ContractsProf Blog

Guest Post by Otto Stockmeyer on Wood v. Boynton and Murph the Surf

Otto Stockmeyer (left) has taught at the WMU-Cooley Law faculty since 1977. He has also taught as a visiting professor at California Western School of Law and Mercer University Law School, and in the "Down Under" Foreign Study Program.  He has taught Contracts, Criminal Law, Equity/Remedies, Legal Writing, and Research & Writing

A three-time recipient of the Stanley E. Beattie Teaching Award, Professor Stockmeyer was named national Outstanding Professor in 1985 by Delta Theta Phi Law Fraternity. He has also received the Socrates Award from the Hellenic Bar Association and the Student Bar Association's first Barrister Award.

Professor Stockmeyer is the editor and co-author of the book Michigan Law of Damages (1989) and is the author of articles in a wide variety of professional journals and newsletters. He is a past president of Scribes — the American Society of Legal Writers. In 2009, he was named to the ABA Communication Skills Committee. You can find his recent publications on SSRN.

A former president of the Michigan State Bar Foundation, Professor Stockmeyer has also served on the State Bar Board of Commissioners and in the ABA House of Delegates. He is a Life Fellow of the Michigan and American Bar Foundations and was named Professional of the Year by the Michigan Association of the Professions.

The Lansing State Journal recognized Professor Stockmeyer in 1988 as one of mid-Michigan's "88 Greats" for his service to the community and the legal profession. He was profiled in Michigan Lawyers Weekly as one of Michigan's "Leaders in the Law" in 2005.

Professor Stockmeyer's post follows:

I haven’t taught Wood v. Boynton in a decade. But I remain intrigued by its dramatic backstory. So I was excited to learn that MGM+ is streaming a four-part series on the life of Jack Roland Murphy: “Murf the Surf: Jewels, Jesus and Mayhem in the USA.”

Episode 1, “The Heist,” covers Jack’s sensational 1964 theft of world-renown gems. His haul included the “Eagle Diamond” (left), the mystery stone at issue in Wood’s case. Presumably upcoming episodes will detail Jack’s subsequent major life events: a double-murder conviction, self-proclaimed prison conversion, parole, ministry, and recent death.

I prefer the less-dramatic 1992 American Justice documentary “Murph the Surf” (Season 1, Episode 3). It’s narrated by lawyer-commentator Bill Kurtis. A 1975 movie (“Live a Little, Steal a Lot: The True Story of ‘Murph the Surf’”) is also based on his exploits. Whether “Murf” or “Murph,” Jack Murphy led a cinematic life, for sure.

My blog post “The Adventure of the One-Dollar Diamond“ includes links to more information on Wood’s aftermath. I should have included Jack’s slim autobiography “Jewels for the Journey” (1989).

Re-Post: Eric Goldman Reviews Netflix's "Pepsi, Where's My Jet?"

Review of the “Pepsi, Where’s My Jet?” Netflix Documentary
Eric Goldman
Technology and Marketing Law Blog

In the mid-1990s, at the height of the Cola Wars, Pepsi ran an ad to introduce its “Pepsi Stuff” loyalty program, including a featured prize of a Harrier Jet for 7M points–a ridiculously high number that was supposed to signal that it was a joke. Watch the ad. However, Pepsi also sold points for 10 cents each, putting a $700k price tag on a jet that was allegedly worth tens of millions of dollars (assuming it could be acquired at all–the US government frowns on individual citizens owning military equipment).

John Leonard, backed by a rich friend Todd Hoffman (who looks like George Carlin), tendered $700k and ordered 1 Harrier Jet. Pepsico declined; they sent him coupons for a couple of cases of Pepsi instead. Leonard retained a lawyer and made legal threats. Pepsi preemptively sued Leonard in its home court of SDNY. Judge Wood’s opinion concluded that the ad objectively did not communicate an offer due to its humor, so no contract ever formed and Leonard didn’t get his Harrier jet. Wood’s opinion is relatively dry, but it’s become a staple of the contracts law canon because of its fun facts and its precise analysis.

Because this case is so iconic, I was excited to see the new Netflix documentary, “Pepsi, Where’s My Jet?” The documentary interviews key figures in the case, many of whom are still alive, and it’s fabulous to hear them tell their stories in their own words.

Despite that, the documentary was disappointing overall. If you’re a contracts or advertising law nerd like I am, you’re going to watch it no matter what I say. But I had hoped the documentary might become a must-see pedagogical supplement for anyone reading the case, and I don’t think it gets there.

The documentary is framed around the cross-generational bromance between GenXer Leonard and his financial sponsor, Boomer Hoffman. Obviously that relationship is at the story’s heart because there was no case without Hoffman’s largesse. However, the filmmakers repeatedly steered the narrative into the bromance, such as seemingly irrelevant segments showing Leonard and Hoffman recently summitting Mt. Vinson in Antarctica (an impressive, but very expensive, accomplishment).

The documentary was split into four episodes, totaling over 2.5 hours. It would have been much better packed into a single 90 minute episode, but instead it felt like the filmmakers padded the narrative with tangents and dead-ends to reach the target length.

Also, the documentary includes many historical reenactments, many of which were unnecessary and not compelling. I am not a fan of recreations in documentaries.

The actual legal ruling gets surprisingly little airtime in the back half of the fourth episode, and the filmmakers did a poor job of contextualizing it. For example, long-standing contracts law doctrine says that advertisements ordinarily are an invitation to make an offer and not an offer themselves, which the documentary doesn’t mention. The documentary repeatedly mentions that many consumers, especially teens, would have taken the ad seriously, but the documentary only offers Team Pepsi’s rebuttals and a few words from the opinion to counter this view. The filmmakers surely could have interviewed some independent experts in contracts law or the advertising industry to supplement the parties’ self-interested statements, and many of them would have sided emphatically with Team Pepsi. By omitting the independent voice, the filmmakers betrayed their normative agenda.

Similarly, the filmmakers styled the case as a David v. Goliath battle. Indeed, it was, but the filmmakers didn’t aggressively question Leonard’s motives. (Instead, the documentary spent a minute or two indulging in overly speculative conspiratorial theories about Pepsi malfeasance that should have been cut). Sure, Pepsi is the big bad company, and surely Pepsi could have easily made safer legal choices in how it presented the jet. At the same time, it’s impossible not to feel like Leonard was an opportunist who used the law, and then media pressure, to improperly seek something he knew he wasn’t really entitled to. For every story of big companies squashing little consumers, there’s another story of little consumers gaming the legal system to extract undeserved cash from big companies and subtracting social value. Leonard’s story really could be told either way. A different filmmaker might have included some counternarrative material that Leonard’s legal efforts were a wasteful and venal abuse of the legal system, along the lines of Harris v. Time. The documentary suffers by not offering that self-reflective/critical perspective.

Some other details I learned:

• At one point, Pepsi considered sending Leonard a model of a Harrier jet. That reminded me of the Toyota/Toy Yoda case.
• Leonard turned down a $1M settlement offer because he really, really wanted the jet. Ah, youthful exuberance. I was shouting at the screen for him to take the cash.
• The ad designers had initially storyboarded a 700M point price tag for the Harrier jet, but during ad review, someone said that number was too hard to read, so two zeros got dropped to make it less cluttered. Oops.
• Pepsi simultaneously ran the same ad in Canada and put a “just kidding” disclaimer on the 7M point price.
• Now-disgraced lawyer Michael Avenatti was involved in the case, principally as a PR advisor/opposition researcher because he was still in law school at the time. Avenatti advised Leonard to launch an attack ad campaign against Pepsi that sounded similar to the scheme he deployed against Nike that sent him to jail. That part of the video was painful to watch.

Other things the documentary should have addressed but did not:

• How much money Leonard/Hoffman spent on the case and why they repeatedly doubled-down despite the adverse developments.
• Why they didn’t appeal the district court decision.
• What, if any, life lessons Leonard took away from his experiences. Knowing what he knows now, would he have made the same choices? He did say he perhaps regretted not taking the settlement offer, but I would have liked to hear more about his meta-reflections after 25 years of life experience.
• In 2014, a (non-functional) Harrier jet sold at auction for $200k. This datapoint makes Pepsi’s 7M point pricetag seem actually quite reasonable, not like a joke at all. Then again, if Leonard really wanted a Harrier jet, his $700k offer was above-market, and he could have fulfilled his dream at a lower cost. I’m disappointed the documentary filmmakers didn’t raise this development because it puts the case in a whole new light.

Though it was completely irrelevant to the story, the filmmakers had many of their interview subjects take the Pepsi Challenge. I won’t spoil the fun by revealing which soda won this completely nonscientific test, but I will note that both Coke and Pepsi have lost the war as consumer tastes have evolved and consumers now drink less sugary sodas overall.

Quentin Tarantino Settles NFT Case

Back in January, co-blogger Nancy Kim alerted us all to a fight involving Quentin Tarantino's rights to NFT of scenes from Pulp Fiction, the greatest movie ever.  Citizen Kane? The Seven Samurai? The Seventh Seal?  The Princess Bride?  Morons!  

Anyway, last week, Eli Tan of Coindesk brought news of a settlement.  Tan reports that the first NFT that Mr. Tarantino put up for sale went for over $1 million.  Miramax claimed that it owned the rights to Pulp Fiction, but did it own the rights to an NFT, created much later?  The parties settled their dispute and hinted at plans to jointly distribute NFTs in the future.

C'mon Quentin!  It used to be about the art!  It's about some real token, not some digital token.  Something you would risk everything for -- like going back to your apartment to recover something of purely sentimental value when you know that an assassin is waiting for you there.   It was about something so pure that everyone just looked on it with wonder, and you were willing to give Ringo and Honey-Bunny your wallet just to protect it.  See, money is not what you are after!  You are after that moment of enlightenment when you appreciate the little differences that make Europe special, like being able to walk into a McDonald's and order a Royale with cheese.  Or the delight in winning, incontrovertibly, an argument over whether a foot massage is sexual. 

NFT's are like art dressed up in somebody else's clothing, so that even the coolest of customers end up looking like dorks!  

Now you're the dork, Quentin.  Have you always been the dork?

Countdown: A Horror Film About Terms of Service

A student told me about Countdown, so I had to watch it.  I'm not gonna lie.  It's terrible.  But it's also kitschy fun if you like the genre and are obsessed with terms of service.  

The premise is simple.  And yes, ***SPOILER ALERT***: I am going to reveal some plot details!  If you are so addicted to schlocky horror films that you can't bear to miss this one, even though, I assure you, it is after-school-special-style bad, read no further

A bunch of young people discover an app that predicts when you will die.  They all download it for yucks.  First mistake.  None of them bothers to read the terms of service.  Second mistake.  One learns that she will die in a matter of hours.  So she loses the contest.  Drink up, girl!  As the time of her projected death nears, she decides not to let her chivalrous but drunk boyfriend drive her home.  Third mistake.

If only she had read the terms of service!  Then she would know that trying to evade your appointment with death unleashes a creepy demon who then hunts you down and kills you.  That right, if you don't die, you DIE!  And the demon isn't nice about it either.  It subjects you to a series of jump scares before finally killing you (mostly offscreen, because this movie is PG-13).  The young people attempt various schemes to escape their fates.  They delete the app; they buy new phones; they enlist a priest, but this is not The Exorcist. 

In the end good triumphs over evil.  Or does it . . . ?  Countdown 2.0 makes an eery appearance on the hero's phone.   This could be the best horror sequel since The Crows Have Eyes 3: The Crowening.

I wish I could say that Countdown is a thoughtful rumination on our times, like Don't Look Up or Bridgerton.  But no.  If you want serious reflection on living in the age of Terms of Service, I recommend South Park's Humancentipad episode.

H/t: OCU 2l, Jordan Kimball.

Weekend Frivolity:* This Is About Love for Bill Murray and Groundhog Day

Not about whatever stupid vehicle this ad is trying to get us to buy.

Frivolity may not have any contracts-related content.

Quentin Tarantino gets sued, demonstrating that NFTs are about contracts after all

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. 

(Readers of this blog are of course familiar with NFTs, thanks to Juliet Moringiello and Christopher Odinet’s article and Jeremy Telman’s blog post on it here).

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.

 

Weekend Frivolity: It's A Wonderful Life Is a Reverse Chanukah Miracle

Thanks to Berkeley Law Prof Orin Kerr's Twitter feed, I came across this BBC story about how It's a Wonderful Life slipped through a copyright loophole and so became a holiday classic.  It is, hands down, my favorite Christmas movie.  I watched it over and over for years, and now I know why. The BBC story explains that the movie's success is a Chanukah miracle in reverse.  It's limited availability for distribution and broadcast was supposed to last 56 years.  But due to an oversight, its copyright lapsed after 28 years, and it entered the public domain in 1974.  

After that, the movie was fair game.  Anyone could show it, and they did.  The movie did not even break even when it was initially released (c'mon 1946, what's the matter with you people?).  Widely available after 1974, for the first time, It's a Wonderful Life became a real hit.  By the way, The Princess Bride followed a similar trajectory, although it made some profits when originally released.  No man is a hero to his valet.  Perhaps the same is true of at least some great movies, whose appeal escapes the notice of their intended audiences.

Sometimes dismissed as "Capra-corn," a dig at the seemingly sentimental fare produced by director Frank Capra, It's a Wonderful Life can be loved for its darkness.  There is a scene when George Bailey, having been turned away by his unrecognizably grim, dour, hostile mother, races to the picket fence in front of his family home, transformed into a boarding house for the damned.  The camera catches George's face as he regards his suddenly unfamiliar surroundings.  He is panicked, lost, terrified, uncomprehending, and alone.  In short, It's a Wonderful Life unblinkingly captures the very opposite of the Christmas spirit.  The film depicts the bleak reality into which our happy lives can so easily devolve.  As a result, the film's sentimental ending is well-earned.  Both George and the viewers have gone through hell on earth.  Even Clarence was tossed out into the unforgiving snow. 

Don't worry, Potter, your time is still to come.

And yet, here's the scene that gets me every time.  Pure Capra corn comes at 3:35 of this clip.  Can't get enough!

Attaboy, Clarence.  And to all a good night.

George Harrison's Residuals and Apple

Now that I have finished grading exams, I can return to loftier thoughts.  I have watched the first episode of "Get Back," Peter Jackson's edition of the recordings that preceded the Beatles' last live concert.  Here's a teaser with a typically overlong introduction from the director: 

I'm enjoying it.  We paused our viewing not because we lost interest but because we want to watch with family who will be with us over this holidays.  Still, I write to raise a contractual question to which the Internet has been unable to provide an answer.

I don't think it's really possible to provide spoilers to a documentary about a fifty-year-old recording session, but of course George's abrupt (and fortunately fleeting) departure from the band is one of the more dramatic moments in the documentary.  After George leaves, the Beatles' road manager says something about paying George his residuals, but then someone (I'm not sure who, maybe John) says, “He shouldn’t be bothered with that. You know, that’s why we’ve got Apple, so we attend to it ourselves.” 

It's rather shocking how quickly the focus moves from making music and creating immortal songs on the fly to contractual concerns.  But also, what are they talking about?  George's residuals from what?  From everything the band had done up until the moment he pissed off?  From the planned live concert performance of a proposed fourteen new songs?  And did these musical geniuses also have the legal acumen to create a corporation that would seamlessly address all contingencies, including George walking out in the middle of a session?  Beatles lives and Beatles lore has been picked over with fetishistic obsessions.  Has anybody unpacked their corporate structure?

When You've Finished Grading Question 2 . . .

But need a break before proceeding to Question 3 . . . 

Enjoy.

Teaching Restitution through The Incredibles

When I first started teaching Contracts law in 2005, I could assume that my students would be familiar with the the film, The Incredibles.  Their knowledge of the film made teaching restitution/unjust enrichment really easy.  I can no longer make that assumption.  In fact, mentions of the film now lead to confused conversations about which Incredibles movie I mean, how many there were, and which is the best (the original, obviously).  And so, I now have to schedule a screening outside of class time, to familiarize my students with the material.  As I explain to the students, it may be possible to cover this material without talking about The Incredibles, but I certainly don't know how to do it.

Mr. Incredible, Elastigirl, and Frozone routinely confer benefits on the public.  Are they entitled to restitution?  No, because they do not confer those benefits in expectation of payment.  Note how this scene does not end with any payment either for the dislodgment of the cat from the tree or for the assistance provided to the police.

Okay, but one would expect that Edna Mode gets paid for the supersuits she designs for her customers.  After all, her house is spectacular.  She must be making money somehow.  Can she, demand payment from Elastigirl when she makes supersuits for the entire Incredibles family?

No, Edna is quite obviously an officious intermeddler.  Elastigirl doesn't want the suits.  She has no need for the suits.  Jack-Jack doesn't even have any powers.  It doesn't matter how much work Edna put into the suits; she has not conferred a benefit on the family when the family doesn't want the suits.

However, things change once Elastigirl and the children set off in search of Mr. Incredible.  They end up using the suits, thus ratifying the transaction and cleansing it of its original, officious character.  The Incredibles now should pay Edna for the suits, assuming that is what one does.

There remains only the problematic opening sequence.  The scene is problematic both for its negative depiction of the legal profession and for the, I believe, faulty assumption that the law would award damages to a person whose suicide attempt was thwarted but who was injured in the process.  The law assumes that life is better than death, and so likely would regard the frustrated suicide attempt as a good, both to the plaintiff and to society as a whole.  

Fortunately, proper legal order is restored at the end of the film when the Incredibles and Frozone thwart Syndrome and save the city.  Supers are now free to return to their traditional practice of providing gratuitous material benefits to an adoring public.

Sid DeLong on Protecting IP Post-Mortem, Part II

“D” is for Dead Hand Control (Part 2)
Sidney DeLong

As discussed in yesterday's post, contract alone cannot achieve Grafton’s goal of post-mortem control of her copyrights. Suppose that students in their third year of law school were given the same problem:

“You are counsel to Sue Grafton. She wants to make sure that none of her alphabet series is ever adapted for the screen after her death. What solutions can you suggest and how confident are you that they will work?”

How would they advise Grafton to prevent post-mortem owners of her copyrights from licensing her books for dramatization in film? Copyright is intellectual property which, like real property, can be conceived as a bundle of rights, a bundle that can be disaggregated into separate “twigs” by its owner. Students who have studied copyright might suggest splitting off the screen rights from the rest of the copyright. To assure that those rights will be enforced against infringers, the rights could be assigned to an institutional owner who will have incentives to prevent unauthorized filming.  The owners of the balance of interests in the copyrights, whether her family or third parties, will be able to profit from the copyrights without violating Grafton’s injunction.

But even though Grafton has strong views about how her work is to be exploited, she may be reluctant to part with any of her control while she is alive. After all, she may change her mind. She may prefer to retain the potential to license screening while she is alive but wish to extinguish it only after death.

The attempt to control the post-death use of one’s property is a familiar objective in the law of trusts and estates, where lawyers are trained to devise ways to achieve dead hand control for their living clients but are also trained in the difficulties that such devices may raise.  Students who have studied trusts might suggest transferring Grafton’s copyrights to an inter vivos trust, administered by a trusted person or an institutional trustee who will be instructed exactly how to manage the copyrights, including the prohibition against ever licensing them for filming. The trustee would collect royalties and other income generated by the copyrights and disburse it to the income beneficiaries, presumably Grafton’s family. The trust would last for the statutory duration of the copyrights. There would seem to be no residual interest at the end of the trust.

But an immediate transfer of her copyrights to a trust might not be acceptable to Grafton. Most clients active in businesses want to retain complete control of their business property and are reluctant to transfer their property to a trust before they die. If sufficient control cannot be achieved by an inter vivos trust, the best trust solution might be a testamentary trust that arises only upon the death of the settlor but that would otherwise provide the same protection.

The trust seems to be the best solution to Grafton’s problem. An inferior option would be to make conditional testamentary gifts of the copyrights, subject to conditions that would effectively prevent the copyrights from being licensed for prohibited purposes. This strategy invokes some of the principles of future interests that are studied in property law. But conditional testamentary gifts are very difficult to enforce against disobedient heirs for a host of reasons, both practical and theoretical. Indeed, the chief advantage of trusts is to avoid such problems. This may lead most students of trust law to resent all the effort they expended memorizing the law of future interests in Property class.

All of the students who have studied decedents’ estates would warn Grafton that if she dies intestate having failed to dispose of her copyrights in life, the copyrights will simply descend to her heirs under the laws of intestate succession, and subject to any special provisions of The Copyright Act.

But contract, copyright, and trust law are not by any means the only relevant fields. Students who have taken family law would caution that any attempt by will to divest a spouse of an interest in a copyright might fail on two grounds. The copyrights may be community property in which the surviving spouse owns 50% regardless of the decedent’s will. In a non-community property state, then, depending on the value of the copyrights in relation to the rest of her estate, they may be property as to which the disinherited spouse has an elective share, e.g. of 33%. Elective share rights can usually be defeated only by inter vivos transfers. These rights may also complicate the attempt to transfer the copyrights to a testamentary trust.

As noted above, to transfer ownership of the copyrights directly to the family will also subject them to the claims of creditors of the family members and possibly result in their transfer to those creditors or to a bankruptcy trustee. Those new owners of the copyrights will of course be free to exploit them in any way they choose. This risk also argues for a trust solution to the problem, where creditors will be able to attach only the beneficial interests of the heirs and not the trust property itself.

The attempt to enforce promises relevant to a copyright might need to be secured by a security interest in the copyright, whose validity will be determined by Article 9 and the Copyright Act.

And always waiting in the wings are students who have studied tax law, especially estate and gift taxation. They will caution that all of these transactional solutions to Grafton’s problem may have favorable or unfavorable tax consequences to Grafton and her heirs. Both income and gift and estate tax considerations may be relevant. Failure to consider tax consequences is a common form of estate planning malpractice and might equally be malpractice even by the lawyer who never studied tax in law school because she thinks of herself as practicing contract law rather than estate planning.

Finally, class discussion of Grafton’s case should also invite comment from students of jurisprudence. I believe that it shows that law, like art, can sometimes permit a person to achieve a form of immortality, or at least to cheat death for a bit.  Ars may be longa, and vita may be brevis, but copyright lasts for vita+70 years.

Lessons of the Case for Law School Curricula: Students who are taught to take a client-centered, transactional approach to the practice of law will soon learn that a negotiated, contractual agreement is only one of many legal mechanisms or tools that can be used to achieve a client’s goals. Often it is not the best one. In the bloom and buzz of practice, client problems will usually not come neatly siloed in ways that conform to the law school curriculum divisions.

Creating the best solution for even the simplest client problem requires an understanding of many different legal domains. The ability to spot the myriad legal issues involved must come from knowledge the lawyer has when the problem is presented. At the issue spotting stage, there is no time to learn tax law or trust law when on an “as needed” or “just in time” basis. A lawyer unfamiliar with the entire gamut of private law will be unable to give good advice. In this age of “curriculum reform” in which students are studying less and less “doctrinal” law before graduation (sometimes with the misleading assurance that they can learn it later), that is particularly worrisome.

Post Script.

To a hammer everything looks like a nail. A lawyer engaged to resolve Grafton”s problem would naturally proffer a legal solution using one of the strategies mentioned above. But what if the lawyer went beyond a legal solution and asked Grafton why exactly she wanted to prevent the dramatization of her characters. The lawyer could remind her not only of the income that movies could generate but also of the vastly broader audience for her work and likely stimulus for her book sales.

And dramatization need not lead to disappointment with the product. Many great mystery writers have seen their characters brought to the screen with great success. The literary reputations of Agatha Christie, Erle Stanley Gardner and John Mortimer have only been enhanced by actors’ distinctive representations of Hercule Poirot, Jane Marple, Perry Mason, and Horace Rumpole. In some of these cases, the authors had significant input into the filming of their work.

Grafton’s experience as a screenwriter had taught her that a novel could be butchered by Hollywood ending up unrecognizable to the author. What if there was a way that she could supervise the video representation with approval not only of the script but the actors? Perhaps she could make a deal with someone she trusted to bring her work to life with fidelity to her conceptions.

Any lawyer who is asked to provide a legal solution to Grafton’s problem should have this discussion. But where in law school does a fledgling lawyer learn to ask such questions or to make such suggestions? Aside from courses in estate planning, where such interrogation of a testator may be common, law school rarely trains lawyers to look for non-legal solutions to client problems.  Perhaps, like medical schools, law schools should become more oriented toward representing the whole client. Law students should be taught not only to look for non-legal solutions to problems but to draw on their knowledge and experience in helping their clients.

And even when the solution to a client’s problem might be clear, there remains uncertainty. Before his death, Franz Kafka sent a letter to his friend and publisher Max Brod commanding him to burn all of his unpublished manuscripts when he died. Both men were lawyers. After Kafka died, Brod ignored his friend’s injunction and arranged for the completion and publication of The Trial and The Castle and other works that Kafka hoped would never see the light of day. Brod rationalized his disobedience by arguing that Kafka must surely have known that, as his greatest admirer, Brod would never be able to bring himself to burn any of Kafka’s work. Therefore, Brod reasoned, Kafka must not have really intended his order to be obeyed.

Whether this was a subtle and impressive interpretative strategy or a slick piece of self-justifying rhetoric, whether it was an act of fidelity or betrayal, the world seems not to care: we are all indebted to Brod for frustrating his friend’s last wish and so share in his guilt. The world of mystery fans may similarly profit from the frustration of Grafton’s wishes for dead hand control of her work.

Sid DeLong on the Scarlett Johansson Suit Against Disney/Marvel

INDUCING BREACH OF CONTRACT: A STUDY IN SCARLETT

Sidney W. DeLong

The tort of inducing breach of contract continues to fascinate. In Periwinkle Entertainment Inc. v The Walt Disney Co., Scarlett Johansson (left), the star of Black Widow sued Disney for tortiously inducing Marvel Studios, a subsidiary of Disney, to breach its contract with her.  The complaint alleges that Marvel entered into a contract with Johansson to act in Black Widow. Because Johansson’s compensation was largely to be determined by box office receipts, the contract required Marvel to make an exclusive “wide theatrical release” of the film for a period of time, “the standard exclusive theatrical window.” Instead, citing the COVID pandemic, Disney caused its subsidiary Marvel to release the movie simultaneously with Disney’s release of the movie through its streaming service, Disney+. Viewers were permitted to watch the movie without going to theaters, which Johansson alleges diverted revenues from theaters, costing her millions.

The complaint provokes several questions. Johansson sued only Disney, not Marvel. Normally, claims of tortious inducement against a third party are joined with claims for breach of contract against the contract breacher. Various reasons relating to preclusion on factual and legal issues dictate that the all defendants should be bound by the same action. Then why did Johansson not sue Marvel as well as Disney? Did its contract contain a mandatory arbitration clause (and if not, why not?)? If it did, then the arbitration clause, if well-drafted, should have included claims against Marvel’s parent, Disney. That shoe may drop later.

The complaint pleads two counts of tortiously inducing breach. Normally a parent company should not be liable for causing a subsidiary to breach a contract. A court usually ignores the separate identities of parent and sub in claims that have concerted activity as an element (cf. the “bathtub conspiracy” cases in antitrust). But here it seems that the parent had an economic motive to divert revenue from the sub to its streaming services and away from Johansson by causing the sub to delay theater release of the film, in violation to its contractual obligation to Johansson. That seems to justify treating Disney as a separate, third-party who is a stranger to the contract with the sub.

A final question concerns remedies. Perhaps because it was hastily drafted, the complaint is sparse on its remedial prayers, seeking only punitive damages in the separate counts, but adding a catch-all ad damnum for all money damages caused by the tort. Damages for inducement usually equal the expectation damages for breach of the underlying contract. But these expectation damages may be speculative, given the uncertainties of the imaginary box office receipts that would have occurred with a weeks-long exclusive theater release.

But the tort claim, if established, should also justify a restitutionary remedy against Disney, measured by its unjust enrichment resulting from its wrongdoing. That calculation too, may be complex, however if one must determine how much of its streaming revenues were caused by its wrongdoing.  

If another reminder were needed, Periwinkle demonstrates anew that Contracts and Remedies students should be familiarized with the tort of wrongfully inducing breach of contract as another weapon in their litigation arsenal.

More New York Cases!

Thanks again to @NY_Contracts 

There are many things about 136 Field Point Circle Holding Co., LLC v. Razinski that I do not understand.  For example, why would one pay $9 million for the option to purchase a property for $19 million?  And why would one do that if one were not absolutely certain that one could put together the necessary financing so as not to lose the $9 million plus $1 million in liquidated damages?  Fortunately, that is not a contracts law issue. 

The issue that matters to us is whether the $1 million liquidated damages provision is enforceable, and it is.  The liquidated damages were not "grossly disproportionate" in relation to the failure to sell a property valued at between $20 and $30 million.  The Razinskis were proceeding pro se in the matter after the court granted their attorney's motion to withdraw.  That may explain why, although they raised what looked plausible legal theories, the court summarily rejected them as lacking factual support.

I think I do understand the facts underlying Crown Jewels Estate Jewelry, Inc. v Underwriters at Interest at Lloyd's London, and what great facts they are.  Crown Jewels thought it loaned $2 million worth of jewels to Sony International films so that Jennifer Lopez (pictured) could wear them for a shoot in Miami.  In fact, the jeweler was working with an agent for James Sabbatino, a member of the Gambino organized crime family who engineered the heist from his prison cell!  The jewels were never recovered, and Sabbatino was convicted of RICO violations and sentenced to 240 months in prison.  Prison guards uncovered the scheme when they went to his cell looking for the jewels (or perhaps Jennifer Lopez) and found Sabbatino talking on one of his cell phones!  I'm imagining a scene that ends with the words, "Uh, I'm gonna have to call you back." 

Anyway, the contracts issue was whether the jeweler's insurance would cover the loss.  It didn't because of something called the dishonest entrustment exclusion.  The rule applies when "[t]he loss of plaintiff's jewelry resulted from theft or an act of dishonest character on the part of the persons to whom the jewelry was entrusted. It is irrelevant to whom or for what purpose the jewelry was actually or intended to be entrusted." Harsh.

Early Start of Weekend Frivolity: John Waters' 75th Birthday

Today is my last day of teaching for the year.  So it seems appropriate to start the celebration a bit early.  I must have been in college when I saw this PSA before a film, perhaps a European film, perhaps even a double feature.  I haven't forgotten it. 

Realtor Approved: This House Is Not Haunted

This article in the Baltimore Sun, and other similar articles, tell of a realtor who is trying to get out ahead of the story by posting signs outside of the houses she is trying to sell advertising that the houses are verifiably "Not Haunted."  

How can the realtor, Joy Sushinsky, be so sure?  She interviews the sellers, and if they say the house isn't haunted, that's all the evidence Sushinsky needs.  After all, she reasons, "People know if they’re living in a haunted house. And they’ll tell you.”  Would they?  Under Maryland law, they are not required to do so.

The scene in which the prior owners of the house at issue in The Amityville Horror (right) warn the new owners that the house is haunted must have landed on the cutting-room floor.  Similarly, in the Academy-cward-winning short film, The New Tenants, nobody told the eponymous couple of the triple homicide that had occurred in their new apartment and explained its sudden availability (complete with "dead guy chips").  They didn't even get a break on the rent.  

Nonetheless, Sushinsky is convinced based on personal experience.  She lived in a haunted house, as her cat, the Instagram influencer Killer, would attest, were he still alive.  Unfortunately, the odd bumps in the night ended with Killer's death, so Sushinsky cannot introduce reporters to her ghost, although she insists that her dog will back her story.  In the alternative, Sushinsky also suggests that the "Non Haunted" signs are a joke, as we can all use a good laugh.

The Sacha Baron Cohen Release, 2.0

We're a bit late to this party, but since a second Borat film has just come out, it seems timely enough.  We covered the first Borat release obsessively here (and also here, here, here and here), since it actually generated a contract dispute that was resolved in Sacha Baron Cohen's favor.  For those interested in a more sober take on the affair, Russell Korobkin has that angle covered here.

Cohen (pictured as Ali G, left) is in trouble again for having broadcast his encounter with Alabama politician Roy Moore for a television show called "Who Is America."  Mr Cohen induced Mr. Moore into a purported demonstration of a device that a disguised Mr. Cohen touted as a pedophile detector.  To Mr. Moore's dismay, the device seemed to identify him as a pedophile.  

Moore and his wife sued, alleging defamation per se, intentional infliction of emotional distress, and fraud.  The fraud claim is crucial.  Mr. Cohen was able to defend himself against false light claims in earlier cases based on releases that the plaintiffs had signed.  Mr. Moore signed a similar release, but despite Mr. Cohen's lawyers' insistence that the release clearly covered any allegations of fraud in the inducement, the District Court is allowing the case to proceed, perhaps because there is some question as to the identity of the parties to the release.  Cohen's joke of acting through alter egos may backfire if a court can't even tell whether he and his co-defendants are parties to a release.

But Moore's case (and Rudy Giuliani's inevitable case) seems distinguishable from the suit against the first Borat movie.  Moore and Giuliani are public figures, and First Amendment protections for ridiculing public figures are very generous.

Two cents on the movie.  Cohen's shtick is getting old and predictable.  His accents are terrible.  Also, I know it is supposed to be a low-budget movie made by a Kazakhstani agency, but the production values are ridiculously poor.  The entire film is in terrible taste, but every once in a while, it's really, really funny.  Maria Bakalova is the breakout star of the movie.  She manages to induce suspension of disbelief when such suspension no longer seems possible.  

Mr. Cohen is also being sued by the estate of a Holocaust survivor, Judith Dim Evans, who appeared in a completely gratuitous scene.  The scene wasn't funny, even by the Cohen standard, under which cringe-inducing awkwardness is supposed to be funny, and it didn't advance the plot.  Still, the suit is confusing, Ms. Evans appeared as an embodiment of empathy and humanitas, ignoring Mr. Cohen's preposterous anti-Semitic costume and literally embracing him.  Yes, the film invites us to laugh at anti-Semitism and Holocaust denial, but haven't we been doing that at least since The Producers?  I'm not sure that being surprised that one has been used as a hallmark of Jewish menschlichkeit in a film that satirizes racial and religious bigotry provides the basis for a cause of action.

Weekend Frivolity: Movies of Contagion and Confinement

Building on the runaway success of yesterday's frivolity (silence is not necessarily ridicule), today was invite our remaining readers to share ideas for movies (or films if they are fancy) on the theme of contagion and confinement.

We'll get things rolling with two picks:

The Andromeda Strain tops the list for being about contagion within the necessarily confined quarters of  an isolated lab. 

And then there's World War Z, which is just fun, even though I usually hate zombie movies.  Also, the zombies' "fleetness of foot" reminds me of my favorite dialogue from Breaking Bad:

Just your periodic reminder that arbitration clauses mean your disputes will be arbitrated

Many contracts have arbitration clauses these days, and parties consistently challenge their enforceability, and consistently get told they have to arbitrate. The challenges make some sense in consumer contracts where we might not expect the consumer to grasp all of the ins and outs of the legalese. However, I'm always a bit confused by arbitration clauses being challenged by more sophisticated parties in contracts that were negotiated. They were part of those contract discussions, much more so than consumers ever are. If they didn't want to have to arbitrate, they didn't have to put that clause in. Once it's in, though, they're bound by it. 

A recent case out of the District of Arizona, Gravestone Entertainment LLC, v. Maxim Media Marketing Inc., No. CV-19-03385-PHX-GMS (behind paywall), is yet another case reminding us of this. The plaintiff produces horror films and licensed the defendant to distribute those films. Eventually, the relationship between the parties deteriorated and the licensing agreement was terminated. The plaintiff, however, alleged that the defendant went on distributing the films, thereby infringing on the plaintiff's copyright. 

The defendant moved to dismiss and arbitrate the claims, and the court agreed, based on the terminated licensing agreement's arbitration clause, which was worded broadly enough to cover these claims and to survive the termination of the agreement. Nor, the court found, was it unconscionable. 

Was Leaving Neverland a breach of contract by HBO based on its airing of a 1992 Michael Jackson concert?

HBO's Leaving Neverland documentary, detailing the allegations of sexual abuse leveled at Michael Jackson, has resulted in an interesting lawsuit in the Central District of California, Optimum Prods. v. Home Box Office, CV 19-1862-GW(PJWx) (behind paywall).

Because Jackson is dead, there is no defamation claim to be brought; therefore, this lawsuit is grounded in a contract between Jackson and Optimum's predecessor entity and HBO regarding televising one of Jackson's concerts from his Dangerous world tour, which HBO aired in October 1992. The contract contained a provision prohibiting HBO from making "any disparaging remarks concerning" Jackson. Optimum alleges that HBO has breached this provision by airing the Leaving Neverland documentary. 

Naturally the contract also contained an arbitration provision, which provided that the parties would choose an arbitrator and, if they couldn't agree, eventually the Superior Court of the State of the California for the County of Los Angeles would select the arbitrator. Optimum initially filed its complaint in state court, but HBO removed it to federal court based on diversity jurisdiction. Optimum does not dispute the existence of diversity jurisdiction but argues that the arbitration provision also acts as a forum selection provision requiring the litigation be heard by California Superior Court in Los Angeles County. 

The court declines to construe the arbitration provision as conferring exclusive jurisdiction to California state court. The arbitration provision does not discuss exclusive jurisdiction at all. The plain language of the provision only provides the state court with one responsibility: choosing an arbitrator if the parties can't agree on one. That is not a conferral of exclusive jurisdiction. 

There is also a dispute between the parties over whether the suit needs to be arbitrated. The court is torn on that issue. The American Arbitration Association's rule that arbitrability of a contract be decided by the arbitrator came into effect after the parties had signed the 1992 contract, and the court is hesitant to apply it retroactively. There is precedent to support retroactive application but the court thinks it doesn't make sense to pretend that the parties "clearly and unmistakably" agreed to be bound by rules that did not even exist. None of the precedent provided to the court was binding, so the court requests that the parties discuss the issue further at an upcoming hearing. 

You and your corporate entities: often a complex story with repercussions

I got really excited when I saw this case because it's always nice to have a recent parol evidence case to look at, and this one involves movies!

It's a recent case out of Mississippi, Rosenfelt v. Mississippi Development Authority, No. 2017-CA-01120-SCT (you can listen to the oral arguments here). The MDA had communications with Rosenfelt regarding his movie studios' attempt to make movies in Mississippi, eventually guaranteeing a loan through a term sheet signed by the MDA and by Rosenfelt on behalf of his two movie studios. When Rosenfelt wanted to make another movie and applied for another loan under the terms of the agreement, the MDA turned down the request. Rosenfelt then sued for specific performance and damages. Rosenfelt initially triumphed on a motion for partial summary judgment but then, during the specific performance debate in the case, the MDA filed a summary judgment motion challenging Rosenfelt's standing, which resulted in dismissal of Rosenfelt's complaint. 

Rosenfelt appealed, alleging that there was an agreement between him personally and the MDA. However, the court noted that all communications from the MDA were directed explicitly to Rosenfelt as president of the relevant movie studio. The court's decision came down to contract interpretation: All of the written documents in the case unambiguously referred to Rosenfelt in his official corporate capacity or were signed by Rosenfelt in his official corporate capacity. Given the lack of ambiguity on the face of the documents, the court refused to consider parol evidence as to whether Rosenfelt was personally a party to any of the agreements.  Because all of Rosenfelt's allegations concerned his personal agreement with the MDA, the court dismissed the suit. 

This case serves as a reminder that, once you have set up corporate entities, you need to be careful to remember how those corporate entities impact not just your legal liabilities but also your legal rights.