ContractsProf Blog

The SAG-AFTRA Strike

We wrote last week about the auto workers strike.  We have been remiss in not having covered the strike of the Screen Actors Guild and American Federation of Television and Radio Artists (SAG-AFTRA) against the Alliance of Motion Picture and Television Producers (AMPTP), and the related strike of the Writers Guild of America (WGA) that began in May and just concluded this week. 

Although when I first drafted this post, there was no hint that the WGA strike was about to end, I will not claim that I alone fixed it. 

But did I?  I'm just asking questions.

In any case, it is time to catch up.

The WGA strike was the longest work-stoppage involving that group since 1988.  One of the main issues in the strike was the writers' access to residuals from streaming media.  Writers, like all of us, are also concerned that the studios might replace them with some new version of artificial intelligence.   The parties started off pretty far apart, with the WGA saying that its proposals would yield benefits of $429 million a year; the AMPTP's offer would yield $86 million. For months, there seemed to be no prospect of a resolution.  This month, negotiations seemed to make promising progress.

Suddenly, over the weekend, there was a breakthrough.  A tentative deal has been signed and, as Brooks Barnes of The New York Times reports, writers began returning to work this week.  The parties are expected to enter into a new three-year agreement, and most reporting suggests that the writers got most of what they were seeking, including 

• a 76% increase in residuals payments;
• a bonus to writers from streaming services; 
• guarantees of minimal staffing; and 
• no AI encroachment on writers' credits and compensation.

So now the writers can write.  But who will perform what they have written?

SAG-AFTRA joined the strike in July.  This is the first such industry strike since the actors' strike in 1980, and it is the first time writers and actors have gone on strike simultaneously since 1960.  The actors' concerns are similar to those of the writers.  They seek residuals from broadcasts over streaming services, and they too have worries about being replaced through artificial intelligence.

\According to Wikipedia, actors can still appear on podcasts, micro-budget independent films, student films, unscripted television work such as game shows, reality competition shows, documentaries, and talk shows.  This might be a boon to podcasts, and I assume that if the casts of Oppenheimer and Barbie want to make a video appearance on this blog, that would be no problem.  

So, for example, there has been at least one positive externality of all of this.  Jeri Ryan, unable to work due to the strike, has more time to spend on social media.  Two weeks ago, she used some of that time to like something I posted on BlueSky.  

I have followed Ms. Ryan's career since getting to know her as 7 of 9 on Star Trek Voyager.   Let's just say I am a fan.  I wanted to name my daughter "Seven," but my wife, also a fan, won that battle.  Still, twenty years later, one "like" from Jeri Ryan was mind blowing.  I asked my Associate Dean if I could cancel class due to being on Cloud 7 of 9.  She suggested that I instead share my joy with my students.  Which I did.  They had no idea who Jeri Ryan is, but that is their loss.  Also, as Seven would say, irrelevant.

Edited with helpful corrections from David August.

Baltimore Orioles Strike Out in Appeal of Arbitral Decision in the New York Court of Appeals

The playoffs are on their way.  In the context of this case, I have only one thought.  Go Cubs!

In 2001, the Baltimore Orioles and  TCR Sports Broadcasting, LLC (TCR) established the Orioles’ Television Network, which had the exclusive right to broadcast Orioles games in the region, covering seven states and the District of Columbia.  When Major League Baseball (MLB) decided to move the Montreal Expos to Washington D.C., where they became the Nationals, the Orioles chirped a bit, but the Orioles, MLB, and TCR entered into a settlement agreement, converting the Orioles' Television Network into the MidAtlantic Sports Network (MASN), a two-team regional sports network. 

This was a sweet deal for the Orioles, because they got to keep the majority of the revenues from the network.  That was intentional and intended to compensate the Orioles for the revenues they would lose, having to share the market with the upstart Nationals.  The structure is also a bit unwieldy.  MASN was to pay both teams equally for the right to broadcast their games, but given that the Orioles got the lions share of MASN's profits, it was incentivized to sell its rights rather cheaply in order to reap benefits from the Nationals' television revenues.  

The first time the parties tried to negotiate telecast rights fee, they failed to reach agreement.  The parties chose not to avail themselves of the mediation process provided for in their agreement, and so they opted for arbitration through a body provided for in the agreement consisting of the three members of the MLB revenue-sharing committee.  There were complications, but the arbitral body eventually determined that each teams' revenues should be set at $53 million for 2012, rising to $67 million for 2016.  MASN and the Orioles objected and, despite MLB's insistence that the parties avoid litigation, the Orioles filed suit in New York.  They claimed that MLB was biased in favor of the Nationals.  

The New York court vacated the arbitral award on the ground that the Nationals' attorneys, Proskauer, also represented MLB in various matters.  This ruling was affirmed on appeal, and so the case was sent back for a new arbitration, this time with a different panel and without Proskauer.  The result of the second arbitration was pretty similar to the first, and the Nationals moved in a New York state court to have the second decision enforced.  The Orioles still called foul, but the New York trial court affirmed the arbitral award, entering a judgment of $105 million, including pre-judgment interest.  New York's Appellate Division affirmed, and the Orioles appealed both the 2017 and the 2020 decisions.

Still think arbitration is a fastball?  Seems more like a knuckler.

In Matter of TCR Sports Broadcasting Holding, LLP v WN Partner, LLC , New York's highest court affirmed the arbitral award and yet still condemned the parties to "extra innings."  Baseball puns?  So unprofessional!

The Court of Appeals found no impropriety in the trial court's decision to return the matter to the original arbitral body, and it agreed with the lower courts that the second proceeding was free from the taint of partiality.  While the lower courts thus properly affirmed the second arbitral award, they erred in awarding the Nationals prejudgment interest and rendering a money judgment in the Nationals’ favor.  As the Court of Appeals explains:

The settlement agreement grants the RSDC the power only to determine “the fair market value” of the telecast rights fees. The parties did not agree that the RSDC could resolve disputes over nonpayment of such fees. Instead, remedies for MASN’s nonpayment of those fees are governed by a different provision of the settlement agreement, which sets forth certain requirements, including a cure period. Only after that cure period expires do the Nationals “have a right to seek money damages.” Further, disputes over nonpayment of the fees appear to be governed by the settlement agreement’s more general dispute resolution provisions. Now that our courts have confirmed the RSDC’s determination of the fair market value of the telecast rights, the parties must resolve any disputes over nonpayment of those fees in accordance with their agreement. 

One hopes that these court-ordered "extra innings" will be quickly completed.  After all, with so many legal matters sorted out after over ten years of adjudication, it's almost like having a runner on second base at the start of an inning.  

Go, Cubs, Go.

Reefer Brief: Arbitration, After Joint Venture Goes up in Smoke

In 2019 Blue Roots, LLC (Blue Roots) attempted to purchase the assets of Biochron, Inc. (Biochron).  Both are licensed commercial cannabis growers located in Spokane, Washington.  The terms of the parties' Memorandum of Understanding (MOU) provided that Blue Roots would pay ten percent of its net profits for ten years to Biochron in exchange for all of the latter's assets except for the business entity itself.  Biochron's President, Mr. Bennett would become a manager at Blue Roots and would be paid a monthly salary of $5000.  The agreement included a clause providing for dispute resolution through the American Arbitration Association.

The parties began to proceed under their MOU and undertook a joint venture.  On the advice of an attorney and accountant, the parties modified the MOU to comply with guidelines of the liquor and cannabis board.  The MOU was now reconfigured as a purchase and option agreement.  That agreement governed the parties' relations for the first four months of 2020.   In February, Blue Roots required all Biochron employees to sign a non disclosure agreement, which they all did.  

But in April 2020, Biochron retained counsel to help finalize the deal, and this joint venture went up in smoke.  Seems kinda inevitable when you think about it.  The issue was the pricing, and Biochron, accusing Blue Roots of bogarting, started selling some of its product to third parties.  By this point, Biochron had acquired intellectual property, including Blue Roots' grow process.  Upon request, it refused to return Blue Roots' plants that were how housed in its facility, and it continued to use Blue Roots' grow process.

Incomplete Joint Venture (filtered)

Blue Roots sought to initiate an arbitration pursuant to the MOU, but Biochron ran to court to enjoin the action.  The trial court denied Blue Roots' motion to compel, finding that the MOU was an unenforceable agreement to agree.  Blue Roots moved for a temporary injunction to protect its trade secrets.  It also renewed its motion to compel arbitration, now citing conduct as well as the MOU as a basis for enforcement of the parties' agreement.  After an inexplicable one-year delay, the trial court denied that motion and granted partial summary judgment to Biochron, citing Blue Roots' failure to take reasonable measures to protect its trade secrets.  Blue Roots appealed both the denial of its renewed motion to compel arbitration and the grant of the partial motion for summary judgment.  

In Biochron, Inc. v. Blue Roots, LLC, a Washington State appeals court reversed a grant of partial summary judgment for Biochron on Blue Roots' misappropriate of trade secrets claim.  It granted Blue Roots' motion to compel arbitration, notwithstanding the parties extended litigation.  

The legal analysis begins with the finding that the trial court erred in deciding the enforceability of the MOU.  A long line of cases provides that where the issue is to the enforceability of the entire agreement, not just the arbitration clause, the matter is to be determined by the arbiter.  Nor could there be any serious question that this matter was within the scope of the arbitration clause, given that the clause provided that any dispute relating to their agreement was to be arbitrated.

The most interesting issue was whether Blue Roots had waived its right to arbitration by participating in over a year of litigation.  Waiver of a right to arbitrate requires an act inconsistent with any intention other than to forego the right to arbitrate.  SCOTUS addressed this very issue two terms ago in Morgan v. Sundance.  But the opinion does not reference that case.  This may be because the case seems to be governed by Washington state's arbitration act rather than the Federal Arbitration Act -- or so I presume given the lack of reference to the FAA and reliance on state law.  

Here, the court found no waiver.  Blue Roots immediately attempted to compel arbitration.  When that motion was denied, it just played defense, as Biochron filed dispositive motions.  Its only other motions were for a return of its property and trade secrets and for a continuance.  Blue Roots did fail to appeal the denial of its motion to compel, and it participated in discovery, but that is not enough.  Biochron claims prejudice by the delay, but the court reasons that, because of its decision to reverse partial summary judgment, the parties would have to start over anyway, and they can do so in an arbitration just as efficiently as in a court.  

Turning to the trade secrets issue, the appeals court found that the trial court erred, largely because it inappropriately used its discretionary powers to exclude Blue Roots evidence under its Local Rules.  The appeals court proceeded to explain why there were disputed material issues of fact relating to trade secrets, rendering the grant of partial summary judgment on that issue erroneous.  The trial court stated that something that is disclosed cannot be a trade secret.  The appeals court disagreed: "This oversimplified statement does not accurately reflect Washington law."

Chief Judge Fearing wrote a short concurring opinion, lamenting the conflation of the legal concepts of waiver and estoppel.  Such conflation is common, according to Chief Judge Fearing but nonetheless regrettable.  Here, the only issue was waiver, and so there was no need to consider whether that alleged waiver had been relied on.

Tuesday Top Ten - Contracts & Commercial Law Top SSRN Downloads for September 26, 2023

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 28 Jul 2023 - 26 Sep 2023

Rank	Paper	Downloads
1.	Generative Interpretation David A. Hoffman and Yonathan A. Arbel University of Pennsylvania Carey Law School and University of Alabama - School of Law	1,265
2.	The 2012 Greek Retrofit and Borrowing Costs in the European Periphery Patrick Bolton, Xuewen Fu, Mitu Gulati and Ugo Panizza Imperial College London, University College London - Department of Economics, University of Virginia School of Law and Graduate Institute of International and Development Studies (IHEID) - Department of Economics	314
3.	Rawls and Antitrust’s Justice Function Elettra Bietti Harvard University, Law School	227
4.	The Electronic Trade Documents Act 2023 and the 2003 Amendments to Article 7 of the Uniform Commercial Code: Do They Do the Same Thing? Miriam A. Goldby Centre for Commercial Law Studies, Queen Mary, University of London	214
5.	Consumer Protection after Consumer Sovereignty Luke Herrine University of Alabama - School of Law	188
6.	Corporate Governance and Risk-Taking: A Statistical Approach Steven L. Schwarcz Duke University School of Law	156
7.	Anticipated Contracts and Unjust Enrichment Henry Cooney The University of Western Australia	138
8.	Mathias v Accor Economy Lodging: Judge Richard A. Posner’s Message and Method on Punitive Damages Ellen M. Bublick University of Arizona - James E. Rogers College of Law	133
9.	Non-Disclosure and the Misrepresentation Act 1967: A New Framework Fred Halbhuber Yale Law School	132
10.	Rationalising the Penalties Rule Prince Saprai University College London - Faculty of Laws	113

 

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 28 Jul 2023 - 26 Sep 2023

Rank	Paper	Downloads
1.	Generative Interpretation David A. Hoffman and Yonathan A. Arbel University of Pennsylvania Carey Law School and University of Alabama - School of Law	1,265
2.	The 2012 Greek Retrofit and Borrowing Costs in the European Periphery Patrick Bolton, Xuewen Fu, Mitu Gulati and Ugo Panizza Imperial College London, University College London - Department of Economics, University of Virginia School of Law and Graduate Institute of International and Development Studies (IHEID) - Department of Economics	314
3.	Investment Treaty Arbitration Caught in the Public-Private Law Divide Catharine Titi CNRS	300
4.	Anticipated Contracts and Unjust Enrichment Henry Cooney The University of Western Australia	139
5.	Non-Disclosure and the Misrepresentation Act 1967: A New Framework Fred Halbhuber Yale Law School	132
6.	What Might Contract Theory Be Gregory Klass Georgetown University Law Center	89
7.	Choice of Law and the After-Acquired Domicile Luke Meier Baylor University - Law School	86
8.	The Shape of Consumer Contracts Andrea J. Boyack Washburn University - School of Law	64
9.	Contract Law and Persuasive Design: Dark Patterns, AI and the Concept of Free Choice Eric Tjong Tjin Tai Tilburg Law School	41
10.	Exploring the Effects of Alternative Dispute Resolution (ADR) Implementation on Cost and Time Efficiency in Nigerian Construction Projects: A Comprehensive Analysis Yusuf Joe Gandu, Williams Barnabas Qurix, Ruth Rakiya Martins and Henry Amusa Bingham University, Bingham University, Bingham University and Bingham University	35

Woman Sentenced for Assisting in an Abortion, and Yes, There's a Contracts Angle

Mifepristone Molecule

Susan Rinkunas at Jezebel reports that Jessica Burgess accepted a plea deal, and a Nebraska court sentenced her to two years in prison for assisting her daughter in getting pills that helped the daughter end her pregnancy at 29 weeks.  The daughter was charged as an adult and was sentenced to ninety days in jail (she served 53) and two-years' probation.  Ms. Burgess pled guilty to tampering with human remains, false reporting, and abortion after 20 weeks’ gestation.  In exchange, prosecutors dropped two other charges. 

It is not clear how the authorities learned of the abortion, but one crucial bit of information was private messages between mother and daughter exchanged on Facebook.  As Jezebel reports,

Police obtained a warrant for Facebook messages between the mother and daughter and Facebook parent company Meta complied, providing the messages in which they allegedly discussed ending Celeste’s pregnancy with pills. 

Prior to the warrant served on Facebook, prosecutors also somehow obtained medical records revealing the daughter's pregnancy.  How they did so is not clear.  According to Jezebel, while Nebraska at the time prohibited medical professionals from performing abortions after twenty weeks, only three states, including mine, but not including Nebraska, prohibit self-managed abortion.  So, the prosecutor was investigating something that was not a crime, and Ms. Burgess pled guilty under a criminal statute that did not apply to her.

But what matters to us of course are Facebook's Terms of Service.  I recently reviewed Orin Kerr's work about Terms of Service and the Fourth Amendment.  My concern with Professor Kerr's work is that I think he downplays the ways in which users of social media sites diminish their privacy protections.  In that context, I find it striking that Facebook immediately complied with the warrant in the Nebraska abortion case.  By contrast, as Rachel Weiner reported in The Washington Post, Twitter paid $350,000 for dragging its feet in complying with a subpoena in connection with the January 6th case (above left) for Donald Trump's direct messages on the site.  In the end, even a former President has no way to protect his private messages once he shares them with a social media site.  It seems that Facebook complied with the Nebraska subpoena in a context where the illegality of the underlying conduct was much less clearly established, given that hundreds of people have already been convicted or pled to criminal charges in connection with the January 6th case.

Stay safe out there people.  If you are a woman, don't get pregnant.  Learn from the Spartan Women.  And if you do, know that your should not have any expectation of privacy if you communicate, even privately, using social media.  

The Art of the Steal and the Art of (Not) Paying Damages

Two years ago, Sid DeLong (below left) posted on The Art of the Steal.  The facts of the case are as follows (lifted from Sid's post)

A Danish artist, Jens Haaning, was famous for imaginative art works intended as social commentary. Two of his previous works consisted of real currency pasted into a picture frame, each containing the average annual incomes of Danes and Austrians. The Kunsten Museum of Modern Art commissioned him to recreate these two pieces as part of an exhibition about the labor market entitled “Work It Out.”  Its contract with Haaning provided that he was to receive the equivalent of around $7,000 in expenses plus a government-determined viewing fee. In addition, the Museum gave him the equivalent of $84,000, (534,000 kroner), which he was to attach to the art works as he had previously done. 

Shortly afterward, he delivered two empty picture frames, entitled “Take the Money and Run.” As he later explained, he thereby fulfilled his promise of artwork: “The work is that I have taken their money…It’s not theft. It is a breach of contract, and breach of contract is part of the work.” 

In my own follow-up post, I opened as follows:

However, it appears that he never contracted for the right to keep the 530,000 Danish kroner he was supposed to use to make the art.  The title of his blank canvases could be construed as an admission of liability.  Not having seen the documents relating to the deal between artist and museum one cannot be certain, but it is hard to imagine a legal argument for why Mr. Haaning should get to keep the money.

Now it's time for the rest of the story, care of our former co-blogger Meredith Miller (right), who now just drops us little jewels from time to time.

Meredith shared with us Doha Madani's story for NBC News, which tells us that the art of the steal is not as profitable as you might think.  A court found that Mr. Haaning had breached his agreement with museum and ordered him to repay the money he was given to attach to the canvases of his works of art (currently valued at about $70,000).  He was permitted to keep his fee.  Mr. Haaning brought a counterclaim, alleging breach of copyright.  The reporting does not explain the legal reasoning underlying that claim, but the court ruled against Mr. Haaning.

True to the take-the-money-and-run spirit of his art, Mr. Haaning does not intend to appeal the ruling, but he also does not intend to pay damages.  He claims that he doesn't have the money. Harriet Sherwood, reporting in The Guardian provides the following quotation from Mr. Haaning at the time he created "Take the Money and Run":

“I encourage other people who have working conditions as miserable as mine to do the same. If they’re sitting in some shitty job and not getting paid, and are actually being asked to pay money to go to work, then grab what you can and beat it.” 

Seen from this perspective, it really would be hypocritical of Mr. Haaning to return the money.  He wouldn't be following his own advice.  Perhaps.  But it is not clear whether he is "sitting in some shitty job," and he definitely was paid.  Unfortunately, his pay may not cover his court fees.

Today! Central States Law School Association Annual Conference

Today, I and four of my colleagues will be presenting at the Central States Law School Association conference at Oklahoma University in Norman.  It's just like SEALS, except that it is intimate, nowhere near the ocean, not during the summer, and only lasts two days.  In short, it's nothing like SEALS, but still.  

I will be present work that I have developed on this very blog. See, e.g. this article uploaded to SSRN (I have since revised it, but you get the idea) and this blog post.  Also this one and this one, which links to six other posts on the subject.  In short, I write on the interaction of contracts law the First Amendment in recent Supreme Court jurisprudence.  My colleagues will presenting on patent-law judging (Tim Hsieh), felony murder (Maria Kolar), prescriptive jurisdiction and conflict of laws (Eric Laity), and a non-naturalist reading of legal realism (Trevor Wedman).

And here we are, except for Trevor, whom we haven't gotten up on our website yet, but we are very excited to have him with us!

And we're all looking forward to seeing old friends and making new ones at CSLSA this weekend.

Thrift Store Makes a $250,000 Mistake, but That's No Excuse

2021 was a great year for cases about undervalued goods.  In February, 2021, we posted about a Ming Dynasty bowl that someone bought for $35.  A month later, we covered the case of the valuable doors from the Chelsea hotel.  Nine months later, there was the case of a Dürer drawing picked up an estate sale for $30.  The law of mistake is pretty clear that the seller cannot undo the transaction.  They had possession of the good and could have had it appraised before sale.  

It's been a while, but this week, Matt Stevens writing in The New York Times  brings us yet another case of a valuable art find at a very low price.  This time, a shopper at Savers, in Manchester, New Hampshire found a small painting, for which she paid $4.  Years later, she became curious about the painting's origins, and so she posted a query on Facebook.  Eventually, an excited curator was nattering on about brushstrokes.  The painting was by N. C. Wyeth (above left).  It was the frontispiece illustration and part of a four-image set that Wyeth contributed for a 1939 novel “Ramona,” by Helen Hunt Jackson.  It is expected to fetch up to $250,000 at auction.  

Savers' current manager concedes that the staff members are not connoisseurs of paintings.  He was not with the company in 2017 when the sale took place, but he adopted a philosophical attitude:  “Obviously we missed the boat.”

Dishy Case About Recovery of an Engagement Ring with a Coda on Promissory Estoppel

This week, I learned from Professor Alexandra Jane Roberts that instead of following the Grateful Dead, people now follow cases involving attempts to recover rings from failed engagements.  We got a live one out of Massachusetts.  

Fans gathering in Soldier Field, perhaps to hear a new Engagement Ring Case read . . .  
Image by Shelby Bell from Omaha, NE, US, CC BY 2.0 , via Wikimedia Commons

According to Justice Singh of the Appeals Court of the Massachusetts Superior Court, writing in Johnson v. Settino, "If the contract to marry is terminated without fault on the part of the donor[, the donor] may recover the ring."   Fair enough, but what does "without fault" mean?  The Superior Court awarded the ring and one wedding band to Ms. Settino, but a divided panel of the Appeals Court reversed.  And now, . . .

The parties began dating in 2016. Mr. Johnson paid for vacations within the U.S. and abroad and bought many gifts for Ms. Settino, always providing her with receipts.  She wanted dental implants (below, left), and he paid for the first stop in the process, the extraction of her upper teeth.  After a year, he asked her parents for permission to marry her and then popped the question, to which she said yes, while slipping a $70,000 engagement ring onto her finger.  He also sent he two wedding bands, again with receipts.

Isn't it romantic?

Once they were engaged, Mr. Johnson found some things about Ms. Settino troubling.  She became vexed with him about trivial things -- a spilled drink, or the way he ate his oysters.  She seemed not to appreciate his accomplishments, and he did not think she supported him when he got a cancer diagnosis.  She would call him a "moron" and storm off if he tried to prevent her from gumming his arm with her toothless mouth.  Okay, I made that last bit up, but the rest is really in the case. 

After Ms. Settino bragged to Mr. Johnson, "I can get a man whenever I want," he grew concerned that she might not be entirely faithful to him.  He found what he took to be evidence of an affair on her cellphone and confronted her.  Soon thereafter, he ended the engagement by voicemail, as one does.  The trial court found that he was mistaken in his suspicions of her fidelity, and so concluded that he was at fault for the demise of the relationship.  Ms. Settino was awarded the ring, and Mr. Johnson was also directed to pay for the completion of her dental implants, as he had promised.

On appeal, the court spends many pages reviewing the approaches that courts take to such matters.  Some courts sensibly treat engagement rings as either revocable conditional gifts or irrevocable inter-vivos gifts.  I can live with either of those rules.  Other courts try to determine who was "at fault" for the break up.  At fault might be determined by establishing which party broke off the engagement, which is arbitrary and idiotic, or by determining, regardless of who broke off the engagement, whose fault it was that the parties did not proceed, which is far more idiotic.  Who goes to court to determine why a couple broke up?   And why is there no Seinfeld episode covering the subject?  

Massachusetts opts for the most idiotic approach.  It's not the Appeals Court's fault.  They have to play the precedential hand they were dealt.  The trial court determined that Mr. Johnson was at fault, because he falsely accused Ms. Settino of being unfaithful to him.  The Appeals Court reversed.  Even granting that she did not cheat on Mr. Johnson, Mr. Johnson had other reasons for ending the relationship.  Nobody should have to marry someone who judges them based on how they eat oysters.  

Justice Milkey, sensibly dissented in part.  While he did not think Mr. Johnson was at fault for the break-up, he would not disturb the trial court's finding that he was.  More generally, Judge Milkey notes, "Simply put, there is an inherent unseemliness to having judges, or juries, sitting in judgment of matters of the heart." Justice Milkey's conclusion seems spot on to me:

None of this is to say that I think the defendant here should have kept the ring. To the contrary, my own view is that she should have given it back. But why should my personal view on this issue matter? To me, the ultimate question this case poses is whether such issues should be resolved in courts of law, or instead left to the interplay between private conscience and social norms.

The court's reasoning on the dental implants is an object lesson in the vast gulf between how we teach promissory estoppel and how courts treat it.  The trial court ordered Mr. Johnson to pay for Ms. Settino's dental implants because he breached a promise to do so.  He did not challenge that ruling on appeal.  The promise was binding because she relied on it in having her upper teeth removed.  Now that's reliance!  The court drops a footnote explaining why this is the proper result under Massachusetts law:

The plaintiff has not challenged the trial judge's finding on this point. See Rhode Island Hosp. Trust Nat'l Bank v. Varadian, 419 Mass. 841, 849 (1995) ("When a promise is enforceable in whole or in part by virtue of reliance, it is a 'contract,' and it is enforceable pursuant to a 'traditional contract theory' antedating the modern doctrine of consideration" [citation omitted]).

This bugs me.  I doubt that promissory estoppel predates consideration, but I know somebody who could tell us for sure 👉.  I don't think it is best understood as a contract or as a "contract."  But Val Ricks (right) has done great work showing that most courts do not follow the grand design of R.2d § 90, and award expectation damages as a remedy for promissory estoppel, effectively treating it no differently from how they would a breach of contract.  Val applauds this development as predictable, practical, and just.  I find it dissatisfying as inconsistent with the majestic theory of damages as laid out by Fuller and Perdue.  My attitude towards Val's "predictable, practical, and just" is akin to Einstein's horror of quantum mechanics.  I find this form of justice aesthetically disquieting.

Franchisee Gets Deep Fried in an Opinion from the Tenth Circuit

I love me a good franchise case.  We all encounter franchises with great frequency, and they involve us in interactions both with large multi-national corporations and with their local and often small-time agents.  The relationship between franchisees and franchisors is complicated and often vexed.  Franchising strategies can make or break large chains, and as this case illustrates, can also enrich the franchisees -- or do them great economic harm.  Here, the franchisee is also extremely well-to-do, but I suspect he worked his way, over decades, to his current station from a much more humble one.

As an added bonus, this case was decided by friend-of-the-blog Judge Harris Hartz (right) .  The case involves a claim that KFC (which now officially stands for KFC) breached an agreement with a Pueblo, Colorado franchisee, or at least the duty of good faith and fair dealing, by allowing for a second franchise in the town.  In Kazi v. KFC, US, LLC, the Tenth Circuit vacated a jury verdict in favor of the franchisee and remanded for an entry of summary judgment in favor of KFC.

Plaintiff Zubair Kazi has been the proud owner of a KFC franchise in South Pueblo since 1986.  He most recently renewed his franchise for ten years in 2017.  He owns a total of eighty franchise restaurants, which generate over $100 million in annual revenue.  In 2019, KFC licensed a new franchise in north Pueblo.  

The case provides a great history of the economic context in which the case arose.  In short, KFC downsized early in the 21st century, and during that time, Mr. Kazi lost three of his four Pueblo franchises.  In 2016, KFC was ready to start establishing new franchises again, but it did so through a cooperative agreement with franchisees to protect their profitability.  Before a new franchise was opened, a feasibility study had to be undertaken with an eye to the impact on existing franchises.  No new franchise could be built within a fixed radius of an existing franchise and the closest existing franchisee was to be offered an opportunity to own the new franchises.  The feasibility studies were undertaken by a firm designated in cooperation with the franchisees.

In this Pueblo case, the feasibility study indicated that the impact on Mr. Kazi's franchise would be within acceptable parameters.  Mr. Kazi did not seek the franchise for himself.  Instead,  he demanded a second feasibility study, which came out higher, but still within acceptable parameters.  Mr. Kazi then undertook his own study of the projected impact of the new franchise on his business.  According to KFC's agreement with its franchisees, anything above a 15% decline in revenue was unacceptable; Mr. Kazi's study indicated that the new franchise would cause his revenues to decline by 35%.  KFC ignored Mr. Kazi's study, and that seems fair, as the entity that undertook the original study was approved by KFC's franchisees.  

Then something procedurally messy occurred.  Real estate issues caused KFC to move the new franchise to a new location.  It was now farther away from Mr. Kazi's franchise.  KFC consulted the appraisers, and they advised that no new feasibility study was necessary.  If anything, the move would lessen the impact on Mr. Kazi's franchise.  And so KFC proceeded.  Mr. Kazi was not informed of the change.

Mr. Kazi brought his suit in November 2019.  The District Court dismissed most of his claims, but his claim for a breach of the implied duty of good faith and fair dealing went to the jury, and the jury found for Mr. Kazi, awarding him nearly $800,000 in damages.  On appeal, the Tenth Circuit found that the District Court erred.  Mr. Kazi could not state a claim for breach of the duty of good faith and fair dealing under Kentucky law.  

Following case law from Kentucky and the Sixth Circuit, the Tenth Circuit concluded that, in order to state a claim for a breach of the duty of good faith and fair dealing, a party must allege that the other party's bad faith defeated "an expectation created by the language of the contract."  Mr. Kazi could make no such allegation.  The KFC franchise agreement specifically addresses the issue of encroachment of new franchises on the domain of existing franchisees and provides a contractual solution.  The Tenth Circuit surveyed other case law involving franchise agreements and found near unanimity that "if the franchise agreement addresses encroachment, the franchisee cannot invoke the good-faith covenant to expand its protections against encroachment beyond the contract terms." The only circuit court to go the other way was the Ninth, which relied on a Florida case subsequently rejected by the Eleventh Circuit.  

Tuesday Top Ten - Contracts & Commercial Law Downloads for September 19, 2023

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 21 Jul 2023 - 19 Sep 2023

Rank	Paper	Downloads
1.	Generative Interpretation David A. Hoffman and Yonathan A. Arbel University of Pennsylvania Carey Law School and University of Alabama - School of Law	1,212
2.	The 2012 Greek Retrofit and Borrowing Costs in the European Periphery Patrick Bolton, Xuewen Fu, Mitu Gulati and Ugo Panizza Imperial College London, University College London - Department of Economics, University of Virginia School of Law and Graduate Institute of International and Development Studies (IHEID) - Department of Economics	313
3.	Rawls and Antitrust’s Justice Function Elettra Bietti Harvard University, Law School	213
4.	The Electronic Trade Documents Act 2023 and the 2003 Amendments to Article 7 of the Uniform Commercial Code: Do They Do the Same Thing? Miriam A. Goldby Centre for Commercial Law Studies, Queen Mary, University of London	209
5.	Consumer Protection after Consumer Sovereignty Luke Herrine University of Alabama - School of Law	177
6.	Corporate Governance and Risk-Taking: A Statistical Approach Steven L. Schwarcz Duke University School of Law	148
7.	Anticipated Contracts and Unjust Enrichment Henry Cooney The University of Western Australia	134
8.	Non-Disclosure and the Misrepresentation Act 1967: A New Framework Fred Halbhuber Yale Law School	130
9.	Mathias v Accor Economy Lodging: Judge Richard A. Posner’s Message and Method on Punitive Damages Ellen M. Bublick University of Arizona - James E. Rogers College of Law	121
10.	Rationalising the Penalties Rule Prince Saprai University College London - Faculty of Laws	11

 

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 21 Jul 2023 - 19 Sep 2023

Rank	Paper	Downloads
1.	Generative Interpretation David A. Hoffman and Yonathan A. Arbel University of Pennsylvania Carey Law School and University of Alabama - School of Law	1,212
2.	The 2012 Greek Retrofit and Borrowing Costs in the European Periphery Patrick Bolton, Xuewen Fu, Mitu Gulati and Ugo Panizza Imperial College London, University College London - Department of Economics, University of Virginia School of Law and Graduate Institute of International and Development Studies (IHEID) - Department of Economics	313
3.	Investment Treaty Arbitration Caught in the Public-Private Law Divide Catharine Titi CNRS	293
4.	Anticipated Contracts and Unjust Enrichment Henry Cooney The University of Western Australia	134
5.	Non-Disclosure and the Misrepresentation Act 1967: A New Framework Fred Halbhuber Yale Law School	130
6.	What Might Contract Theory Be Gregory Klass Georgetown University Law Center	86
7.	Choice of Law and the After-Acquired Domicile Luke Meier Baylor University - Law School	83
8.	The Shape of Consumer Contracts Andrea J. Boyack Washburn University - School of Law	61
9.	Contract Law and Persuasive Design: Dark Patterns, AI and the Concept of Free Choice Eric Tjong Tjin Tai Tilburg Law School	32
10.	Judge Jed Rakoff: Personal Impressions of a Testifying Expert Witness (and Anatomy of a UCC Foreclosure) Steven L. Schwarcz Duke University School of Law	32

Strike!

"Stike," by Theodor Kittelsen

Remember the days when Henry Ford stiffed his investors so that he could reduce the price of his cars and pay his workers a living wage (and also deprive the Dodge brothers of capital they could use to  start a rival company)?  A very different ethos inspires the managerial class at the Big Three automakers these days. 

According to Adam S. Hersh, writing for the Economic Policy Institute, profits at the Big Three have increased 92% over the past decade and are expected to be over $30 billion in 2023.  CEO pay is up 40% over the same period, and the companies have paid out $66 billion in dividends and stock buy-backs.  Worker pay, by contrast, adjusted for inflation, has decreased over 19% over the same period.  Unions made concessions to save the industry during the 2008 crisis.  The government bailed out the companies and their shareholders, but workers were expected to believe that keeping their jobs was benefit enough.

However, as Jack Ewing reports in The New York Times, unions sometimes bump up against structural economic changes, including new groups, such as immigrants, people of color, and women, joining the labor force, mechanization, and in this case, the shift to electric vehicles (EVs).  EVs have much simpler engines, which require fewer workers to build.  Moreover, Tesla, a leading EV manufacturer, has fiercely resisted unionization and has labor costs far below those of the Big Three.  Management is trying to frame the issue as pitting the unions against the drive to develop cars that contribute less to global climate change.  The reality is more complicated.  The Biden Administration is providing economic incentives for the shift to EVs, so the money that the Big Three spends on those efforts is partly provided through government subsidies.  

The unions are concerned about the shutdown of plants in the Midwest dedicated to the production of components for internal combustion engines.  Workers could shift to battery manufacturing plants, but those tend to be located in so-called "right-to-work" states where union organizing is much more difficult.  

The timing of the strike seems very well-chosen.  Despite their profits, the Big Three cannot afford a prolonged shutdown.  They run the risk of losing market share to other manufacturers of EVs.  Tesla continues to grow, as do new boutique start-ups that specialize in electric pick-up trucks and SUVs.  And then there are the foreign manufactures that have long located their factories in the U.S. South, where unions are scarce.  

As Michael D. Shear reports in The New York Times, President Biden has backed the union, but he is caught between his gut support for workers' rights and his environmental policies.  The White House has sent mediators hoping to avert a prolonged strike.  There is a lot at stake here, not only for workers and the automobile industry.  Mr. Biden must be aware that his re-election chances are linked to the state of the economy, and a significant strike at the Big Three could have national economic ramifications.

Yesterday, we blogged about Taylor Swift's impact on the fortunes of movie theaters.  Let us hope that a new contract for the autoworkers' unions will provide similar benefits for the rest of the economy.

Taylor Swift Has the Cure for COVID! And It Involves Contracts Law!

Image by Cosmopolitan UK,
CC BY 3.0, via Wikimedia Commons

Is there anything that woman cannot do?  Clearly, she can do anything she sets her mind to do, and if reviving the struggling movie theater business, with carry-on effects for shopping malls and other venues, is a positive externality of Taylor being Taylor, then so be it.  

For those of you who have avoided all human contact for the past decade, Taylor Swift (left) is a singer/songwriter who has had a number of hit songs.  Her international "Eras Tour" broke all imaginable records for successful concert tours, broke the Internet when tickets went on sale, and even generated a seismic event that registered 2.3 on the Richter scale, reportedly due to 70,000 white people trying to dance simultaneously to "You Belong With Me."  

As someone who does not particularly care for Ms. Swift's music but is surrounded by people who do, I have had no choice but to learn some of the details of her career.  So, I know that Ms. Swift does not like to share revenues with media industry bloodsuckers, like record labels and (now) movie studios.  

She has made headlines once again by leaving the studios out of the deal that will bring the Eras Tour to a movie theater near you.  Taylor Swift and her parents have cut the studios out of the process of financing and distributing the film version of her fabulously successful tour.  As Chris Eggertsen, reports on Billboard, the proceeds of the enterprise will be split, with 43% to be shared by the 1000 theaters at which the movie will be shown and 57% to be split between AMC and the Swift family.  Billboard reports (and I find this hard to fathom) that the theaters get to keep proceeds from concessions (fair enough) including from the sale of bespoke Taylor merch to be sold at the screenings (I'll believe it when I see it).  Theaters must agree to show the film for at least four weeks and may keep it up for as long as 26 weeks.  Taylor Swift now aims to beat Starbucks for market penetration.  

And of course, the records for sales for a new movie are dropping like flies.  The movie is not going to be released until October, but it seems like a safe bet that the Swifties will not lose their enthusiasm between now and then.  More likely, only Taylor-inspired bonding will prevent them from beating each other with friendship bracelets as they jostle for position in line.  No studio wants to release anything anywhere close to the release date for Ms. Swift's film, and for the first time in years, there is actually reason to buy AMC stock -- and not just to piss of the investment banks!  If there is a corresponding video game, I would recommend investing in GameStop next. One can anticipate people flocking back to theaters and the shopping malls that house them.  Social behaviors that we had completely forgotten about will return, and before long, we will re-familiarize ourselves with pre-pandemic life.  People will return to work, if only because the water-cooler conversations will now become opportunities to compete for the honors of having seen the movie the most and having bought the most Eras Tour merch.  And all thanks to Ms. Swfit!  

I am a lifelong Cubs fan.  I thought I would never get tired of the song "Go, Cubs, Go."  Then they won the World Series.  The weekend of the victory parade, I took a train into Chicago to attend Loyola Chicago's annual Constitutional Law Colloquium.  The train lasts about an hour, and my fellow Cubs fans were irrepressible, breaking out into song at the slightest provocation and with no regard to pitch or timbre.  I was relieved to step off of the train at my destination station, where "Go, Cubs, Go" was playing over the public address system.  I'd had it.  I was officially tired of the song.  Will the Swifties ever tire of their darling.  All signs point to no.  Well, let them enjoy their pleasure.

Twenty-six weeks may be enough, but expect it to have an afterlife akin to that of the Rocky Horror Picture Show, with dedicated Swifties heading out week after week to the Saturday night showing of The Eras Tour, complete with a pre-show costumes, Karaoke contests, and Taylor-wannabe talent shows.  And of course, the entire concert will be a sing-along punctuated by shrieks and shouts of adoration directed at the image of the singer.

AMC has visions of "Taylorstyle" deals moving forward.  That seems unlikely.  Her charms are lost on me, but they are undeniably unique and powerful.  I cannot think of another performing artist who could replicate this deal.  Maybe Beyonce? And just so that my Swiftie students will actually look at this blog, here's the trailer:

 

Teaching Assistants: Victor Goldberg on Consequential Damages in the U.S.

This is the eleventh in our series of posts on Victor Goldberg's second volume of collected essays on contracts law, Rethinking the Law of Contract Damages (RLCD).  Links to previous posts on the first volume, Rethinking Contract Law and Contract Design (RCL), can be found here.  Today's post covers the tenth chapter of RLCD, in which Professor Goldberg addresses consequential damages and exclusion clauses under U.S. law.

My students always struggle to understand the difference between direct and consequential damages, especially with respect to lost profits.  I always confidently tell them that direct damages arise as the immediate result of the breach, and the connection to the lost profits as consequential damages is more attenuated, for example, arising from the non-breaching party's inability to run its business due to the breach, as in Hadley v. Baxendale), or liability for its own downstream breach caused by the original breach.  The casebook I used for Sales last year even had a great series of hypos in which it asked students to distinguish direct, incidental and consequential damages.  How neat!

But the more my students pushed me that more I had that uncomfortable "I know it when I see it" feeling, and Professor Goldberg's chapters on consequential damages illustrate why.  The distinction is harder to make the more you look at it.

Professor Goldberg tries to provide some clarity to this area of the law.  Right off the bat, he would eliminate two categories of damages.  As we already noted in an earlier post, he would not allow lost volume sellers to recover.  In RLCD's Chapter 12, he rejects lost profits in the new business context (RLCD, 173).  In the American context, Professor Goldberg discusses three categories of cases.  

In cases in which plaintiffs seek lost profits in connection with contract terminations, Professor Goldberg argues that the losses should be treated as direct damages (RLCD, 175-80).  That holds true whether the claim is for goods not delivered or for anticipatory repudiation of a contract to deliver goods in the future.  Professor Goldberg next looks at indirect compensation in the context of distribution agreements.  If retailers were paid flat fees for their services, then their harm from a breach would be easy to calculate.  Their expectation would be the flat fee.  But they usually get paid indirectly, through the difference between the wholesale and the retail price. There is no reason to think that the way payments are structured make the damages a retailer suffers from breach any less direct (RLCD, 180-85).   

Professor Goldberg then covers cases, like Hadley, in which the harm is caused by delay.  While Hadley clearly involved consequential damages, sometimes delay can cause direct damages, but courts confuse the analysis.  They treat consequential damages that would be compensable under the Hadley test as direct and award them, even when the parties have agreed to an exclusion of consequential damages (RLCD, 185-89).  Breach of warranty cases pose their own unique challenges in terms of valuing the harm to the non-breaching party, but the direct harm is best measured as either the costs of providing what had been warranted or  the value of what had been warranted (RLCD, 190-94).  Professor Goldberg does not address the distinction between incidental and consequential damages in this chapter, and in some of the cases he discusses, that distinction might matter.

Courts struggle when the parties include lost profits in their lists of excluded categories of damages.  What do the parties thereby mean?  Lost profits can be "the purest version of direct damages, the contract-market differential" (RLCD, 195).  Are the parties incorrectly assuming that lost profits are always consequential damages or did they really intend to exclude almost all damages?  The outcomes turn, appropriately, on the specificity of the exclusion, but courts are reluctant to enforce a limitation on lost profits as direct damages (RLCD, 195-97).

Below are links to previous posts on RLCD and the first post links to post posts on RCL:

Teaching Assistants: Victor Goldberg, Volume II, An Introduction
Teaching Assistants: Victor Goldberg on Valuation of the Contract as an Asset
Teaching Assistants: Victor Goldberg on The Golden Victory
Teaching Assistants: Victor Goldberg on Lost (Volume) in America
Teaching Assistants: Victor Goldberg on Lost Volume in the UK
Teaching Assistants: Victor Goldberg on Mitigation
Teaching Assistants: Victor Goldberg on the Middleman's Damages
Teaching Assistants: Victor Goldberg on Sub-Sales in the UK
Teaching Assistants: Victor Goldberg on Jacob and Youngs v. Kent
Teaching Assistants: Victor Goldberg on Victoria Laundry

A Theater Ticket Is a Revocable License

A theater ticket gives the holder a revocable license to attend an event.  We could easily forget this.  The ticket stub is tangible and moveable, or at least it was before smart phones made many everything things a little bit less tangible.  Nonetheless, what you are buying is not the ticket stub, nor is it title, even temporarily, to a seat.  Rather you are purchasing the abstract, intangible right occupy a seat, perhaps a specific seat, in the theater.

Licenses, like other legal instruments, come with terms and conditions.  You are welcome to enjoy the performance.  You are encouraged to applaud, cheer, and otherwise express your enthusiasm for the people on the stage or screen.  You are also expected to behave in a way that will not interfere with others' enjoyment of the performance.  

This is elementary.  Adults understand it.  Children understand it.  Support animals understand it.  Who doesn't understand it?  Well, apparently, more and more people over time. 

According to Michael Paulson, writing in The New York Times, theaters in the UK and also in NYC are having to deal with overenthusiastic patrons with increasing familiarity. The story in The Times focuses on Colorado politician Lauren Boebert (right), who apparently mistook a production of the musical "Beetlejuice" for the latest iteration of the State of the Union address. 

To her credit, with respect to Beetlejuice, Ms. Boebert "plead guilty to laughing and singing too loud!"  There were also allegations of cellphone usage and of improperly recording the show, but the story does not make clear whether Ms. Boebert was accused of these additional misdeeds.  Although her party was heard to yell things like "Do you know who I am?" and "I will call the mayor!" (he knows, don't worry), it seems Ms. Boebert does understand the concept of basic civility when it comes to theater-going. 

If only we could import such understanding of common decency and respect for others into our politics.  While Ms. Boebert seems to understand and accept the theaters reasons for insisting that the leave the venue, the notion persists that social media sites have no right to enforce their terms of service to engage in content moderation so that others can enjoy the use of those sites without having to endure threats, harassment, and other content posted that exceed those sites' rather capacious tolerance for freedom of expression.

Ephemeral Tattoos Won't Go Away!

Tattoo I Would Get if I Were to Get a Tattoo
Image by DALL-E

If you pay for a temporary tattoo, aren't you getting a great deal if it turns out they last longer than their estimated 9-15 months?  So you might think, but as Callie Holtermann reports in The New York Times, some purchasers are dissatisfied and are seeking compensation.  

In Williamsburg, Brooklyn, there was a shop called "Ephemeral" where you could get a tattoo guaranteed to fade after fifteen months.  If I were making up this story, Williamsburg is where I would put the tattoo parlor, but actually they popped up across the country.  Ephemeral's slogan is "Regret nothing."  Regretful customers feel like they have been misled.

Two years later, the disaffected tattoo-curious are lodging complaints.  Some of their tales of woe can be found in Caleb Pershan's story in The San Francisco Chronicle from last November.  They have founded a community on Reddit to express their displeasure.  Ephemeral co-founder Brennal Pierre has joined the group to assure them that their tattoos will fade . . . eventually.   

If it faded. . .
Image by DALL-E

But do they have a claim?  According to The Chronicle, Ephemeral's customers sign a consent form which warns that the tattoos should fade in nine-to-fifteen months, but they may last longer and they won't fade evenly.  As one perhaps not-entirely-dissatisfied customer put it,  “There is a period where it looks like you got this tattoo 20 years ago, you know — in prison. They’re open about that.”  Again, depending on the person, having what looks like a 20-year-old prison tat might be a feature, not a bug.

As of February, the tattoos now come with a "Regret Nothing Guarantee" -- if your tattoo does not fade within three years, you can get your money back.  Ah, but can I get my arm back?

I am looking forward to the next re-make of The Paper Chase.  Imagine Professor Kingsfield updating his casebook by substituting Tatt00-Curious v. Ephemeral for Hawkins v. McGee.

Mr. Hart, what did the tattoo parlor promise?

And the result of the operation?

How should the court measure the damages?  What should Ephemeral pay Tattoo-Curious?

Cut to Mr. Hart desperately entering a bathroom and inspecting his still-intact chest tattoo that reads "I eat organic chemistry for breakfast!"  He gets out his phone, places a call and says, "Babe, I just figured out how I'm going to pay for law school!"

Coinbase Users' Complaints About Hacked Accounts Sent to Arbitration

Manish Aggarwal and Mostafa el Bermawy owned Coinbase accounts.  Both claim that hackers broke into Coinbase and drained their accounts of cryptocurrency.   They may also have drained Coinbase's logo (right) of any spark of interest and originality, but that is not part of the case.

The plaintiffs brought an action on behalf of themselves and other Coinbase users who registered since April 1, 2021 and either lost access to their accounts or lost funds or cryptocurrency from those accounts.  They alleged violations of the Electronic Fund Transfers Act and related regulations and of various California statues, but also breach of contract and unjust enrichment.

Coinbase moved to dismiss and to compel arbitration.  In Aggarwal v. Coinbase, Inc., the District Court for the Northern District of California granted Coinbase's motion.  The case provides a nifty overview of how modern contracts of adhesion work and or how to design a website so that the adhesive seals tightly. 

Plaintiffs contended that their contracts with Coinbase are illusory because Coinbase reserves the right to amend the contract at any time.  The court quickly dispenses with this argument, noting California law recognizing that the implied duty of good faith and fair dealing saves such contracts from being illusory.  Ah, responded plaintiffs, but what if the amendments render nugatory claims that have already accrued or which the corporation was aware of at the time the amendments went into effect?  The rule is that if a provision for unilateral amendment is silent as to pre-existing claims, it has no effect on those claims.  Such is the case here, and so Coinbase's unilateral amendment agreement, read in light of the duty of good faith and fair dealing, is not illusory.

Plaintiffs next attacked the extent to which the Arbitration Agreement that they signed delegated threshold questions of arbitrability to the arbiter.  The delegation clause at issue in this case reads as follows:

The arbitrator shall have exclusive authority to resolve any Dispute, including, without limitation, disputes arising out of or related to the interpretation or application of the Arbitration Agreement, including the enforceability, revocability, scope, or validity of the Arbitration Agreement or any portion of the Arbitration Agreement[.]

Very similar language has been construed by the Ninth Circuit and has been held to delegate all threshold issues of arbitrability to the arbiter.   The court thus found that the parties had clearly and unmistakably delegated issues of arbitrability to the arbiter. 

Doing so was not unconscionable.  The court noted that there were some elements of procedural unsconscionability in the delegation, as there are in most contracts of adhesion, but those elements were minimal.  However, plaintiffs'  allegations of the delegation clause's substantive unconscionability were the same as their allegations of the substantive unconscionability of the arbitration clause as a whole.  In such situations, under SCOTUS precedent and precedent from the Ninth Circuit, the issue must be assigned to the arbiter.  Other courts have reviewed Coinbase's arbitration agreement and delegation clause and have not found them to be unconscionable.  

The case is stayed pending arbitration.

Tuesday Top Ten - Contracts & Commercial Law Downloads for September 12, 2023

Top Downloads For:

Contracts & Commercial Law eJournal

Recent Top Papers (60 days)

As of: 14 Jul 2023 - 12 Sep 2023

Rank	Paper	Downloads
1.	Generative Interpretation David A. Hoffman and Yonathan A. Arbel University of Pennsylvania Carey Law School and University of Alabama - School of Law	1,173
2.	Why Study Law? Lawrence J. Trautman, Judith Bohr, Rachel Chambers, Michael Conklin, Brian Elzweig, Angelica Guevara, Larry D. Foster II, Christopher P. Guzelian, Ella McCown Jones, Lora Koretz, more... Prairie View A&M University - College of Business, Prairie View A&M University - College of Business, University of Connecticut - School of Business, Angelo State University - Business Law, University of West Florida, Business Law and Ethics, Prairie View A&M University - College of Business, Texas State University School of Business, Ohio University, W. P. Carey School of Business at Arizona State	670
3.	The 2012 Greek Retrofit and Borrowing Costs in the European Periphery Patrick Bolton, Xuewen Fu, Mitu Gulati and Ugo Panizza Imperial College London, University College London - Department of Economics, University of Virginia School of Law and Graduate Institute of International and Development Studies (IHEID) - Department of Economics	307
4.	The Electronic Trade Documents Act 2023 and the 2003 Amendments to Article 7 of the Uniform Commercial Code: Do They Do the Same Thing? Miriam A. Goldby Centre for Commercial Law Studies, Queen Mary, University of London	209
5.	Rawls and Antitrust’s Justice Function Elettra Bietti Harvard University, Law School	209
6.	Consumer Protection after Consumer Sovereignty Luke Herrine University of Alabama - School of Law	156
7.	A Law Professor's Love-Hate Relationship with the Restatement (Second) of Contracts Jeffrey M. Lipshaw Suffolk University Law School	149
8.	Anticipated Contracts and Unjust Enrichment Henry Cooney The University of Western Australia	129
9.	Corporate Governance and Risk-Taking: A Statistical Approach Steven L. Schwarcz Duke University School of Law	127
10.	Non-Disclosure and the Misrepresentation Act 1967: A New Framework Fred Halbhuber Yale Law School	126

 

Top Downloads For:

Law & Society: Private Law - Contracts eJournal

Recent Top Papers (60 days)

As of: 14 Jul 2023 - 12 Sep 2023

Rank	Paper	Downloads
1.	Generative Interpretation David A. Hoffman and Yonathan A. Arbel University of Pennsylvania Carey Law School and University of Alabama - School of Law	1,173
2.	The 2012 Greek Retrofit and Borrowing Costs in the European Periphery Patrick Bolton, Xuewen Fu, Mitu Gulati and Ugo Panizza Imperial College London, University College London - Department of Economics, University of Virginia School of Law and Graduate Institute of International and Development Studies (IHEID) - Department of Economics	307
3.	Investment Treaty Arbitration Caught in the Public-Private Law Divide Catharine Titi CNRS	287
4.	A Law Professor's Love-Hate Relationship with the Restatement (Second) of Contracts Jeffrey M. Lipshaw Suffolk University Law School	149
5.	Anticipated Contracts and Unjust Enrichment Henry Cooney The University of Western Australia	129
6.	Non-Disclosure and the Misrepresentation Act 1967: A New Framework Fred Halbhuber Yale Law School	126
7.	Recent Developments in Mandatory Arbitration Warfare: Winners and Losers (So Far) in Mass Arbitration Maria Glover Georgetown University Law Center	111
8.	Privacy Protection, At What Cost? Exploring the Regulatory Resistance to Data Technology in Auto Insurance Omri Ben-Shahar University of Chicago Law School	100
9.	How Smart are Smart Readers? LLMs and the Future of the No-Reading Problem Yonathan A. Arbel and Samuel Becher University of Alabama - School of Law and Victoria University of Wellington	91
10.	What Might Contract Theory Be Gregory Klass Georgetown University Law Center	85

Contracts Hypothetical Come to Life!

I have been using Brian Blum's Examples and Explanations book as a supplement to my first-year contracts course for years.  This week, we are covering offers.  Professor Blum (right) provides Example 13 of chapter 4, which involves the acceptance of an offer to enter into a unilateral contract by hitting a hole-in-one at a charity golf tournament.  Professor Blum's hypo is based on a case out of Utah, and he cites another case out of South Dakota.

But they just keep coming.  As Teny Sahakian reports for Fox News, Linda Chen hit a hole-in-one at a charity golf tournament in Florida.  She claimed entitlement to a new Mercedes Benz, valued at $90,000.  The tournament organizers denied her the prize on the ground that the offer was only made available to amateurs, and Ms. Chen had been a professional golfer from 1994-96.  She claims that she is now "officially registered" as an amateur.  Gosh.  I'm not registered.  What does that make me?

According to her complaint, as reported on Fox News, Ms. Chen claims that "By showing up, entering the Fins on the Fairway golf tournament, her host paying the entry fees, and hitting a hole in one," Chen "accepted the Defendants’ offer, formed a contract, paid consideration, and fulfilled her obligations under the contract."  The tournament organizers claim that only amateurs were qualified to claim the prize.  And no, this is not a Lefkowitz  situation, because the limitation to amateurs was not some unspoken "house rule"; it was a stipulation of the tournament rules, a copy of which Ms. Chen signed.   

But is someone who has not been a professional golfer since 1996 a professional for the purposes of the contest?  Did Ms. Chen have duty to disclose her status as a former professional.  The tournament organizers insist that other professionals had registered in the tournament as such.  If Ms. Chen had only done that, they say . . .   Well, if she had only done that, what exactly?  Are they suggesting that they would have told her, imitating a Seinfeld character, "No Mercedes for you!"?  In any case, we can now layer interpretive issues on top of the unilateral contract issues to make one lovely fact pattern!  I hope you are paying attention, Professor Blum.

Thanks to OCU 1L Hunter Lovell (left) for sharing the story with me.

Eleventh Circuit Affirms Dismissal of COVID Claims Against the University of Miami

Adelaide Dixon attended the University of Miami (the University) in the Spring of 2020, but when the University shut down its campus in response to the COVID-19 pandemic, she did not experience the benefits of in-person education as she had hoped.  She sued, purporting to represent a class of similarly-situated students, alleging breach of contract and unjust enrichment.  The District Court granted the University's motion for summary judgment in 2022.  In July, the Eleventh Circuit affirmed in Dixon v. the University of Miami.

As we have seen in similar cases involving other colleges and universities (e.g. the University of Delaware, Bradley University, Brandeis University, DC schools, NJ schools), the outcomes of these cases turn on the particulars of the school's representations to the students.  In this case, the Eleventh Circuit agreed with the District Court that, even if the University had entered into express or implied contracts with its students, those very contracts provided that the University could amend its contracts with or without notice.  In short, the University reserved the right to amend the way in which it delivered its curriculum and so it acted within its rights when it moved to online education in Spring 2020.  

As to Ms. Dixon's unjust enrichment claim, the court first noted that the University could not have continued in-person education without violating two separate executive orders.  In any case, under Florida law, one cannot state a claim for unjust enrichment where payment has been made for the benefits conferred.  Here, the court found that Ms. Dixon received the benefits of a University of Miami education, even if that education was delivered temporarily through online courses.  Her claim that the University did not appropriately prorate her refund for fees was not supported by evidence.  

The opinion concludes on a note of optimism:

We hope that some comfort can be found, however, in our certainty that despite enduring the hardships created by the pandemic, any student who has earned a degree from a school like the University of Miami retains the unspoiled potential for a fulfilling and prosperous future.

May it be so.