Monday, September 30, 2024
Troubling Case of an Anthropology Professor Fired for Pro-Palestinian Speech
Maura Finkelstein (left) was, until recently, a tenured anthropology professor at Muhlenberg College. She is Jewish, but she is also fierce critic of Israel and a supporter of Palestinians. Her Twitter and BlueSky accounts are about little else. As far as I can tell, her scholarship is about other things, but she taught courses at Muhlenberg College on Palestine, so her commitment to Palestine did not prevent her advancement, even at a college whose student body is 30% Jewish.
According to Ryan Quinn, writing for Inside Higher Education, in May, Professor Finkelstein became the first professor to be fired for pro-Palestinian speech since October 7th. She is appealing the decision and is still being paid by the College. The speech occurred on Professor Finkelstein's Instagram page in January. She reposted the following statement by a Palestinian poet:
Do not cower to Zionists. Shame them. Do not welcome them in your spaces. Why should these genocide loving fascists be treated any different than any other flat out racist. Don’t normalize Zionism. Don’t normalize Zionists taking up space.
There seems to have been a coordinated campaign against Professor Finkelstein. The College came under pressure from multiple directions. A complaint, referencing Professor Finkelstein, was filed against the College with the Department of Education. The College and media outlets were deluged with thousands of automated e-mails about Professor Finkelstein. What the reporting thus far does not reveal is any evidence of student dissatisfaction with Professor Finkelstein or her teaching. She awaits a hearing on her appeal. The College won't talk about personnel matters. nor will any of the faculty members who recommended firing Professor Finkelstein comment. None of that is surprising.
The AAUP is alarmed, and Graham Piro, the faculty legal defense fund fellow at the Foundation for Individual Rights and Expression, calls Professor Finkelstein's firing "extremely disturbing." So far, everyone is talking about academic freedom, but nobody is addressing the role of contracts in securing such freedom. We really have some work to do getting language into faculty handbooks that expressly acknowledges contractual elements of tenure and provides real-world protections for faculty members who speak their mind in ways that their colleagues find alarming or off-putting.
I am not a "I do not like what you say but I will fight to the death for the right to say it" person. I don't think it factually accurate to imply that all Zionists are genocide-loving fascists. I don't think responsible adults, let alone faculty members, should promote such views. I will not fight to the death for Professor Finkelstein's right to do so. But if having tenure confers on faculty members significant freedom to speak their minds, especially when one does so outside of the context of one's professional responsibilities, then those rights ought to be protected in the manner of any other rights that arise through private legislation.
September 30, 2024 in Commentary, Current Affairs, In the News, Labor Contracts | Permalink | Comments (0)
Michael Helfand on Contracts and the Right to Change Religions
I have been writing recently (here and here) on the intersection of contracts law and the First Amendment. In most cases, I argued, courts pay scant attention to contractual rights and obligations when they come up against First Amendment rights. It used to be otherwise, Michael Helfand (right) notes in his article, Contractual Commitments and the Right to Change Religion, forthcoming in the North Carolina Law Review. He considers cases in which people make binding contractual agreements relating to religion but then change their religious convictions.
People might enter into a divorce agreement in which each partner commits to raise the children in a certain set of religious beliefs of practices. Parties might agree to adjudicate disputes through religious arbitral bodies. A congregation might enter into an agreement with a member of the clergy, but one or the other party might conclude that the other no longer follows the orthodox version of the faith. Courts used to enforce such agreements, reasoning that the parties had entered into contracts voluntarily and thus assumed the risk that their religious convictions might shift. Recently, courts have been more rigorous in their protection of religious exercise, and they have been allowing religious interests to win out over contractual commitments. Professor Helfand thinks that a mistake.
Properly applied, contract law can ensure that religious contracts amplify religious freedom. Where such contractual obligations flow from the free and private choices of the parties, and not government coercion, enforcing religious contracts enhances authentic religious exercise. (5)
Contracts law defenses, such as impracticability and frustration of purpose, Professor Helfand argues, are up to the task of enforcing only those contractual commitments that promote the First Amendment principle of voluntarism. (5-6)
Tough cases abound. Professor Helfand recounts Weisberger v Weisberger. In that 2017 case, a divorced couple had agreed to raise their children in the Hasidic tradition. The father sought sole custody on the ground that the mother had come out as Lesbian and was introducing the children to other members of the LGBT community. The New York appellate court refused to enforce the agreement, on the ground that courts cannot compel people to adopt a certain religious tradition. Professor Helfand notes that such decisions may constitute a special case. Courts do not automatically enforce custody agreements but do so only when they further the best interests of the child. (15-16)
In cases involving the Jewish requirement that a husband provide a get before a couple can divorce, courts used to enforce Jewish marriage contracts (ketubot, illustrated at left) even after one party to the marriage had abandoned their faith on the ground that the law should hold them to their agreement. (20) Recently, however, courts have concluded that courts should not coerce people to behave in a way inconsistent with their religious beliefs and have refused to issue positive injunctions relating to gets. (20-21)
Religious arbitration has, until recently, been another special case. Because the Federal Arbitration Act permits only limited judicial oversight of arbitral decisions, courts have enforced parties' agreements to subject themselves to religious arbitration, even when one party is no longer an adherent of the relevant faith. But some legal scholars and courts are now subjecting that tradition to Free Exercise and statutory (RFRA) challenges. However, Professor Helfand cites only one case, which involved allegations of rape by a Church of Scientology member, a cover-up, and harassment by church authorities. The court recognized a Free Exercise right to leave a religion. (21-26) Hard cases make bad law? Seems like ordinary unconscionability doctrine could have done the trick, given that it seems pretty unlikely that a church arbitral body would be free from bias against a party suing the church.
Professor Helfand next turns his attention to changes in belief in the context of the ministerial exception to non-discrimination law when the employer is a religious institution. Some ministerial exception cases seem clearly absurd. A cantor at a synagogue claimed that he was fired without the contractually-guaranteed notice of three "strikes" that justified termination. The court dismissed the claim, citing the ministerial exception, notwithstanding the fact that the contractual claim at issue had nothing ministerial about it. (28-29) Other courts have been more careful, distinguishing breach of contract claims from employment discrimination claims in the ministerial context. (29-30)
With this caselaw as a backdrop, Professor Helfand then proceeds to his main argument: that the enforcement of religious contracts, notwithstanding changed beliefs, does not not undermine religious freedom. Free exercise of religion and the enforcement contractual obligations can be reconciled as emanating from the same principle: voluntarism. The Article deftly establishes the extent to which both legal scholars and courts have understood protections of religious freedom in voluntaristic terms. People should be free to choose their religions and exercise their religions free from government interference. (33-37) Where courts can apply neutral general principles of contract law, doing so does not violate a principle of voluntarism, so long as the assumption of contractual obligations was a product of free and private choices. Contracts law, Professor Helfand argues, helps us determine whether the obligations in question were voluntary. (37-43)
Professor Helfand regards the freedom of religion and the enforcement of contractual obligations as mutually supportive of the principle of voluntarism. Contracts excuses, such as frustration of purpose and impracticability, enable contract law to establish when that principle would be thwarted by enforcement of religious contracts when one party is no longer an adherent of the religion whose dictates will govern. (43-64)
At first blush, it might seem that contractual excuse undermines the sanctity of contracts and thus frustrates the voluntarism at the heart of contract formation. Not so, Professor Helfand argues, drawing on the scholarship of Hanoch Dagan. Rather, when we enter into contracts, we legislate for our future selves, and setting that private legislation aside is consistent with the voluntarism at the heart of Professor Helfand's understanding of contracts theory, only when some unforeseen event that goes to a basic assumption of the contract either renders performance impracticable or frustrates the purpose of the party seeking excuse. In such circumstances, enforcing the contract would not enact the parties' wills, because the parties never contemplated the unforeseen change negating their basic assumption. (52-54)
The problem with this analysis is that that the party seeking enforcement has a ready response. The change in the other party's beliefs was not unforeseen. The contractual provisions providing for resolution in accordance with the parties' shared religious beliefs would be unnecessary if the parties' continued adherence to those beliefs were guaranteed. The party seeking performance entered into an agreement assuming that the contract would be interpreted consistent with their religious beliefs, and they continue to operate on that assumption. From their perspective, not only was there nothing unforeseen, nothing has changed at all. Professor Helfand's discussion of the problem of foreseeability (60-64), which focuses on the general possibility that a person might change their faith, does not, in my view, adequately account for the fact that fact that a contract that provides for a religious adjudication is, as a matter of fact, acknowledging the foreseeability of a loss of faith by one or the other party.
Notwithstanding the broad embrace of the voluntarist model by courts and the scholarly literature, there is a danger of overstating it. The state is not the only entity that may coerce assent. Contracts of adhesion create an illusion of free and voluntary choice that is often wholly lacking, as discussed in our post on Andrea Boyack's work earlier this year. Religious choices may be a product of upbringing rather than considered choice. Or one might choose a religious community based on factors other than adherence to religious doctrine. The trouble with Professor Helfand's voluntarist model, it seems to me, arises most acutely when religious institutions impose form contracts on their adherents. In that context, one can argue that, both from a Free Exercise and from a freedom of contract perspective, the enforcement of religious contracts undermines the principle of voluntarism.
Professor Helfand's preferred doctrines are excuses. They arise when there has been an unforeseen change in circumstances after the contract has been formed. Impracticability and frustration of purpose do nothing to address failures of voluntarism in the formation of religious contracts. Moreover, it is hard to imagine that the party claiming excuse would not bear the risk of this unforeseen change of heart. This is especially so, as parties to such agreements could condition their performance obligations on continued adherence to the faith, as Professor Helfand acknowledges. (64) Finally, it is quite a stretch to think that a change in belief would render performance impracticable. Stretching the doctrine to allow excuse in cases where performance hinged on one party's subjective beliefs would risk rendering all religious contracts subject to an implied condition so broad as to render the contractual promise illusory.
And so, while Professor Helfand proposes that contracts law, in the form of excuses, could invalidate religious contracts in some circumstances based on an unforeseen change in one of the party's religious convictions, I think excuses would never provide a basis for non-enforcement of the contracts about which Professor Helfand writes. Professor Helfand does not disagree, as he notes that the excuses rarely succeed. (56) He provides no examples of these defenses working in connection with the cases he describes, and he notes the problem that the party seeking excuse must not be at fault for the occurrence of the unforeseen event. (58-60) Professor Helfand's earlier work, focusing on unconscionability and duress defenses to religious contracts might hold more promise.
However, contracts law could produce the results that Professor Helfand desires either through a more exacting inquiry into whether the parties had given meaningful assent to the agreement or through an adoption of the Jamal Greene's rights medication approach for which I have advocated in my scholarship. The latter would entail rejecting the rights absolutism in which our First Amendment jurisprudence abounds and instead weighing the contracts-based and religious-liberty-based interests in each individual case and giving effect to the intentions of the parties in light of those interests.
September 30, 2024 in Commentary, Contract Profs, Recent Cases, Recent Scholarship, Religion | Permalink | Comments (0)
Friday, September 27, 2024
Friday Frivolity: A Limerick for Wisconsin Knife Works
I am teaching Wisconsin Knife Works v. National Metal Crafters for the first time this year. It is hard to find good cases on modification under the UCC's Article 2, and I think I may stick with this one, even though it forces me to talk about the Statute of Frauds long before I am ready to talk about the Statute of Frauds. It is a fun case to teach because it is interesting to see Judge Posner and Judge Easterbrook (pictured, as ChatGPT and I imagine them dueling, at right) on different sides of a case when they were both quite new to the Seventh Circuit. They are trying to make sense of UCC § 2-209's provisions relating to oral modifications in the face of a no-oral-modifications clause.
Judge Posner begins with two thoughts that epitomize what I love about his writing. He dismisses the "reasoning" (scare quotes his) behind the common law's willingness to set aside no-oral-modification clauses through subsequent oral agreements as not reasoning but "a conclusion disguised as a metaphor." Second, he is willing to concede that perhaps the challenge of reconciling the provisions of § 2-209 is simply a product of a failure of foresight. The drafters of the UCC made a "big break" from the common law in eliminating the requirement for consideration. They did not imagine all of the "ramifications of the break." Article 9 underwent significant revisions soon after adoption. Revision of Article 2 could also use a tune-up. I wonder why nobody ever attempted to revise Article 2 . . . Even if Judge Posner is right about §2-209's blind spots, I don't think either he or Judge Easterbrook comes up with an entirely satisfactory solution grounded in the UCC's text.
Judge Posner correctly identifies the problem: while § 2-209(2) says that no-oral-modifications clauses will be enforced, and § 2-209(3) says that modifications within the Statue of Frauds are also within the statute of frauds, § 2-209(4) seems to undercut both. It says that "attempted" modifications may operate as waivers of the writing requirement. But if all attempted modifications count as waivers, we are back at the common law rule whereby parties can just ignore their own no-oral-modifications clauses.
Judge Posner's solution relies on the fact that § 2-209(4) does not say that all attempts are waivers; they only can operate as waivers. So far so good. But then Judge Posner adds a reliance requirement before an attempted modification transforms into a waiver. It comes out of nowhere. Worse still, UCC § 2-209(5) talks about reliance, so if the drafters wanted reliance to be a necessary element of waiver in §2-209(4), they certainly could have said that. Even worse still, as Judge Easterbrook points out in dissent, it is hard to imagine a scenario were there would not be reliance on a modification, so Judge Posner hasn't taken us far from the common-law conclusion disguised as a metaphor.
Judge Easterbrook's solution, which allows conduct to operate as a waiver, preserves some usefulness to § 2-209(2) and (3). They still prevent an oral modification of a contract that can only be modified through a signed writing, either because of a no-oral-modifications clause or because of the Statute of Frauds. The problem is that Judge Easterbrook provides no textual basis for why waiver through conduct should be favored over waiver through oral agreement. He praises the drafters of the UCC and calls it "one of the most carefully assembled statutes in American history." Seems like careful drafters could have distinguished modification by conduct from modification by oral agreement if that were their intention.
Moreover, I am not sure that there would be many more cases of attempted modification unaccompanied by conduct than there would be cases of attempted modification without reliance. Again, we seem not to have moved far from the common law rule. Perhaps no-oral-modifications clauses really are just standard boilerplate that nobody seriously intends and thus we should not be overly concerned if they are routinely ignored both by the parties and the courts.
The Limerick
Judge Easterbrook thought there was waiver,
While Judge Posner views with disfavor
Such nonchalant changes
To written exchanges
This case is one knife-fight to savor!
September 27, 2024 in Commentary, Famous Cases, Limericks, Teaching | Permalink | Comments (0)
Force Majeure, COVID, and a Win for Lizzo
I've long been on the hunt for a case that illustrates the interaction between a force majeure clause and the COVID-19 pandemic. This might be the one. It also makes use of the surplusage canon of construction, so if one has the time to work through a lengthy force majeure clause, it could be a useful teaching case.
In 2019, VFLA Eventco, LLC (VFLA) announced that there would be a two-day music festival, the Virgin Fest Los Angeles in June 2020. In February and March, 2020, VFLA entered into contracts with agencies representing Ellie Goulding, Kali Uchis, and Lizzo (collectively the Artists). William Morris Endeavor Entertainment, LLC (WME) acted as the agent for all three artists and negotiated the contracts on their behalf. The contract provided that WME should not be liable under the contract, and there was a force majeure clause. In this clause, VFLA is the "Purchaser" and the agencies representing the Artists are the "Producer":
A ‘Force Majeure Event’ means any act beyond the reasonable control of Producer, Artist, or Purchaser which makes any performance by Artist impossible, infeasible, or unsafe (including, but not limited to, acts of God, terrorism, failure or delay of transportation, death, illness, or injury of Artist or Artist’s immediate family (e.g., spouses, siblings, children, parents), and civil disorder). In the event of cancelation due to Force Majeure then all parties will be fully excused and there shall be no claim for damages, and subject to the terms set forth herein, Producer shall return any deposit amount(s) (i.e., any amount paid to Producer pursuant to the Performance Contract prior to payment of the Balance) previously received (unless otherwise agreed). However, if the Artist is otherwise ready, willing, and able to perform Purchaser will pay Producer the full Guarantee unless such cancellation is the result of Artist’s death, illness, or injury, or that of its immediate family, in which case Producer shall return such applicable pro-rata portion of the Guarantee previously received unless otherwise agreed.
[Italics added] This language was negotiated and had been updated based on a model used for another event. The language that I have italicized was new language inserted by WME and agreed to by VFLA.
VFLA transferred to WME’s trust account nonrefundable deposits of $400,000 for Kali Uchis, $600,000 for Goulding, and $5 million for Lizzo. The deposits were consideration for the artists’ performance at Virgin Fest, as well as for exclusivity and advertising rights, which allowed for the use of their images for Virgin Fest's marketing materials and subjected the Artists to certain restrictions on public performances in temporal or geographic proximity to the Virgin Fest.
And of course, the whole Virgin Fest was shut down because of COVID. VFLA sought the return of the deposits, and the parties disagreed as to the meaning of the force majeure clause. After discovery, the parties filed motions for summary judgment. The trial court granted summary judgment in favor of WME and the Artists and denied VFLA's motion. The language of the force majeure clause had been revised to favor the Artists.
By Library of Congress Life
In VFLA Eventco, LLC v. William Morris Endeavor Entertainment, LLC , a California appellate court affirmed. The appellate court broke down the force majeure clause according to its three sentences. The first sentence defines "force majeure," and the parties do not dispute that the pandemic was a force majeure event. The meaning of the second sentence was also not in dispute -- the Artists had to return the deposits in case of a force majeure event unless another performance term applies.
The dispute centers on the third sentence, which states that the Artists do not have to return the deposits if they are "otherwise ready, willing, and able to perform." The Artists contend that the best reading of this language is that, but for the force majeure event, they would perform, which is clearly the case. VFLA reads "otherwise" to mean something more like "notwithstanding." In the court's view, the Artists reading is the better one, as VFLA's reading would "deprive the third sentence of any meaning and render it surplusage." The Artists could never show that they were ready, willing, and able to perform notwithstanding a force majeure event, which is defined as any event that renders performance "impossible, infeasible, or unsafe."
VFLA argued that the performance in this case would be illegal, which is different from "impossible, infeasible, or unsafe," but the court did not buy it, as the force majeure clause doesn't mention illegality, and illegality could make performance impossible. The court also addresses the exceptions to the exceptions in the third sentence, which provides that the Artists do have to return the deposits if they or an immediate family member die, become ill, or are injured. The court concludes that VFLA's reading cannot be squared with this language, again relying on the surplusage canon.
Personally, I don't think there is a reading that would avoid rendering some part of this language surplusage. If one of he artists dies, she is definitely unable to perform and so the third sentence would not apply at all. VFLA instead argued that if it had intended to accept all risk of a force majeure event, unless it involved death, injury, or illness of an artist or a family member of an artist, it could have drafted a much shorter provision. The court conceded the point but the fact that the provision could have been better drafted is no reason not to give effect to its most likely meaning.
There is a lengthy section of the opinion dealing with parol evidence. The trial court determined that the parol evidence was more or less in equipoise and did not provide a basis for giving effect to VFLA's reading of the force majeure clause. As there were no factual disputes about the parol evidence that the trial court considered, there was no reason why the trial court could not decide the matter on summary judgment. If I were to use this as teaching case, leaving this stuff out would help shorten the case.
There are other parts of the opinion that I would also omit if I were to use this as a teaching case. The court addresses VFLA's claim that the Artists have not proved that they were ready, willing, and able to perform, even though that issue had not been preserved. VFLA alleges that a ruling in favor of the Artists would effect a forfeiture, but a forfeiture requires a breach, and because of the force majeure clause, the Artists are not in breach. VFLA's argument that allowing the Artists to keep the deposits would render the contract illegal provides an interesting hypo along the lines of Hanford v. Connecticut Fair Association, a case involving the Babyland Amusement Company (whose letterhead appears above). In deciding that the Artists can keep their deposits (the opposite result from Hanford), the court is not promoting illegality; it is merely giving effect to the parties' contractual allocation of risk.
And this really is a case that comes down to allocation of risk. Just as I think it absurd that a college football coach should be paid $75 million for not coaching (or for coaching, but that's another matter), I think it absurd that Lizzo should get $5 million for not performing. But apparently it was so important to VFLA to secure Lizzo as a performer so that it could generate an audience for its music festival that VFLA was willing to take the risk of losing that $5 million in case of cancellation. In the alternative, VFLA agreed to contractual language that forced it to take on more risk than it intended. Either way, it should be bound by its objective manifestations of assent.
Absent evidence that the allocation of risk was commercially unreasonable (another canon of construction), it seems like the court got it right. It does not seem that VFLA made a commercial unreasonableness argument. I lack the industry-specific knowledge to judge whether it is commercially unreasonable to pay a seven-figure, non-refundable deposit to an artist to secure their commitment to perform at a music festival.
September 27, 2024 in Celebrity Contracts, Recent Cases, Teaching | Permalink | Comments (2)
Thursday, September 26, 2024
Big CISG Case in Florida Involving Formation via WhatsApp
Fertilizantes Toncantins (FTO) is a Brazilian importer and distributor, specializing in fertilizer. TGO Agriculture (TGO) is a commodities trader, specializing in ammonium sulphate and other chemicals used in agriculture. The parties entered into three contracts for the sale of ammonium sulphate in 2017 prior to entering into the September 2020 contract at issue in the case.
In each of these prior contracts, the parties first negotiated the terms via calls, e-mails and WhatsApp, then drafted informal memoranda, and finally TGO issued a proposed written contract. While FTO claimed that the final written agreements merely memorialized terms already agreed upon, they actually contained many provisions and details not previously discussed. In each case, the shipment of the goods pre-dated the parties' signing of the contracts, but the goods, which had to be shipped from China to Brazil, arrived later.
There was a discrepancy between the bills of lading and invoices for the ammonium nitrate shipped, on the one hand, and the contracts. The former said that the shipments contained 21% nitrogen; the contract said 20,5%. FTO asked for a change in the contract to 21%, but TGO refused, saying that 20.5% was the best that the producer could guarantee. Ammonium sulfate that tis 20.5% nitrogen is called "steel grade"; ammonium sulfate that is 21% nitrogen is called "capro grade" and is significantly more expensive.
The September 2020 contract was for 20,000 metric tons of ammonium nitrate, later amended to 45,000 metric tons at a price of $145/metric ton. All of the negotiations were conducted, as before, via e-mail and text, and internal communications evidence TGO's knowledge of the terms of the transaction. However, this time, TGO never sent the final contract. TGO then refused to deliver the ammonium sulfate, claiming that the parties had never finalized the deal.
Two developments may explain TGO's unwillingness to deliver on the September 2020 contract. First, FTO complained about the quality of a shipment that it received in December 2020. TGO's agent sent pictures of the delivery to FTO, characterizing it as a "shit show." Second the price of ammonium nitrate rose dramatically. As a result, when FTO made cover purchases to make up for the 45,000 metric tons it did not receive from TGO, the cost over contracts price was more than $6.5 million.
The case is procedurally strange, but it's Florida, so . . . . The court held a bench trial in July 2023. There was then extensive post-trial briefing. The court then issued its finding of facts and conclusions of law in Fertilizantes Tocantins S.A. v. TGO Agriculture (USA) Inc. in March 2024. It found that the CISG applied and that, under the CISG, the WhatsApp messages sufficed to form a contract, even if a later written document was contemplated.
Based on the parties' prior dealings, the court found that there was a sufficiently definite offer followed by a clear acceptance of the offer. Yes, there were open terms, but those terms could be implied through prior dealings and industry custom. The CISG requires only price, product, and quantity as essential terms. All were specified in the parties' WhatsApp messages.
The court allowed FTO to recover all of its cover costs. It also allowed for the recovery of incidental damages. Finally, the court allowed for the recovery of pre-judgment interest, for a grand total of over $7.7 million, with post-judgment interest accruing as the case steams its way towards appeal.
September 26, 2024 in Recent Cases | Permalink | Comments (0)
Wednesday, September 25, 2024
Fifth Circuit Will Not Allow Insured's Gamesmanship to Defeat Insurers' Motion to Compel Arbitration
In May 2020, Bufkin Enterprises, L.L.C. (Bufkin) purchased insurance coverage from ten insurers—eight domestic and two foreign—to insure Bufkin’s property in Louisiana. There was one contract, but it stated that it should be treated as a series of separate contracts between Bufkin and each of the insurers. The contract included a provision calling for arbitration of disputes in New York.
In August 2020, Hurricane Laura damaged Bufkin's Louisiana property, and a dispute ensued over insurance coverage. Bufkin first sued the eight domestic insurers. It then amended its complaint to include the international insurers, but the amendment was filed, so says the court, for the sole purpose of then seeking dismissal with prejudice of the claims against the international insurers. That strategy was an attempt to avoid arbitration. It's a three-dimensional chess move worthy of Mr. Spock of blessed memory.
The District Court denied the insurers' motion to compel arbitration. In Bufkin Enterprises, L.L.C. v. Indian Harbor Ins. Co., the Fifth Circuit reversed. The reason for the multiple-dimensional chess is a bit obscure, but it seems to involve "reverse preemption" of the Federal Arbitration Act (FAA) facilitated by the McCarran-Ferguson Act and a Louisiana Statute.
The Fifth Circuit did not reach that issue because it decided the case on equitable estoppel grounds. The District Court opinion in the case spells out the reverse preemption gambit in basic checkers moves. McCarran-Ferguson provides that state law governs insurance contracts. Under the last-in-time doctrine, McCarran Ferguson supersedes the FAA. Louisiana state law prohibits the arbitration of insurance claims. Q.E.D. According to the District Court, this reverse preemption applies to the FAA but not to the New York Convention, which governs international arbitrations. The contracts with the international insurance carriers are important, as they are governed by the New York Convention, rather than the FAA.
But the District Court erred, said the Fifth Circuit, on the equitable estoppel argument. Equitable estoppel is about fairness. It applies, under relevant Fifth Circuit precedent, in two situations: when a signatory to an agreement containing an arbitration clause must rely on the terms of the written agreement in asserting its claims against the non-signatory; and when a signatory to a contract containing an arbitration clause raises allegations of substantially “interdependent and concerted misconduct by both the non-signatory and one or more of the signatories to the contract.”
The Fifth Circuit found that this case falls into the second situation, even if we treat the one contract as ten separate contracts, making the domestic insurers "non-signatories." In its amended complaint, Bufkin made the same allegations with respect to all defendants, in effect conceding that their conduct was "interdependent and concerted." Compelling arbitration would not, in this instance, violate Louisiana public policy, because neither the relevant statute nor reverse preemption apply to the New York Convention.
It seems like the right result, as a matter of law and as an application of precedent, but I wonder why Louisiana would not want to allow arbitration of insurance claims by domestic insurers but allow it for cases involving foreign insurers. It may be that some clever weighing of interests has occurred here -- Louisiana's interest in protecting insureds from the imagined horrors of arbitration versus the need to open Louisiana's insurance markets to foreign insurers who might not want to be homered in the Louisiana courts. It also might be that the legislators behind Louisiana's statute gave absolutely no thought to the effect of the New York Convention on their attempt to shield insureds from mandatory arbitration.
September 25, 2024 in Recent Cases | Permalink | Comments (0)
Tuesday, September 24, 2024
Tuesday Top Ten - Contracts & Commercial Law Top SSRN Downloads for September 24, 2024
Top Downloads For:
Contracts & Commercial Law eJournalRecent Top Papers (60 days)
As of: 26 Jul 2024 - 24 Sep 2024| Rank | Paper | Downloads |
|---|---|---|
| 1. | 215 | |
| 2. | 168 | |
| 3. | 161 | |
| 4. | 156 | |
| 5. | 155 | |
| 6. | 112 | |
| 7. | 90 | |
| 8. | 76 | |
| 9. | 64 | |
| 10. | 63 |
Top Downloads For:
Law & Society: Private Law - Contracts eJournalRecent Top Papers (60 days)
As of: 26 Jul 2024 - 24 Sep 2024| Rank | Paper | Downloads |
|---|---|---|
| 1. | 112 | |
| 2. | 63 | |
| 3. | 63 | |
| 4. | 60 | |
| 5. | 48 | |
| 6. | 46 | |
| 7. | 38 | |
| 8. |
Cutthroat Business |
30 |
| 9. | 28 | |
| 10. | 24 |
September 24, 2024 in Recent Scholarship | Permalink
Ninth Circuit Affirms Ruling that Suquamish Tribal Court Has Exclusive Jurisdiction over Insurance Claims
I mentioned last summer that I have come to appreciate how Indian law intersects with almost every substantive body of law. Here's another example in the contracts context. The issue in Lexington Ins. Co. v. Smith was whether a tribal court had jurisdiction over a claim against nonmember, off-reservation insurance companies that participate in an insurance program tailored to and offered exclusively to tribes.
In Montana v. United States (1981), SCOTUS recognized two situations that empower tribal courts to exercise jurisdiction over nonmembers. They have jurisdiction over: “the activities of nonmembers who enter consensual relationships with the tribe or its members” and the conduct of nonmembers that “threatens or has some direct effect on the political integrity, the economic security, or the health or welfare of the tribe.” The Ninth Circuit found that this case fell squarely within the first part of the Montana test and thus that the Tribal Court had jurisdiction.
Beginning in 2016, the Suquamish Tribe (the Tribe) and the Port Madison Reservation (the Reservation) over which it has sovereign authority purchased insurance policies from the Lexington Insurance Company (Lexington) and others that joined the case through the Tribal Property Insurance Program (“Tribal Program”), which is administered by Alliant Specialty Services, Inc., under the moniker Tribal First. Tribal First specializes in tailoring insurance policies to the needs of Indian communities and Indian employees.
The troubles arose in 2020, when many of the insured business enterprises shut down due to the COVID-19 pandemic. The Tribe and the Reservation made claims on their policies, and Lexington coverage. The Tribe and the Reservation then brought suit for breach of contract in Tribal Court. The parties agreed to stay the proceedings there while Lexington sought declaratory judgment against the Tribal Court in Federal Court. The District Court granted summary judgment to the Tribal Court, finding that the Tribal Court did indeed have jurisdiction over the claims against Lexington, and the Ninth Circuit affirmed.
The court begins its analysis by laying out the parameters of tribal authority. A tribe can only exercise jurisdiction over nonmembers within its sovereign territory. Even within its territory, tribal courts can only exercise jurisdiction over matters within the tribe's legislative powers.
In this case, Lexington's relevant conduct related to properties within tribal lands. The fact that negotiations of the insurance policies occurred elsewhere and that no Lexington employees set foot on tribal land is irrelevant. What matters is that Lexington was conducting business with the Tribe and that Lexington's business was related to Tribal lands. Proceeding to the Montana test, the court expressed some incredulity that Lexington would feign lack of awareness that its contracts with the Tribe applies to properties on Tribal lands. Nor did the court have any difficulty identifying the nexus between the parties' consensual relationship and the Tribe's regulatory powers. The court concluded that the Tribe had regulatory power over Lexington under Montana's first exception to the general rule that Tribes cannot exercise jurisdiction over nonmembers.
On September 16, by a vote of 16-6, the full Ninth Circuit denied Lexington's motion for rehearing en banc. The rhetoric of the opposing sides reflects an intense and fundamental disagreement. The majority accuses the dissent of elevating form over substance. The dissent emphasizes the parties' stipulation that no Lexington employee ever set foot on tribal lands in connection with the transaction at issue and thus argues that allowing the Tribe to hale the non-member insurer into Tribal Court "defies both the Constitution and Supreme Court precedent. It seems quite possible that SCOTUS could take this case to revisit some of the consequences of McGirt v. Oklahoma, at least by analogy.
September 24, 2024 in Recent Cases | Permalink | Comments (0)
Monday, September 23, 2024
Colorado Taxpayer Bill of Rights Provision Provides No Grounds for Breach of Contract Claim
In 2018, the Center for Wound Healing and Hyperbaric Medicine of Burlington, Colorado (the Center) and Kit County Health Services District (the District) entered into an Administrative Services Agreement (the Agreement). Under the agreement, the Center established a facility at the county hospital, and the District was to pay the Center 80% of the District's net collections for hyperbaric care and $75 per wound care treatment performed at the Center, subject to a 3%/year increase. The Agreement originally had a seven year term, with provisions for acceleration of payments due in case of breach by either party. In order to comply with Colorado's taxpayer bill of rights law (TABOR), the Agreement provided:
[A]ny provision of the Agreement . . . that requires payment of any nature in fiscal years subsequent to the current fiscal year, and for which there are no present cash reserves pledged irrevocably for purposes of the payment of such obligations shall be contingent upon future appropriations by [the District] of sufficient funds for purposes of payment of such obligations for any future fiscal year.
In August 2020, the District became concerned about irregularities in the Center's submissions for Medicare reimbursement. The District then stopped submitting claims from the Center to Medicare for reimbursement. In June, 2021, the Center gave the District notice that it was in material breach of the Agreement. The District responded by terminating the Agreement and ceasing all payments. The Center then sent a demand letter, invoking the Agreement's provisions for accelerated payments. The District paid its June, 2021 invoice but made no further payments. The Center sued, seeking $8 million under the acceleration provisions. In 2023, the county hospital paid a $3 million fine to the U.S. Department of Health and Human Services for charging the government for services at the Center that were never performed or supervised as billed.
The District filed a motion in the trial court, alleging that the effect of the TABOR provision quoted above was that the District could not be liable where it had made no appropriations. It made no appropriations following the termination of the Agreement. The trial court agreed and dismissed the Center's claims.
In Ctr. for Wound Healing & Hyperbaric Med. of Burlington, Colo. v. Kit Carson Cnty. Health Serv. Dist., an intermediate appellate court affirmed in part. In so deciding, the court did not need to consider TABOR. The above-quoted language rendered the Agreement TABOR-compliant. However, regardless of TABOR, the provision by itself provided that the acceleration clause would not be triggered where, as here, the District had appropriated no funds in connection with the Agreement. However, questions remained as to payments for services already rendered and as to whether there had been appropriations for the remainder of fiscal year 2021. The court reversed the trial court's entry of judgment to the extent that it precluded the Center from recovering unpaid sums that the Center claims correspond to fiscal year 2021 and remanded for further proceedings.
September 23, 2024 in Government Contracting, Recent Cases | Permalink | Comments (0)
Friday, September 20, 2024
Friday Frivolity: Arizona Couple Excluded from Mickey Mouse Club
Thanks to OCU 1L Lynne Neveu (left) for sharing with me this cringe-inducing story. According to Seth Abramovitch of The Hollywood Reporter, Scott and Diana Anderson are both sixty, and they have been together for forty-four years. They own a golf course in Arizona.
Little known to those of us who think of Disney parks as places to take the children for occasional trips, Disney has an exclusive venue for Disney VIPs (that is, people who shell out a lot of money) called Club 33. The Andersons worked at it for twelve years before they were invited to join the Club, and they paid $50,000 (or $40,000, the story is not entirely internally consistent) for their first year of membership. Club 33, in case you were wondering, is located above the Pirates of the Caribbean ride, and they serve hard liquor there, a fact that will play a role in the rest of our story. There is also a venue in California Adventure called the 1901 Lounge -- I hope that's because there you can also get absinthe and laudanum, or perhaps some old timey Coca Cola with all the original ingredients, but I digress. The Andersons visited these elite establishments upwards of eighty days a year.
But then tragedy struck. Mr. Anderson was cited for public intoxication at one of the venues. He protested that his symptoms were explained by a vestibular migraine brought on when he had a sip or two of red wine. Disney expelled the Andersons from the club forever. To make matters worse, Disney had Snow White's stepmother (right) deliver the news. The Andersons claim that Disney was retaliating against them for having accused another Club member of sexual harassment. $400,000 in legal fees later, a jury sided with Disney.
Initially, it seemed that the Andersons were going to continue to fight, but now they have decided to take the high road. The article in The Hollywood Reporter includes a lengthy, dishy interview with the couple. Some highlights include:
- Annual fees for membership is $32,000, which the Andersons, who spent twelve times that amount trying to say in the Club, now say is "just insane";
- "Club 33 is really a glorified annual pass";
- And yet, Club members get booted out if Tom Hanks decides to have Thanksgiving Dinner at the venue, and don't get them started on Katy Perry!
And then the real dishy stuff begins:
- Club members get up to 100 park tickets, which they (not the Andersons, of course) then sell to Muggles;
- Club members (not the Andersons, of course) raid the Club for the latest merch and then sell it to . . . Muggles;
- Club members used to have access to Walt Disney's rooms, with original furnishings, and they could even use his bathroom, but now it is all roped off (I wonder why . . . ) and the furniture has been replaced with replicas;
- "It's a cult, and Walt's the messiah," say the couple, who brag about using Walt's toilet.
The couple had been disciplined by the Club before. After a member of their party knocked over a drink, the Club refused to offer them any more alcoholic beverages. Mrs. Anderson had words, at least one of which began with "f," with the manager, which resulted in a suspension. Was Mrs. Anderson drunk? Impossible! Because "everyone knows" that she waters down her drinks.
Heard enough? Imagine how the reporter feels. The interview, which I have reduced to bullet points, had already been edited for length and clarity and still was the length of a short Bildungsroman. And yet I still have so many follow-ups!
And that's the news from the Happiest Place on Earth, where the men are strong, the women's drinks are watered, and the children . . . are not allowed entry.
September 20, 2024 in Current Affairs, Food and Drink, In the News, Recent Cases | Permalink | Comments (0)
Derivative Sovereign Immunity Claim Fails in the First Circuit
In October, 2020, a group of au pairs sued Cultural Care, Inc. (Cultural Care), a company that places foreign nationals as au pairs with US host families. The allegations are about what you would expect -- violations of the Federal Labor Standards Act (FLSA), various state wage and overtime laws, and deceptive trade practices. Cultural Care responded that all claims against it are barred under the derivative sovereign immunity doctrine articulated in Yearsley v. W.A. Ross Construction Company, 309 U.S. 18 (1940). In that case, SCOTUS held that "there is no ground for holding [an] agent [of the Government] liable" for actions "authorized and directed" by the Government and taken "under" Government "authority" that has been "validly conferred."
In August, 2021, the District Court rejected that argument, while dismissing some state law claims for lack of standing. Cultural Care brought an interlocutory appeal on the Yearsley issue and tried to bring others under pendant appellate jurisdiction. The resolution of the interlocutory appeal has turned out to be quite complicated, involving a request that the U.S. Department of State weigh in and two different First Circuit panels.
In April 2023, Posada v. Cultural Care, Inc., the First Circuit affirmed the decision of the District Court as to Yearsley and found that it had no jurisdiction to hear anything else on an interlocutory appeal. Cultural Care's next move was a motion to compel arbitration. Meanwhile, nearly 8000 individuals have joined the class making FLSA claims. The District Court denied that motion in February, 2024 on multiple grounds in Posada v. Cultural Care, Inc.
Some of Cultural Care's arguments seem to border on the frivolous. The arbitration agreement dates from 2023. None of the named plaintiffs signed it, and Cultural Care has submitted no evidence that any individuals who have opted into the suit have signed it. To the extent that Cultural Care moved to compel arbitration based on the 2023 agreement, its motion was denied without prejudice should Cultural Care be able to name individuals in the opt-in group to whom it would apply.
The District Court rejected more decisively Cultural Care's claim that plaintiffs were obligated to arbitrate in Switzerland because of a arbitration agreement they signed with a related company, International Care. Three years into the litigation, there is a strong presumption that Cultural Care has waived any right to arbitrate. Given that Cultural Care set out with gusto to have the case dismissed by a federal court, the District Court found the right to arbitrate waived.
Even if that were not the case, Cultural Care is not a party to any arbitration agreement with plaintiffs. It argues either that it should have rights under the arbitration agreement between International Care and plaintiffs as a third party beneficiary or by reason of estoppel. Under Massachusetts law, a third party beneficiary must present clear and definite evidence of the parties' intent that it benefit from the provision. Cultural Care could not meet that standard.
The estoppel claim is once again borderline frivolous. Under Massachusetts law, "a nonsignatory may compel arbitration against a signatory where that signatory (1) “must rely on the terms of the written agreement in asserting its claims against the nonsignatory”; or (2) “raises allegations of substantially interdependent and concerted misconduct by both the nonsignatory and one or more signatories to the contract.” Cultural Care relies on the first argument, but the contract with International Care does not set out the terms of plaintiffs' employment by Cultural Care. In any case, plaintiffs bring only statutory claims, so they are not relying "on the terms of the written agreement in asserting [their] claims against the nonsignatory."
Motion to compel denied. Cultural Care has appealed, and the appeal has not yet been decided. Plaintiffs are going to be old enough to need their own au pairs by the time any court rules on the merits of their claims. We are well into justice delayed is justice denied territory. If some court eventually rules that plaintiffs are entitled to some recovery, I hope there is some entity still in existence that can pay them, and not just the attorneys.
September 20, 2024 in Government Contracting, Recent Cases | Permalink | Comments (0)
Thursday, September 19, 2024
Even Judge Easterbrook Won't Enforce Ancestry.com's Arbitration Agreement Against Minors
Plaintiffs in this case are children. Their guardians registered on Ancenstry.com and in so doing agreed to arbitration. While the plaintiffs' guardians sent in the plaintiffs' saliva samples to Ancestry.com, plaintiffs did not read Ancestry.com's terms, nor were they required to do so. Plaintiffs allege that they never created their own Ancestry.com accounts, did not access their guardians accounts, did not receive their DNA test results, or interact with Ancestry’s website in any way before filing suit.
Ancestry.com was then acquired by Blackstone, Inc. (Blackstone), and plaintiffs allege that Ancsetry.com violated their privacy rights by disclosing private genetic information to Blackstone. Ancestry.com moved to compel arbitration. The district court denied the motion, and in Coatney v. Ancestry.com DNA, LLC, the Seventh Circuit affirmed. The opinion is by Judge Brennan, but in fairness to Judge Easterbrook, I note that he joined the opinion, causing me to further revise my view that his position is "arbitration for all."
On appeal, Ancestry.com first argued that plaintiffs were bound by its terms through the conduct of sharing their DNA. The Seventh Circuit rejected that argument because the terms of Ancestry.com's agreement with plaintiffs' guardians unambiguously binds only the guardians. Ancestry.com cited only one unpublished district court opinion in support of its consent-through-conduct argument, but the Seventh Circuit found the case distinguishable, based on the very different language in the relevant agreements.
Ancestry.com next tried to argue that plaintiffs were bound as closely-related or third-party beneficiaries. This section of the opinion is very lengthy, but the Seventh Circuit states right from the start that Illinois law has a strong presumption against biding third-parties to contractual obligations. To make matters worse, Ancestry.com's terms exclude third parties.
Ancestry.com's final argument is that plaintiff's directly benefitted form the guardians' accounts and thus are estopped from challenging the motion to compel arbitration. This section of the opinion is also very long, in part because there is scant authority for the doctrine of direct-benefits estoppel under Illinois law. I wonder why courts don't more often certify questions to the state supreme court in such instances. Instead, the Seventh Circuit plows ahead.
The fact that the plaintiffs in this case never accessed Ancestry.com themselves or saw any of the genetic information that their guardians gathered makes this case much easier. It also likely makes the ruling very narrow. My instinct, based on zero experience with Ancestry.com, is that it would be rare that parents would gather their children's genetic material and send it in to Ancestry.com for analysis and then that the family would never discuss the results. If my instincts are correct, this rare victory for the foes of mandatory arbitration may be limited to its unique facts.
September 19, 2024 in E-commerce, Recent Cases | Permalink | Comments (0)
Wednesday, September 18, 2024
New York Court of Appeals Weighs in on COVID Business Interruption Claims
We were covering this sort of claim a lot back in 2021, for example here and here. Things didn't go well for businesses. Many of the cases were being decided in federal courts, even though insurance issues are a matter of state law. The federal courts engaged in Erie guessing, and they consistently guessed that state courts would find that COVID caused no "direct physical loss or damage" covered under business interruption insurance policies.
Back in February, New York's Court of Appeals confirmed in Consolidated Restaurant Operations, Inc. v. Westport Insurance Corporation that, at least with respect to New York law, the federal courts guessed right. With admirable New York-style directness, the Court foregrounds its conclusion:
We hold that direct physical loss or damage requires a material alteration or a complete and persistent dispossession of insured property, which petitioner has not alleged. We therefore affirm the order below dismissing the complaint.
It's a tale as old as 2020. Consolidated Restaurant Operations (CRO) owned and operated dozens of restaurants. Due to the presence of the virus in its restaurants and government-ordered closures of non-essential businesses, CRO had to curtail or shut down its businesses. It sought insurance coverage for its business losses, and its insurer (Westport) denied coverage. The trial court granted Westport's motion to dismiss, and the Appellate Division affirmed.
On appeal, CRO tried two arguments. First, it argued that the court should interpret "physical loss" "to encompass situations where a physical event occurs on insured property and impairs its functionality or renders it, in whole or in part, unusable for its intended purpose." Second, if required to allege a physical alteration to its property, CRO claimed that it had so alleged. The Court of Appeals said, "No and no."
There are plenty of similar cases in which courts have held that "physical loss" requires a physical alteration of the property. CRO came up with a few cases from other jurisdictions in which courts treated contamination, e.g., through gasoline fumes, as physical loss, but only in situations where the harm was permanent and complete, making it impossible for the premises to serve their function. New York thus joined a large number of jurisdictions that have ruled in favor of insurers on such claims. The Court of Appeals dispensed with CRO's argument that it had pled physical loss in a few paragraphs. While CRO had alleged the presence of the virus in its restaurants, it had not alleged any physical loss caused by the presence of the virus.
September 18, 2024 in About this Blog, Recent Cases | Permalink | Comments (0)
Tuesday, September 17, 2024
Tuesday Top Ten - Contracts & Commercial Law Top SSRN Downloads for September 17, 2024
Top Downloads For:
Contracts & Commercial Law eJournalRecent Top Papers (60 days)
As of: 19 Jul 2024 - 17 Sep 2024| Rank | Paper | Downloads |
|---|---|---|
| 1. | 2,475 | |
| 2. | 214 | |
| 3. | 177 | |
| 4. | 154 | |
| 5. | 152 | |
| 6. | 149 | |
| 7. | 149 | |
| 8. | 120 | |
| 9. | 105 | |
| 10. | 88 |
Top Downloads For:
Law & Society: Private Law - Contracts eJournalRecent Top Papers (60 days)
As of: 19 Jul 2024 - 17 Sep 2024| Rank | Paper | Downloads |
|---|---|---|
| 1. | 85 | |
| 2. | 62 | |
| 3. | 58 | |
| 4. | 46 | |
| 5. | 46 | |
| 6. | 44 | |
| 7. | 38 | |
| 8. |
Cutthroat Business |
28 |
| 9. | 28 | |
| 10. | 23 |
September 17, 2024 in Recent Scholarship | Permalink | Comments (0)
Putting Our Computing Might to Good Work: Does AI Think a Burrito Is a Sandwich?
Tracy L. M. Norton, Associate Professor of Professional Practice at Louisiana State University's Paul M. Herbert Law Center, has run a very useful and up-to-the-moment comparison of the leading generative AI products. Given our continuing coverage of the burrito controversy, and our recent Contracts Stuff Vlog on using generative AI in teaching, this seems like content we ought to share.
Here are her findings, which are not intended as an endorsement of any product:
Comparing Different Generative AI Models
The world of generative AI gets more crowded with each passing season as existing models upgrade and new models enter the chat. This document is a quick comparison of how some popular models respond to the same prompt. It's not a deep technical analysis, just a fun way to see how they stack up against each other as of September 15, 2024.
For this experiment, we're looking at:
- ChatGPT-4 (one of the most effective models even 6 months ago)
- ChatGPT-4o (one of the most effective models until a few days ago)
- Chat GPT-o1 and ChatGPT-o1 mini (OpenAI's newest models)
- Claude 3.5 Sonnet (generally agreed to have better reasoning than ChatGPT-4o
- Perplexity AI (integrates web searching)
To keep things simple and fair, we're using a single prompt for all models, and all responses were cut-and-paste with minimal additional formatting. 'Is a burrito a sandwich?
Read through to the end to see what adding integrated web searching does for the answers Perplexity gives.
ChatGPT-4
A burrito isn't typically considered a sandwich. While both are portable meals that include fillings encased in a bread product, there are key differences:
- Bread Type: Sandwiches use two slices of bread or a split roll, whereas a burrito uses a single, soft flour tortilla that's wrapped and enclosed.
- Cultural Origins: Sandwiches have a broad and varied origin story, often linked back to Europe, while burritos are a traditional part of Mexican cuisine.
- Preparation and Presentation: Sandwiches are generally open on the sides and can be customized with a variety of toppings visible from the outside. In contrast, burritos are fully enclosed with the ingredients not visible.
These distinctions generally keep burritos out of the sandwich category in culinary and cultural discussions.
ChatGPT-4o
No, a burrito is not a sandwich. A burrito involves a tortilla wrapped around its fillings, while a sandwich typically consists of ingredients placed between two slices of bread or inside a split roll. Cultural, structural, and culinary distinctions keep them as separate categories of food.
ChatGPT-o1
The classification of a burrito as a sandwich is a subject of debate that touches on culinary definitions, legal interpretations, and cultural perceptions.
Definitions:
- Sandwich: Traditionally, a sandwich consists of ingredients like meat, cheese, or vegetables placed between two slices of bread or within a split roll or bun.
- Burrito: A burrito is a dish from Mexican cuisine that involves wrapping a flour tortilla around fillings such as beans, rice, meat, and cheese, fully enclosing the contents.
Arguments That a Burrito Is Not a Sandwich:
- Structural Differences:
- Enclosure: Burritos are fully enclosed by the tortilla, whereas sandwiches are typically open on the sides.
- Bread vs. Tortilla: Sandwiches use leavened bread, while burritos use unleavened flatbread (tortilla).
- Cultural and Culinary Distinctions:
- Burritos are part of Mexican cuisine and have distinct preparation methods and flavor profiles compared to sandwiches.
- The eating experience and customary accompaniments differ significantly.
- Legal Precedents:
- In a 2006 Massachusetts court case, White City Shopping Center, LP v. PR Restaurants, LLC, a judge ruled that burritos are not sandwiches in a dispute over a non-compete clause in a lease agreement.
Arguments That a Burrito Could Be Considered a Sandwich:
- Broad Definitions:
- Some definitions of a sandwich include any food where ingredients are "sandwiched" between or wrapped in bread or a bread-like substance.
- For tax or regulatory purposes, some jurisdictions categorize burritos along with sandwiches.
- Functional Similarities:
- Both are handheld foods that can contain similar types of fillings like meats and vegetables.
Conclusion:
While a burrito shares some similarities with a sandwich—such as containing fillings and being handheld—the differences in ingredients, preparation, and cultural origins generally place it in a separate category. Most culinary experts and legal interpretations maintain that a burrito is not a sandwich. So, in common usage and culinary contexts, a burrito is considered its own distinct type of food.
ChatGPT-01 mini
The question of whether a burrito qualifies as a sandwich is an interesting one that touches on definitions, cultural perspectives, and culinary classifications. Here's a comprehensive look at the topic:
Definitions
- Sandwich: Traditionally, a sandwich consists of one or more fillings (such as meat, cheese, vegetables) placed between two slices of bread, a split roll, or within a bun.
- Burrito: A burrito is a Mexican dish that involves a flour tortilla wrapped or folded around a variety of fillings, which can include beans, rice, meat, cheese, and vegetables. The tortilla is typically fully enclosed around the fillings.
Arguments Against a Burrito Being a Sandwich
- Structural Differences:
- Enclosure: Burritos are usually fully wrapped and sealed, whereas sandwiches are generally open on the sides.
- Type of Bread: Burritos use flour tortillas, which are unleavened flatbreads, while sandwiches typically use leavened bread.
- Cultural and Culinary Distinctions:
- Cuisine Origin: Burritos are a staple of Mexican cuisine with specific preparation methods and flavor profiles that distinguish them from sandwiches.
- Eating Experience: The way burritos are consumed and the typical accompaniments (like salsa, guacamole, or sour cream) differ from those of sandwiches.
- Legal Precedents:
- In certain legal contexts, such as the 2006 Massachusetts court case White City Shopping Center, LP v. PR Restaurants, LLC, burritos were not classified as sandwiches, highlighting distinctions in business and regulatory settings.
Arguments That a Burrito Could Be Considered a Sandwich
- Broad Definitions:
- Some definitions of a sandwich include any food where fillings are enclosed within some form of bread or bread-like substance, which could technically encompass burritos.
- Functional Similarities:
- Both sandwiches and burritos are handheld, portable meals that contain various fillings, making them functionally similar as convenient food options.
Conclusion
While there are superficial similarities between burritos and sandwiches—such as containing fillings and being handheld—the differences in their structural composition, cultural origins, and culinary contexts generally place them in separate categories. Most culinary experts, cultural perspectives, and legal interpretations treat burritos as distinct from sandwiches. Therefore, in common usage and culinary contexts, a burrito is not considered a sandwich.
However, it's worth noting that definitions can vary, and in casual conversations or certain regulatory frameworks, the classification might differ. Ultimately, whether a burrito is labeled a sandwich can depend on the criteria and context being considered.
Claude 3.5 Sonnet
This is a contentious question without a clear consensus. There are arguments on both sides:
Arguments for a burrito being a sandwich:
- It consists of fillings between or wrapped in bread/grain-based exterior
- Shares similarities with other wrapped sandwiches like gyros or wraps
Arguments against:
- Burritos use a single tortilla rather than separate pieces of bread
- Culturally and culinarily distinct from what's typically considered a sandwich
Ultimately, it depends on how strictly one defines "sandwich." Many food experts and culinary associations don't classify burritos as sandwiches, but there's room for debate. What's your view on this?
Thanks, Professor Norton!
September 17, 2024 in About this Blog, Commentary, Teaching, Web/Tech | Permalink | Comments (0)
Beating Cubs' Arbitration Clause Is Easier in Illinois than Tennessee
Yesterday, we covered a journalist's defeat of the Chicago Cubs' attempt to compel arbitration of his negligence claims. The Illinois court found, as it had found in the 2021 case, Zuniga v. Major League Baseball, that the Cubs did not put people on notice of arbitration terms by referencing their website, which links to an arbitration agreement, on the back of tickets or press credentials.
A Tennessee court reached the opposite conclusion based on very similar facts involving the Cubs' Double-A affiliate, the Tennessee Smokies. Deborah Roberts attended a Smokies game on April 22, 2022 and sat in the front row near the third-base dugout. She was hit by a foul ball and injured, requiring a three-day hospitalization and further treatment. Her husband immediately met with team representatives, but the Robertses claim that they only learned of the Smokies' arbitration clause when the team filed a motion to compel arbitration. As in Zuniga, the motion to compel was based on notice on the back of Ms. Roberts' ticket. The court provides the added particulars that the notice was in part in bold and in part in ALLCAPS, and it referenced arbitration, as well as a class-action waiver to be found on the team website. To me, the most relevant fact is that all of the print on the back of the ticket was in 4-point font [this is eight-point because our platform knows that going small than that is absurd], which would make it completely illegible to me and likely to any potential reader over the age of forty. Moreover, the court does not seem to read this blog, because if it did it would know Yonathan Arbel and Andrew Toler's work showing that people are actually less likely to read and understand ALLCAPS text than they are to read and understand ordinary text.
Applying Tennessee law, the District Court in Roberts v. Boyd Sports, LLC found that the parties had formed an arbitration agreement. It's reasoning is summarized as follows:
. . . [A] reasonable onlooker or objective observer would conclude that the parties mutually intended to assent to the terms on the tickets by Plaintiffs' acceptance of the tickets and subsequent entry into the stadium. Plaintiffs were provided with ample opportunity to read, investigate, and understand the provisions on their tickets, both when received, and certainly in the 7 days afterward when they were investigating their options to resolve the injury that occurred. According to the undisputed facts here, they never inquired as to the terms or indicated confusion or lack of understanding. Simply failing to read the terms does not present a party with the ability plead ignorance to or reject the terms after the fact.
The seven-day period is relevant because, had plaintiffs during that time found the arbitration agreement on the team website and worked through its terms, they would have seen that ticketholders have an option to opt-out of the arbitration provision within seven days. To do so, plaintiffs would have had to know their account number, which they did not have. While
the Zuniga court found the seven-day period substantively unconscionable because it is so short, the Tennessee court declined to follow non-binding precedent. As to the account number, given that the Roberts claim that they did not even know of the arbitration clause, their lack of an account number was irrelevant. The team represented that it would have honored the opt-out even without such a number.
I find the opinion infuriating, in part because it treats four-point font as notice and in part because unconscionability relates to formation. A contract that provides for an opt-out but requires an account number that the team does not actually provide is unconscionable at the time of formation. It is of no matter that the team later proffers self-serving assurances that it would not stand by the terms of its unconscionable arbitration provision.
In the case discussed in yesterday's post, Arbogast v. Chicago Cubs Baseball Club, LLC, the court held a summary hearing into arbitrability. Such a hearing could have been useful in this case. A judge ought to want to hear from the parties about what was going on during those seven days. Were the plaintiffs not actively exploring their legal options based on conversations or assurances that the team had given in discussions with Mr. Roberts about Ms. Roberts' injury? If I were not a contracts professor and my spouse were hospitalized for three days with facial injuries, my first instinct would not be to try to decipher the four-point font on the back of her ticket stub. But perhaps I am not the "reasonable and objective observer" that the court is looking for.
As usual, I say all this without quite grasping why plaintiffs prefer litigation over arbitration. In Arbogast, the arbitration was to take place in New York. If the same is true in this case, that might be a reason to opt out. But I would think such a remote venue would also be a basis for a claim of substantive unconscionability, so perhaps this arbitration clause allowed for arbitration in Tennessee.
September 17, 2024 in Commentary, Recent Cases, Sports | Permalink | Comments (0)
Monday, September 16, 2024
New Feature! The ContractsProf Blog's ContractsProf Vlog: Contracts Stuff
Here is the first installment of what we hope will become a regular feature of the blog. Michigan State University College of Law Professor Daniel Barnhizer.
In our first session, we discuss generative AI and its potential uses in law teaching. Our production values can only go up!
September 16, 2024 in About this Blog, Commentary, Contract Profs, Teaching, Web/Tech | Permalink | Comments (0)
Journalist Challenges Enforceability of Chicago Cubs' Arbitration Agreement
Back in 2021, we covered a surprising case, Zuniga v. Major League Baseball, in which a woman attending a Chicago Cubs game was injured by a foul ball. She did not read the back of her ticket (shocking!), nor did she visit the Cubs' website referenced on the back of the ticket (more shocking!) and familiarize herself with the Cubs' mandatory arbitration provision (the most shocking of all!). The court in that case held that the woman was not on notice of the arbitration provision, and the court denied the Cubs' motion to compel arbitration.
As they say in baseball, "It's that old deja vu all over again!" Charles Arbogast was awarded journalist credentials and granted entry to storied Wrigley Field on July 26, 2018. While there, he “fell and sustained injuries,” allegedly due to the Cubs' negligent decision to stack pallets in the photo well near first base. The pallets were intended for photographers to stand on, but Arbogast claims that they created a hazard.
Once again, on the back of Mr. Arbogast's press credential were terms and conditions, including the words "Bearer acknowledges receipt and review of, and agrees to be bound by, the further terms and conditions contained on the website of the Office of the Commissioner of Baseball at MLBPressbox.com." If Mr. Arbogast had visited that website and found the appropriate link, he would have found a twenty-five paragraph, six page document containing an arbitration clause.
When Mr. Arbogast sued for negligence, the Cubs moved to compel arbitration. The trial court, citing Zuniga, denied the motion without prejudice, and the appellate court affirmed. The case was a bit more complicated than Zuniga, because Mr. Arbogast had been awarded media credentials on numerous occasions and had been granted access to Major League Baseball (MLB) stadiums during every season since 2018. The Cubs' renewed their motion and demanded a summary proceeding to determine the existence of an arbitration agreement between the parties. In a supplemental affidavit submitted by a Cubs' employee, the Cubs identified an Associated Press (AP) employee who requested the credential on behalf of Mr. Arbogast and other journalists. In order to receive the credential this AP employee had checked a box agreeing to the Cubs' and MLB's terms.
Having conducted the summary proceeding, the trial court now granted the Cubs' motion to compel arbitration, rejecting Mr. Arbogast's claims that he had no reasonable notice of the arbitration provision and that the provision was unconscionable. In Arbogast v. Chicago Cubs Baseball, LLC, the appellate court reversed and remanded.
The appellate court agreed with the trial court that an agreement had been formed but reversed on unconscionability. Here, even more than in Zuniga, there was procedural unconscionability because Mr. Arbogast's press credential did not even mention arbitration. Like in Zuniga, the provision was substantively unconscionable because, although the holder of a press credential has seven days to opt out of the arbitration provision, Mr. Arbogast had no ability to do so, as he was hospitalized during the relevant period and in any case had not been furnished with an account number which he would have needed in order to opt out.
September 16, 2024 in Recent Cases, Sports | Permalink | Comments (0)
Friday, September 13, 2024
Friday Frivolity: Panda Contracts
Panda enthusiasts know that China does not give giant pandas to American zoos. The pandas are leased, and the terms of the leases permit China to reclaim their pandas, which remain, as they put it, Chinese citizens.
Now you might think that, when these loaned pandas reproduce, we might use their offspring as anchor babies. The baby pandas, the logic would run, are natural born U.S. citizens, and then, after an appropriate time, they could apply to get citizenship for the parents. But no, under the terms of the leases, the babies are and remain Chinese citizens, subject to repatriation within four years of birth.
Ambassador Barbara K. Bodine explains it all in this interview on the Georgetown University website. With Washington and Atlanta due to return their pandas to China this year, there was consternation in the U.S. panda-loving community that the U.S. might be entirely bereft of pandas. We would all have to get by with Internet videos and baby sloths. However, as Jorge Garcia reports on Reuters, a new panda exhibit opened in San Diego in August. And there's more good news: it seems that Washington is going to get two young pandas later this year! Panda diplomacy is alive and well.
Thanks to OCU 1L Jacey Herrington (above right) for calling my attention to the lease agreements.
And now, a panda video.
Enjoy the weekend.
September 13, 2024 in Current Affairs, True Contracts | Permalink | Comments (0)
"We'll Take Care of You" Does Not Equal $2.5 Million for Johnny Wilkes
When I teach vagueness, I use Baer v. Chase. The case is about an aspiring screenwriter who pitches a script for a show about the New Jersey mob to David Chase, the creator of The Sopranos. Mr. Chase did not use the script, but he is alleged to have borrowed some ideas and, at the very least, the colorful names of two characters. Mr. Baer alleged an expectation of payment, but the best evidence he had of an agreement was an allegation that Mr. Chase repeatedly promised, "We'll take care of you." In the mob context, I found this statement not just vague but delightfully ambiguous. See the conversation in Pulp Fiction between Jules (Samuel Jackson) and Vincent (John Travolta) in the elevator about "taking care" of Mia Wallace ("Uma Thurman").
Well, it turns out "We'll take care of you" is just what people say in these situations. Johnny Wilkes, the best friend of an uncle of Kawhi Leonard (right, with fan), claims that Jerry West said those words to Mr. Wilkes in connection with the latter's efforts to help the Los Angeles Clippers persuade Mr. Leonard to join the team. Mr. Wilkes claims that he demanded and was assured that he would be taken care of to the tune of $2.5 million, which was his estimate of a sports agent's take on such a contract.
It appears that the Mr. Wilkes's best friend, Dennis Robertson, is an important advisor to Mr. Leonard, but Mr. Wilkes does not allege that either he or Mr. Robertson was Mr. Leonard's sports agent. After Mr. Leonard did join the team, Mr. Wilkes sued Mr. West and the Clippers, alleging, inter alia, breach of contract, promissory estoppel, and fraud. The trial court dismissed the claims, and in January, 2024, a California appellate court affirmed in Wilkes v. LA Clippers, LLC.
This case adds an agency wrinkle to the vagueness problem in Baer v. Chase. The court provides an extended excerpt from Mr. Wilkes's testimony, and he is less than convincing about the specific promise to pay $2.5 million. Nor is it clear what services, if any, he provided, given that Mr. Leonard appears to have been unaware fo Mr. Wilkes's role. Another impediment is that the alleged promise came from Mr. West, but the alleged payor was Steve Ballmer, the owner of the Clippers, and Mr. Ballmer never made a promise. The parties dispute whether Mr. West had authority to bind either Mr. Ballmer or the Clippers in this matter, but the case really turned on the court's finding that the alleged contract was fatally vague as to the services Mr. Wilkes was to perform in order to be entitled to payment.
September 13, 2024 in Celebrity Contracts, Recent Cases, Sports, Teaching | Permalink | Comments (0)
