Wednesday, February 1, 2023
As Nimo Omer, in conversation with Eamonn Forde, reports in The Guardian, Justin Bieber (below -- honest, I'm not trying to be mean (yet) by posting his mugshot; it's the only public domain image I could find!) has entered into a $200 million deal giving Hipgnosis Songs Capital the rights to all of his music recorded before 2021. Baby, baby, baby, oh, that's a lot of money! But it covers 290 titles, even though I can only think of one.
The transaction is an indicator of a trend. Music is back, according to The Guardian, with album sales climbing in the U.S. over the past two years. I'm not sure what these guys mean by "album," but whatever.
And it's not just about you-know-who who is committed to owning all of her own music and insists on bringing out a new (old) album every year in order to do so to the delight of her fans who apparently are unaware that the world is teeming with talented artists of whom they've never heard (like Sarah Dooley) because all they listen to is this poor girl who is the most downloaded artist in history but for some reason is still singing about somebody who broke up with her ten years ago when she is not setting records for use of her private jet in a year when she's not even touring.
Haters gonna hate.
Actually, I wouldn't hate this artist if she were just stupendously successful. I hate that she takes up all the oxygen in the room so that no other artists can breathe (and my students disappear for 48 hours after she drops a new album so that they can commit every syllable to memory and then shoot each other knowing looks when I accidentally use some utterly humdrum phrase that also happens to have found its way into her lyrics, which are 98% utterly humdrum phrases.
But I digress.
Anyhew, Hipgnosis is a big player in the market, and that company and its rivals are betting on the long-term value of the songs that they are buying up. Hipgnosis principal proclaims himself to be a "disruptor" who wants to destroy the traditional model of music publishing. It's not clear to me that there's anything left to destroy, but his company has literally spent billions of dollars on demolition, so I suppose there's still work to be done.
Among the things that makes me wonder whether the parties know what they are doing is the round numbers involved in these transactions. According to the Guardian, "Stevie Nicks sold her catalogue for $100m. Bob Dylan shed his for a cool $300m-400m. Bruce Springsteen tops the lot at $550m." Okay, so a Bieber is twice a Nicks and half a Dylan? But also, what are these numbers based on. If there were a formula, it would produce a number with more significant digits. I think these deals are very rough guesstimates to true value, which is why I have decided not to buy the rights to all of Britney Spears' music just yet.
Monday, December 26, 2022
Tom Brady: From G.O.A.T. to Scapegoat:
A Cautionary Tale of Influencer and Endorser Liability
Sidney W. DeLong
If the next Tom (the Greatest Of All Time) Brady is in college today he is sure to be earning a lot more money than Tom was able to scrape together as a student athlete when he played for Michigan. As predicted in an earlier post, Name, Image, and Likeness Mercenaries: NIL Desperandum in College Athletics, the next Tom is already aboard the Name, Image, Likeness (NIL) bandwagon that has already showered millions of dollars in “endorsement” income on student-athletes. The NIL beneficiaries are Very Definitely Not being “Paid to Play” for the schools that woo them to step through the Transfer Portals into a world of big money endorsement contracts. Star athletes can earn tens or hundreds of thousands of dollars, ostensibly as pitchmen for local car dealerships and plumbing companies. All of which is good practical training for the much more lucrative and slickly produced product endorsements for which they will be paid when they become professionals, endorsing insurance companies, sneakers and fast food.
And in a sense, NIL income for athletes is only fair compensation for the hard and dangerous work they must put in to earn their scholarships. Star athletes must keep up financially with their non-athletic but internet-famous classmates who pull down five and six-figure salaries as Influencers, persuading their followers to buy whatever music, fashions, and cosmetics that their advertisers are paying them to pitch. “Influencer: It’s not just a side-hustle, it’s a career.”
But the shock waves emanating from recent collapses in the world of crypto portend risks that a fledgling NIL athlete or Influencer might well bear in mind. It turns out that touting a product as a celebrity endorser or influencer can lead to significant personal financial liability for the endorser, especially if what is being touted is not a diet plan but what a judge may later call a “security.”
Endorser liability is a relatively new concept and the courts have not yet evolved clear rules. The common law offers few theories under which a buyer might sue a seller’s agent for personal liability resulting from misleading statements the agent made about a purchase of a commodity, whether in the form of facts or opinions. Lies by a non-seller might justify avoidance or a warranty claim against the seller, but the agent owes no common law duty to the buyer to make only truthful statements about the product.
By statute, however, two forms of endorser liability have emerged in the U.S. For the sale of goods, The Federal Trade Commission has issued regulations making it illegal for a product endorser to fail to disclose whether she is compensated for her endorsement or to publish a misleading consumer product review of the product. The FTC has even published “guidelines” for social media influencers. Because these rules are aimed at misleading endorsement rather than misstatements of fact, liability can be avoided if the celebrity announces, ‘I am just saying this because I have been paid to do so.” Of course, such candor would defeat the purpose of the endorsement. Actual disclosures are more subtle, but effective in avoiding liability. But the American public has always been fully aware that every celebrity endorser since Lucy, Lady Duff-Gordon (left) has compensated and so the formalistic acknowledgement of compensation that is demanded by the FTC seems to be a solution in search of a problem. Or perhaps an example of straining at a gnat and swallowing a camel.
A far more lethal risk arises if the product being endorsed is held to be a security as defined in federal and state law. Which leads us to the crypto disaster. Tom Brady, along with his wife Gisele Bundchen, Shaquille O’Neal, Naomi Osaka, Larry David, Steph Curry, and many other celebrity endorsers of crypto products have been sued for damages and fines by the Securities and Exchange Commission (SEC) and classes of private parties under theories of securities act violations, violations of FTC disclosure regulations, and common law fraud, all arising from their promotional activities on behalf of FTX, Crypto.com and other sellers of crypto assets.
In a widely-publicized enforcement action, Kim Kardashian (right) was fined $1. 2 million in penalties plus disgorgement of profits by the SEC for failing to disclose a $250,000 payment she received to publish a post on her Instagram account promoting EthereumMax’s crypto asset security EMAX tokens. The article suggests that Matt “Fortune Favors the Brave” Damon was not charged because he was promoting a website, Crypto.com, rather than a specific security offered by his principal. More importantly, because EthereumMax’s tokens declined in value by 98% following Kardashian’s promo, she has been sued by disappointed investors for their losses.
Even the question whether Bitcoins themselves are securities may be an open question about which legal advice would be necessary. Gary Gensler, Chairperson of the SEC, has said that he believes that most cryptocurrencies are securities, as defined under the Howey Test, leading many to anticipate regulation of the market. If a celebrity touts an unregistered security, that alone could subject them to potential fines and jail time as well as to civil claims by disappointed purchasers regardless of the celebrity’s disclosure of their interest.
In addition to liability for fraud or for promoting the sale of unregistered securities, endorsers may run afoul of the SEC’s statement of policy about “celebrity backed” initial coin offerings requiring disclosure of compensation paid for endorsements (concerning the policy relating to “initial coin offerings”). Under this theory, Brady and Bundchen may have additional disclosure obligations arising from an alleged equity stake they took in FTX in 2021, before the endorsements.
What conclusions should a lawyer representing Future Tom Brady or Future Gisele Bundchen draw from the GOAT’s latest problems? I would suggest at least the following.
First, you should have final review of any endorsement contract and should not depend on the endorsement agent’s version, whose financial interests are not coincident with his own. Tell the client that “Jerry Maguire is interested only in his cut of the promotional fees; he won’t be there for you when you are sent away for securities fraud.”
Second, you will require securities law expertise whenever there is any possibility that what the client is touting is a security. With novel crypto products, it may be months or years before the courts decide whether the thing being touting is a “security,” under some version of the Howey test. Emphasize to the client that the personal liability for violating the securities laws can be staggering: that is the reason that liability insurance for securities lawyers is so expensive. An endorsement fee cannot possibly compensate for this level of risk.
Third, insist that the entity paying for the endorsement agree to indemnify the client and hold them harmless from any liability they may incur to any person or organization resulting from their performance of the endorsement contract. The indemnity must also include compensation for attorneys’ fees and other professional fees incurred, tax-related losses, and any other financial liability resulting from the product endorsement. (An agreement to pay criminal fines might be unenforceable on grounds of public policy, but it cannot hurt to obtain it.) If you cannot obtain indemnity, you should probably advise the client to walk away from the deal. If they refuse, you should (sad to say) probably memorialize your advice to the client.
When Matt Damon (left) told America that “Fortune favors the Brave” he was really sending a double message. He was not only encouraging ordinary people to risk their life savings on Bitcoin in a bold bid to earn a fortune. He was also, by his own example, encouraging celebrities to risk losing everything they owned in a securities fraud class action just to earn a hundred-thousand-dollar fee. Both messages proved to be disastrous, but at least some of the celebrities may end up as the bigger losers.
Thursday, December 22, 2022
Last week, Tariq Panja spilled the tea in The New York Times about David Beckham's contract to promote Qatar in connection with the World Cup and his utter failure to do so in any way that would have the sort of impact for which Qatar shelled out (perhaps?) $150 million. That said, he didn't exactly breach either. He kinda ChatGPT'd it.
Some people think you ought to actually enthuse to the media about Qatar when you enter into a contract to promote Qatar. Others think that you ought not to promote Qatar in connection with the World Cup if that might force you to opine about workers' rights or LGBTQ+ issues.
Or so I imagine ChatGPT would respond if I asked it about Beckham's contractual performance.
Mr. Beckham's strategy, according to the New York Times, is to show up for events when asked, on condition that his appearance not be announced in advance and the press not be notified. Mr. Beckham's bearded visage can be seen all around Qatar, on billboards and signs promoting Qatar and the World Cup, but the man himself is rarely seen and largely inaccessible. When pressed to speak about why he is endorsing Qatar or about his views on the various controversies that swirled around the World Cup and its 2022 host, Mr. Beckham issued press statements that sounded genuine, by which I mean that they genuinely sounded like they were generated by ChatGPT. Some samples:
David has been involved in a number of World Cups and other major international tournaments both as a player and an ambassador and he has always believed that sport has the power to be a force for good in the world.
We understand that there are different and strongly held views about engagement in the Middle East but see it as positive that debate about the key issues has been stimulated directly by the first World Cup being held in the region.
Other celebrity sponsors of the World Cup have apparently been irked by Mr. Beckham's special treatment. But some of them, unlike Mr. Beckham, have won the World Cup tournament, so there may be some consolation in that.
Wednesday, November 30, 2022
Mark Savage reports on BBC.com that Bob Dylan has apologized. You need not read any further. That is news in and of itself. I'm wracking my brain. Has Bob Dylan ever apologized before? For anything? Isn't that more of a John Denver vibe?
What has finally made the American Bard issue an apology? Breach of contract, of course. Mr. Dylan's publisher, Simon & Schuster sold for $600 each 900 "hand-signed" copies of Mr. Dylan's new book, The Philosophy of Modern Song. Some Dylan aficionados, it turns out, were also signature aficionados, and they discovered that the "hand-signed" books were signed using an autopen. The publisher went through the five stages of settlement: anger, denial, reference to "letters of authenticity," consultations with PR, the offer of refunds.
For his part, Mr. Dylan regretted an "error of judgment," but he also offered explanations. He has vertigo, so it takes a team of five to accompany him during signing sessions. I recently saw Bob Dylan in concert, and I can confirm that he is unsteady on his feet. During the pandemic, such sessions became a health risk and so, "with contractual deadlines looming" (that's an actual Dylan quote!!) when some unnamed person recommended the use of the autopen, accompanied by assurances that people do it all the time, Mr. Dylan agreed to auto-sign copies of his book. The BBC report suggests that other artists have indeed used the same device. Sinead O'Connor was unapologetic, but signed copies of her book sold for £30, so no big deal.
What is the difference in value between a book hand-signed by Bob Dylan and a book auto-signed by Bob Dylan? Apparently, quite a bit, and the reason for that turns, contrary to what Walter Benjamin (left) would have you believe, on the ability of works of art to retain their auras, even when they have been stripped of their unique existence in an (often sacred) time and space. Remy Tumin reports in The New York Times on what motivated one fan, who already owned the book in both in hardcover (unsigned), audio, and Kindle versions, to buy the signed version. “If he touches this book — he wrote it, signed it — it feels like the soul of Bob Dylan is with me.” That, my friends, articulates the power of the aura of an authentic work of art, or at least, a thing touched by the artist.
There is a great deal to unpack in all of this, and I wish Benjamin were around to reflect on it. Works of art once had a specific cultural role. They elevated and celebrated; they connected us to the divine. In the modern, disenchanted world, when they became reproducible, the cult value of the work of art is supplemented and eventually replaced with its exhibition value. The role of the work of art changes as the sources of its value changes. Benjamin celebrated the transformation of the social function of art. Art, freed from cultic aura, is democratized. Pictures, movies, electronic files, etc. can be endlessly reproduced and enjoyed by the masses. The museum, the gallery, the cafe, the salon, the cinema become the new settings in which the work of art does its work.
At this point, one wants Adorno to step in and to warn about the susceptibility of art to commodification. People still long for the cultic aura -- the verisimilitude of proximity to artistic creation. We cannot look over Bob Dylan's shoulder as he writes "Mother of Muses" (below), my favorite song on Rough and Rowdy Ways. He will not premiere his new songs for us. The best we can do is buy memorabilia, and we value that memorabilia to the extent that we think it connects us to art or the artist, but the connection is attenuated, shrouded in mists or mysticism. And then we degrade the artwork's aura (or that of its creator) by reducing its value to the cash nexus. Appalling! As thought paying for something would reduce our alienation from our species-being rather than embodying it! It's in the 1844 manuscripts people!!!
Console yourself that with each breath, you likely inhale some of the same molecules that Mr. Dylan inhaled just before he sang "Blowin' in the Wind" for the first time. By paying for his signature, you might as well be breathing in molecules Mr. Dylan exhaled during the recording of "Idiot Wind." Better than either option, you can get a whiff of Dylan's aura at the Dylan Archives in Tulsa. I plan a pilgrimage soon, even though I reside firmly on the post-Weberian side of disenchantment.
That said, I was thinking about art and aura when I saw Bob Dylan live. The stage was crowded. I heard him before I could pick him out, in the (I assume intentionally) one dark patch of an otherwise carefully illuminated mis-en-scene. The voice was unmistakable. Bob Dylan was there, singing an unrecognizable version of a recognizable song. And so it would continue for ninety minutes or so. Eventually I found him, hunched over a keyboard, looking down at his lyrics, harmonica at the ready, and I was enchanted.
Tuesday, November 1, 2022
Adidas has a line of shoes branded "Yeezy," a brand associated with Kanye West, who now goes by Ye (right). According to Jaclyn Peiser and Jacob Bogage of the Washington Post, the brand generated $2 billion in revenue last year and accounts for nearly ten percent of Adidas' annual revenue. The end of the contract will be costly to Ye, but Adidas estimates that it will also cost the company about $250 million. Adidas is the last domino to fall. Numerous other companies had already severed ties with Ye.
None of the articles that I have looked at discuss the basis for terminating the deals. One expects that the contracts have morals clauses, but one would like to have a look at them to see whether Ye's partners have discretion to invoke them selectively. As discussed below, his anti-Semitic outbursts are not the first occasion that might have given corporate partners concerns about how Ye's conduct reflected on the product. To date, I haven't seen anything suggesting that Ye was challenging the companies' rights to termination his deals.
Earlier, Ye's social media accounts were restricted in connection with statements viewed to be anti-Semitic. Ye responded, according to media accounts, by entering into a preliminary agreement to buy Parler, a social media platform that promotes itself as more amenable to unbridled freedom of expression than its mainstream rivals.
The Washington Post provides many reasons why Adidas might have been willing to bid auf wiedersehen to Ye. He was not easy to work with, to say the least, and his recent barrage of provocative speech is not his only brush with controversy. The Post speculates that, shunned by the fashion industry, Ye might fall back on music to keep his empire afloat. But there is also the danger that the major music platforms will also refuse to distribute his products.
That seems unlikely to me. It's not as if Ye supporters are in it for the anti-Semitism, but as of CNN reports, many have noticed that corporate partners did not sever ties with Ye when he made statements that could be construed as anti-Black, such as when he donned a "White Lives Matter" t-shirt, called slavery a "choice," and decried racism as "a dated concept." Those who were willing to stick with Ye despite his anti-Black expression and expressive conduct would likely continue to do so notwithstanding his anti-Semitism.
Doing so, in my view, would not make them complicit in Ye's anti-Semitism. Most of his fans dislike his anti-Semitism, but many would overlook it because of his unique attributes as an artist. I'll admit it, when I recently learned that Eric Clapton (far right, with Blind faith) had expressed support for Enoch Powell's British fascism, and that David Bowie (left) had expressed unseemly enthusiasm for Hitler and the Third Reich, it had no effect on my enjoyment of Layla or Changes. I forgive them their trespasses or their not-so-youthful indiscretions or whatever made these wonderful musicians say such stupid things. Our broken world is full of broken people, including broken artists. Sometimes, it is more appropriate to respond with compassion than with judgment.
Monday, September 19, 2022
Last week, we posted about Nebraska's decision to fire its head football coach Scott Frost and pay him $15 million in severance. Victor Goldberg shared Coach Frost's contract and its two addenda, with me. You can also find it online here.
One big takeaway from Professor Goldberg's work is that sophisticated parties fashion their own remedies, and those remedies often depart from the default rules set out in the common law. So too in the realm of coaching contracts. You might think that a coach who gets a $15 million severance package for early termination of his contract would have to mitigate should he land comparable employment at another school. Not so here.
As Professor Goldberg notes after reviewing the contracts in his comment here, Coach Frost's initial Dec. 2017 contract provided that, while he had no obligation to mitigate, if he got another coaching job, either in the NFL or with another Division I NCAA team, the severance pay (termed "Liquidated Damages") would be offset (set forth in Section 13(b) of the original agreement). But the addenda provided for neither a duty to mitigate nor an offset (in paragraph 2 of the 2021 addendum and paragraph 3 of the 2019 addendum).
The mystery to me is why the addenda, negotiated after Coach Frost and Nebraska football suffered through several losing seasons, would be more generous than the original contract, negotiated when Coach Frost was the hottest coach on the market. One would have to review the contracts as whole to determine what Coach Frost gave up in exchange for more generous liquidated damages provisions.
Thursday, September 15, 2022
You have to be an extraordinary person to be an elite college football coach. You must be unusually savvy about contracts. That must be true, because I know a lot about contracts but I can't make any sense of the incentive structures in the contract of former Nebraska head coach Scott Frost (right). Andrew Doughty of BetMGM has the numbers here.
Coach Frost had an extraordinary second season, leading the University of Central Florida to an undefeated campaign and defeating Auburn in the Peach Bowl. Nebraska paid $3 million to buy out his contract and then agreed to a seven year, $35 million contract with Coach Frost. Two dismal years in, the contract was extended through 2026. After two more dismal years, Nebraska and Coach Frost renegotiated his contract, reducing his annual salary to a miserly $4 million/year. The buyout structure is complicated, but in the end, Coach Frost is entitled to a $15 million buyout. If the team had waited until October to buy him out, it would have owed only $7.5 million.
You might think that Nebraska is not really out that $15 million because Coach Frost has a duty to mitigate. Except that I seem to recall reading somewhere in Victor Goldberg's Rethinking Contract Law and Contract Design that coaches' contracts often specify that there is no duty to mitigate [if someone can find the cite or knows from some other source, please chime in]. Moreover, Coach Frost's record at Nebraska was 16-31 overall, 10-26 against conference opponents, and the team was winless against ranked teams. When Nebraska landed Coach Frost, he was the most sought-after young coach in college football. Now, he's asking Kramer's question after a prolonged cigar binge:
Why, you might ask, did Nebraska not wait until October? Some sportswriters speculate that the timing was dictated by an upcoming game against the Oklahoma Sooners. Nebraska's athletic director did not want to see his team humiliated by the team he played for. One would think that even rabid Nebraska football fans would not think that motivation justified a $7.5 million price tag. But there are other reasons that would surely pass a business-judgment-rule type sniff test. It seems there are advantages to being the first in the pool when it comes to picking a new head coach.
Has Nebraska learned its lesson? Coach Frost's resume shows that past performance is no guarantee of future success.
Tuesday, August 30, 2022
According to media reports, including this one from Drew Harwell in The Washington Post, FPOTUS Donald Trump's Twitter clone, Truth Social, is in financial difficulties. An SEC S-1 filing from Digital World Acquisition Corp., the company that is supposed to take the Trump Media and Technology Group (TMTG) public, contains all sorts of statements casting doubt on the viability of the enterprise. Mind you, SEC filings are supposed to protect against claims by investors that they were mislead as to the company's prospects for success. Pessimism is common. When I was in private practice helping to deal with the fallout of the post 2000 .com bust, every SEC filing I read about a technology company made the following points:
- We are bleeding money;
- We have never made money;
- We don't know when we ever will make money; and
- We have invested heavily in companies just like us that are bleeding money, have never made money, and don't know whether they will ever make money.
My job was to explain why my clients nonetheless advised their clients to invest in such companies.
Perhaps more alarming is the report that TMTG has stopped paying its bills. According to WaPo, TMTG stopped paying its web-hosting service, RightForge, in March and is now in arrears to the tune of over $1 million. As WaPo also notes, the man behind TMTG has a long history of not paying his bills. Not to mention the fraudulent businesses. Not to mention the fraudulent charitable organizations. More alarming still, an SEC investigation into the planned transaction involving TMTG and Digital World has placed the entire deal on hold.
The FPOTUS has been in the news of late. Another dog bites man story. Despite the FPOTUS having posted (that is "truthed") on his site "WE GAVE THEM MUCH," he has also claimed that: (1) the FBI planted incriminating and classified documents; (2) he had declassified the documents; (3) he was entitled to keep the documents, and (4) the documents are subject to executive and/or attorney-client privilege. All of these shenanigans have somehow not improved traffic on Truth Social, which now is down from a peak of 1.5 million to about 300,000 views per day.
Our goal on this blog is to overtake Truth Social for page views. Now that would be a man bites dog story.
Monday, July 11, 2022
We have covered this case before, but it is a useful reminder of the power of releases.
In 2018, Roy Moore, former Chief Justice of the Alabama Supreme Court, former U.S. Senate candidate agreed to be interviewed by Sacha Baron Cohen. As is his wont, Baron Cohen misrepresented the purposes of the interview. He pretended to be an Israeli intelligence offer, and he lured Judge Moore into the interview by claiming that the purpose was to present the Judge with an award for his support of Israel. During the interview, Baron Cohen produced an instrument that he claimed Israel had developed to detect underground tunnels. Baron Cohen then claimed that it could also detect pedophiles, and, sure enough, it started beeping whenever help up close to Judge Moore's body. Judge Moore's alleged stalking of women as young as 14 had been an issue in his election campaign.
The interview did not go well, as you can see below, and the problems go well beyond Baron Cohen's mock unibrow:
In its opinion, the Second Circuit points out the Judge Moore signed a standard consent agreement, which provided in relevant part:
[Judge Moore] waives, and agrees not to bring at any time in the future, any claims against the Producer, or against any of its assignees or licensees or anyone associated with the Program, which are related to the Program or its production, or this agreement, including, but not limited to, claims involving assertions of . . . (h) infliction of emotional distress (whether allegedly intentional or negligent), . . . (m) defamation (such as any allegedly false statements made in the Program), . . . [or] (p) fraud (such as any alleged deception about the Program or this consent agreement).
Judge Moore crossed out other language in the Release, but the Second Circuit agreed with the District Court that he agreed to enough to bar his claims for defamation, infliction of emotional distress, and fraud.
Judge Moore claimed that the entire agreement was the product of fraudulent inducement, but any such claim was barred under New York law because, in the Release, Judge Moore also confirmed that he was not not "relying upon any promises or statements made by anyone about the nature of the Program or the identity, behavior, or qualifications of any other participants, cast members, or other persons involved in the program,” and that he was “signing this agreement with no expectations or understanding concerning the conduct, offensive or otherwise, of anyone involved in this Program.” The Second Circuit also agreed with the District Court's rejection of Judge Moore's arguments that New York law does not enforce general releases. This was not a general release. It specifically released the defendants from the very claims Judge Moore sought to bring.
Judge Moore's wife's claims of intentional infliction of emotional distress were barred under the First Amendment. Judge Moore is a public figure and, given his candidacy for public office, the subject matter of the segment was clearly of public concern. The court found that "no reasonable person" could have taken it seriously. Thus, while the representation that the "pedophile detector" was a reliable device was clearly false, in context, nobody would have thought otherwise.
We may have to revisit this doctrine in a world in which many people believe that "you can't trust the media." In our current environment, Sacha Baron Cohen is at least as reliable a source as George Stephanopoulos. I once was engaged in a political debate with a former student, and he pointed me to an article from the Babylon Bee. When I informed him his source was satire, and he might was well be citing The Onion, he responded, "What difference does that make?" At that point, I knew that I had lost. And that all was lost.
Wednesday, February 16, 2022
According to Rolling Stone Magazine, the estates of some comedians, as well as some comedians who are still alive, are suing Pandora for breach of copyright. Robin Williams' estate is seeking over $4 million; George Carlins' estate is seeking $8.4 million. All together, five comedians have filed suit seeking over $40 million collectively.
While it is commonplace in the music industry for companies like Pandora to enter into public performance licensing agreements with performance rights organizations like BMI and ASCAP for musical compositions, these entities do not license literary works. Therefore, it was the responsibility of Pandora to seek out the copyright owners and obtain valid public performance licenses.
The comedians' record labels have shared their recordings on Pandora. However, the comedians claim, the recordings are separate from the jokes, which remain the intellectual property of their creators. As Variety explains here, the comedians claim "that they should be treated like singer-songwriters, earning a separate royalty for the underlying 'literary work' in addition to the performance of it."
Just a quick anecdote about Robin Williams. I saw him perform live stand-up in San Francisco. I think it must have been in the late 1980s. I went with a friend to a comedy club. At the end of the scheduled performances, the M.C. got up and said, "Hey, Robin Williams is here, and he wants to do a set. Do you all want to stick around and give him a listen?" It was late, but it was Robin Williams. We indicated our enthusiastic assent.
He was clearly excited to try out some material. He had more energy than the small space could contain. The material was raw. Most of the jokes didn't fly. He was sweating and agitated. After about ten minutes, the M.C. came back and, apologizing to Robin Williams, said that by city ordinance, he had to stop. I guess they were already past the time when comedy clubs were supposed to shut down. Robin Williams pleaded, could he do one more bit? The M.C. allowed it. It was Robin Williams. The last bit wasn't much better than the others, but he was trying so hard. He attempted to engage in "safe comedy" by placing a condom over the microphone. Edgy? In desperation, the club cut the lights and the mike. It seemed there was no other way to get him to stop.
It was not the best stand-up I've ever seen, but it was certainly the most memorable. I loved that he was still so eager for an audience, that he was still so hungry to create new comedy, and ultimately that he, by that time, rich beyond imagining, possessing iconic fame, was still so naked and vulnerable and pathetically desirous of our approval.
Watching Robin Williams cover himself in inglorious flop-sweat reminded me of Robert Musil's essay, Flypaper. Musil observes the moment when the flies stop struggling to escape the flypaper's grasp and relax a bit into their fate, freezing in ridiculous poses. "They no longer hold themselves up with all their might, but sink a little, and at that moment appear totally human." Never did I see anyone look more human than Robin Williams did as he utterly bombed in a San Francisco comedy club.
Wednesday, January 19, 2022
I’m excited to teach copyright this semester and while I miss teaching contracts, there is a lot of synergy between the two subjects. So, I was interested to read that the director Quentin Tarantino is being sued by Miramax in an action claiming copyright infringement and breach of contract. The lawsuit involves Tarantino’s efforts to auction pages of the script from Pulp Fiction as non-fungible tokens or NFTs.
The issue is whether Tarantino owns the rights to the NFTs. That will depend on the contract between Tarantino and Miramax and whether the language the parties used was broad enough to capture this type of technology – technology that wasn’t contemplated at the time the parties entered into their agreement.
Tuesday, January 18, 2022
Here's the problem about writing about the British Royal Family. If you are someone who cares about the Royals, you know approximately 1.7 million times more about them than I do. If you don't care about the Royals, nothing in the post will be of the slightest interest to you. And yet, there is a big story out there; contracts law is at the center of it. I am somewhat compulsive. Sigh. Here we go.
Earlier this month, Sid DeLong posted about the argument that Virginia Roberts Giuffre's suit against Prince Andrew alleging sex trafficking should be dismissed based on a Settlement Agreement and Release that she entered. into with Jeffrey Epstein in 2009. Last week, Judge Lewis Kaplan denied Prince Andrew's motion to dismiss in a 46-page opinion. In that opinion, Judge Kaplan carefully considers whether Prince Andrew was among the defendants whom the parties intended to release or whether he is a third-party beneficiary of the Agreement. At this point in the litigation, Judge Kaplan concluded, it is too early to rule definitively on either argument. Judge Kaplan also rejects the so-called "Dershowitz argument." That is, because Ms. Giuffre dismissed her claims against Mr. Dershowitz when the Agreement was raised as a potential defense, the same result should obtain here. Judge Kaplan avoided speculating on why the Release might be helpful to Mr. Dershowitz but insisted in any case to consider independently the Release's applicability to every potential defendant.
There is more to the opinion, but the rest of it does not really touch on contracts law or the law of third-party beneficiaries, so we will leave it to others to expound. What interests us for now is the Crown's response to this opinion.
With The Queen's approval and agreement, The Duke of York’s military affiliations and Royal patronages have been returned to The Queen.
The Duke of York will continue not to undertake any public duties and is defending this case as a private citizen.
He may no longer use the honorific "His Royal Highness," and he had to surrender his military titles. The BBC, perhaps a more reliable source on this subject, clarifies, "Like Harry and Meghan, Prince Andrew retains his title HRH but will not use it in any official capacity." I'll assume you all know to which "Harry and Meghan" the BBC refers, and I will leave it at that.
Thursday, January 6, 2022
“Yes Virginia, There is a Santa Clause”: The Giuffre Release
Denied the benefits of three years of law school, the general public must learn what it can about contract law in piecemeal fashion, in the school for scandal afforded by news reports of highly publicized cases. Thus, for example, the Stormy Daniels controversy introduced everyone to the law of mandatory arbitration, non-disclosure agreements, and temporary restraining orders.
Seen as a teaching moment, the sexual abuse lawsuit brought by Virginia Roberts nee Giuffre against Prince Andrew may further educate the laity about the arcana associated with general releases and third-party beneficiary law. It also may give an incidental education in the state of legal prose.
Last Monday, the court unsealed a Settlement Agreement and Release entered into by Virginia Roberts (Giuffre’s maiden name) and Jeffrey Epstein (below, right) in 2009. The agreement settled her lawsuit and released all her then-pending tort claims against Epstein. Her allegations included that he trafficked her, while a minor, to his powerful friends, who included politicians, academicians, and “royalty.” The Release states that it was executed in connection with a non-prosecution agreement entered into by a Florida federal prosecutor and Epstein, an agreement that was later to become controversial in itself when he was prosecuted in New York.
In her current lawsuit against Prince Andrew, Giuffre alleges that he was a friend of Epstein who sexually assaulted her on multiple occasions when she was a minor. Without admitting any of her allegations, he has pleaded as an affirmative defense that she released her claims against him when she signed the Epstein release, even though he was not a party to the Epstein lawsuit and is not named in the release. Instead, he claims that he is an unnamed third-party beneficiary of the release because it extends to “any other person or entity who could have been included as a potential defendant” to the Epstein lawsuit.
The Settlement Agreement and General Release contains language that, although it is boilerplate familiar to many litigators, would strike most laypersons and many lawyers as bizarre. Like many other forms of contractual boilerplate, release boilerplate grows by accretion and never seems to diminish. As a result, it contains many terms that have no application to this controversy.
Thus, the agreement binds not only Giuffre and Epstein in the singular, but also in the plural:
Virginia Roberts and her agent(s), attorney(s), predecessor(s), successors(s), heir(s), administrator(s), and/or assign(s)/(hereunder, “First Parties”) and Jeffrey Epstein and his agent(s), attorney(s), predecessor(s), successors(s), heir(s), administrator(s), and/or assign(s)/(hereunder, “Second Parties”).
All this means that in form the agreement is between two large groups of people, real and imaginary. More significantly, the agreement also refers to a third group of unnamed persons: “any other person or entity who could have been included as a potential defendant (“Other Potential Defendants”).
The First Parties not only “release“ the Second Parties and the Other Potential Defendants from the Giuffre claims, but also “remise, release, acquit, satisfy, and forever discharge” them.
When the drafter(s) entitled the document a “General” release they were not kidding. The released claims include not only the tort claims Giuffre brought against Epstein in the lawsuit, but also (take a deep breath)
all, and all manner of, action and actions of Virginia Roberts, including State or Federal, cause and causes of action (common law or statutory), suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, executions, claims, and demands whatsoever in law or in equity for compensatory or punitive damages that said First Parties ever had or now have or that any personal representative, successor, heir, or assign of said First Parties hereafter can, shall, or may have, against Jeffrey Epstein, or Other Potential Defendants for, upon or by reason of any matter, cause, or thing whatsoever (whether known or unknown), from the beginning of the world to the day of this release.
For a unique experience, legally trained readers may, for once in their professional life, actually read this passage word-for-word, preferably aloud, and reflect on its meaning. They might then reflect on the fact that no living person fully understands every word of this paragraph. Non-lawyers may be surprised that, as Holmes famously remarked, the law finds no difficulty under the objective theory of contract in holding parties to the terms of agreements that neither of them may correctly understand.
If we had world enough and time, it would be highly rewarding to parse this language, lingering lovingly over each word, imagining what drafting disaster in what ancient agreement led to its inclusion in the ever-growing, immortal mass that is the result. Does anyone remember what a “specialty” is? What “variances” might Epstein have committed against Giuffre, assuming one can commit a variance?
Sadly, courts do not always ignore such boilerplate. In the infamous decision, Hershon v. Gibraltar Building & Loan Assoc., Inc., 864 F.2d 848 (D.C. Cir. 1989) a general release with even more extravagant language that was intended only to settle five business claims was held to have inadvertently cancelled a debt of $265,000 owed by the released party to the releasing party in a completely unrelated and uncontested loan.The majority rested on a rather punitive application of the plain meaning theory of contract, visiting the sins of the drafters on their clients. Under Hershon’s reasoning, the Giuffre release would discharge any claim of any sort that she might have had against anyone who might have been a “possible defendant” in her action against Epstein, such as his insurer.
The unique feature of the release is not that it refers to “the beginning of the world”: they all do. Rather, it is that it extends to “said Second Parties and any other person or entity who could have been included as a potential defendant ('Other Potential Defendants').” In a sea of everyday lawyer prose, the phrase “who could have been included as a potential defendant” sticks out like a sore thumb. The phrase has no settled legal meaning, and so the litigants have focused on it intently, as it limits the scope of the The unique feature of the release is not that it refers to “the beginning of the world”: they all do. Rather it is that it extends to “any other person or entity who could have been included as a potential defendant (“Other Potential Defendants”).” In a sea of everyday lawyer prose, the phrase “who could have been included as a potential defendant” sticks out like a sore thumb. The phrase has no settled legal meaning and so both litigants have focused on it intently, as it limits the scope of the release. According to NPR, Giuffre’s lawyers, for example, have argued that it did not include Prince Andrew because, inter alia, he could not have been sued in the jurisdiction where the action was brought. His lawyers argue that, although innocent of any wrongdoing, he is clearly in the category of unnamed “royalty” whose crimes were alleged in the Epstein complaint and who might have been sued along with Epstein.
There were easily-imagined reasons for Epstein’s lawyers to employ the ambiguity so as not to name the “powerful friends” that Epstein wanted to shield with this settlement. But in this case, professional coyness might encourage a court sympathetic to the plaintiff to refuse to read their names into the agreement.
A final question is whether a release can be a “third-party beneficiary contract.” First, a release is not a contract as the Restatement defines it because, as Restatement (Second) of the Law: Contracts § 278, cmt. c acknowledges. A release is not a promise that creates rights and duties but instead extinguishes rights and duties. But there is no reason the Release may not be construed to extinguish claims against third parties if that is the intent. Protection of third parties is common in tort settlements.
Under Restatement (Second) of the Law: Contracts § 302, a third party may enforce a promise whenever the promisee manifests an intention that third parties have enforcement rights and that they are appropriate to achieve the promisee’s purposes. If Epstein intended to give the unnamed friends the benefit of the release, it should be “enforceable” by those third parties if the court resolves the issue noted above as to their identity.
Two things raise doubts about whether Epstein manifested an intent that Andrew be able to enforce the release. First, the release seems not to have been disclosed to Andrew until discovery in the pending case. Than alone argues against Andrew being an intended third-party beneficiary.
A second, related doubt about third party rights arises from the following term.
Additionally, as a material consideration in settling, First Parties and Second Parties agree that the terms of this Settlement Agreement are not intended to be used by any other person nor to be admissible in any proceeding or case against or involving Jeffrey Epstein, either civil or criminal. (emphasis added).
Is Prince Andrew an “other person” who is trying to “use the terms” of the agreement? Or does the term “other person” not include the previously mentioned “Other Potential Defendants”? Does the phrase “in any proceeding or case against or involving Jeffry Epstein” modify the clause limiting the intended use by other persons, so that Prince Andrew may argue that he may use the release because this is not a case “against or involving” Epstein?
What lessons might the public learn from this combination of verbal overkill and under-specificity in Settlement Agreement and General Release? Perhaps that lawyers are paid by the word rather than the thought.
Tuesday, December 28, 2021
My students think I hate unilateral contracts. It's not true. I hate the statute of frauds and the parol evidence rule. I'm fine with unilateral contracts. They are interesting. They are also uncommon. That is to say, they make up a tiny percentage of the universe of contracts. That's why they show up in the news.
As reported in the New York Times, Daniel Sturridge, an English football (soccer) star, made a video after his dog, Lucci, a Pomeranian, disappeared from his Los Angeles home. In the video, Mr. Sturridge offered a reward, "20 Gs, 30 Gs, whatever" to anybody who helped him to recover the dog. Soon thereafter, Foster Washington, found the dog.
Mr. Sturridge claims that he already paid Mr. Washington a reward. On Tuesday, a judge found otherwise. Mr. Sturridge now plays in Australia. When he was signed as a striker with Liverpool in 2013, the contract was valued at $20 million. Lucci is valued at $5300. Mr. Washington has three children and makes $14/hour working as a security guard. His utterance may have been too vague to be considered a clear offer. Is it a promise to pay 20 G? 30? Whatever? Is it an invitation to bargain? Don't care. You are rich. A poor man helped you out, thinking you would honor your pledge to provide a reward.
Pay the man.
Tuesday, December 7, 2021
Yesterday, I ranted about executive compensation. Today, I will rant about compensation paid to college football head coaches. If you think that college football coaches deserve to be, in most states, the highest paid public employees, feel free to tune out.
Recently, a friend recommended that I listen to a story at the start of this Advisory Opinions podcast. I don't want to ruin the story, I've put it below the fold. If you want to listen, it just takes up the first two or three minutes of the podcast, which I do not otherwise recommend.
I bring up the story in this context because I recently was conversing with a neighbor who had various criticisms of Dr. Fauci. Among Dr. Fauci's misdeeds, according to my neighbor, is that he is the highest-paid employee of the federal government. It's true. According to Forbes, Dr. Fauci's annual compensation is now over $400,000, and in the decade between 2010 and 2019, he earned $3.6 million. Okay, so let's use football coaches' salaries to put that in perspective.
First, according to the New York Times, Louisiana State University (LSU), a public institution, is paying its new coach $9 million/year. That is well over twice what Dr. Fauci made over ten years. At the same time, it is paying its former coach $17 million to step aside, so that former coach will be paid nearly five times what Dr. Fauci made over ten years, and he will make it for doing precisely nothing.
Second, and this is crucial, Dr. Fauci is the highest paid federal employee because people who understand his role (that is, not Senator Rand Paul), know that he is an incredibly dedicated, effective public servant who has provided unparalleled leadership since the AIDS crisis. If Dr. Fauci were to leave public service and work in the for-profit bio-tech sector, he could easily command salaries akin to what we pay corporate executives in those fields -- that is, many multiples of what he makes as a public servant. Before one criticizes Dr. Fauci for making $400,000 a year, consider that the opportunity cost for him to do so by working as public employee is likely $1-2 million/year.
LSU's new coach, on the other hand, is guaranteed a bonus of $500,000 if LSU manages to win half its games, which would be a pretty unimpressive accomplishment for a team that has won three national championships since 2003. That's right, on top of his salary, which is already twenty-two times higher than Dr. Fauci's, LSU's coach will get a bonus in excess of Dr. Fauci's salary if the team underperforms during his first year as badly as it did this year.
For my money, an Anthony Fauci is worth more than the best football coach in the country. For my money, investing in great scientists who can guide our country through catastrophic health crises makes more sense than investing in men who can win college football games. I would also venture to guess that the secondary effects of investing in science, in terms of gains in useful knowledge that can be applied to future medical challenges, greatly outweigh the benefits of having a successful college football team in the state. As this story from the Guardian makes clear, most college sports programs operate at a loss. Mad about the high tuition and fees you are paying for your child's education at a public university? Maybe you should talk to your legislators about the high costs of college sports programs. And those costs could be cut very easily if every state paid its coaching staff a decent but not excessive wage. Salaries in line with what full professors in competitive fields like, law, business, medicine, or engineering, seem about right to me. University presidents are also absurdly overcompensated, given that they take on no downside risk, but that can be a subject for some other post.
And since anybody who disagrees with me probably stopped reading a long time ago, let me add that the United States is the only country in the world that operates this way, and it is wholly irrational. Universities are primarily about education and research. Young people who are primarily interested in athletics can pursue that dream through developmental leagues, like the rest of the world has. Teams in those leagues could be located in or near college towns, and universities that want to create a connection between the teams and their institutions can offer scholarships to the athletes who play on those teams. Those students may have to attend part-time, as athletics is their day job. Still, universities could provide support so that those students can succeed either as athletes, or as students, or as both, if they have the requisite aptitudes in both areas. Given that very few students athletes become professional athletes, and professional athletic careers are very short on average, very little is lost if students choose to try their luck in the lottery of professional sports and then pursue college eduction at the age of 25 or 29.
Wednesday, November 17, 2021
Beginning in 2009, Jay-Z, entered into a series of agreements with Parlux Fragrance and parent company Perfumania (Plaintiffs). The agreements granting them an exclusive license to use the Jay-Z trademark for manufacture, promotion, distribution, and sale of fragrances and related products.
According to the Complaint, the parties agreed that Plaintiffs could use the Jay-Z trademark on certain products and that Jay-Z (right, in a 1988 photo ) would not unreasonably withhold permission to use the trademark. In 2013, Plaintiffs launched Gold Jay Z fragrance. Plaintiffs maintain that, in order for a celebrity fragrance to succeed, the celebrity has to actively promote it, and they allege that Jay-Z was obligated under a licensing agreement to do so but breached those contractual obligations.
Plaintiffs claim multiple breaches by Jay-Z including: (i) declining to be interviewed, (ii) failing to provide a quote for an upcoming Women's Wear Daily article, (iii) failing to make various promotional appearances at Macy's in support of the product, (iv) declining to provide a quote or statement for the press release in connection with the product launch, (v) or to provide quotes or complete "Q & As" for Elle, Glamour, or Cosmopolitan, and (vi) rejecting five different concepts for a promotional contest involving a giveaway of an 18-carat gold bottle of GOLD JAY-Z created by Jacob the Jeweler valued at $20,000, and instead keeping the prototype gold bottle.
In the litigation, Jay-Z contended that Parlux proceeded with the launch despite knowing these promotional events conflicted with Mr. Carter’s Magna Carta World Tour, which made him unavailable for these promotional events. In his testimony, according to Allhiphop.com, Jay-Z did not like the promotional work that Plaintiffs put together for the branded fragrances, calling it "B-rate" and called their efforts "crappy, lazy work."
After the initial launch, Plaintiffs began developing concepts for additional products for the brand but it was unclear whether these additional requests were included in the original product development plan. Jay-Z and his people felt under no contractual obligation to approve new products under the agreements. Plaintiffs argued that Jay-Z's refusal to aid them in the development of new products was a breach of his obligations.
Jay-Z and his attorneys broadly argued that Plaintiffs failed to understand how to properly market his luxury brand and protect his products from being sold "on the shelves of Walmart between hand sanitizer and Tic-Tacs," as his attorney said in his opening statement. Jay-Z counterclaimed, seeking $2.7 million in unpaid licensing fees.
On November 10, 2021, a New York jury, after a three-week trial, took only two hours to reject both parties' breach of contract claims.
Thanks to my research assistant, Alyssa Cross, for helping me with this stinky assignment.
Wednesday, November 3, 2021
I'll admit it. I watched Tiger King. My students at the time insisted that I do so. My friends warned me away, because I don't like watching people being cruel to animals. People told me that you either love it or hate it. I did neither. I get the over-the-topness of the series. That part was fun, but I resented the way the series encouraged identification with its main character, Joe Exotic. He's a complicated human. I don't know if anybody merits the treatment they get from our criminal justice system. But he should not be allowed anywhere near large cats. I was also dimly aware that fans of the show had adopted Joe Exotic's perspective and treated Carole Baskin as a villain, accepting the false equivalence Joe Exotic tried to establish between his operation, which exploited animals for profit and bred them irresponsibly, and Carole Baskin's animal rescue preserve.
Now Tiger King II is about to come out. Carole Baskin wants no part of it, and she is suing to enjoin use of footage of her from the first shoot in the second series. She claims breach of contract The Complaint is here.
The Complaint is basically a vehicle for Baskin to tell her side of the story. Much of it is taken up with the achievements and awards and recognition of her Big Cat Rescue organization. Joe Exotic is introduced as follows.
Joe Exotic . . ., the operator of a private roadside zoo and prolific breeder of big cats and purveyor of cub petting services [sic] sought to discredit and silence the Baskins' [sic] and their advocacy through years of constant and persistent intimidating and libelous social media attacks and physically during one incident at Big Cat Rescue.
The heart of Ms. Baskin's current suit against the producers is her claim that the releases she signed allowing use of footage filmed with her was only with respect to a single "documentary motion picture." She did not agree to participate in a second series, and when approached by the producers, her response was "No. And lose my number." That's gold, baby! If only that were in the new series! Sorry.
If you watch the trailer for the new series, linked to in ¶ 36 of the Complaint, prepare to be overwhelmed with the powerful stench of desperation. Joe Exotic is in prison. His zoo is shut down. The film makers chase after similarly despicably situated persons, i.e., other polyamorous, gun-toting, purported animal-lovers, committed to money-making and lawless libertarianism. Prepare also for unsubstantiated allegations, artfully edited and cross-cut to look as plausible as the rampant criminality and exploitation that was the very stuff of Joe Exotic's business. The desperation comes from the producers, who, as the breathless editing of the trailer makes clear, no longer have a story to tell but want to mine this vein until it is completely tapped out. It also comes from Netflix, which has recently made clear that it is committed to the view that the only thing worse than being talked about is not being talked about.
It is only because I am not a participant in cancel culture that I will not cancel my Netflix subscription in protest of their decision to release Tiger King II. Also, the new season of Shameless just became available, and the forthcoming season of Ozark is one of the few things I have to look forward to in this life.
Tuesday, November 2, 2021
Yesterday, we noted that Elon Musk's "offer" to donate $6 billion to solve world hunger was couched in conditions that rendered it non-binding. Musk's offer likely was not serious. Rather, it was a more clearly provocative version of the attempted jest in Lucy v. Zehmer. It was more of a taunt than it was a charitable pledge. In the alternative, Musk's offer could be characterized as an illusory promise. Musk demanded proof that the UN World Food Program demonstrate its ability to do the work for which it won the Nobel Peace Prize in 2020. He likely considered himself the lone arbiter of the adequacy of the evidence, and he was prepared to move the goalposts.
You can vote for your favorite characterization of Musk's Tweet by taking this Twitter poll. Don't like any of the options? Leave a comment!
But today, we have word of a real offer accepted through completed performance. We posted ten months ago about Texas Lieutenant Governor Dan Patrick's offer of $25,000 for anyone who comes forward with evidence of voter fraud in connection with the 2020 Presidential election. There was some skepticism expressed in the comments regarding the enforceability of the offer or of its duration. One of my students, not satisfied with the efforts of the Republican governor, Republican secretary of state, or the Trump-appointed U.S. Attorney for Georgia, had to be restrained from undertaking her own investigation into electoral fraud in that state.
But now, via Professor Miriam Cherry's reliable nose for contracts news, we learn from the Dallas Morning News that Dan Patrick (left) has cut his first check. Alas, it does not relate to systematic voter fraud, and the fraud did not occur in Georgia. It did occur in another contested state, Pennsylvania, but the fraud consisted of a single case of voter fraud by a Republican voter who tried to vote twice, once on his own behalf, and once for his son, a registered Democrat. The Dallas Morning News describes the recipient of the $25,000 check as "the scion of a family of Democratic operatives." What a strange phrase! Is that on his c.v.?
In any case, let's credit Dan Patrick for doing the honorable thing and paying up. On the other hand, it's not like he was paying out his own money. The money came from his campaign war chest, which stands at $23 million right now. In addition, maybe it is also time for Mr. Patrick to acknowledge what his offer really reveals. Even with a pretty generous economic incentive (he set up a fund of $1 million), nobody was able to successfully claim the reward by having uncovered evidence of voting fraud by Democrats. That is extraordinary, and extraordinarily telling. Mr. Patrick ought to acknowledge that fact and concede that the allegations of election fraud in the 2020 elections had and have no basis in fact. Alas, according to the Dallas Morning News, Mr. Patrick had no comment.
Wednesday, October 27, 2021
Sullivan v. O'Connor is an old chestnut of contracts lore, which we have memorialized in prior posts here and here. One of the joys of teaching contracts is that musty old cases turn up periodically in new guises. If none of your students remember Lady Duff, they might remember Maya Angelou or Britney Spears.
Everything old is new again. Musty old Sullivan v. O'Connor is reborn, as according to the New York Times, the former supermodel Linda Evangelista (left) is suing the company behind a cosmetic procedure known as "CoolSculpting," alleging that her experience with the procedure has left her "brutally disfigured." And the great thing for us is that her complaint alleges causes of action sounding not only in tort but also in contracts (sort of)!
Ms. Evangelista alleges that Zeltiq Aesthetics, Inc (Zeltiq) marketed its CoolSculpting System, a non-invasive alternative to liposuction surgery, and failed to warn consumers of serious adverse side-effects associated with CoolSculpting, such as paradoxical adipose hyperplasia (PAH). Rather, Zeltiq claimed that CoolSculpting was "the safe, non-invasive way to reduce fat in common trouble areas that tend to be diet- and exercise-resistant."
CoolSculpting apparently involves killing fat cells in targeted areas by freezing them. The dead cells are then absorbed by the body and excreted in the four-six months following treatment. Ew.
Although Zeltiq disclosed in its SEC filings that PAH was a known side-effect to the CoolSculpting System, Ms. Evangelista alleges that it did not disclose that risk to consumers. She alleges that her career was cut short in 2016 after she underwent seven rounds of CoolSculpting treatments. Some of the treated areas swelled rather than reducing, and Ms. Evangelista was diagnosed as suffering from PAH, a risk about which she claims neither Zeltiq nor her dermatologist warned her.
When Ms. Evangelista complained to Zeltiq about her condition, the company offered to pay for corrective liposuction surgery on condition that Ms. Evangelista sign a confidentiality agreement and release. Ms. Evangelista refused to sign the document but proceeded nonetheless with the corrective surgery, which was painful and required her to wear compression garments for several months, making it impossible for her to work. Despite two rounds of corrective surgery, each of which required "length and painful" recoveries, Ms. Evangelista's condition did not improve. As a result, she claims that she suffered permanent disfiguring injuries that have made it impossible for her to work as a model.
She alleges causes of action sounding in products liability, negligence, breach of express and implied warranties, various types of fraud, and a violation of New York's consumer protection statutes. She also alleges promissory estoppel.
It's hard to see how she gets to her $50 million in alleged damages on a promissory estoppel claim. It seems like the best that would get her would be reimbursement for her medical expenses associated with the corrective surgeries. According to the complaint, that will only get her $38,000. Similarly, while breach of warranty claims can be quite generous, they cannot be speculative. Even if she can show her career was cut short due to the side-effects she suffered after treatments, how can we know that, but for that her disfigurement, she would have earned $50 million. Ms. Evangelista would have to show that the value of contracts that she was forcded to decline due to her condition amounted to $50 million.
More likely, the warranty and promissory estoppel claims are sideshows. The main event will be her products liability and tort claims. She alleges significant mental harms in addition to her physical harms, including severe social anxiety and agoraphobia. The torts claims seem like a more reliable path towards the stratospheric damages that Ms. Evangelista seeks.
H/T David Oedel
Tuesday, October 5, 2021
As Sid Delong noted in his post about the case from August, Ms. Johannson's litigation strategy was unusual and a bit mysterious. She sued Disney for tortiously interfering with her contractual relations with Marvel, a Disney subsidiary, without suing Marvel for breach of contract. The case was catnip for law profs interested in contracts, torts, remedies, the Marvel movies, and Ms. Johansson.
Alas, as is so often the case, Ms. Johansson settled her claims against Disney. The details of the settlement have not been made public. However, in separate statements, the parties seem to have decided to kiss and make up.
As reported on the BBC, Disney's content chairman said of Ms. Johansson, "We appreciate her contributions to the Marvel Cinematic Universe and look forward to working together on a number of upcoming projects," and he proceeded to plug a forthcoming movie. Even though the report is on the BBC, let's not forget that Disney owns ABC, so it never forgets to Always Be Celling.
For her part, Ms. Johansson, whose Black widow character is a Russian assassin turned Avenger, said "I'm incredibly proud of the work we've done together over the years and have greatly enjoyed my creative relationship with the team." More of a whimper than a bang.
Will the actor be haunted for sucking up so shamelessly in order to move on with her career, just as the Natasha Alianova character (the Black Widow) is haunted by the fact that in her attempt to assassinate General Dreykov, she gravely injured his daughter, Antonia Dreykov (Taskmaster)? We're just asking questions here.