that the parties intended otherwise.   Here, only the defendants' employment agreements required arbitration, and the plaintiffs were not parties to those agreements.  The court thus found that defendants had not established the parties' intent to have the arbiter determine whether the defendants' claims were arbitrable.  

The Court then concluded that the plaintiffs' claims, seeking declaratory and injunctive relief, were not arbitrable.  The Court determined that it had jurisdiction over plaintiffs' claims and personal jurisdiction over the defendants as New Buzzfeed shareholders pursuant to the New Buzzfeed forum selection clause, which specifies jurisdiction in the Delaware Chancery Court.  The Court then granted plaintiffs the anti-arbitration injunction they sought.  

The reasoning seems solid, but the outcome seems unjust.  Plaintiffs have manipulated the corporate form so as to deprive defendants of their preferred forum.  Defendants are forced to litigate in the Chancery Court as New Buzzfeed Shareholders, but they did not become New Buzzfeed shareholders by choice.  That occurred as a result of the Combination.  They thought they had a right to arbitrate pursuant to their employment agreements with Old Buzzfeed, but they cannot vindicate that right against a corporate entity that no longer exists.  Nor can they vindicate that right against the new entity or its officers and directors, because they  were not party to the employment agreements.  

I wonder what contracts profs who also teach corporate law think of all this.  I'm putting out a call for help.

Harvard Will Have to Pay Some Litigation Costs in SCOTUS Litigation

Last month, the U.S. Supreme Court heard arguments in two consolidated landmark affirmative action cases, styled Students for Fair Admissions Inc. v. President and Fellows of Harvard College.  One of the cases, as the name of the case suggests, involves a challenge to the admissions policies at Harvard College.

Harvard duly notified its primary insurer that it would incur legal expenses in connection with the pending litigation, but it did not provide formal notice to its supplemental insurer until long after it policy had lapsed.  The primary insurer provided coverage up to $25 million.  The supplemental insurer refused coverage due to late notice.

In President and Fellows of Harvard College v. Zurich American Insurance Company, a federal district court sided with the insurer, Zurich.  Harvard's policy with Zurich obligated Harvard to provide notice of claims within 90 days of the expiration of the policy.  The policy in question expired on November 1, 2016, but Harvard did not provide notice until May 23, 2017.  Harvard argued that Zurich was on constructive notice of the claim, as it had been informally made aware of the litigation, but Massachusetts law recognizes neither actual knowledge nor constructive knowledge exceptions to the formal notice requirements of insurance contracts.  

Adam Liptak reports in The New York Times that Harvard's expenses in the litigation had exceeded $27 million.  Ouch.

Tuesday Top Ten - Contracts & Commercial Law Downloads for December 27, 2022

Welcome to the final Tuesday Top Ten of 2022! By musical reckoning, today is also the third day of Christmas, but what would you actually DO with "three French hens"? Here at ContractsProf Blog, we think that "three downloads" would be a much better way to celebrate the occasion, and we've got just the perfect shopping list belw for you today. See you soon on the other side of the new year!

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 28 Oct 2022 - 27 Dec 2022

Rank	Paper	Downloads
1.	The Obsolescence of Blue Laws in the 21st Century Ira P. Robbins American University - Washington College of Law	303
2.	An Outsider’s View of the Brussels Ia, Rome I, and Rome II Regulations Symeon Symeonides Willamette University - College of Law	97
3.	Against Bankruptcy Exceptionalism Jonathan Seymour Duke University School of Law	95
4.	The Other Hand Formula Maytal Gilboa and Yotam Kaplan Bar-Ilan University - Faculty of Law and Bar-Ilan University - Faculty of Law	92
5.	Smart Contracts: Elements, Pathologies and Remedies Andrea Stazi European University of Rome - Faculty of Law	88
6.	Le rôle passé de la cause au stade de la formation du contrat (« Cause » and the Formation of Contracts) Samuel Fulli-Lemaire Centre de droit privé fondamental (CDPF), University of Strasbourg	76
7.	Restatements and the Common Law Andrew S. Gold and Henry E. Smith Brooklyn Law School and Harvard Law School	67
8.	Behavior-Based Price Discrimination and Consumer Protection in the Age of Algorithms Haggai Porat Harvard Law School	47
9.	Response to the Law Commission's Digital Assets Consultation Paper Johan David Michels and Christopher Millard 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	42
10.	Stare Decisis and the Status of California's Super Pension Contract T. Leigh Anenson and Jennifer Gershberg University of Maryland - Robert H. Smith School of Business and University of Maryland - Robert H. Smith School of Business	37

 

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 28 Oct 2022 - 27 Dec 2022

Rank	Paper	Downloads
1.	Ten Real Mediation Systems John Lande University of Missouri School of Law	237
2.	An Outsider’s View of the Brussels Ia, Rome I, and Rome II Regulations Symeon Symeonides Willamette University - College of Law	97
3.	The Other Hand Formula Maytal Gilboa and Yotam Kaplan Bar-Ilan University - Faculty of Law and Bar-Ilan University - Faculty of Law	92
4.	Le rôle passé de la cause au stade de la formation du contrat (« Cause » and the Formation of Contracts) Samuel Fulli-Lemaire Centre de droit privé fondamental (CDPF), University of Strasbourg	76
5.	Behavior-Based Price Discrimination and Consumer Protection in the Age of Algorithms Haggai Porat Harvard Law School	47
6.	Arbitration Agreements as Executory Contracts in Bankruptcy After Mission Products Holdings, Inc. v. Tempnology Stephen J. Ware University of Kansas - School of Law	46
7.	China’s Standard Contractual Clauses: Restricted Use and Complex Terms Graham Greenleaf University of New South Wales, Faculty of Law	35
8.	The Bankruptcy Tribunal Anthony J. Casey and Joshua Macey University of Chicago Law School and University of Chicago Law School	29
9.	Honor Among Thieves: Enforcing Criminal Contracts Daniel Pi University of Maine - School of Law	24
10.	Administrative Browbeating and Insurance Markets George A. Mocsary University of Wyoming College of Law	19

Contracts and the Death Penalty in Georgia

Last week, the Georgia Supreme Court provided evidence (if readers of the blog needed any) that contracts can be a life or death matter.  The case, Georgia v. Federal Defender Program, began when a death row prisoner, Virgil Delano Presnell, Jr., filed a breach of contract claim against the state, for failure to abide by a promise made by the state and its attorney general relating to the suspension of execution proceedings during the COVID pandemic. 

Specifically, the agreement, communicated in an e-mail, stated:

Our office will not pursue an execution warrant from the District Attorney in the below defined cases before: 1) the final COVID19 judicial emergency order entered by the Chief Justice of the Supreme Court of Georgia expires; 2) the Georgia Department of Corrections lifts its suspension of legal visitation, and normal visitation resumes; and [3)] a vaccination against COVID19 is readily available to all members of the public.

The Attorney General's office promised not to pursue an execution warrant until six months after the three above-named conditions were met.  And then, one-year later, the state issued an execution order for Mr. Presnell, whose case was indisputably subject to the e-mail referenced above, before two of the three conditions had been met.  

Georgia argued that the e-mail agreement could not be enforced against it without violating sovereign immunity, but the trial court found that the e-mail itself constituted a waiver of sovereign immunity.  Georgia's Supreme Court agreed.  Its discussion might serve as a useful teaching vehicle for those who want to cover electronic signatures.  

The Supreme Court first established that the was no per se rule that Georgia could not waive its sovereign immunity in an e-mail.  Next, there was the trickier issue of whether Georgia had agreed to be bound by electronic signatures in this case, as required under the Georgia Uniform Electronic Transactions Act (GUETA).  The court looked at the context of the parties' interactions and concluded that the state had consented to be bound by electronic means, satisfying GUETA.  The state tried to contend that, in contracts involving the state, certain formal requirements must be met, and the state must explicitly state that it is agreeing to be bound in electronic form.  The Supreme Court found nothing in the statute creating special rules for contracts involving the state.  The only requirement is that the agreement at issue be a "transaction," as defined in GUETA, which this undoubtedly was. "Transaction" is defined to include agreements involving state entities.  

Georgia next argued that even if it could waive its immunity by e-mail and even if it had agreed to be bound by electronic form, the e-mail in question was not signed.   The Supreme Court did not buy it.  GUETA provides broad guidelines for what constitutes a signature.  Here, where an agent of the attorney general with proper authority manually typed her name into an e-mail from her government account, she signed on behalf of Georgia, and Georgia was bound.  Another agent of the state confirmed and thus ratified the agreement. 

Going down swinging, Georgia argued that the agreement was unenforceable because it lacked consideration.  The Supreme Court noted that the consideration requirement is easily met.  Here, plaintiffs agreed to be bound by the e-mail in exchange for giving up their efforts for a more complete resolution through legislation addressing all of the issues surrounding the challenges related to capital defense during COVID. 

The Supreme Court wasted little time dismissing Georgia's argument, raised for the first time on appeal, that the argument was unenforceable because vague.  There were other arguments relating to injunctive relief, but there the state fared no better than it had with its contractual claims.

It took the majority no less than 87 pages to address all of Georgia's arguments for why it should not be bound by its electronic agreement with the plaintiffs.  In a short concurrence, six Justices noted the state motto: "Wisdom, Justice, Moderation."  The state's conduct in this matter, the concurring Justices noted, could breed cynicism.  "Government is often an accidental vector of our society’s cynicism," the concurrence noted.  "It really should avoid being an intentional one." 

"[T]he State should keep its promises," the concurrence continues, "because The People of Georgia, who are the very source of the State’s sovereignty, are owed a government that honors its commitments."  The Justices regretted that anybody in state government thought it appropriate to ask that the government be excused from doing so. 

It's a peach of an opinion and a dandy concurrence. 

Sid DeLong: Risks Associated with Name, Image & Likeness Deals

Tom Brady: From G.O.A.T. to Scapegoat:
A Cautionary Tale of Influencer and Endorser Liability
Sidney W. DeLong

If the next Tom (the Greatest Of All Time) Brady is in college today he is sure to be earning a lot more money than Tom was able to scrape together as a student athlete when he played for Michigan. As predicted in an earlier post, Name, Image, and Likeness Mercenaries: NIL Desperandum in College Athletics, the next Tom is already aboard the Name, Image, Likeness (NIL) bandwagon that has already showered millions of dollars in “endorsement” income on student-athletes. The NIL beneficiaries are Very Definitely Not being “Paid to Play” for the schools that woo them to step through the Transfer Portals into a world of big money endorsement contracts. Star athletes can earn tens or hundreds of thousands of dollars, ostensibly as pitchmen for local car dealerships and plumbing companies. All of which is good practical training for the much more lucrative and slickly produced product endorsements for which they will be paid when they become professionals, endorsing insurance companies, sneakers and fast food.

And in a sense, NIL income for athletes is only fair compensation for the hard and dangerous work they must put in to earn their scholarships. Star athletes must keep up financially with their non-athletic but internet-famous classmates who pull down five and six-figure salaries as Influencers, persuading their followers to buy whatever music, fashions, and cosmetics that their advertisers are paying them to pitch. “Influencer: It’s not just a side-hustle, it’s a career.”

But the shock waves emanating from recent collapses in the world of crypto portend risks that a fledgling NIL athlete or Influencer might well bear in mind. It turns out that touting a product as a celebrity endorser or influencer can lead to significant personal financial liability for the endorser, especially if what is being touted is not a diet plan but what a judge may later call a “security.”

Endorser liability is a relatively new concept and the courts have not yet evolved clear rules. The common law offers few theories under which a buyer might sue a seller’s agent for personal liability resulting from misleading statements the agent made about a purchase of a commodity, whether in the form of facts or opinions. Lies by a non-seller might justify avoidance or a warranty claim against the seller, but the agent owes no common law duty to the buyer to make only truthful statements about the product.

By statute, however, two forms of endorser liability have emerged in the U.S. For the sale of goods, The Federal Trade Commission has issued regulations making it illegal for a product endorser to fail to disclose whether she is compensated for her endorsement or to publish a misleading consumer product review of the product. The FTC has even published “guidelines” for social media influencers.  Because these rules are aimed at misleading endorsement rather than misstatements of fact, liability can be avoided if the celebrity announces, ‘I am just saying this because I have been paid to do so.” Of course, such candor would defeat the purpose of the endorsement. Actual disclosures are more subtle, but effective in avoiding liability. But the American public has always been fully aware that every celebrity endorser since Lucy, Lady Duff-Gordon (left) has compensated and so the formalistic acknowledgement of compensation that is demanded by the FTC seems to be a solution in search of a problem. Or perhaps an example of straining at a gnat and swallowing a camel.

A far more lethal risk arises if the product being endorsed is held to be a security as defined in federal and state law. Which leads us to the crypto disaster. Tom Brady, along with his wife Gisele Bundchen, Shaquille O’Neal, Naomi Osaka, Larry David, Steph Curry, and many other celebrity endorsers of crypto products have been sued for damages and fines by the Securities and Exchange Commission (SEC) and classes of private parties under theories of securities act violations, violations of FTC disclosure regulations, and common law fraud, all arising from their promotional activities on behalf of FTX, Crypto.com and other sellers of crypto assets.

In a widely-publicized enforcement action, Kim Kardashian (right) was fined $1. 2 million in penalties plus disgorgement of profits by the SEC for failing to disclose a $250,000 payment she received to publish a post on her Instagram account promoting EthereumMax’s crypto asset security EMAX tokens. The article suggests that Matt “Fortune Favors the Brave” Damon was not charged because he was promoting a website, Crypto.com, rather than a specific security offered by his principal. More importantly, because EthereumMax’s tokens declined in value by 98% following Kardashian’s promo, she has been sued by disappointed investors for their losses.

Even the question whether Bitcoins themselves are securities may be an open question about which legal advice would be necessary. Gary Gensler, Chairperson of the SEC, has said that he believes that most cryptocurrencies are securities, as defined under the Howey Test, leading many to anticipate regulation of the market. If a celebrity touts an unregistered security, that alone could subject them to potential fines and jail time as well as to civil claims by disappointed purchasers regardless of the celebrity’s disclosure of their interest.

In addition to liability for fraud or for promoting the sale of unregistered securities, endorsers may run afoul of the SEC’s statement of policy about “celebrity backed” initial coin offerings requiring disclosure of compensation paid for endorsements (concerning the policy relating to “initial coin offerings”). Under this theory, Brady and Bundchen may have additional disclosure obligations arising from an alleged equity stake they took in FTX in 2021, before the endorsements.

What conclusions should a lawyer representing Future Tom Brady or Future Gisele Bundchen draw from the GOAT’s latest problems? I would suggest at least the following.

First, you should have final review of any endorsement contract and should not depend on the endorsement agent’s version, whose financial interests are not coincident with his own. Tell the client that “Jerry Maguire is interested only in his cut of the promotional fees; he won’t be there for you when you are sent away for securities fraud.”

Second, you will require securities law expertise whenever there is any possibility that what the client is touting is a security. With novel crypto products, it may be months or years before the courts decide whether the thing being touting is a “security,” under some version of the Howey test. Emphasize to the client that the personal liability for violating the securities laws can be staggering: that is the reason that liability insurance for securities lawyers is so expensive. An endorsement fee cannot possibly compensate for this level of risk.

Third, insist that the entity paying for the endorsement agree to indemnify the client and hold them harmless from any liability they may incur to any person or organization resulting from their performance of the endorsement contract. The indemnity must also include compensation for attorneys’ fees and other professional fees incurred, tax-related losses, and any other financial liability resulting from the product endorsement. (An agreement to pay criminal fines might be unenforceable on grounds of public policy, but it cannot hurt to obtain it.) If you cannot obtain indemnity, you should probably advise the client to walk away from the deal. If they refuse, you should (sad to say) probably memorialize your advice to the client.

When Matt Damon (left) told America that “Fortune favors the Brave” he was really sending a double message. He was not only encouraging ordinary people to risk their life savings on Bitcoin in a bold bid to earn a fortune. He was also, by his own example, encouraging celebrities to risk losing everything they owned in a securities fraud class action just to earn a hundred-thousand-dollar fee. Both messages proved to be disastrous, but at least some of the celebrities may end up as the bigger losers.

A Russian Threat to the New York Convention

Earlier this week, we noted a decision of the Cour de Cassation, which subjects arbitral awards to scrutiny for their consistency with international public policy.  That court attempts to achieve the right balance between respecting global anti-corruption efforts and insuring the finality of arbitral judgments.  Russia seems determined to evade arbitral judgments entirely.  

Sarah Bronkhorst reports in Eurasianet on yet another disturbing development out of Russia.  Back in 2020, the Russian Duma passed new legislation, On Introducing Changes to the Arbitration Procedure Code of the Russian Federation (Law No: 171-FZ), which protects Russian companies against arbitral judgments.  According to Sarah Bronkhorst, the new law signifies nothing less than Russia’s withdrawal from the 1958 New York Arbitration Convention.

The new law permits any Russian entity subject to international arbitration to shift the proceedings to the Russian judicial service.  Russia justified its action by pointing to international hostility to Russian interests since its 2014 occupation of Crimea.  More recent events have done little to improve Russia's standing abroad.  Russia's Supreme Court upheld the legality of the new law in an eight-page opinion in 2021.  

The good news?  The glass was already (more than) half empty.  Russian companies' compliance with arbitral decisions has been spotty for some time, as Russian courts have long applied exceptions to the New York Convention with liberality.  This was especially true for entities favored by the Kremlin or that could make the argument that their financial stability was of a matter of national concern.  Too big to fail?  But the law may also have limited effect on Russian companies with assets abroad.  One assumes that if a Russian company's right to withdraw from arbitration is not recognized, the arbitration will proceed in the foreign jurisdiction and the victorious party can proceed against the Russian company's foreign assets.

H/T to Ben Davis.

The World Cup of Contracts: Bend Contractual Obligations Like Beckham?

Last week, Tariq Panja spilled the tea in The New York Times about David Beckham's contract to promote Qatar in connection with the World Cup and his utter failure to do so in any way that would have the sort of impact for which Qatar shelled out (perhaps?) $150 million.  That said, he didn't exactly breach either.  He kinda ChatGPT'd it. 

Some people think you ought to actually enthuse to the media about Qatar when you enter into a contract to promote Qatar.  Others think that you ought not to promote Qatar in connection with the World Cup if that might force you to opine about workers' rights or LGBTQ+ issues.

Or so I imagine ChatGPT would respond if I asked it about Beckham's contractual performance.

Mr. Beckham's strategy, according to the New York Times, is to show up for events when asked, on condition that his appearance not be announced in advance and the press not be notified.  Mr. Beckham's bearded visage can be seen all around Qatar, on billboards and signs promoting Qatar and the World Cup, but the man himself is rarely seen and largely inaccessible.  When pressed to speak about why he is endorsing Qatar or about his views on the various controversies that swirled around the World Cup and its 2022 host, Mr. Beckham issued press statements that sounded genuine, by which I mean that they genuinely sounded like they were generated by ChatGPT.  Some samples:

David has been involved in a number of World Cups and other major international tournaments both as a player and an ambassador and he has always believed that sport has the power to be a force for good in the world.

We understand that there are different and strongly held views about engagement in the Middle East but see it as positive that debate about the key issues has been stimulated directly by the first World Cup being held in the region.

Other celebrity sponsors of the World Cup have apparently been irked by Mr. Beckham's special treatment.  But some of them, unlike Mr. Beckham, have won the World Cup tournament, so there may be some consolation in that.

Is "Death by Cop" a Suicide for the Purposes of Insurance Coverage?

Justin Caldwell (Caldwell) took out two life insurance policies with the North American Company for Life and Health Insurance (North American).  Each policy provided for a $1 million death benefit; each had an identical suicide exclusion:

SUICIDE — If the Insured commits suicide, while sane or insane, within two years from the Policy Date, Our liability is limited to an amount equal to the total premiums paid.

Mr. Caldwell then committed "suicide by cop," and so the issue before the Eleventh Circuit in North American Company for Life and Health Insurance v. Caldwell was whether "suicide by cop" is suicide within the meaning of the policy.  Plaintiffs argued that Justin's death was not suicide; it was justified homicide.  They argued that suicide requires death by one's own hand.  North American countered that suicide occurs when one intends to die and achieves that end; the method is irrelevant.   The trial court ruled for the plaintiffs; the Eleventh Circuit reversed.

The opinion comes from Chief Judge Pryor (left) and it embodies everything I hate about Gorsuchian textualism, which is to say, extreme, dictionary-based textualism divorced from context, logic, or tradition.  The opinion rests largely on dictionary definitions, which do not say anything useful about suicide by cop, and quotations taken out of context from one California Supreme Court opinion, Gulf Life Insurance Company v. Nash, a 6-5 Florida Supreme Court decision which, if anything, suggests that affirmation of the trial court would have been proper.

In Nash, the decedent killed himself by holding a pistol to his chest and firing it.  The first two pulls on the trigger resulted in only ineffectual clicks.  The third pull ended the man's life.  Two insurance policies were at issue.  The accident policy paid a benefit if his death was a "result of bodily injury caused solely by external, violent and accidental means;" the life insurance policy excluded death by the insured's "own hand or act."  The case was about construing the language of those two policies and determining whether the facts suggested accidental death or suicide.

Back then, courts were capable of subtlety and nuance in their treatment of contractual language.  "The obligation of one policy and the condition of the other are not so closely related, or inseverable, that recovery should be allowed on both or neither."  The quotation on which Judge Pryor relies runs as follows:  "the words death 'by his own hand or act' should not be construed literally, but to mean death as a result of an intent on the part of the insured to take his own life."  But the Florida Supreme Court was unanimous in the view that the insurer in Nash had the burden to prove intent to commit suicide and had not done so.  It so concluded without recourse to dictionaries. Rather it looked at the behavior of the decedent in the hours before he fatally shot himself at point-blank range, in the chest.  

Six Justices concluded that Mr. Nash's death, while not suicide, also was not accidental.  Five Justices dissented from the second holding.  The dissenting opinion's conclusion is worth quoting here in its entirety.

The principle of law is firmly imbedded in the jurisprudence of this State that contracts of insurance should be construed most favorably to the insured. To draw such a fine distinction between the words "accident" and "accidental means" would do violence to this principle. It is a classic example of a distinction without a difference. As a practical matter, the average person buying accident insurance policies assumes that he is covered for any fortuitous and undesigned injury. The average man has no conception of the judicial niceties of the problem and even the most learned judge or lawyer, in attempting to understand and comprehend the niceties of the distinction, is left in a state of bewilderment and confusion.

When an insurance policy is ambiguous, the insured wins.  Is the undefined term "suicide" in the policy at issue in Caldwell ambiguous?

Let's look at the context in which Mr. Caldwell died.  Here is the sequence of events on October 8, 2020, the day he died.  According to Judge Pryor's opinion

• At 3 AM he Mr. Caldwell called his parents to say good-bye after learning that his wife wanted a divorce;
• He told his wife that he was “waiting for the police to come and kill [him]”; 
• Around 7 AM, his wife called 911 and reported that her husband was "suicidal," that he was loading his weapons in the family garage, and that he "wanted to commit suicide by cop”; 
• When police arrived, his wife warned them that he “intended to start shooting until law enforcement shot him”; 
• After an attempt to de-escalate failed, officers fired rubber bullets at Mr. Caldwell; and
• When he ran towards his truck and picked up a rifle, they shot and killed him.

Judge Pryor notes that no precedent governs the opinion and yet he begins with his conclusion: "A death is a suicide when a person intentionally causes his own death."  Citing absolutely nothing, Judge Pryor expounds the elements of suicide: "The requirements for a suicide are a person’s intent to die, his voluntary act on that intent, and his resultant death. The specific method is irrelevant."  Judge Pryor then turns to dictionaries, most of which define suicide in terms of "taking one's own life."  Only two sources define "suicide by cop" as a form of suicide.  

Finally, Judge Pryor has recourse to one psychiatric publication, one newspaper article, and two cases that are actually relevant to the issue at hand, one from Florida court of appeals and one from the Fifth Circuit.  Why not start there and leave the dictionaries aside? In any case, common sense, Judge Pryor informs us, supports conflating "suicide" and "suicide by cop."  

Does it?  Why do people commit "suicide by cop" when they could just shoot themselves?  Perhaps it has to do with a fear that they might lack the physical courage to actually kill themselves.  Or perhaps a man who has just learned that his wife wants to leave him wants to put on a good show so that everyone will know the extent of his despair.  And perhaps he is expecting that the police will act professionally and do everything in their power to actually prevent the outcome that the man professes to desire.  

Plaintiffs relied on a Maryland dictum that recognized that forcing someone else to kill you is not suicide but "justified homicide."  Judge Pryor responds as follows:

After all, if a man threw himself before a train, nobody would argue that the conductor had committed homicide. Cf. Vantran Indus., Inc. v. Ryder Truck Rental, Inc., 890 So. 2d 421, 426 (Fla. Dist. Ct. App. 2004) (discussing the “act of committing suicide by jumping in front of a fifty-thousand pound tractor-trailer traveling at seventy miles per hour”).

What?  No.  Of course they wouldn't.  But if that's your best analogy, Judge Pryor, I'm afraid you are not persuasive.

In Caldwell, the police had options.  They did not have good options, but at a certain point, they chose to use deadly force.  Judge Pryor concedes as much when he notes, "Police officers are trained to, and have little choice but to, use deadly force to stop a civilian who threatens them, their fellow officers, and the public at large" (emphasis added).  In Vantran and in Judge Pryor's train hypo, the driver/conductor makes no choice at all.  Suicide by throwing oneself in front of a large, fast-moving object is called suicide.  Suicide by cop is called "suicide by cop."  

My common sense tells me that "suicide by cop" is not obviously "suicide."  Arguably, if they were the same thing, there would not be two terms.  Plaintiffs have successfully established an ambiguity in North American's policy.  Any Florida insurer, aware of the contra proferentem doctrine as recognized in Nash and innumerable other cases, would be wise to clarify that "suicide by cop" is included in its suicide exclusion.  

Cour de Cassation Vacates $15 Billion Arbitral Award Based on International Public Policy

This decision in Belokon v. Kyrgyzstan is from March 2022, but we just got wind of it care of Roslyn Lai and Charles Ho Wang Mak's publication in on the American Society of International Law Website last week.  The ruling is significant because it demonstrates the willingness of even pro-arbitration jurisdictions like France to consider materials not available to the arbitral tribunal.  In this case, the court determined that upholding the award would have enabled the investor to profit from money laundering.

Cour de Cassation
Image by Arushi0880, CC BY-SA 4.0 via Wikimedia Commons

The case arises out of Kyrgyzstan's actions agains the Manas Bank, in which Mr. Belokon, a Latvian national, had invested, in 2010.  Mr. Belokon brought a UNCITRAL action in 2010.   When the arbitral award was rendered in 2015, Manas Bank was insolvent.  

In the arbitration proceedings, Kyrgyzstan presented evidence that the bank was engaged in money laundering, but the arbitral body did not find the evidence sufficient.  It noted that, had Kyrgyzstan presented substantial and probative evidence of money laundering, it might not have ruled in Mr. Belokon's favor.  

Kyrgyzstan challenged the award before the Paris Court of Appeal, which found substantial evidence that the award would enable Mr. Belokon to profit from money-laundering activities.  Mr. Belokon appealed to the Cour de Cassation, arguing that the Paris Court of Appeal exceeded its authority in considering facts not presented to the arbitral tribunal.  The Court de Cassation found that the public policy anti-corruption interest in this case outweighed the public policy interest in the finality of arbitral decisions.

Cour de Cassation Building
Image by Daniel Vorndran / DXR, CC BY-SA 3.0, via Wikimedia Commons

The scope of the decision is unclear.  Based on the authors' summary of the case, it is hard to tell whether the relevant evidence was unavailable to Kyrgyzstan at the time of the arbitration or if it simply neglected to present it.  One would think that difference ought to matter.  In addition, it is not clear how a reviewing court should weigh the public policy interest in ferreting out corruption against the public policy interest in the finality of arbitral decisions.  In this case, the Cour de Cassation was persuaded that enforcing the decision would enable Mr. Belokon to benefit from money-laundering and apparently it was convinced the the arbitral tribunal, if presented with the evidence it had before it, would have refused Mr. Belokon's demand for compensation.

More on ChatGPT from Sid DeLong

THE BLOG COMES IN ON LITTLE CHAT FEET

By ChatGTP

(Introduction by Sidney DeLong)

The AI writing program ChatGTP was persuaded to submit samples of its legal analysis for evaluation by readers of ContractsProf. It generates plausible arguments at a relatively shallow level. Academic writing was not part of its data base, which does not include anything published after 2021. The prompts are in bold-faced type. Each response was produced in 5-10 seconds.

Does a person commit the crime of breaking and entering if he reaches through an open window to steal someone else's purse from a nearby table?

In general, the crime of breaking and entering requires the unlawful entry into a structure with the intent to commit a crime. Reaching through an open window to steal something from inside would likely not constitute a "breaking" because there was no physical force used to enter the structure. However, the act of stealing the purse would likely still be considered a crime, such as larceny or theft.

It is important to note that the specifics of what constitutes a crime and the potential consequences for committing a crime can vary by jurisdiction. It is always a good idea to consult with a legal professional or research the laws in your specific area to get a better understanding of your rights and responsibilities.

If I offer someone a reward for climbing a flagpole, can I revoke my offer when he is half-way up?

In general, an offer made by one person to another can be revoked at any time before it is accepted. Once the offer has been accepted, however, a legally binding contract is formed, and the terms of the contract must be fulfilled.

In the case of offering a reward for climbing a flagpole, the person making the offer would generally be free to revoke the offer at any time before the person attempting to claim the reward has completed the task. If the person attempting to claim the reward has already started climbing the flagpole in reliance on the offer, it is possible that they could argue that the offer was partially accepted and that they are entitled to some type of compensation for the work they have already done.

It is important to note that the legal rules governing contracts can vary by jurisdiction, and it is always a good idea to seek the advice of a legal professional if you have questions about the formation or revocation of a contract.

If a statute prohibits vehicles in the park, does it outlaw a child riding a tricycle?

It depends on how the statute is written and how it is interpreted by the courts. If the statute specifically prohibits vehicles in the park and defines "vehicles" as including tricycles, then it would be illegal for a child to ride a tricycle in the park. On the other hand, if the statute only prohibits motorized vehicles or specifically excludes tricycles, it would not be illegal for a child to ride a tricycle in the park.

It is important to carefully read and understand the specific language of a statute before determining whether a particular activity is legal or illegal. If you are unsure about the meaning of a statute or its application to a particular situation, it is always a good idea to seek the advice of a legal professional or research the laws in your specific area.

Make an argument that the statute you just wrote about does not prohibit tricycles, even if it does not say either way.

Here is one possible argument that could be made in favor of the interpretation that a statute prohibiting vehicles in a park does not apply to tricycles:

1. The ordinary meaning of the word "vehicle" generally includes automobiles, trucks, buses, and other types of motorized transportation. It does not typically include non-motorized vehicles such as tricycles.
2. When a law is ambiguous or open to multiple interpretations, courts will often consider the purpose or intent of the law in order to determine its meaning. If the purpose of the law is to regulate motorized traffic and prevent noise and pollution in the park, it is unlikely that the law was intended to apply to non-motorized tricycles.
3. If the law was intended to apply to tricycles, it would have been more clear and straightforward to specifically mention tricycles in the text of the law. The fact that tricycles are not mentioned in the law could be taken as an indication that they were not intended to be included.

It is important to note that this is just one possible argument, and the ultimate determination of whether a statute applies to tricycles would depend on the specific language of the law and how it is interpreted by the courts.

Make an argument that the Supreme Court was wrong in the Heller decision on the Second Amendment.

Here is one possible argument that could be made against the Supreme Court's decision in District of Columbia v. Heller, which held that the Second Amendment protects an individual's right to keep and bear arms:

1. The Second Amendment was adopted in the late 18th century, when the militia system was an important part of the country's defense. The militia was made up of all able-bodied men, who were expected to provide their own firearms for service. The purpose of the Second Amendment was to ensure that the militia would have access to firearms, not to protect the individual right to bear arms for personal use.
2. The language of the Second Amendment, which states that the right to bear arms shall not be infringed, does not clearly and unambiguously protect an individual right to keep and bear arms. The phrase "the right of the people to keep and bear Arms" could be understood to refer to the collective right of the militia to keep and bear arms, rather than to an individual right.
3. The Supreme Court's decision in Heller has been controversial and has generated a significant amount of debate and disagreement. Many legal scholars and advocates believe that the decision was wrongly decided and that it has had negative consequences for public safety and the regulation of firearms.

It is important to note that this is just one possible argument, and the ultimate interpretation of the Second Amendment is a matter of ongoing debate and legal dispute.

Let’s have a discussion about blackmail.

Blackmail is a criminal act in which someone threatens to reveal embarrassing, damaging, or illegal information about another person unless that person meets certain demands. It is a form of coercion that can have serious consequences for the victim, including financial ruin, social ostracism, and emotional distress. Blackmail is typically committed by someone who has access to sensitive information about the victim, such as an ex-partner, a former employee, or a hacker who has obtained confidential data. It is a serious crime that can result in imprisonment and other legal penalties. It is important for anyone who is being threatened with blackmail to seek help from law enforcement or a trusted authority figure, as attempting to handle the situation on one's own can be dangerous.

What do you know about Coasean blackmail?

The Coasean approach to blackmail is a theoretical framework for analyzing and understanding the economic consequences of blackmail and other forms of coercion. It is named after economist Ronald Coase, who developed the concept in his 1960 paper "The Problem of Social Cost."

According to the Coasean approach, the economic efficiency of an act of blackmail depends on the costs and benefits associated with the threatened action (e.g., the publication of embarrassing information) and the costs and benefits of complying with the blackmailer's demands. If the costs of complying with the demands are lower than the costs of the threatened action, then it may be economically rational for the victim to comply with the blackmailer's demands. On the other hand, if the costs of complying with the demands are higher than the costs of the threatened action, then it may be more efficient for the victim to suffer the consequences of the threatened action rather than pay the blackmailer.

The Coasean approach has been influential in shaping how economists and legal scholars think about the economic implications of blackmail and other forms of coercion. However, it has also been the subject of criticism, with some scholars arguing that it fails to adequately capture the moral and social consequences of blackmail and other forms of coercion.

Is efficient breach of contract moral?

Efficient breach of contract is a term used to describe a situation in which one party to a contract decides to breach (or break) their obligations under the contract because it is more economically advantageous for them to do so. The concept of efficient breach is based on the idea that it is more efficient for a party to breach a contract if the costs of performance (i.e., fulfilling their obligations under the contract) are higher than the costs of breach (i.e., the damages that the other party can recover as a result of the breach).

Whether efficient breach is considered moral or not is a subjective matter and can depend on one's personal values and ethical beliefs. Some people may believe that it is always wrong to breach a contract, regardless of the costs and benefits involved, while others may see it as a legitimate way of maximizing one's own economic self-interest. In the field of economics, the concept of efficient breach is often analyzed from a more neutral, objective perspective, focusing on the efficiency implications rather than the moral ones.

Can someone be a third-party beneficiary of a gratuitous promise?

A third party beneficiary is a person who is not a party to a contract, but who is intended to benefit from the terms of the contract. In order for a third party to be a beneficiary of a contract, the contract must explicitly state that the third party is intended to benefit from the contract.

A gratuitous promise is a promise that is made without any legal consideration (i.e., without anything being given in return). Gratuitous promises are not legally enforceable, since there is no exchange of value between the parties. However, if a gratuitous promise is made with the intention of benefiting a third party, that third party may be able to enforce the promise if they can show that they relied on the promise to their detriment.

Therefore, it is possible for a third party to be a beneficiary of a gratuitous promise, but it is not automatic. The third party must be specifically named as a beneficiary in the promise, and they must be able to demonstrate that they relied on the promise to their detriment.

What happens if a buyer fails to give notice of breach to a seller who delivers nonconforming goods?

Under the Uniform Commercial Code (UCC), which is a set of laws that govern commercial transactions in the United States, a buyer is required to give notice to a seller if the goods delivered by the seller are nonconforming (i.e., if they do not meet the specifications of the contract). This notice must be given within a reasonable time after the buyer discovers or should have discovered the nonconformity.

f the buyer fails to give notice of breach to the seller within a reasonable time, the buyer may lose certain rights and remedies. For example, the buyer may be unable to reject the goods or recover damages for breach of contract. The buyer may also be deemed to have accepted the goods, which means that the seller has fulfilled their obligations under the contract and the buyer is obligated to pay for the goods.

It is important for a buyer to carefully review the terms of their contract and follow the proper procedures for giving notice of breach if they receive nonconforming goods. Failure to do so can have significant consequences and may limit the buyer's ability to seek remedies for any breach of contract.

ChatGPT and Law School

Last week, Farhad Manjoo's op-ed in The New York Times explored the capabilities of ChatGPT, a computer program with some pretty decent writing chops.  For those interested, a readable explanation of the technology can be found here.  The column chooses as its theme a question that has occupied us more than once on this blog: What is a sandwich?   We have discussed the issue in connection with disputes over whether a sandwich shop's restrictive covenant with a shopping mall precluded the mall from leasing space to a burrito shop.  Is a burrito a sandwich?  Endless listserv debates later, Taco Bell sought to capitalize on our enthusiasm for the topic by launching a commercial addressing the debate.  

Farhad Manjoo asked ChatGPT whether a hot dog is a sandwich. It provided a hedged response.   He then showed how the program dealt with other matters, such as abortion and the Electoral College.  It's rather mealy-mouthed on hot-button issues.  "Some people think this; some think that."  That sort of thing.  At Sid DeLong's suggestion, I gave it the following prompt

Write a 500 word post for the ContractsProf Blog about Chatbots in law school

 

Here is its response

As technology continues to advance, chatbots are becoming increasingly prevalent in various industries, including law. These AI-powered virtual assistants are designed to mimic human conversation and can assist with tasks such as answering questions, providing information, and even handling simple legal matters. In the realm of legal education, chatbots have the potential to revolutionize the way law students learn and interact with the legal system.

One major benefit of chatbots in law school is their ability to provide 24/7 assistance to students. Law school can be a demanding and stressful experience, with students often facing tight deadlines and a heavy workload. Chatbots can help alleviate some of this burden by providing immediate answers to common questions, such as how to access certain resources or where to find certain case laws. This can save students valuable time and allow them to focus on more pressing matters.

Another advantage of chatbots in law school is their potential to enhance the learning experience. Many chatbots are equipped with natural language processing capabilities, which allows them to understand and respond to complex questions and requests. This can be particularly useful for law students who may not have access to a human tutor or mentor. By interacting with a chatbot, students can get personalized feedback and guidance on their legal research and analysis, which can help them develop their skills and knowledge.

Chatbots can also play a role in simulating real-world legal situations. Some chatbots are designed to simulate client interactions, allowing law students to practice their communication and problem-solving skills in a safe and controlled environment. This can be a valuable addition to traditional legal education, which often relies on theoretical exercises and case studies rather than practical application.

Despite the many potential benefits of chatbots in law school, it's important to note that they are not a replacement for human interaction and guidance. Chatbots are a tool, not a substitute, and they should be used in conjunction with other forms of legal education. However, when used appropriately, chatbots can be an effective supplement to traditional teaching methods and can help law students better prepare for their future careers.

It's worth noting that chatbots are not a new concept in the field of legal education. Many law schools and legal organizations have already implemented chatbots as a way to provide information and assistance to students and clients. For example, the American Bar Association has developed a chatbot called "Ask ABA," which allows users to ask questions about legal issues and receive answers from trained attorneys. Similarly, the University of Ottawa has implemented a chatbot called "Ask Ottawa," which provides students with access to legal resources and information on a variety of topics.

While chatbots have the potential to revolutionize legal education, there are also some potential challenges and limitations to consider. One concern is that chatbots may not be able to fully understand or address the nuances of complex legal issues. While they can provide general information and guidance, they may not be equipped to handle more specific or complicated matters. Additionally, chatbots may not be able to provide the same level of personalization and individualized attention as a human tutor or mentor.

Despite these challenges, chatbots have the potential to be a valuable asset for law students and legal professionals. By providing round-the-clock assistance, enhancing the learning experience, and simulating real-world legal situations, chatbots can be a powerful tool for legal education. As chatbot technology continues to evolve, it will be interesting to see how they are integrated into law school curricula and the legal profession as a whole.

I originally asked it to write 1000 words, but ChatGPT actually gets boring and repetitive pretty quickly.

In addition, I wanted room for a follow-up question: Can chatbots be used to cheat on law exams?  ChatGPT's response was a bit preachy:

It is generally not advisable or ethical to use chatbots or any other form of technology to cheat on exams. Cheating on exams undermines the integrity of the educational process and can have serious consequences, including academic penalties and damage to your reputation.

That being said, it is possible that some students may attempt to use chatbots to cheat on law exams by seeking answers to exam questions or using the chatbot to complete assignments or exams. However, it is likely that such attempts would be detected and penalized by the educational institution. Most institutions have strict policies in place to prevent cheating and have systems in place to detect and deter cheating behaviors.

In addition, it is important to keep in mind that the use of chatbots or other forms of technology to cheat on exams does not ultimately benefit the student. Cheating does not allow the student to gain a true understanding of the material and does not prepare them for future legal practice. It is much more beneficial for students to put in the time and effort to study and understand the material on their own, rather than attempting to cheat their way through exams.

I have never given a take-home exam, and now I certainly will not do so.  I for one welcome our new robot overlords.

Elon Musk's Strategy for Saving Twitter: Breach Contracts

According to Ryan Mac, Mike Isaac and Kate Conger writing in The New York Times, Elon Musk is seeking to cut costs at the company for which he paid $44 billion by breaching contracts.  Specifically, according to the Times, Mr. Musk is:

• Instructing employees not to pay vendors;
• Not paying rent on Twitter's office space;
• Not paying a $197,725 bill for private charter flights made the week of Mr. Musk’s takeover; and
• Contemplating not paying thousands of former employees the severance payments they are owed

As a contracts guy, I don't care much for intentional breach.  As someone who can't imagine what it's like to run a company like Twitter, I also can't imagine how this is a helpful strategy.  We reported last week on the cheeky demand letter that attorney Akiva Cohen sent to the "Chief Twit" on behalf of terminated Twitter employees.  Not paying one's clear contractual obligations is more expensive than paying them, given litigation costs.   Unless of course, you are hoping to have those debts excused in bankruptcy.  .  .  .

Seems like we've seen this business model before, but absent constitutional amendment, Mr. Musk is not headed to the White House.  Does he want to be the governor of California?  They had the Governator; do they want the Teslarnor?  The GovernX?  The Twitternor?

There's also the irony that Mr. Musk is demanding that his employees come to work rather than working remotely, but that's hard to do if you get evicted from your office space for not paying rent.  

Speak Out Act Provides Some Protection Against Non-Disclosure Agreements

Last week, Congress passed and President Biden signed into law the Speak Out Act.  The Act is evidence that Congress can still pass meaningful legislation.  This one was introduced by New York Senator, Kirsten Gillibrand (right).  Co-sponsors included nine Democratic Senators, as well as  Republican Senators, Marsha Blackburn, John Cornyn, Lindsey Graham, Chuck Grassley, and Rob Portman.  The Act had unanimous support from Democrats, and Republicans in the House were pretty much evenly divided.  It passed the Senate by unanimous consent.

The key operational provision reads as follows:

With respect to a sexual assault dispute or sexual harassment dispute, no nondisclosure clause or nondisparagement clause agreed to before the dispute arises shall be judicially enforceable in instances in which conduct is alleged to have violated Federal, Tribal, or State law.

Keen readers will note that this Act is only a partial victory (but a victory nonetheless), as it only precludes the enforcement of nondisclosure or non-disparagement provisions entered into before the dispute arises from being introduced in connection with sexual assault or sexual harassment disputes.  

As Tom D'Agostino explains on HRmorning.com, there are four ways in which the Act falls short.  First, employers can still enter into NDAs with employees after a dispute as begun and thus shield themselves somewhat from the public disclosure of misconduct.  The Act will not end the tradition of paying hush money to employees to get them to drop their claims.  Second, to the extent that pre-dispute NDAs purported to prohibit the reporting of criminal activity, they likely were already unenforceable without the Act.  Third, the Act elevates sexual harassment above other forms of workplace misconduct.  One would hope that the next step would be a broader prohibition on pre-dispute NDAs relating to all forms of workplace harassment.  

Finally, there are state models for bars on NDAs that are already far more protective than the act.  As Tom D'Agostino's reporting notes:

In Maine, for example, employers cannot use nondisclosure agreements to block employees from talking about workplace discrimination and harassment. And in California, employers cannot use nondisclosure agreements in connection with settlement agreements that involve sexual assault or sexual harassment. These laws place a glaring spotlight on the absence of a broader measure of protection in the Speak Out Act.

So the glass if half full, but this is nonetheless a positive development in the realm of federal workplace protections.

HT to my colleague, Michael Gibson.

(Belated) Tuesday Top Ten - Contracts & Commercial Law Downloads for December 14, 2022

While we are admittedly a day late this week, let the record show that we are but never a dollar short with the Tuesday Top Ten! Let's see what's happening on our subject-favorite SSRN charts:

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 15 Oct 2022 - 14 Dec 2022

Rank	Paper	Downloads
1.	The Obsolescence of Blue Laws in the 21st Century Ira P. Robbins American University - Washington College of Law	303
2.	Zauderer and Compelled Editorial Transparency Eric Goldman Santa Clara University - School of Law	175
3.	The Privity of Contract: Third Party Rights Under Maldivian Contract Law Husnu Al Suood Maldives Law Institute	163
4.	An Outsider’s View of the Brussels Ia, Rome I, and Rome II Regulations Symeon Symeonides Willamette University - College of Law	93
5.	Against Bankruptcy Exceptionalism Jonathan Seymour Duke University School of Law	92
6.	The Other Hand Formula Maytal Gilboa and Yotam Kaplan Bar-Ilan University - Faculty of Law and Bar-Ilan University - Faculty of Law	86
7.	A Silver Lining to Russia's Sanctions-Busting Clause? Michael Bradley, Irving De Lira Salvatierra, Mark C. Weidemaier and Mitu Gulati Duke University - Fuqua School of Business, Duke University, University of North Carolina School of Law and University of Virginia School of Law	75
8.	Adapting Private Law for Climate Change Adaptation Jim Rossi and J. B. Ruhl Vanderbilt University - Law School and Vanderbilt University - Law School	59
9.	Automated Contract Review: Challenges and Outcomes of a Data Annotation Framework Mattias Rättzén Independent	56
10.	Restatements and the Common Law Andrew S. Gold and Henry E. Smith Brooklyn Law School and Harvard Law School	5

 

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 15 Oct 2022 - 14 Dec 2022

Rank	Paper	Downloads
1.	Deconstructing Smart Contracts Eliza Mik and Eliza Mik The Chinese University of Hong Kong (CUHK) - Faculty of LawTILT	248
2.	The Privity of Contract: Third Party Rights Under Maldivian Contract Law Husnu Al Suood Maldives Law Institute	163
3.	An Outsider’s View of the Brussels Ia, Rome I, and Rome II Regulations Symeon Symeonides Willamette University - College of Law	93
4.	The Other Hand Formula Maytal Gilboa and Yotam Kaplan Bar-Ilan University - Faculty of Law and Bar-Ilan University - Faculty of Law	86
5.	A Silver Lining to Russia's Sanctions-Busting Clause? Michael Bradley, Irving De Lira Salvatierra, Mark C. Weidemaier and Mitu Gulati Duke University - Fuqua School of Business, Duke University, University of North Carolina School of Law and University of Virginia School of Law	75
6.	Adapting Private Law for Climate Change Adaptation Jim Rossi and J. B. Ruhl Vanderbilt University - Law School and Vanderbilt University - Law School	59
7.	Automated Contract Review: Challenges and Outcomes of a Data Annotation Framework Mattias Rättzén Independent	56
8.	Behavior-Based Price Discrimination and Consumer Protection in the Age of Algorithms Haggai Porat Harvard Law School	41
9.	Older Adults and 'The Biggest Lie on the Internet': From Ignoring Social Media Policies to the Privacy Paradox Jonathan A. Obar and Anne Oeldorf-Hirsch York University and University of Connecticut	40
10.	No Money Allowed Kimberly D. Krawiec University of Virginia School of Law	38

KCON XVI: The Portal for Submissions Is Open

The Sixteenth International Conference on Contracts will be held at Texas A&M University School of Law in Fort Worth on Friday & Saturday, March 17-18, 2023. Paper abstracts and proposed panels should be submitted through the Conference Website:

https://law.tamu.edu/kcon

Registration for the Conference is available on the site. The Conference is booking blocks of rooms at the Fort Worth Sheraton (across the street from the law school) and the Hampton Inn Downtown Fort Worth (5 blocks from the law school). Hotel registration links will be added shortly.  The Conference registration fee includes two Continental breakfasts, two catered lunches at the Schuchtman Conference Center, and the Friday night Conference Dinner.  The Trinity Rail line runs directly from DFW International Airport to Fort Worth Central Station, which is 5 blocks from the law school.

ABOUT THE CONFERENCE

Each year the Conference's goal is to present papers and works-in-progress that address the whole spectrum of contract and commercial law scholarship, whether doctrinal, historical, jurisprudential, economic, philosophical, critical, pedagogical, or interdisciplinary. Presentations by those who work in non-U.S. legal systems and by junior scholars who are new to the field are particularly encouraged. Individual paper and works-in-progress submissions will be assigned to panels. Proposals for entire panels with particular themes are particularly welcome,

SUBMISSIONS

Submissions should identify the author(s) and contain an abstract (not more than 500 words) of the proposed presentation. Proposed panels should include the names and contact information for all participants. Submissions will be accepted on a rolling basis, and submissions after the submission deadline may be accommodated on a space-available basis. Submissions may be made by using the form on the website, if possible.

Questions should be directed to:

Professor Frank Snyder

[email protected]

Texas A&M University School of Law

1515 Commerce Street

Fort Worth, TX 76102

Both Texas A&M School of Law and the KCON Organizing Group look forward to seeing you in Fort Worth!

Reefer Brief: Cannabis Dispensary Deploys Illegality Defense to Get Out of Paying Rent!

Today's edition of the Reefer Brief, our occasional series on lawsuits involving the marijuana industry, we bring you a tale of the sort of genius scheme gone awry that could only be inspired by reefer madness . . . or a thorough introduction to affirmative defenses in one's first-year contracts course.  The case is Thor 942 Fulton St., LLC v Future Transactions Holdings, LLC et. al.

According to Keyla Prince of California News, MedMen Enterprises (Medmen), a dispensary, entered into a fifteen-year lease with Thor Equities (Thor) on a warehouse-style building in Chicago in 2019.  The annual rent was to be $800,000/year, rising to $1.2 million after five years.  But MedMen did not pay rent, or utilities, or insurance.  At the time Thor Equities filed its claim for back rent in a federal district court in New York, MedMen owed over $1 million.  

That's when MedMen's attorneys came up with a brilliant solution: they argued that the lease agreement was unenforceable in federal court because it was a contract to engage in activities that are considered criminal under federal law.  Thor responded by seeking voluntary dismissal so that it could refile its claim in state court, a jurisdiction that does not consider dispensing marijuana a criminal act.  MedMen struck back, as William M. X. Wolfe explains here, accusing Thor of forum shopping.  District Court Judge J. Paul Oetken noted that Thor should have anticipated MedMen's defense but also noted that it was still early in the litigation, and so a voluntary dismissal was warranted.

Too bad.  If the district court had heard the case, it would have paired nicely with Carroll v. Beardon.  Readers may recall that Carroll involved the sale of a bordello as a going concern.  The court nonetheless chose to treat the seller as non in pari delicto (not equally culpable) with the buyer and enforced the contract under an exception to the illegality rule.  Here, a court could decide to treat this as an ordinary real estate transaction.  If the lease terms were no different from what Thor would have gotten leasing its premises to a tenant engaged in lawful activities, Thor could argue that it did not benefit from the illegality and thus was non in pari delicto.

 

Showdown in the Florida Supreme Court Over Objective and Subjective Theories of Formation

Although the case, Suarez Trucking FL Corp. v. Souders, arises in the context of Florida Statute § 768.79, which governs the enforcement of settlement agreements, the statute is consistent, unsurprisingly, with the basic law of contracts formation.  The relevant facts are straightforward: Souders filed with the court its offer to dismiss its lawsuit against Suarez in exchange for a $500,000 payment, due within ten days of acceptance.  One month latter, Suarez filed its notice of acceptance.  The majority finds nothing the least bit troubling here, but the trial court and the intermediate court of appeals both found the settlement agreement to be unenforceable.

The governing statute provides as follows:

An offer shall be accepted by filing a written acceptance with the court within 30 days after service. Upon filing of both the offer and acceptance, the court has full jurisdiction to enforce the settlement agreement . . . 

[Such a]n offer may be withdrawn in writing which is served before the date a written acceptance is filed” and that “[o]nce withdrawn, an offer is void.”

Also of significance, according to the majority, Florida Rule of Civil Procedure 1.442(f)(1) states that, in connection with an offer and acceptance under section 768.79(4), “[n]o oral communications shall constitute an acceptance, rejection, or counteroffer.”

None of this is surprising, and other than the requirement that settlement offers and acceptances must be in writing, matters ought not to operate any differently under common law rules of contract formation.  

The intermediate appellate court rejected the settlement agreement on two grounds.  First, it found that the mirror image rule was not satisfied.  According to that court, Suarez's acceptance of the offer was "ineffectual boilerplate" that failed to recite the terms of the deal.  Florida's Supreme Court was unanimous in finding that the mirror image rule required no such recitation.  Second, articulating concerns echoed in part in the dissenting opinion, the intermediate appellate court viewed the statute as requiring acceptance by performance consistent with the original offer rather than by a return promise.  Otherwise, the statute would allow unilateral alternation of the terms of settlement.  

The basis of a disagreement lies in objective and subjective views of contract formation.  The majority pulls out the big guns, quoting Holmes (right):

The making of a contract depends not on the agreement of two minds in one intention, but on the agreement of two sets of external signs—not on the parties having meant the same thing but on their having said the same thing.

The dissent points to ongoing negotiations between the parties. 

After Souders made his initial offer, Suarez’s counsel contacted Souders’ counsel and asked that the settlement agreement provide that the lien issued by the workers’ compensation carrier (Guarantee Insurance Company) be paid from the proceeds of the settlement check." 

Despite Souders' rejection of this proposal, Suarez filed its notice of acceptance but issued a settlement check that designated, Souders, his attorney, and Guarantee as payees.  When we take these negotiations into account, it is easy to see why the trial court, appeals court, and dissent all contend that the parties had not actually agreed on the terms of their settlement.  At the time that the parties "agreed" to their settlement, the allocation of the settlement payment among the payees had yet to be determined.

The dissent points out that Florida Rule of Civil Procedure 1.442(f)(1), which the majority treats as barring the evidence of on-going negotiations, assumes a valid offer and acceptance.  However, the dissent contends, there had been no valid offer and acceptance here, where the parties had not agreed on who was to be the payee on the settlement check.  And this ambiguity now helps us understand why the dissenters fear that a boilerplate submission that conceals a continuing disagreement between the parties as to fundamental element of the settlement could permit an offeree to change the terms of the agreement unilaterally.   Where the trial court to approve payment to the insurer, it might actually be imposing on the settlement offeror a term to which it did not agree.

Whether of not enforcing the settlement agreement in this case would in fact change the terms of the offer is addressed satisfactorily only in a two-Justice concurring opinion.  There, Justice Canady takes note of the relevant statutory scheme that seems to require that the workers compensation carrier's lien be taken into account in any settlement.  Under Florida's Workman Compensation Statute § 440.39, "Souders was required by law to bring his third-party tort claim not only for his own benefit, but also for 'the use and benefit' of the workers’ compensation carrier."

Under the concurring opinion's view of the matter, Souder must have, as a matter of law,  made his settlement offer knowing that the lien would come out of the $500,000 settlement payment.  Had Saurez failed to identify Guarantee as a payee, it would have been in violation of Florida's Workman Compensation Statute.  While the majority remanded the case to resolve the issue of how the $500,000 payment was to be allocated among the payees or whether Saurez had breached the agreement by naming Guarantee as a payee, the concurring opinion sees no possibility of breach, as Saurez's conduct was mandated by statute.

COVID Case Against Brandeis University May Proceed

I am still working my way through a backlog of material that accumulated while I was taking a teaching break from blogging.  This decision is from October.  The facts and allegations are pretty familiar from all of the other cases in which college or university students sued their institutions alleging breach of contract or unjust enrichment in connection with the move to online education in response to the COVID pandemic in March 2020.  

In Omori v. Brandeis, the Federal District Court for Massachusetts denied Brandeis' motion for summary judgment.   The court had earlier dismissed plaintiffs' claims for conversion, and plaintiffs' abandoned their claim for breach of an express contract.  The issue was whether plaintiffs had a factual basis to support their claims for an implied promise of in-person education with access to campus facilities and unjust enrichment.  The District Court found that plaintiffs' allegations were sufficient to survive Brandeis's motion for summary judgment on those claims.  

Plaintiffs are seeking partial recovery of tuition and fees for the Spring 2o20 semester.  Like Northeastern before it, Brandeis sought to rely on its financial responsibility agreement (FRA) entered into with students  and the university’s tuition refund schedule.  Brandeis argued that these were express contracts that set forth the rules for tuition refunds, and that Plaintiffs cannot state a claim for an implied contract when those very matters were covered by an express contract.  The District Court's response is simple and straightforward.  Neither the FRA nor the schedule say anything about closing campus due to an emergency.  The grounds for Plaintiffs' complaint are not covered by any express agreement.   

The court then proceeded to consider the merits of Plaintiffs' breach of an implied contract claim.  The court found that material issues of fact precluded summary judgment.  Plaintiffs had alleged that Brandeis's promotional materials implied a right to in-person education, and a trier of fact would need to determine whether those allegations were persuasive.   Brandeis claimed that, even if there were an implied contract, it reserved discretion to make changes to the manner in which it delivered its curriculum.  The court reviewed similar cases and found that Brandeis's reservation of discretion was inadequate.  Like many other institutions, Brandeis's reservation did not give it the unfettered right to move all classes online due to public emergency without consequence.  Brandeis's proffered the defense that its performance because impossible once Massachusetts' governor issued a shutdown order in response to the pandemic.  The validity of that defense, the court concluded, would have to be decided by a jury.  

As to Plaintiffs' claim for fees, the court dismissed all but one claim, a studio fee that should have been refunded if the in-person course was cancelled due to the pandemic.  As to the other fees, Plaintiffs presented no evidence that those fees were connected with any promise of in-person education.

The court dismissed Plaintiffs' claim for unjust enrichment.  Their recovery, if any, will be under breach of an implied contract.

 

The Reefer Brief: SSL Investments v. Oroskar

Today, in our continuing occasional series on cases involving the marijuana industry, we bring you an account of a successful motion to compel arbitration in SSL Investments, LLC, v. Oroskar.   It's a pretty typical Reefer Brief Story.  THC oil distributor meets entity developing new technology for THC oil processing.  Distributor loves technological innovator.  Distributor enters into a long-term agreement with innovator.  Innovator's technology does not work as advertised.  Distributor sues innovator for RICO violations, inter alia.   

Defendants here are corporate entities and representatives of those corporate entities that approached SSL Investments (SSL), a processor and wholesale distributor of THC oil, to offer proprietary technology useful in the processing of such oil.  The process purported to produce oil of over 90% purity, while retaining cannabinoids present in the raw material.  

The parties entered into an agreement in 2018, and defendants installed their equipment in plaintiff's facility.  SSL alleges that not all of the equipment arrived, that the equipment failed to function as advertised, that defendants in fact used SSL's facility to engage in product research and development, and that defendants induced SSL to invest in their equipment.  Less than one year into the relationship, defendants terminated the agreement and removed their equipment.  SSL sued, claiming losses arising from defendants' violation of RICO (wire fraud), conspiracy to violate RICO, fraud, fraudulent concealment, unlawful business practices, and false advertising.  Defendants responded with a motion to compel arbitration.

Plaintiff attempted to avoid the arbitration provision by pointing out that its claims arise in tort, not contract, and thus the contractual provision ought not to govern.  The court rejected this argument, noting that all of SSL's claims arise out of the agreement and the parties' conduct regarding the agreement.  Although the Federal Arbitration Act calls for District Courts to stay proceedings when granting a motion to compel arbitration, the Ninth Circuit permits District Courts, in the exercise of their discretion, to dismiss the action when all claims are arbitrable.  That being the case here, the District Court dismissed SSL's claims without prejudice.