ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Sunday, September 22, 2019

Students Suing Universities

A sexual investigation was launched against male student “John Doe” of Columbia College of Chicago (“Columbia”) after a female accused Doe of non-consensual sexual relations.  A formal investigation and a hearing led to Doe being suspended from Columbia for an academic year.  Doe then filed suit in federal court alleging, i.a., Title IX violations and that Columbia had breached its contract with him by not providing him with an impartial investigation and adjudication of the matter.  He also asserted that he did not get access to the documentation relating to his hearing, that Columbia failed to discipline female individuals who engaged in similar conduct, and that the hearing panel’s decision was against the weight of the evidence.

The trial and appellate courts both pointed out that Illinois courts have expressed a reluctance to interfere with academic affairs and have held that a student’s breach of contract claim must involve decisions that were arbitrary, capricious, or made in bad faith.  Thus, Columbia would not even have been liable if the court had found that it exercised its academic judgment unwisely; rather, it must have disciplined a student without any rational basis.  This was not the case here.

Doe had had a chance to review the documentation, it was found.  Further, Columbia was not arbitrary or capricious in its response to Doe’s complaints about female students: they responded quickly, investigated, handled his complaints, and encouraged him to inform the university if any further incidents occurred. 

In other words, the burden in such cases is high.  To find in the student’s favor, the courts must find that the university “did not exercise its academic judgment at all, instead acting arbitrarily or in bad faith in its treatment of plaintiff.” Images

This outcome was probably warranted in this case and the reaffirmation of the standard welcome to educational institutions.  On the other hand, I find it slightly disturbing that, under better facts, a student’s contractual rights and arguments could not be given any weight even if the student could show that the university “exercised its academic judgment unwisely” or “at all”?  Of course, as law professors, we are aware of the difficulty it can be to deal with students who may be complaining about something out of emotional issues with their grades or the like.  However, just because a student is a student and, of course, protected by federal civil rights law does not mean that the student may not have a valid contractual argument.  As we know from extensive media discussions about the expense of going to college modernly, does it make sense from a contracts law point of view to say that the students cannot prevail with a contract claim even if the university exercised its judgment unwisely?  - Is the latter not exactly what you pay a university for?

Of course, these issues intersect with constitutional law, which must be followed.  But the standard is somewhat troubling under some circumstances, I think.

The case is Doe v. Columbia College Chicago, 2019 WL 3796000.

September 22, 2019 in Commentary, Contract Profs, Current Affairs, Law Schools, Recent Cases, Teaching | Permalink | Comments (0)

Thursday, August 22, 2019

Taylor Swift to Re-record Her First Albums in Contractual Dispute

For artists, master recordings — the original recordings of musicians' work — are vital musically, historically and financially.  In most situations, labels own those masters.  But many musicians, both prominent and independent ones, have tried to hang on to their masters.  As Prince famously told Rolling Stone back in 1996, "If you don't own your masters, your master owns you."

Taylor Swift is the most recent major artist to want to own her own masters, but can’t because of earlier contractual provisions.  This will change with her newest album, Lover, which she will own outright.  The masters of her first five albums were and are, per her contracts with Big Machine, owned by that company and, now, its contractual assignees.  However, Taylor has stated that “my contract says that starting November 2020 … I can record albums 1 through 5 all over again — I'm very excited about it. ... I think artists deserve to own their work. I just feel very passionately [sic] about that." Unknown

Of course, Swift now also has significant contractual bargaining powers that she did not while an early teenaged recording artist.  Still, girl power!  Does this make her a “nasty woman”?..  And if so, isn't this a compliment?!

August 22, 2019 in Celebrity Contracts, Commentary, Current Affairs, In the News, Music | Permalink | Comments (0)

Monday, August 12, 2019

Hey, remember that time you went on that cruise and agreed to a contract before boarding?

Here's another case for the "periodic reminder" file, this one reminding you that you are entering into enforceable contracts all over the place, often without really registering that's what you're doing. This recent case out of the Southern District of Florida, Incardone v. Royal Caribbean Cruises, Ltd., Case No. 16-20924-CIV-MARTINEZ/GOODMAN (behind paywall), reiterates this lesson in the context of a cruise. The plaintiff argued that there was no binding contract between the parties because there was no evidence she had ever agreed to any such contract, but Royal Caribbean pointed out that every passenger is required to agree to terms and conditions during the online check-in, and that's the only way they're allowed to board the ship. Therefore, the court found, there was a binding contract. Granted, probably not one the plaintiff was really aware of when she checked in to go on vacation, but she clicked the button nonetheless. 

You can read more about the lawsuit here and here

August 12, 2019 in Current Affairs, In the News, Recent Cases, Travel, True Contracts, Web/Tech | Permalink | Comments (0)

Wednesday, July 24, 2019

School handbook statements about civility, respect, diversity, and inclusiveness are aspirational, not contractually binding

A recent case out of the First Circuit, G. v. The Fay School, No. 18-1602 (behind paywall), has an ADA angle, but I'm focusing on the breach of contract claim, which was based on statements in the school handbook about respect, civility, and diversity. The court held, though: "Without diminishing the importance of these words, they are exactly the sort of generalized, aspirational statements that are insufficiently definite to form a contract." For a school handbook to form a binding contract, it has to consist of "well-defined procedures and policies," rather than just generalized statements such as those at issue in this case. The student and his parents failed to point to any statements in the handbook definite enough to form the basis of a contract, borne out by the fact that the school's enrollment contract, signed by the student's parents, specifically stated that the handbook was not a contract but rather just "general expectations." 

The First Circuit decision is behind a paywall but you can read some reporting on the district court decision here

July 24, 2019 in Current Affairs, In the News, Recent Cases, Teaching, True Contracts, Web/Tech | Permalink | Comments (0)

Thursday, July 11, 2019

Ja Rule mostly dismissed from Fyre Festival case, with the possibility of one pesky tweet coming back to haunt him

If you're not familiar with the debacle of Fyre Festival, you can watch two documentaries about it, or catch up on the Wikipedia page. The tl;dr version is: It was billed as a luxury music festival that would blow Coachella out of the water, and was canceled on the day it was to start, leaving attendees, who had paid thousands of dollars to attend, stranded with FEMA tents for accommodation. The festival had some big names associated with it, co-founded by Ja Rule and promoted on social media by people like Kendall Jenner and Bella Hadid. Ja Rule was sued, along with Billy McFarland, CEO of Fyre Media, who has already pleaded guilty to fraud in connection with the festival and has been sentenced to prison. 

Now, there's a recent ruling out of the Southern District of New York in In re Fyre Festival Litigation, 17-cv-3296 (PKC) (see links at end of blog post), that might succeed in dismissing Ja Rule from the case. The plaintiffs have been granted a very limited leave to amend with respect to one specific tweet, so Ja Rule might stay in the case on the basis of that tweet. 

The case has contract claims against Fyre Media, but this opinion focuses on individuals, Ja Rule and Grant Margolin, former Chief Marketing Officer for Fyre Festival. Neither Margolin nor Ja Rule was a party to the contract at issue in the case, so this decision doesn't take up the contract issues, but it is interesting on the fraud issue, so I'm blogging it anyway (also, how can you not blog a court opinion that has a footnote explaining what "FOMO" means?). Fraud requires pleading with particularity, and the plaintiffs fail to meet this burden. Although they allege many allegedly fraudulent statements, they fail to allege when many of those statements were made or whether the defendants knew at the time that the statements were untrue. After all, the defendants could have made the statements about Fyre Festival with every intention of delivering on their promises of an incredible festival. 

The one exception to this is a particular tweet at issue by Ja Rule. The plaintiffs properly allege the date of that tweet, which was the day before the festival was scheduled to start (and instead was canceled). The tweet reads, "The stage is set!!! In less than 24 hours, the first annual Fyre Festival begins. #festivallife" The plaintiffs also allege that Ja Rule must at least have been reckless in continuing to encourage people to attend a festival whose stage was not at all set. The plaintiffs trip up when it comes to alleging reliance on their part on the tweet, but the court gives them leave to amend to try to fix this failure. The court does not give the plaintiffs leave to amend any of the other failings of the complaint because of delay on the part of the plaintiffs. 

The court also discusses some negligence issues as well as tortious interference and unjust enrichment claims. When it comes to tortious interference, there were no allegations that Ja Rule or Margolin interfered with or caused Fyre Festival's inability to perform the contract, merely that they knew Fyre Festival would not be able to perform. As for the unjust enrichment claim, the court warns that this is not a catch-all cause of action and cannot be used to cure the defects in the other causes of action. 

Some other reporting on this ruling here, here, and here.  

(edit: h/t to Ryan Smith of Smith Law for sending the motion: Download 1-17-CV-03296-PKC Brief and opinion: Download Fyre Dismissal to me)

July 11, 2019 in Celebrity Contracts, Commentary, Current Affairs, In the News, Recent Cases, True Contracts | Permalink | Comments (0)

Monday, July 8, 2019

Warren Calls Arbitration “Exploitation”

In a letter to JPMorgan Chase & Co.’s CEO, Presidential hopeful Elizabeth Warren asked the bank to stop “exploiting its customers” by using what the bank considers the “standard practice” of asking its customers to arbitrate potential claims against it.  Chase’s customers can, however, opt out of mandatory arbitration by mailing written rejection notices by Aug. 9, 2019.

Arbitration is, of course, easier for banks and other defendants than having to face a multitude of individual lawsuits.  The concern for smaller plaintiff such as private bank customers is that arbitration is not as neutral as a lawsuit as arbitrators are hired privately by, for example, the banks.  Arbitrators may thus be unduly biased in favor of the banks and more business savvy than bank customers, who might obtain greater protections from hiring an attorney and going to court.  The exploitation part comes in when defendants arguably seek to "sneak" arbitration onto unsuspecting, unsavvy bank customers who are not aware of all the pros and cons of various types of dispute resolution.

July 8, 2019 in Commentary, Current Affairs, Famous Cases, In the News, Miscellaneous, True Contracts | Permalink | Comments (0)

Friday, July 5, 2019

Black family fires racist contractor

For very good reason, a black family fires a contractor who showed up for a job with a confederate flag on his truck in GA.  This raises issues of whether one can simply terminate a contract once entered into (one cannot with out at least having to pay damages, potentially in the form of wasted time and gas money here) or whether this was simply an at-will contract that can be terminated (that does not seem to be the case here.).  At any rate, isn't it incredible that in 2019, some "proud Southerners" still have to display their pride in such a blatantly tone deaf manner?  Racism ought to be a thing of the distant past, but clearly is not.  Shameful! 4543a520-9d01-11e9-b3ff-b4c8c3c3f024

July 5, 2019 in Commentary, Current Affairs, In the News, Labor Contracts, True Contracts | Permalink | Comments (0)

Monday, July 1, 2019

Contractors with White Ancestry got $300 million Claiming to be Native American

In St. Louis, MO, a contractor recently was awarded a lucrative government contract set aside for minority businesses by claiming to be Cherokee.  He was found out and stripped of his minority status.

“Since 2000, the federal government and authorities in 18 states, including California, have awarded more than $300 million under minority contracting programs to companies whose owners made unsubstantiated claims of being Native American.  The minority-owned certifications and contract work were issued in every West Coast state, New Mexico and Idaho, Texas and four Southern states, several states in the Midwest and as far east as Pennsylvania.”

There are only three federally recognized Cherokee tribes, but members of unrecognized, self-described Cherokee groups have received more than $300 million dollars in funds set aside for minorities. 

This, of course, is infuriating, but the “vetting process for Native American applicants appears weak in many cases, government records show, and officials often accept flimsy documentation or unverified claims of discrimination based on ethnicity. The process is often opaque, with little independent oversight.”

People trying to milk the system this way should be identified and action should, if appropriate, be taken against them to further deter such despicable contractual conduct. It is a federal crime, for instance, to sell arts and crafts falsely labeled as Native American.  Perhaps many different groups and gender identifications are discriminated against to some extent in government contracting, but existing law was created to remedy a very real problem: the white “old boys club.” Sorry for saying the truth, but the problem is real and needs to be addressed and remedied.

July 1, 2019 in Commentary, Current Affairs, In the News, True Contracts | Permalink

Wednesday, June 26, 2019

Don't rely on vague promises that you'll be "taken care of"

I had been paying attention to this case out of the Western District of Washington, Moi v. Chihuly Studio, Inc., Cause No. C17-0853RSL (behind paywall), because it raises interesting copyright authorship issues. The case is a lawsuit brought by a person who was one of Chihuly's assistants, who create artwork in Chihuly's name under Chihuly's supervision. The plaintiff worked for Chihuly in this way for fifteen years, until a falling-out between Chihuly and another of the assistants resulted in the deterioration of the plaintiff's relationship with Chihuly as well. The plaintiff filed this lawsuit alleging co-authorship of 285 artworks and requesting compensation for his work on them. You can read more about the lawsuit here

As I said, I was paying attention to this case for the copyright authorship analysis, which follows the Aalmuhammed test and finds that, because the plaintiff did not exercise control, he is not an author of the artworks, despite his copyrightable contributions to the artworks. The authorship test analysis also considers the lack of contract between the plaintiff and Chihuly as indicating that Chihuly did not intend to share authorship with the plaintiff. 

That same lack of contract dooms the plaintiff's attempt to seek compensation for his work. Because there's no contract, the plaintiff's cause of action is promissory estoppel, but Chihuly's promises over the years to compensate plaintiff by keeping track of which artworks plaintiff had contributed to were, in the court's view, too vague to constitute promises that the plaintiff could have relied on. The plaintiff confessed that he had no idea what his eventual compensation might be or when he would receive it, just that he trusted Chihuly to treat him "fairly." Promises forming the basis of promissory estoppel need to be clear and definite, and Chihuly's statements were simply too vague. Considering that plaintiff couldn't even say what they meant, the court refused to enforce them. 

This is, once again, a lesson in making sure you have a clear and complete understanding with someone, and not just vague platitudes. 

June 26, 2019 in Celebrity Contracts, Commentary, Current Affairs, In the News, Labor Contracts, Recent Cases, True Contracts | Permalink | Comments (0)

Wednesday, June 19, 2019

A brand new apple variety leads to a discussion about extrinsic evidence

Continuing the theme of thinking about fall courses, a recent case out of the Western District of Washington, Phytelligence, Inc. v. Washington State University, Case No. C18-405 RSM (behind paywall), has a discussion about both extrinsic evidence and agreements to agree -- both topics my students often struggle with. Might be worthwhile to take a look at this recent analysis, especially if you teach in Washington. 

Plus it's a dispute about a new apple variety, which is pretty cool. You can read more about it here and here

 

June 19, 2019 in Commentary, Current Affairs, Food and Drink, In the News, Law Schools, Recent Cases, Teaching, True Contracts, Web/Tech | Permalink | Comments (0)

Friday, June 14, 2019

The challenges of licensing music

This isn’t, strictly speaking, about contracts, I guess. But it is about a consent decree, which is at heart a document that binds parties to terms. The Department of Justice has announced that it is reviewing the antitrust consent decree that governs ASCAP and BMI, the two major performing rights organizations used by songwriters and music publishers. Because ASCAP and BMI control so much of the music licensing market, they have been governed by a consent decree for several decades, with the Department of Justice worried about the competitive effects of their near-monopoly over music licensing.

I thought, therefore, that maybe it was time for me to share my friend's Music Licensing Experience.

The music copyright holders keep noting that piracy is a major problem. However, piracy tends to decrease if you make it easier for people to gain legal access to the work in the question. For some time now, studies have shown that people will pay for content, if they are given a feasibly legal way to do it.

A friend of mine was starting a noncommercial podcast. Podcasts are all the rage now. They’re low-cost and have few barriers to entry, and recording equipment is so cheap and easy to come by these days, basically anyone can have a podcast. I am frequently asked by students for information about using music on podcasts. They’ve heard, of course, that any length of time less than thirty seconds is “automatic fair use.”

So my friend’s got this noncommercial podcast and they want to use, in a single episode, two separate clips of the same copyrighted song. Together, the clips total less than forty seconds. My friend, who is not a lawyer, was inclined to do what so many lawyers do, and just take the risk and use the song. “But no!” I protested. “You know me, a copyright lawyer! You should properly license the song!”

I had, in actuality, never licensed a song before. But, I thought, how hard can it be? It shouldn’t be hard, right? Wouldn’t it be in the best interest of the music copyright holders to make it relatively easy for this kind of use to be licensed? Especially given the apparent stance BMI takes that there is no way for you to use music without a license.

Capture

(Fair use? What fair use?)

I told my friend that either BMI or ASCAP would probably have the rights to the song, and they should just ask for a license through the right one. So they looked into it. BMI ended up being the organization to contact, and my friend found a literal tab for Podcasts on the BMI website, so they contacted BMI.

I thought that would be the end of it for my friend, but BMI’s response, unfortunately, was not very helpful. BMI said that the only license it offers is a blanket license, so my friend could not license a single work the way they wanted. The blanket license would be an annual license of almost four hundred dollars a year – a lot of money for a noncommercial podcast that wanted to use a grand total of forty seconds of music from a single song. But, BMI informed them, that license would get my friend access to fourteen million songs!

The problem: My friend didn’t want access to fourteen million songs. My friend wanted one song. Also, I’m pretty sure that BMI is actually required by that consent decree currently under review to offer per-song licensing rates. See Section IX.C ("[BMI] shall not, in connection with any offer to license by it the public performance of musical compositions by music users other than broadcasters, refuse to offer a license . . . for the performance of such specific (i.e., per piece) musical compositions, the use of which shall be requested by the prospective licensee."); see also United States v. Broad. Music, Inc., 275 F.3d 168, 178 n.2 (2d Cir. 2001) ("[T]he per piece license . . . is explicitly required in Section IX(C).”). My friend told me what BMI said, and I told my friend that maybe they should try again, maybe they weren’t clear the first time. So they wrote back to BMI, clarifying that they wanted a per-song rate.

BMI responded saying that it was not capable of providing my friend with the licensing rights they wanted. Despite the fact that it had been very willing to provide my friend with a license for several hundred dollars in the previous email, it now took the stand that it did not have the ability to provide rights for a song used within a podcast, and my friend had to contact a different entity. I don’t know if I’m more alarmed by BMI trying to sell my friend a license that wouldn’t actually cover their use, or BMI lying about whether it could sell them a license that would cover their use.

At any rate, BMI at least provided my friend with the contact information for another entity, which my friend contacted. But that entity wrote back and said it was not the right entity and provided the contact information for yet another entity. Which never wrote back to my friend’s request at all.

So, in the end, that’s how music licensing goes if you’re a little guy, I guess: It doesn’t. My friend lost a little bit of faith in the U.S. copyright legal system as a result of their experience, and that definitely harms all of us. And as we’re thinking about the music business in the context of the consent decree, maybe we should also think about the people who use music. Because, sometimes, as studies keep showing, they’d really love to pay the artist, they literally can’t find the way to do it.

(Could my friend’s use qualify as fair use? I am offering no legal opinion on that. What I will say is that, fair use doesn’t stop you from getting a DMCA notice.)

June 14, 2019 in Commentary, Current Affairs, In the News, Music, True Contracts, Web/Tech | Permalink | Comments (0)

Wednesday, May 22, 2019

Salmonella-infected Chicken is not a "Defective" Product

Salmonella-infected raw chicken meat is not “defective” under Maine law.  Anyone selling such meat also do not violate the implied warranties of merchantability or fitness for a particular purpose.  This is so even if tons of meat have been recalled by a manufacturer precisely because of a salmonella outbreak affecting the meat. Such held the United States Court of Appeals for the Tenth Circuit recently. Unknown

The result may seem both incredibly gross and grotesque, but in a strange way, makes sense.  In the case, a raw food manufacturer sold almost 2 million pounds of raw meat to a food processor preparing chicken products such as frozen chicken cordon bleu products.  The manufacturer recalled the meat, causing losses to the processor in excess of $10 million.  The processor filed suit for breach of contract.  Both the trial and appellate courts held that the processor had failed to state a claim under F.R.C.P. 12(b)(6).

Why?  Because salmonella is an “inherent, unavoidable, and recognized component of raw chicken that is eliminated by proper cooking methods.”  Even though the recall admitted that the recall was adulterated with salmonella, the complaint did not allege that the chicken was contaminated with a form of salmonella that could notbe eliminated by proper cooking.  The sick consumers could have contracted the infections from merely touching the raw meat. Images

This shows the relatively low level of sanitary integrity that can be expected in today’s meat market. Bon Appetit! 

The case is Scarlett v. Air Methods Corporation, 2019 WL 1828908

May 22, 2019 in Current Affairs, Food and Drink, Miscellaneous, True Contracts | Permalink

Tuesday, May 21, 2019

Information Asymmetries Lead to Women Being Underpaid

Democratic presidential candidate Kamala Harris has revealed a plan that would overhaul American discrimination laws to ensure that women and men are paid the same for the same work. Unknown-1

Under the plan, companies with 100 or more employees would, among other things, be required to obtain a federal certification showing they are not underpaying women.  If they fail to do so, they may be fined.  The burden would be on the employers to show that any pay gap is based on merit, performance, or seniority.  If companies discriminate, they would be fined 1% of their average daily profits for every 1% of their average daily profits for every 1% gap that exists between the gender-based pay differential.  The plan would also bar employers from asking job applicants about their salary history and ban forced arbitration in pay discrimination disputes.

But is this really necessary?  Can’t employees themselves contract around this problem in a free marketplace? Unknown

Sadly, the answer is no. Women who work full time are paid an average of 80 cents for every dollar paid to men.  For black women, the figure is 61 cents.  For Latinas: only 53 cents.  And we are talking about pay for the same jobs; not educational or other relevant differences.

Of course, this is just a proposal from a political candidate who at this point in time appears unlikely to win the race.  But it raises an important, yet sadly not new, contractual problem, namely that of disparity in bargaining positions.  As the situation is now, much of the burden of avoiding this problem is on the potential or actual employee.  If a woman needs a job, how is she going to ensure that she is, in effect, paid the same as her fellow male workers?  In other words, how would she even find out what males earn in a particular job?  She can’t. And the pressure of adding one’s salary history is also known to create a bargaining inequality.  This is an example of information asymmetry; a situation in which government action might help ensure a better situation for individuals who have proved unable to obtain that situation contractually.  This is a political issue that will, of course, have to be decided by legislators.  The free market is not producing an acceptable situation here as it is unacceptable that employers pay their employees differently simply because of gender. The fact that race makes the pay disparity even greater makes matters worse.

May 21, 2019 in Contract Profs, Current Affairs, In the News, Labor Contracts, Legislation | Permalink | Comments (1)

Thursday, May 16, 2019

Adobe reminds everyone just how much power it has over end users

Very few of us actually read the terms and conditions of the many, many, many services we register for every day. It's not like we can negotiate them, anyway, so I think, as a matter of sheer efficiency, most of us just grin and bear it. We want or need the particular service in question, it comes with conditions we can't get out of, so we just click "OK" and move on with our lives. I think a lot of people think, well, how bad can it be? 

But these terms and conditions often give the licensor a great deal of power, leaving end users with very few rights to whatever they want to gain access to. A perfect illustration of this: As many outlets have reported (here's a link to just one), Adobe has told its users that it's discontinuing older versions of popular programs like Photoshop, and so users are no longer allowed to use those versions under the licenses they agreed to years ago when they gained access to the program. We've gotten blase about the lack of ownership we have over many things in our current economy, but this action is exposing the fact that, when you rent everything instead of owning it, then there's very little we can do to keep the things we like; all of the control over them always continues to rest with the original licensor, and we possess them only so long as the original licensor lets us. You might have preferred the older version of Photoshop, but that doesn't matter; Adobe's terms of service let Adobe choose when you are allowed access to Photoshop. 

Many of the terms and conditions we agree to have clauses that leave us exposed to the whims of the more powerful party in the transaction, and consumers therefore have very little recourse. A lot of social media websites have a lot of discretion over terminating accounts, for either no reason or vaguely worded reasons that leave them with a lot of leeway. So I would caution everyone to please be careful about what you're storing on social media accounts and make sure you have copies of anything you really care about elsewhere (preferably on a device that actually belongs to you), because the terms of use make clear that there's no guarantee that social media account (or even remote storage) will always be there. 

May 16, 2019 in Commentary, Current Affairs, In the News, True Contracts, Web/Tech | Permalink | Comments (2)

Monday, April 29, 2019

Would we really say that Weinstein's company's directors didn't approve of his pattern of sexual misconduct?

This, strictly speaking, isn't really a contract case, although there is an employment contract at issue so I guess that's how it got caught in my filter. But I read it and thought that this case is raising important enough issues that we should be discussing them. 

The case is David v. The Weinstein Company LLC, 18-cv-5414 (RA), out of the Southern District of New York, and it's a case centering around the alleged sexual assault perpetrated by Harvey Weinstein on the plaintiff. The story the plaintiff tells is a familiar one to those who have read the Weinstein reporting, that "Weinstein asked her to meet him in his hotel room to discuss potential acting roles, and then, on one occasion, forcibly raped her." This decision isn't so much about Weinstein's conduct, though, as it is about the former directors of Weinstein's companies, who the plaintiff contends "enabled Weinstein's sexual misconduct, making them liable for general negligence and negligent retention or supervision." 

The court dismisses the claims against the directors, and the reasons why were what caught my eye about this case. Plaintiff's allegations were that the directors were aware of Weinstein's harassing behavior toward women, based on a number of things: a written communication within the company calling his behavior a "serial problem" the company had to deal with; the characterization by a company executive of Weinstein's female assistants as "honeypot[s]" to lure actresses into meetings with Weinstein; a formal complaint by an employee about Weinstein's behavior; an employee memo summarizing two years' worth of allegations of sexual harassment and misconduct by Weinstein and characterizing the company as a "toxic environment for women"; the settlement of many sexual misconduct claims against Weinstein; and at least one police investigation into Weinstein's behavior. 

None of the allegations established negligence on the part of the directors, according to the court. First of all, the directors did not owe the plaintiff a duty of care, and there is no case law that directors of a company can be held liable for an employee's tortious act. The plaintiff pointed to the fact that the directors renewed Weinstein's contract in 2015 with a provision that prevented Weinstein from being fired for sexual misconduct as evidence that they were enabling Weinstein's conduct, but the court found that this was "a far cry from them approving of Weinstein's sexual assault." While the court admitted that the directors "were not without moral culpability," their actions were not negligence as a legal matter. 

Nor did the plaintiff assert a claim for negligent retention or supervision. The plaintiff did not show that Weinstein's sexual assault took place on the company's premises, since she asserted it happened at a hotel not affiliated with the directors. While the plaintiff argued that Weinstein used company credit cards to pay to the hotel room and lured her to the hotel room under the guise of a business meeting regarding employment by the company, that was regarding the company, not the directors sued here. 

As a matter of law, the court's reasoning makes sense.

As a matter of recognition of how oppressive power structures work, this decision is terrible.

When I learned negligence way back in law school, I remember so many discussions about the policy behind it, about not wanting to hold people to a generalized duty to protect everyone on the planet, about how we decide proximate causation, about how it's really at heart about what we want to hold people liable for and what we don't. 

So this decision makes sense in terms of worrying about generalized duties, of not dismissing the culpability of those committing the intentional tortious act. But it doesn't make sense in terms of thinking about the type of society we want to live in. The Weinstein reporting tells a story of serial abuse that was systemically protected for years by the power structure around Weinstein. To say that nobody else in the power structure was sexually assaulting women is a true statement of legal fact, but also seems disingenuous at this point. Weinstein's abuse was so widespread and lasted so long not only because of Weinstein but also because of the entire operation around him deflecting culpability for it. 

The negligence analysis in this case feels like it's operating in a vacuum, which is kind of how we teach our students to think, presenting them with discrete hypotheticals, but might not be the best or most effective way to set up a fair legal system that protects the most vulnerable and least powerful in society. The societal discussion about the oppressive system that permitted Weinstein (and others) to perpetrate so much abuse has just begun, and maybe we should include how the legal system interacts with those power structures in the discussion. If negligence is all about policy decisions about who you need to protect and how much, then maybe we should have a policy discussion about how to make those decisions, especially if we're making them in the context of an abusive pattern that might be obscured by looking at things in isolation.  

The plaintiff's allegations in this case contain many damning examples that many people around Weinstein knew about the disturbing pattern of sexual misconduct, and made affirmative choices to find ways to use the power structure to protect Weinstein. I appreciate the court's statement that the directors might be morally culpable but not legally culpable, and I recognize that law and morals are two different things. But I don't know that I agree that the director's actions are "a far cry from them approving of Weinstein's sexual assault . . . ." Given the allegations about what the directors knew and how they reacted to that knowledge, I think we could read their actions as indicating that they were a far cry from disapproving of Weinstein's sexual assault.

April 29, 2019 in Celebrity Contracts, Commentary, Current Affairs, Famous Cases, In the News, Labor Contracts, Recent Cases, True Contracts | Permalink | Comments (0)

Monday, March 18, 2019

If your contract says you'll provide notice of modifications, then you can't modify without notice

A class action in the Southern District of New York, Pisarri v. Town Sports International, No. 18 Civ. 1737 (LLS) (behind paywall), has breach of contract claims that survived a motion to dismiss based on the notice requirement to make modifications. The class action has been brought on behalf of a number of members of a chain of gyms. The contract between the gyms and their members stated that the gyms could modify the contract at any time but it also stated that the gyms would notify members of any modifications. The members alleged that they were not notified of the modifications to the contract. This was a plausible allegation of breach of contract and so survived the motion. 

However, the members' other breach of contract claim based on the gyms' revocation of their memberships did not survive. The contract allowed the gyms to revoke membership at any time if it was in the gyms' best interest. The court concluded that it was well within the gyms' best interest to revoke the memberships of people who were suing them. Since the members had other gym alternatives available to them, the court found the gyms' actions reasonable and dismissed this breach of contract claim. 

(Previous decisions on the preliminary injunction in this case can be found here, and the complaint is here. Some additional stories on the case are here and here.)

March 18, 2019 in Current Affairs, In the News, Recent Cases, True Contracts | Permalink | Comments (1)

Wednesday, March 13, 2019

An issue spotter of a case

A recent case out of New York, Neumann v. Sotheby's, Inc., 652170/2018, has so many issues it reads like an exam question. (You can read the complaint here, and a more general write-up here.)

First. the court had to tackle the question of when a contract was formed and which of the many interactions between the parties was the governing contract. That involved the court reading emails closely to determine if there was ever an offer and acceptance. The court concluded there was not, because the parties always spoke in terms of "fine tuning" the agreement, contemplated a subsequent written document would happen, and did not intend to be bound until then. There was also a consideration issue, because basically in the emails the parties were just agreeing to discuss entering into an agreement. 

Subsequent written contracts between the parties on the subject contained merger clauses that in and of themselves would have superseded the emails, even if the emails had constituted binding contracts. The emails also did not satisfy the statute of frauds, as they contemplated a three-year term but did not contain all the material terms nor a signature from the party to be bound. Finally, the plaintiff had not been damaged because the plaintiff did not actually have the rights he was claiming were violated. 

 

March 13, 2019 in Current Affairs, In the News, Recent Cases, True Contracts | Permalink | Comments (0)

Friday, March 1, 2019

The disputes around the "To Kill a Mockingbird" play could fill a whole contracts exam

I have already blogged about one contract dispute over the new stage adaptation of "To Kill a Mockingbird."

Now, with that dispute settled, the former adversaries (Harper Lee's estate and the producers of the current stage adaptation) have joined forces to shut down small productions across the country of the previous stage adaptation of the novel. As the New York Times reports, the problem seems to have arisen from the conduct of Dramatic Publishing Company, which has the right under a contract signed with Harper Lee in 1969 to license theater companies to produce the original stage adaptation of the novel. The problem is that, allegedly, those rights were limited in times when a "first-class dramatic play" of "To Kill a Mockingbird" was playing in New York or on tour. However, Dramatic has apparently continued to license the play's production without adhering to the restrictions that the current play's producers argue should have kicked into place. Many small theater companies have found themselves caught in the fallout of this contractual dispute, through no fault of their own. 

h/t to Eric Chiappinelli, Professor of Law at Texas Tech!

March 1, 2019 in Celebrity Contracts, Commentary, Current Affairs, In the News, True Contracts | Permalink | Comments (0)

Wednesday, January 30, 2019

Contract dispute between university and its former president goes to jury trial

I had previously blogged about this case involving a dispute between a university and its retired president over his retirement contract during its motion to dismiss phase. Now it's completed its trial, and the jury verdict is in. The jury ruled against the former president Taylor and in favor of the university, finding that the university did not have to pay Taylor under the asserted contract. It seems from the press coverage of the closing arguments that there were two warring versions of the facts: Taylor asserted that the board of trustees approved the contract as a reflection of Taylor's worth to the university. The university, however, asserted that Taylor drafted the contract himself and then had his friend, who happened to be the chairman of the university's board, sign it, meaning that it was never reviewed by university attorneys and never approved by the board of trustees. 

You can read more about the case here and here

h/t to Eric A. Chiappinelli of Texas Tech University School of Law for passing this one along!

January 30, 2019 in Current Affairs, In the News, Labor Contracts, Recent Cases, True Contracts | Permalink | Comments (0)

Monday, December 3, 2018

Taylor Swift and Contract Law

Sorry for being absent lately. Blame exam season! So this is slightly old news but I plan to bring it up in my Entertainment Law class in the spring, so I was doing a sprint through the news reporting on it: Taylor Swift and her new contract

December 3, 2018 in Celebrity Contracts, Current Affairs, In the News, Labor Contracts, Music, True Contracts, Web/Tech | Permalink | Comments (0)