Tuesday, October 31, 2023
Spooky Tuesday Top Ten - Contracts & Commercial Law Top SSRN Downloads for October 31, 2023
Why not drop a download into the trick-or-treater bags tonight? Contract law, as all who inhabit this space know, is always a treat. Happy Halloween from the blog and our scholarly "sponsors" listed below. As for me, all I want for Halloween is three more downloads to break the century mark for After FTX!
Top Downloads For:
Recent Top Papers (60 days)
As of: 01 Sep 2023 - 31 Oct 2023| Rank | Paper | Downloads |
|---|---|---|
| 1. | 239 | |
| 2. | 213 | |
| 3. | 168 | |
| 4. | 97 | |
| 5. | 84 | |
| 6. | 80 | |
| 7. | 78 | |
| 8. | 71 | |
| 9. | 71 | |
| 10. | 59 |
Top Downloads For:
Law & Society: Private Law - Contracts eJournalRecent Top Papers (60 days)
As of: 01 Sep 2023 - 31 Oct 2023| Rank | Paper | Downloads |
|---|---|---|
| 1. | 239 | |
| 2. | 168 | |
| 3. | 97 | |
| 4. | 71 | |
| 5. | 44 | |
| 6. | 39 | |
| 7. | 36 | |
| 8. | 27 | |
| 9. | 22 | |
| 10. | 16 |
October 31, 2023 in Recent Scholarship | Permalink
Monday, October 30, 2023
The Plea Deals in State of Georgia v. Trump
Nineteen were indicted in the Georgia election case. Four have now pled guilty. All four have agreed to cooperate with the prosecutors in the case against the remaining co-conspirators.
A plea agreement is a contract. Cooperation is offered in exchange for leniency in sentencing. The terms of those agreements have been described in the media as generous, in that the defendants will all avoid jail time, assuming good behavior. In some cases, they get to keep their law licenses, although state bars might determine otherwise down the road. Of interest beyond that are the specifics about what cooperation entails and the penalty for breach. If criminal plea agreements are reduced to writing somewhere, I have been unable to find online versions of the plea agreements in Georgia v. Trump, which is a shame. I will have to cobble together the terms from news reports on the court proceedings on the matter.
The first to enter a plea was bail bondsman Scott Hall (right), perhaps the least notorious of the alleged criminal conspirators. According to Richard Fausset and e pled guilty to five misdemeanor counts of intentional interference with performance of election duties. He had been charged with racketeering and felony conspiracy in connection with tampering with voting equipment in Coffee County, Georgia in January 2021 in an attempt to discover evidence of voting fraud at the behest of the Trump campaign.
According to the plea deal, he will serve five years of probation. He will pay a $5000 fine and apologize to the people of Georgia. He will have to perform 200 hours of community service and surrender his license to carry a firearm. He may not participate in activities relating to the administration of an election. He agreed to testify against his co-conspirators, which is bad news for two other defendants, Misty Hampton and Cathy Latham, who allegedly participated in the Coffee County scheme. Defendant David Shafer the former head of the Republican Party in Georgia, also seems to have ties to Mr. Hall through Mr. Hall's brother-in law, David Bossie.
The next to fall was Sidney “Release the Kraken” Powell (left). and provide in-depth coverage in The New Yorker on what led Ms. Powell to plead guilty. She pled guilty to six misdemeanor counts of election interference and will have to pay nearly $9000 in fines and serve six years of probation. She has apologized the the people of Georgia and agreed to testify in the proceedings against her co-conspirators.
Ms. Powell was engaged in a lot of election fraud shenanigans, but she, like Mr. Hall, was convicted for allegedly tampering with voting machines in Coffee County. Misty Hampton, the county's election supervisor, apparently bought into Ms. Powell's nutter idea that Dominion voting machines had been tampered with. She refused to certify her county's election results. The story in The New Yorker provides a lot of details I had not read elsewhere. It took a long time to discover what happened in Coffee County, because Georgia's secretary of state blocked efforts to learn whether the voting records has been illegally accessed. An election watchdog group investigated and was able to issue subpoenas. Their forensic expert was able to confirm a breach, and the rest was expected to come out in Fani Willis's case.
The New Yorker obtained a copy of a 400-page report by the Georgia Bureau of Investigation (GBI). It details what might have been the basis for Ms. Powell's rather surprising decision to plead guilty. Among other things, it seems clear that Powell and her co-conspirators, including Ms. Hampton and Ms. Latham, represented to their hired forensics experts that they had permission to access election equipment when they did not. Ms. Powell had pursued a litigation strategy of trying to persuade the court that her involvement in the alleged conspiracy could be limited to conduct in Coffee County on January 7th. The fact that she paid the outside experts who were given illegal access to voting data suggests a larger role. The New Yorker seems to suggest that she pled guilty when she did once it became clear that she was going to be implicated in wider illegality.
Next came Kenneth Chesebro. According to Richard Fausset and
And finally, yesterday, Jenna Ellis joined the ranks of those who have entered guilty pleas. According to Richard Fausset and
Richard Fausset and
What's next, you might ask? This is not my area of expertise, but from the perspective of my position as an armchair prosecutor, it seems that these Misty Hampton and Cathy Latham are left looking very exposed, and the noose also seems to be tightening around John Eastman's neck. Rudy Giuliani has already confessed to lies in another Georgia case and is reportedly running out of funds to pay his attorneys. I would be surprised if there weren't more plea agreements on the way to trial, unless the prosecutors, thinking they already have enough witnesses, are no longer interested in offering such generous terms. They may not need to.
October 30, 2023 in Commentary, Current Affairs, In the News, Recent Cases | Permalink | Comments (0)
Friday, October 27, 2023
Friday Frivolity: Thanks for all the Unilaterals, Elon Musk!
He may not have been able to make Twitter profitable, and he may not make it to Mars, but boy is he great at generating unilateral contract hypos!
In other Elon Musk news, I just rewatched The Incredibles with my students, as I do every year when I cover restitution. This time I was struck by what an amazing job the Pixar folks did in creating the Syndrome character, because he is basically Elon Musk with red hair. How did they know?
October 27, 2023 in Current Affairs, Web/Tech | Permalink | Comments (1)
Thursday, October 26, 2023
I Think I Agree with Jason Alexander: Phone Companies Should not Yada Yada Contractual Boilerlate
Thanks to OCU 1L Olivia Holder (right) for sharing with me news from the world of contracts in advertising!
T-Mobile has a new ad campaign for its Metro service. The theme is Nada Yada Yada. I'm not quite sure what it means. They explain that T-Mobile offers "no contracts, no price hikes, no surprises."
This offends me as a contracts professor. Sure, contracts of adhesion can contain nasty terms, and the boilerplate component of them can seem like a lot of yada yada yada. But contracts are risk allocation devices. Without contracts, what you get is price hikes and surprises. There is going to be a lot of yada yada yada in any contract of adhesion, and no doubt T-Mobile uses contracts of adhesion just its competitors. But consumers need to be on notice of salient terms, and just saying there is nada yada yada does not provide consumers with those terms.
I am also offended as a Seinfeld fan. You don't yada yada the surprising part. You yada yada the boring part that nobody cares about. In the relevant episode, Jerry and George (Jason Alexander) admire George's yada yadaing girlfriend because she is succinct (although I quibble with their pronunciation of that word). But she takes things too far, whence the comedy. Seinfeld uses this basic social norm of linguistic usage to comic effect when George's girlfiend yada yadas things, like sex and shoplifting, that one would not expect someone to yada yada.
At the end of the episode, George realigns the usage to the norm. Resigned to his girlfriend's foibles, George narrates the demise of their relationship -- "she went shopping for shoes for a wedding and yada yada yada, I'll see her in six t0 eight months." He skips over the part that we now can fill in for ourselves. T-Mobile yada yadas the part its customers need to know. It's like they are making themselves into George's girlfriend. She's not a normative character.
The solution is clear contractual terms and no provision that permits the wireless carrier to change terms on a rolling basis. Well, take it from here, Jason
When a phone company tells you that there is nada yada yada, they are like George's norm-breaking girlfriend -- attractive, but perhaps a thief and probably cheating on you with her ex.
October 26, 2023 in Commentary, True Contracts, Web/Tech | Permalink | Comments (0)
Wednesday, October 25, 2023
Gigi Tewari on Incorporating Narrative Justice into Teaching Contracts & Commercial Law
Contracts and business law professor Gigi Tewari of Widener University Delaware Law School spoke at the Roger Williams School of Law's Integrating Doctrine & Diversity Speaker Series. Professor Tewari discussed different ways diversity, equity, and inclusion pedagogy can be incorporated into business and contract law classes.
Here's a video of the session, with Professor Tewari starting just under 7 minutes in. Contracts Profs might be especially interested in her take on Lucy v. Zehmer, but lots of great contributions here throughout.
October 25, 2023 in Famous Cases, Teaching | Permalink | Comments (0)
Tuesday, October 24, 2023
Tuesday Top Ten - Contracts & Commercial Law Top SSRN Downloads for October 24, 2023
The Tuesday Top Ten returns with a smorgasbord of topics for those hungry for contract law content. We have unjust enrichment, penalties, artificial intelligence, and a bit of CISG. On a personal note, your humble contributing editor is thrilled to see After FTX: Can the Original Bitcoin Use Case Be Saved? in the #6 and #2 positions on the charts. If you are on the fence about downloading something from my oddball corner of commercial law for yourself, at least consider giving download links along with your trick-or-treat candy next week. Yes, you should do it for the children!
And now on to our actual business here--the SSRN charts.
Top Downloads For:
Contracts & Commercial Law eJournalRecent Top Papers (60 days)
As of: 25 Aug 2023 - 24 Oct 2023| Rank | Paper | Downloads |
|---|---|---|
| 1. | 257 | |
| 2. | 185 | |
| 3. | 179 | |
| 4. | 160 | |
| 5. | 125 | |
| 6. | 82 | |
| 7. | 81 | |
| 8. | 70 | |
| 9. | 66 | |
| 10. | 65 |
Top Downloads For:
Law & Society: Private Law - Contracts eJournalRecent Top Papers (60 days)
As of: 25 Aug 2023 - 24 Oct 2023| Rank | Paper | Downloads |
|---|---|---|
| 1. | 160 | |
| 2. | 82 | |
| 3. | 53 | |
| 4. | 41 | |
| 5. | 34 | |
| 6. | 34 | |
| 7. | 31 | |
| 8. | 24 | |
| 9. | 23 | |
| 10. | 21 |
October 24, 2023 in Recent Scholarship | Permalink | Comments (0)
Is the Self-Storage Industry Predatory?
I'm just asking questions.
I'm also pissed off, because I rented a self-storage unit when we moved three months ago. Then I got a notification that the self-storage facility would be increasing my monthly rental fee by 100%. Yup. 100%. I called and left a message just saying that I got the notification and wanted to discuss. They called back and offered to increase my monthly rental fee by only 50%. I said, well, if we're just making up numbers here, I will offer you to pay you 50% of what I currently pay, and I will stay in your facility for six months. Otherwise, I'm giving you my thirty-days' notice. It was no surprise to learn that I had absolutely no bargaining power.
So now I have to find space in our new house for the stuff in storage. After twenty-plus years in the academy, I am financially comfortable. I have options. Which made me wonder whether the business is structured to take advantage of those who don't. A quick search turned up Gaby Del Valle's 2018 article from The Outline. According to Wikipedia, one in ten American households was using self-storage as of 2005. Ms. Del Valle's column suggests it was about the same over a decade later.
Ms. Del Valle's story is a common one. She moved in with her boyfriend to save money and put some stuff in storage. The advertised price was somewhere around $20/month, but when you added fees and insurance, it was double that. Already the story has the ring of familiarity to it. My self-storage facility wanted to charge me for a lock and for insurance. The price they wanted to charge for a lock was absurd, so I brought my own lock. They refunded my money for the lock, but mine was the only private lock I saw in the facility. After an initial investment, the lock charge is pure profit, as the locks are sturdy and pretty unlikely to go missing.
And then there's the insurance. I have homeowner's insurance that covered my storage facility. Most people probably do, but you have to be willing to do the research, which I was. And so I knocked another made-up number off of my monthly rent for my unit. When my facility quoted me a new number for my monthly bill, they didn't even notice that I don't pay insurance. That's the level of care they devote to finding just the right price for each customer.
Ms. Del Valle had a good reason to store things. The things she stored were not valuable, but they had value to her -- high school yearbooks, a build-a-bear, seasonal clothes she would not need now, but could in a few months. But there was also junk, and she just couldn't face sorting through her stuff and making choices. She ended up using the storage for 2 1/2 years and spending over $2000 on the unit.
When we moved, we put some of our daughter's things in storage. She has graduated from college now, and she hasn't lived with us for four years, but we retain a room for her occasional visits, and it serves as a shrine to our time together as a family. The shrine is a rotating exhibit. We have more artifacts from her childhood than we can display. You get the idea. These are precious mementos for her and us, but they take up space.
As of Ms. Del Valle's writing, self-storage was a $38 billion business, with the average unit going for $87.15, a number suspiciously close to what my self-storage unit proposed charging me when our negotiations broke down. And I rented the smallest possible unit.
Although my first instinct was to credit my ability to get my stuff out of storage after three months to my relative affluence compared with Ms. Del Valle. But the difference may be constitutional. Ms. Del Valle cites Derek Naylor, former president of Storage Marketing Solutions, who told The New York Times in 2009, that “Human laziness has always been a big friend of self-storage operators.” People don't want to sort through their stuff, and so once they're in, they'll leave their stuff in storage forever, if they can afford it. That's not me, at least not when a sudden 100% price increase alerts me to the fact that I am being swindled.
Ms. Del Valle concludes that "Big Storage" is only semi-predatory. It preys not on poverty but on precarity. Its' a valuable insight, well expressed. The industry models its business on the "four Ds," although there is some dispute about which Ds are relevant. Take your pick: Death, Divorce, Dislocation, Disaster, population Density, Downsizing (that's us!). Don't get me wrong. There's nothing wrong with an industry that helps people store their property while they are dealing with some combination of the four Ds. There is something wrong with a industry that is structured as a bait and switch, with people's earthly possessions used as bargaining chips. Ms. Del Valle points out that gyms also profit from people who pay their monthly fees but rarely use the facility. The difference is that gyms won't sell or junk your cherished possessions if you cancel your membership.
Ms Del Valle's experience was both better and worse than mine. The company she dealt with never increased her monthly rate, so that's better. She had set up autopay on her credit card. That eased the pain of paying $41/month to store things that she, by this point, clearly did not need in her life. The only reason she got out of the contract was that she lost her credit card, and so the company stopped getting paid. They then threatened to auction her stuff. But she had tried to get out of her contract previously, and she could not reach anybody at the facility. That's worse. My unit is very responsive, and they have people out front during regular business hours.
Ms. Del Valle's reporting also includes horror stories made possible through contracts of adhesion. Apparently, some storage facilities place upper limits on the value of goods you can store there. If you exceed that limit and then stop paying, they will sell your things and keep the difference to the extent that the proceeds exceed the upper limit, which is quite low. They put indemnification provisions in their contracts so that if you or a friend are injured at their facility, you will cover any damages they incur.
My takeaway is that the industry is regulated, but not closely enough. I would offer the following statutory fixes:
- Advertised rates must include all fees, including insurance
- Introductory rates must state in advance how long they last and set a ceiling for increases
- After the end of the introductory rate, further price increases shall occur no more frequently than every six months
I'm not sure how I feel about a maximum value for stored stuff. Given the insurance fees they collect, the provision seems like a swindle. I would think that the solution would be to link insurance costs to the stated value of the contents of the unit. I am also unsure how to address Ms. Del Valle's difficulty of dealing with an unresponsive company. Not to be judgy, but a less avoidant person could have sent a cancellation letter by registered mail or gone to the facility and talked with someone in person. She was going to have to go there anyway to get her stuff. Ms. Del Valle's article is about her own "laziness" -- her word, and to the extent that she incurred expenses because of her own lack of initiative, it is hard to know how the law could help.
October 24, 2023 in Commentary, True Contracts | Permalink | Comments (0)
Monday, October 23, 2023
Can You Recover An Engagement Ring If You Are Already Married When You Proposed?
My Associate Dean, Paula Dalley (left), abandoned her usual haunts, allowing the steady stream of tasks, duties, distractions, requests, alerts, and demands, each accompanied by its own unique levels of exigency, to accumulate unmolested behind her, much as catastrophes mount behind Paul Klee's Angelus Novus as described by Walter Benjamin in imagining the Angel of History. She appeared in my very office unannounced, and shorn of the dignity and authority in which she is habitually cloaked, and handed me a piece of paper so thin and transient that it was already becoming brittle and yellow, although it was only a couple of months old. It was a page from some obscure digest of the sort that private law scholars of a certain age are wont to peruse (in the manner of its ancient usage). "Maybe this is something you would want for your blog thing," Dean Dalley proposed.
And yet that humble sheet harbored a brilliant gemstone.
The case involved a dispute over an engagement ring, which is a topic about which I posted not so long ago, recounting the very dishy case of Johnson v. Settino.
Summarizing the case of Campbell v. Tang, the digest read:
A gift given by a [donor] to a [donee] on condition that [the donee] embark on the sea of matrimony with [the donor] is no different from a gift based on the condition that the donee sail on any other sea. If, after receiving the provisional gift, the donee refuses to leave the harbor, -- if the anchor of contractual performance sticks in the sands of irresolution and procrastination -- the gift must be restored to the donor.
Alas, that part of the opinion was a quotation from Pavlicic v. Vogtsberger, a Pennsylvania Supreme Court case from 1957. But Campbell v. Tang ain't bad, for those who like this kind of case.
The couple met through Match.com. Mr. Campbell represented that he was divorced. The couple met in 2016, were engaged in 2017, and started living together at some point before the wedding date, which was scheduled for early 2018. At the time of their engagement, Mr. Campbell presented Ms. Tang with the diamond engagement ring and necklace at issue in the case.
Mr. Campbell requested that Ms. Tang sign a prenuptial agreement, and she eventually retained a lawyer to advise her on that matter. It was her attorney who discovered that Mr. Campbell was in fact still married. Ms. Tang broke off the engagement and left the couple's shared residence, apparently never having cracked the house's many mysteries: an unexplained piece of red fabric hanging from the open window of an abandoned upper room, her future husband's bed set ablaze during the night, the dour house attendant who guarded the third- floor room off the gallery, and the room itself, which Ms. Tang never dared approach.
You think the parallels between this case and Jane Eyre wholly invented? Well get this! Mr. Campbell explained that, while he and his wife were long separated, he could not divorce her because she needed to retain his healthcare coverage. He also liked the extra tax exemption he derived form their continued matrimony. Okay, I admit it. There was no reference in Jane Eyre to the tax advantages of having Bertha Mason residing in Mr. Rochester's attic. Not exactly Gothic, that.
Ms. Tang retained her engagement ring and accompanying necklace when she broke off the engagement. After trial, the jury allowed Ms. Tang to keep both items. But Pennsylvania is not Massachusetts. As readers may recall, in Massachusetts, courts decide engagement ring disputes by determining which party was "at fault" for the breakup. Pennsylvania adopts one of the sensible rules available: engagement rings are conditional gifts that must be returned if the couple never weds.
But wait (and this is sweet!). The Pennsylvania appellate court reasons that the jewelry that Mr. Campbell gave Ms. Tang was not a conditional gift. He was already married and so he lacked capacity to become engaged. Thus no conditions attached to his gift to Ms. Tang, and she should retain it, notwithstanding their breakup.
I love this case. I love it so much, I may teach it as a supplement to my section on incapacity defenses. It is a case of first impression in Pennsylvania, and I don't know how often the issue arises, but it provides an interesting exploration of the concept of capacity. Also, it might be an opportunity to discuss legal realism with students. Is the Pennsylvania court inventing a rule because it doesn't think people should lie to their betrotheds about their marital status?
October 23, 2023 in Recent Cases, Teaching | Permalink | Comments (5)
Friday, October 20, 2023
Weekend Frivolity: Contractual Chivalry
We learned from Simon Gallager, writing on Screen Rant, that director Matthew Vaughan quit as director of the X-Men III movie, despite his great success with earlier iterations of the franchise. Mr. Vaughan claims that he quit in protest of a dirty trick that the studio was planning to play on Halle Berry (right).
According to Mr. Vaughan, the studio was trying to lure Ms. Berry back into the sequel by representing that it would have a much more prominent story line for Ms. Berry's character, Storm, than they actually planned to give her. Mr. Vaughan discovered the script and thought it was an interesting idea -- it opened with Storm saving an African community during a drought by -- you guessed it! -- making it rain. The executives told Vaughan that the script was just a ploy to get Ms. Berry to sign on for the sequel. Once she had signed, their plan was to pitch the script .
Mr. Vaughan took note of how they treated an Academy Award winning actor and decided he did not want to work for the studio. Vaughan got the "You'll never work in this town again" speech. I thought it was "You'll never have lunch in this town again." No? Anyway, he came back and made another X-Men film . I'm sure it was great.
All's well that ends well, I suppose. Ms. Berry did get a larger role in X-Men, although there was no scene in which Storm saves Africans from a drought. Instead, she took over Charles Xavier's school for mutants. Taking over for Patrick Stewart? Tough act to follow, but a nice coup for Ms. Berry.
The story highlights one of the many areas where my life experience as an academic limits my knowledge of how contracts work in the real world. Clearly, scripts change in production all the time. Scenes, perhaps whole characters perish with the other detritus on the cutting room floor. We all know of Shirley MacLaine's case over Bloomer Girls, and Sandra Locke's suit over "Clint's deal." I can't recall a suit over an editing decision. Is there relevant contract language? Does relational contracts theory explain why such suits rarely arise?
Instead of X-Men III, Mr. Vaughan made Stardust, an adaptation of a Neil Gaiman novel. What the heck was I doing in 2007? Claire Danes, Robert DeNiro, Michelle Pfeiffer, and a host of others!
October 20, 2023 in Celebrity Contracts, Film, True Contracts | Permalink | Comments (0)
Thursday, October 19, 2023
Life Insurance as a Wager
We confronted this issue previously in a Georgia case that found its way to the Eleventh Circuit. You can read about that here. The upshot is that the prohibition on taking out a life insurance policy when the insured has no insurable interest in the life of the insured is quite specific and easily evaded.
North Carolina law will not enforce a life insurance contract if it serves as a wagering contract on the life of the insured. North Carolina also permits insureds to sell or assign the policy for any reason following its issuance. But what if the insured took out the policy for the sole purpose of selling it? In Columbia Life Insurance Company v. Wells Fargo Bank, N.A., a North Carolina court held that the policy was valid and enforceable.
The insured in the case, Dr. Trevathan, got a recommendation from a friend that one Wesley Chesson would loan him money for the purchase of an insurance policy. Dr. Trevathan could use the loan proceeds to pay the insurance premium for two years. After that time, he could either "(1) surrender the policy to [Mr. Chesson's finance company] in full satisfaction of the loan; (2) pay off the loan balance to [the finance company] and continue to retain the policy for himself going forward; or (3) sell the policy and use the proceeds to satisfy the loan balance." Dr. Trevathan, who was 81 years old when he purchased the policy, testified that he had no thoughts of his beneficiaries. The purpose of the transaction was to get access to funds; he had no interest in retaining the policy. Dr. Trevathan did not disclose his motives to the insurer, and the insurance application stated that the purpose of the policy was "personal and family protection."
Dr. Trevathan sold the insurance policy for $440,000, which, after reimbursements and commissions to Mr. Chesson, netted him over $200,000 on the transaction. The insurer duly recorded the transfer. Years later, Well Fargo bought the policy as intermediary for LSH. The insurer gave LSH various assurances that the policy was still valid. Meanwhile, the insurer had flagged the policy as a potential "stranger-initiated life insurance policy" or STOLI. Eventually, the insurer sought a declaratory judgment that the policy was void ab initio on that basis. The insurer originally filed in federal court, but the resolution turns on state law, and so the federal court dismissed the case, and the insurer started over in state court. There were various claims and counterclaims, and in May the North Carolina Superior court issued its ruling on competing dispositive motions.
The STOLI issue has vexed courts over the past two decades, and they have reached no uniform conclusions. The issue is "whether a valid insurable interest on the life of the named insured existed at the time the alleged STOLI policy was issued." States have devised different methods for answering the question, and the question had not previously arisen in North Carolina.
In this case, there was no question that Dr. Trevathan had an insurable interest in his own life. The insurer argued that the court should also consider, using a totality of the circumstances test, whether the entire scheme was an illegal wager. Wells Fargo countered that the scheme is only an illegal wager if the parties entered into an agreement at the time the policy was issued that the insured would assign the policy to a stranger. The court adopted the following rule:
The policy is void as a wagering contract only where there is evidence of an agreement—prior to the policy’s issuance—that the policy would be assigned to a third party and that the third party participated in that agreement.
In this case, the parties to which the policy was assigned only learned of the policy's existence two years after it was issued. In those circumstances, the court found that the public policy concerns about wagering on an early death of the insureds were not implicated. The legislature could set out further rules to limit STOLI schemes but has not done so.
The ruling seems correct under North Carolina law but it also emboldens the Mr. Chessons of the world who are acting as brokers for STOLI schemes. The court duly notes that the policy gave Dr. Trevathan three options, but his testimony makes it clear that he was only interested in one of those options. The court does not explain why the policy concerns change if the wager on Dr. Trevathan's life is placed on the day the policy is issued or two years later.
October 19, 2023 in Recent Cases, True Contracts | Permalink | Comments (0)
Wednesday, October 18, 2023
Another COVID Case: McKendree University
Having learned from the work of Max Schanzenbach (below left) and Kim Yuracko, What Is the University-Student Contract, which we blogged about last week, it is interesting to look at new COVID cases through the lens they provide. The Seventh Circuit's decision in Delisle v. McKendree University provides an opportunity to do so.
The court references decisions involving Loyola and the Illinois Institute of Technology. In both cases, the court recognized that "a university’s course catalogs, class registration system, and pre-pandemic practices—can suffice under Illinois law to allege the existence of an implied contract between a university and its students for in-person instruction and extracurricular activities."
Under Illinois law, students have an enforceable contractual relationship with their universities, even if the contract is implied through conduct. Such claims are distinct from educational malpractice claims, which Illinois does not recognize. Universities may breach their contractual obligations to students by offering only on-line learning when they have promised an in-person experience. Cost differentials in tuition for online courses versus in-person courses is probative, but not dispositive.
Readers may recall that Professors Schanzenbach (left) and Yuracko (right) argue that the human capital model provides the best understanding of the contract between the universities and their students. Under this model, universities offer students the opportunity to "acquire knowledge and complex skills in a residential environment." in Delisle, the complaint provided screenshots from McKendree's website on which the following language could be found:
As a Bearcat, you’ll join a vibrant community, make valuable connections, and serve others in the world around you. You’ll develop strong leadership skills, learn from expert faculty, and attain the personalized education you deserve.
The inclusive spirit and tight community ensure fun and exciting things to do on campus, including athletic events, campus organizations, fine arts events, worship services, and much more! The opportunity to interact outside the classroom is greatly appreciated by our students, faculty and staff.
The plaintiffs' allegations seem consistent with the human capital model. In addition, the university boasted separate graduate, undergraduate, and online programs. However, the complaint does not allege a price differential between online and in-person educational programs at McKendree.
None of this suffices to create an express agreement, but the Seventh Circuit found that this language, coupled with the university's past pattern of practice, suffices to create an allegation of an implied agreement. While the allegations of an implied contract were not as compelling as in other cases, they sufficed to survive summary judgment. Plaintiffs' unjust enrichment was properly dismissed because the complaint incorporated allegations of a contract into that claim, which is not permitted under Illinois law. However, that is a pleading error that plaintiffs should be permitted to fix through an amended complaint.
As Professors Schwanzenbach and Yuracko note, successfully alleging a contract is only the first step in the litigation. The university may have a valid defense, and the plaintiffs will have the burden of proving damages. But having survived the first step, the settlement value of their claim is greatly enhanced.
October 18, 2023 in Recent Cases, Recent Scholarship | Permalink | Comments (0)
Tuesday, October 17, 2023
Tuesday Top Ten - Contracts & Commercial Law Top SSRN Downloads for October 17, 2023
Welcome to this week's edition of the Tuesday Top Ten! Friend of the blog Jeff Lipshaw has edged past the century mark with a second recent Top Ten piece, currently at nine on the Contracts & Commercial Law eJournal with Contract Law Illusions and Delusions. If Jeff's previous work left you with decidedly mixed feelings about the Restatement (Second) of Contracts, you won't want to miss his assault on the broader legal edifice in a piece characterized by the author as the last of his "Cynical Approaches to Doctrine" trilogy. Meanwhile, your humble contributing editor has climbed the third position on the Private Law - Contracts eJournal with After FTX: Can the Original Bitcoin Use Case Be Saved? but has sadly unfulfilled dreams of following Professor Lipshaw's good example and surpassing 100 downloads. C'mon folks, let's get to downloading already!
Meanwhile, I can feel King KProf Blog Jeremy Telman glaring at me from the top of the screen as if to ask: "Have you ever considered using your access to write a substantive blog post based on your article rather than just groveling for downloads?" Ouch! I may have to do that. It's nonetheless a good reminder that we are regularly on the prowl for guest blogger content, so perhaps you too should give into the glare and send Jeremy something to appear in this august space.
So with that out of the way, let us hit the charts!
Top Downloads For:
Contracts & Commercial Law eJournalRecent Top Papers (60 days)
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October 17, 2023 in Recent Scholarship | Permalink
A Unilateral Offer from Ring
When OCU law 1L Dubelza Galvan (left) shared this story with me, I thought it would make a good weekend frivolity post. But then I saw the there are "Official Rules" that govern the offer, and reading those felt non-frivolous. So here we are. Thanks a lot, Dubelza.
So Ring is a company that makes doorbells with cameras attached so that you can see who is at your door and, if you live in the United States, arm yourself appropriately. If you live in Canada, you can see who is at your door and decide whether you should offer your guest fresh-baked pastries or a Molson.
As announced on the company's website, Ring is offering $1 million to anyone who captures footage of an extraterrestrial on their indoor or outdoor device between now and November 3rd. Clever participants might already be working on ideas. After all, Halloween falls between now and November 3rd, so there is a non-negligible chance that some kid will earn me $1 million by showing up as ET or Mork or one of those nasty little guys from Mars Attacks or Boris the Animal ("It's just BORIS") from Men in Black III or that thing from Total Recall that advises Arnold Schwarzenegger, "Open your mind!" or . . . well, you get the idea.
Nope. Ring is all over that. The "Official Rules" define "extraterrestrial" as:
Any life in the universe originating or occurring outside Earth or its atmosphere. The Extraterrestrial must take up physical space in order to be perceived by humans or cameras and have sufficient technology to be capable of traveling to and surviving within Earth’s atmosphere.
So, what are the rules?
First, you have to be a U.S. resident to play. Sorry, Canada. Also, while no purchase is necessary in order to win, you have to own (or have shared access) to a Ring device in order to enter. So, I guess they mean, no additional purchase necessary. Once you enter, there are two options. You can win the GRAND PRIZE by submitting scientific evidence of extraterrestrials recorded on a Ring device. It can't be longer than 1 minute. "Scientific evidence" is also a defined term.
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“Scientific Evidence” is defined as an unaltered video (with audio) recorded with a Ring device (maximum one (1) minute long) containing ALL of the following criteria (the contents of the unaltered video must be recorded during the Promotion Period with a Ring device without the use of computer graphics, digital effects and/or other artificial elements):
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The Extraterrestrial exhibiting unusual, extraordinary, or unexplainable behavior (i.e. strange movement, velocity, pattern or other unique morphology).
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An explanation, within the Promotion Entry Form (as defined below), of why the anomaly is necessarily extraterrestrial in origin (i.e., explanation based on theoretical predictions from the existing scientific literature, recovery and analysis of an Artifact or documentation of Extraterrestrial markings or symbols).
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The Scientific Evidence must unequivocally rule out any known explanations or any new Earth-based phenomena as an explanation (e.g., equipment malfunction, known aerial objects, atmospheric phenomena, recently discovered terrestrial species)
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The Scientific Evidence must demonstrate that there was no alteration or malfunction of the Ring device on which it was captured (“Corroboration") (e.g., including footage from an additional camera, correlating audio, or other simultaneously-captured data).
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The $1 million grade prize will come in the form of an annuity paid out over twenty years.
Feeling uncertain about whether it is really possible to win the Grand Prize? I have some haunting advice for you:
There will also be five "Out of This World" prizes awarded to people who have some time on their hands or really want a $500 Amazon gift card.
The criteria for these prizes are as follows:
To be eligible to win the Out of this World Prize, all eligible Option One and Option Two Entries, including any Grand Prize Eligible Entrants who do not win the Grand Prize, will be reviewed by the judging panel comprised of representatives from Ring and Hunter (“Judging Panel”) who will award points according to the following criteria:
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“extraterrestrial(s)” with the most unique communication style (1-10 points)Definitely an Alien
- “extraterrestrial(s)” that engaged with their Ring device in the most unique way (1-10 points)
- “extraterrestrial(s)” with the most unique mode of transportation (1-10 points)
- “extraterrestrial(s)” with the most unique costume and accessories (1-10 points)
- “extraterrestrial(s)” that made the Judging Panel laugh the hardest (1-10 points)
In case of a tie, there are additional factors:
- Creativity (1-10 points)
- Visual appeal (1-10 points)
- Humor (1-10 points)
I object, on the ground that the first and third additional factors are duplicative of the original factors and so it all comes down to looks. Typical.
October 17, 2023 in Commentary, Film, Film Clips, In the News, True Contracts | Permalink | Comments (0)
Monday, October 16, 2023
The Gaza War in the Law Firms: Contracts and the First Amendment Again
The story has made the rounds. An NYU law student with an offer from Winston & Strawn published the following in the bulletin of the NYU Student Bar Association:
Winston & Strawn responded by withdrawing its offer and issued the following statement:
Today, Winston & Strawn learned that a former summer associate published certain inflammatory comments regarding Hamas’ recent terrorist attack on Israel and distributed it to the NYU Student Bar Association. These comments profoundly conflict with Winston & Strawn’s values as a firm. Accordingly, the Firm has rescinded the law student’s offer of employment.
As communicated yesterday to all Winston personnel, we remain outraged and deeply saddened by the violent attack on Israel over the weekend. Our hearts go out to our Jewish colleagues, their families, and all those affected.
Winston stands in solidarity with Israel’s right to exist in peace and condemns Hamas and the violence and destruction it has ignited in the strongest terms possible. We look forward to continuing to work together to eradicate anti-Semitism in all forms and to the day when hatred, bigotry, and violence against all people have been eliminated. Our strength lies in our unity, empathy, and shared humanity.
Of course, there are multiple issues and sub-issues that have been well-aired. I want to focus on an issue that I have not seen addressed and which overlaps with a topic that I discussed in my forthcoming article, Our Dumb First Amendment.
First, one framing of the debate is whether Winston & Strawn should have retracted its offer or whether its decision to do so is another episode of our cancel culture. If I were a decision-maker at Winston Strawn, I might have made a different decision, but the decision is entirely theirs. It is well within the realm of reason, and would likely have been made more definitively in the era before "cancel culture" was a thing. The decision of a private employer to severe its ties with a potential at-will employee would have passed without notice decades ago, and it also seems unlikely that a person so passionate about the plight of Palestinians would have thought that working for a corporate law firm would put them on the right career path.
A second issue is whether the student's statement might have been misconstrued or distorted by those who want to indulge their appetites for outrage. Again, read in context, I think Winston & Strawn's rendering of the student's meaning, as an endorsement of terror attacks, was a permissible, if not the most likely, reading of the student's intending meaning. The full extent of the massacre was not yet known, but at the time the student wrote, it was already clear that Hamas fighters engaged in mass shootings and kidnappings of unarmed civilians, many at a peace concert/rave that the NYU student very well might have enjoyed attending.
Which brings me to our dumb First Amendment. There used to be an understanding that words matter and that words can be weapons that should be wielded with precision and caution. Before the fetishization of freedom of expression, it was widely understood that if you took a position on a controversial matter, there could be consequences that would attach to your exercise of your expressive rights. In fact, in the heyday of civil disobedience, the consequences were the point.
People took risks because they wanted to signal their commitment to a cause. Punish me for my civil disobedience, and the world will see that I am committed to the non-violent pursuit of justice while you understand only power and wield that power because you have no tools of reason or argumentation at your disposal.
I don't know about the NYU student. Perhaps what they wrote was a considered opinion, and they intended to risk their career in order to get out their message. However, at least some people write as though they think there should almost never be consequences for voicing an unpopular opinion. The result is that people speak passionately and without due deliberation or regard for how their speech might impact others. A lot of nonsense and intentionally hurtful things get said. SCOTUS protects it all in precisely the same way, as if the words "fuck cheer" uttered by a cheerleader demand the same level of constitutional protection as a black armband silently worn in protest of the Vietnam War. Politicians lie with abandon, and the Supreme Court fosters the canard that we have to protect the right to lie in order to allow truth to win out in the marketplace of ideas.
Our dumb First Amendment is nothing like the Framers' First Amendment, for whatever that is worth. In any case, we should not make rights into trump cards, whether or not the Framers would have done so. Words can be harmful weapons, and if we protect all expression as though the world depended on it, we render discourse alternatively insipid and toxic.
October 16, 2023 in Commentary, Current Affairs, Recent Scholarship, True Contracts | Permalink | Comments (8)
Friday, October 13, 2023
Weekend Frivolity: Students Can Do Stuff!
Christine Farley shared with us the movie poster at right. You may be thinking, "Wait a tick, I don't remember that movie poster. Nor do I remember that movie!" Or you may be thinking, "I don't even remember that case." Well, I didn't know the case either, but after seeing the poster, I really wanted to see the movie, I then learned that the poster was just something Professor Farley's students created and not an actual movie. I decided that reading the case would be the next best thing.
It seems that it is a more up-to-date and same-sex version of Marvin v. Marvin and Hewitt v. Hewitt, We once called these "palimony" cases, but I don't know what they are called now. In Mitchell v. Moore, Mitchell moved from South Carolina to Pennsylvania to be with Moore. He also worked on Moore's farm. Moore made various representations relating to compensation for labor, devise of property, and return of contributions to an antique business and a property on Amelia Island Florida. After thirteen years, the relationship ended, and Mitchell sought to enforce Moore's pledges.
A jury found for Mitchell based on unjust enrichment and awarded $130,000. As in Marvin, the court found that the benefits that Mitchell derived from his ability to live rent-free on Moore's property more than compensated for the lack of wages paid. Moreover, Moore's promise to leave his property to Mitchell was a gratuitous statement of future intentions. The court does not address the antique business or the Florida property. Perhaps a sub-plot in the movie?
October 13, 2023 in Contract Profs, Famous Cases, Teaching | Permalink | Comments (0)
Thursday, October 12, 2023
Will Katie Perry Be Known for Music or the PERRY Act?
Today's post was another gift from Miriam Cherry, that Holmesian gatherer of rare gem-like contracts stories. She is as indefatigable as Sherlock and as legally savvy as Oliver Wendell.
Katy Perry, as far as I can recall, is famous for having been creative enough to coin a singular for "fireworks" but not creative enough to find a word that actually rhymed with "firework." "Worth"? Nope. "Burst"? Nope. Here's one that might be coming to your minds now: "Jerk." She is also known for her "left shark" dancer below.
But she also is very into real estate. We reported before about her attempt to buy a convent. She won that case, and only one nun died in the process (that we know about).
More recently, according to TheRealDeal, she and her husband, Orlando Bloom, attempted to purchase the Montecito estate of Carl Westcott, of 1-800-FLOWERS fame. The sale price was $15 million, but Mr. Westcott, who is now 84 years old and suffers from Huntington's Disease, claims that he was not of sound mind when he agreed to the sale, not necessarily because of age or disease, but because he had just undergone a six-hour back surgery, and he was on pain medication. Three years later, the parties are still embroiled in litigation.
In order to avoid such problems in the future, some have proposed the Protecting Elder Realty for Retirement Years Act, or Katy PERRY Act. According to its website,
The Katy PERRY Act addresses the risks of elder financial abuse, especially as it relates to property and real estate sales and transfers. The Act establishes a 72 hour cool-down period during which either party involved in a contract for conveyance of a personal residence, in which one party is over the age of 75, can rescind the agreement without penalty.
If that Act had existed a few years ago, it might have prevented a firework.
October 12, 2023 in Celebrity Contracts, Legislation, Music, Recent Cases | Permalink | Comments (0)
Wednesday, October 11, 2023
Sid DeLong on Ethical Altruism and Sam Bankman-Fried
Defective Altruism: Reflections on Bankman-Fried
Sidney DeLong
As the long hand of the criminal law closes inexorably around the neck of Sam Bankman-Fried the disgraced founder of the bankrupt crypto exchange FTX, the insatiable Meaning Machine has already begun to Draw Conclusions from his fate.
Herein are mine. This is posted during his criminal trial and may be amended.
To some law professors, the most interesting thing in the case is that, although Bankman-Fried is not a lawyer but a graduate of MIT, both his parents, Joseph Bankman (left) and Barbara Fried (right), are each respected members of the legal academic elite, professors at Stanford Law School. Bankman is an expert in tax policy; Fried is an expert in contracts and legal ethics. She is also the co-founder of Mind the Gap, a political fundraising organization that supports the Democratic Party. Both parents are proponents of the philosophical approach of philosopher Peter Singer, known as “effective altruism,” and thoroughly imbued their son with this philosophy. Effective Altruism is said to have motivated him and several of his associates as they built the financial empire that became FTX.
Effective altruism is a modest approach to doing good that would appeal to people across the pollical spectrum in a saner world of ideas. Briefly stated, it challenges each person to maximize their effectiveness in mitigating inequality by careful application of their resources, getting the most bang for your charitable buck. For Bankman-Fried and his friends, it meant making a lot of money and giving a lot of it away to worthy causes, while keeping enough to lead the good life. Effective altruism apparently is not overly concerned with the first step in the program (making a lot of money) and so it seems not to have mattered that Bankman-Fried’s wealth came, directly or indirectly, from speculating in the wildly fluctuating values of bitcoin and other crypto currencies.
Bankman-Fried also established FTX, a cryptocurrency exchange permitting customers to buy and sell bitcoin. In the unregulated world of crypto-currency transactions, FTX offered those who wished to deal in bitcoin a trustworthy platform on which to buy and sell bitcoin with certainty that the trades would be executed and that the customer’s funds and bitcoin holdings were safe. Because it acquired a reputation as being exceptionally trustworthy, bolstered by Bankman-Fried’s celebrity, FTX grew at a prodigious rate and was soon said to be worth several billion dollars.
With the help of funding from ethically minded millionaires, Bankman-Fried and his friends also created Alameda Research, a hedge fund firm that traded and speculated in bitcoin and other crypto currencies. As a market maker, Alameda provided liquidity to some of FTX’s customers. Alameda’s trading profits were intended to be devoted to altruistic causes. During their operations both FTX and Alameda donated millions of dollars to causes their founders deemed worthy, including Democratic Party political campaigns and causes.
Under Bankman-Fried’s control, Alameda and FTX operated closely together with only casual attention to the corporate formalities. The FTX bankruptcy trustee has accused Bankman-Fried of improperly transferring customer funds back and forth from FTX to Alameda, whence they evaporated in the crypto crash, leaving FTX customers with billions of dollars of losses from their accounts. He is also accused of commingling assets, failure to maintain proper records of transactions, and a host of other breaches of fiduciary duty to the customers and creditors of FTX. He is accused of improperly using the funds of FTX for personal gain. His defense to some of these claims is much more difficult than it would be otherwise because of grossly inadequate record-keeping.
But if these allegations are true, What Does It Mean? To trace all of Bankman-Fried’s misbehavior to his parents’ training on Effective Altruism would be unjustified. Effective Altruism is not a call for a crypto-Robin Hood to take bitcoin from the rich and give it to the poor after extracting a handsome handling fee in the process. But it is predictable that the Singer philosophy is likely to become a scapegoat in the political press, especially when the altruism appears directed to Democrats rather than Republicans. One need not be a cynic to predict that teaching Effective Altruism will be banned in Florida schools.
Although Effective Altruism does not require the forms of misbehavior of which Bankman-Fried and his friends stand accused, it seems that they did not think that it excluded it either. Perhaps Effective Altruism should be recast as Ethical Altruism, limiting the raising of funds for charitable redistribution to ethical means. Ethical Altruism would disavow robber baron philanthropy as a form of secular simony in which one’s sins can be pardoned with a sufficiently large charitable foundation, But this is only a suggestion from a non-philosopher.
If Bankman-Fried had been educated at Stanford Law School, where his parents taught, instead of or after his stint at MIT, he might have avoided his present legal plight. At a general level, he would have been taught the legal constraints and fiduciary obligations that arise when dealing with other people’s money, along with the procedural ways in which to comply with them. Regrettably, in their zeal to convert Sam to the ultimate goals of altruism, his parents apparently failed to teach the less dramatic lawyer-virtues that underlie rules that they taught their law students, including those concerning fiduciary duty, commingling, conflicts of interest, breach of trust, and the other constraints one must observe when dealing with Other People’s Money.
On a more mundane level, if he had been trained as a lawyer, he would also have been forced to come to acknowledge his own ignorance of the legal and ethical relationships that were created by his novel and complex financial empire. A less self-confident Bankman-Fried would have sought legal advice on such questions as the following: What is the exact legal relationship between FTX and people who trade bitcoin on its platform? What are FTX’s record keeping obligations regarding their trades? What am I legally permitted to do and what am I prohibited from doing with regard to customer funds and bitcoin? Am I a trustee and if so to what extent? What may I do and what am I prohibited from doing with regard to transactions between FTX and Alameda? What is the best legal vehicle to achieve my goals?
I confess that the urge to speculate as to why Bankman-Fried failed to get detailed, expert advice on these and similar questions is irresistible. To me, his tragic flaw was that old Greek standby hubris, in this case induced by his having become a twenty-something billionaire who was proclaimed a genius by powerful and wealthy people who praised him for thinking outside the box. For one who was a hero in a culture that prizes recklessness (“Move fast and break things”), it would have been uncharacteristic for a genius to run all his business plays by his lawyers. And anyway, he was assured by ethical experts that his soul was pure because his motives were unimpeachable.
So that is the Meaning I have drawn from this sad tale, as we await the completion of his criminal trial. It is a modest, law school level observation that even masters of the crypto universe must know about professional and fiduciary responsibility and that altruism must be tempered by such responsibility.
As a postscript, however, as the lesser-known details of the FTX bankruptcy sadly illustrate, Bankman-Fried may conclude from this experience that merely training lawyers about their professional responsibility may not be enough to prevent ethical lapses of the sort he committed. His counsel and several other people have accused Sullivan and Cromwell, one of the largest and most prestigious law firms in the country, of a massive conflict of interest arising from its representation of both FTX, as it advised him to file for bankruptcy, and the FTX bankruptcy trustee who later attacked those transactions. The bankruptcy court has rejected these challenges after Sullivan supplemented its disclosure.
Nevertheless, Bankman-Fried might well conclude that the Sullivan firm appears to have reasoned its way around apparent ethical barriers that would have stymied less prestigious, less sophisticated lawyers: It seems to be a professional flaw that an unconscionable fee doth make casuists of us all.
October 11, 2023 in Current Affairs, In the News, Recent Cases, Web/Tech | Permalink | Comments (0)
Tuesday, October 10, 2023
Tuesday Top Ten - Contracts & Commercial Law Top SSRN Downloads for October 10, 2023
Welcome to another exciting edition of the Tuesday Top Ten! For the first time in quite a while, we have change in the number one spot. Don't feel too badly for our friends Dave Hoffman and Yonathan Arbel, however, as their wildly popular Generative Interpretation article didn't suddenly get less popular (as if!). It simply aged out of SSRN's 60-day window. Meanwhile, your humble contributing editor's After FTX: Can the Original Bitcoin Use Case Be Saved? moves to number six on the Private Law - Contracts eJournal list, but it has yet to make a dent in the Contracts & Commercial Law eJournal. Come on, people, it has BOTH Bitcoin and FTX in the title! To quote Maximus in Gladiator, "Are you not entertained?"
More seriously, we do have some great subjects on this week's list, ranging from antitrust and consumer protection to fraud and Chat GPT. Check out what's happening below in our favorite corner of legal scholarship.
Top Downloads For:
Recent Top Papers (60 days)
As of: 11 Aug 2023 - 10 Oct 2023| Rank | Paper | Downloads |
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| 1. | 247 | |
| 2. | 208 | |
| 3. | 171 | |
| 4. | 149 | |
| 5. | 148 | |
| 6. | 140 | |
| 7. | 120 | |
| 8. | 111 | |
| 9. | 111 | |
| 10. | 99 |
Top Downloads For:
Law & Society: Private Law - Contracts eJournalRecent Top Papers (60 days)
As of: 11 Aug 2023 - 10 Oct 2023| Rank | Paper | Downloads |
|---|---|---|
| 1. | 316 | |
| 2. | 148 | |
| 3. | 93 | |
| 4. | 90 | |
| 5. | 52 | |
| 6. | 50 | |
| 7. | 47 | |
| 8. | 44 | |
| 9. | 33 | |
| 10. | 31 |
October 10, 2023 in Recent Scholarship | Permalink
Teaching Assistants: COVID and the Legal Relationship Between Students and their Universities
We have spent a lot of time over the last few years providing updates on cases in which students at colleges and universities, upset that their campuses closed due to COVID in Spring 2020, sued their educational institutions alleging breach of express or implied contracts and unjust enrichment. The most recent installment in this series is here and links to others. Max Schanzenbach (below left) and Kim Yuracko (below right) provide a new perspective by placing the cases in a helpful theoretical framework in What Is the University-Student Contract, available on SSRN.
Schanzenbach and Yuracko (collectively the Authors) begin with the general observation that, in these cases, "some courts held that universities promised residential students a multifaceted in-person learning experience, while other courts held that universities merely promised students a course of study that would lead to a college degree." The paper assesses the cases from three perspectives on education. Is the goal of eduction the acquisition of human capital? Does education serve a sorting function by providing students with degree credentialing that then sends signals to relevant employment markets? Or is education best understood on a consumption model, in which students pay for a broad experience, of which education is merely one component? In their view, the best model for education is the acquisition of human capital model "under which students acquire knowledge and complex skills in a residential environment," and if that is what colleges and universities are promising students, then COVID-related closures are far more likely to be considered breaches of the object and purpose of the contract between the institutions and their students than under the credentialing model. In-person instruction, they contend is clearly a part of the deal.
Part I of the Article makes a fascinating case for the human capital model, based on things like data about the percentage of wealth tied up in human as opposed to physical capital and the difference a college education can make to one's ability to succeed in the marketplace. Young people who choose college are making an investment in human capital, and when we fund higher education (or when we used to fund higher education), we as a society are making a wise investment because such investments lead "to more economically productive, happier, and healthier people."
The Authors concede that there is some empirical evidence supporting the credentialing model. Empirical studies indicate that "10 to 30 percent of the earnings differential between college and non-college workers is attributable to the value of the degree apart from skills." The authors spend only a paragraph on the consumer approach, which is a shame, especially in the contractual litigation context. In the end, they need not decide the matter. The different understandings of education overlap and are not mutually exclusive.
In Part II, the authors look at student handbooks as the partial embodiment of the contractual relationship of universities and their students. The Authors reviewed forty student handbooks had have interesting things to say about the variety of things they found and did not find in the handbooks. They then explore in more detail the handbooks from Georgetown and Northwestern. Courts that have reviewed claims brought by students alleging breach of contract in connection with COVID shutdowns have looked for express contractual promises or for language or conduct from which a contract can be implied. In assessing courts' treatment of the manuals, the Authors divide such manuals into three categories, manuals with: no contract disclaimers, blanket disclaimers, and no disclaimers but with a reservation of rights to amend.
My impression, and I have not done the deep dive that the authors have done, is that courts are reluctant to construe manuals as contracts regardless of the presence or absence disclaimers or reservations. Most courts apply a rather formalist, textualist approach and don't find binding contractual language. In most cases, they find descriptions and puffery, but nothing indicating an intent to be legally bound.
In most cases, I'm not sure that's the wrong approach. Sometimes, universities have language reasonably construed as contractual promises. Sometimes, universities create implied contracts by, for example, charging twice as much for in-person learning what they charge for online education. In such cases, courts find a breach of contract where schools shut down and did not offer appropriate refunds. Rightly so.
However, in the usual case, it is not clear to me that the nature of the relationship between a university and its students is fit for contractual adjudication. Students pay tuition in expectation of something individualized, incompletely conceptualized on both sides, and subject to change in response to circumstances beyond the parties' control. Going forward, if university counsel have not already noted in bold on the cover their handbook that the handbook is not a contract and that the university reserves the right to amend the handbook, they likely will all do so in response to the COVID experience.
Finally, in Part III, the Authors offer a sophisticated, nuanced, and multi-faceted assessment of remedies. They begin with the assumption, based on the human capital model, that the universities breached by shutting down in-person operations in Spring 2020. Their breach might be excusable under various doctrines. They then proceed to discuss the ways universities operated during COVID beginning in Fall 2020, including universities' decisions to require vaccination or boosters. The analysis is clear-headed and comparative in nature, noting differences between vaccine protocols in the U.S. and abroad. From the human capital perspective, universities may not have had the contractual right to demand that their students get vaccinated, but such a contractual modification might have been justified by a good-faith belief that vaccinations and boosters would have a net-positive effect on the learning environment.
The Authors' work makes a valuable contribution in that, at least in the cases I have looked at, the courts that consider claims by students alleging that universities have breach contracts by shutting down in Spring 2020 never consider the three ways of conceptualizing higher education identified by the Authors. The Authors make a case that, at the very least, the COVID shutdowns and vaccination requirements constitute breaches of implied or express agreements under the social capital model. Whether the universities can establish defenses requires more extensive and individualized fact development. The same is true for the determination of remedies.
This is fabulous scholarship. I have been casually covering these cases for the last couple years, but my perspective has broadened in many dimensions from reading the piece. It also epitomizes the value of joint scholarly ventures, as these two seasoned scholars bring such a great range of knowledge, methodological scope, and research resources to the project.
October 10, 2023 in Recent Cases, Recent Scholarship | Permalink | Comments (0)
