Monday, April 22, 2019
Don't just stand there, let's get to it: Second Circuit orders payment of "Vogue" royalties (aside, I hadn't listened to "Vogue" in a while, and it totally started my week off right!)
A recent case out of the Second Circuit, Pettibone v. WB Music Corp., 18-1000-cv, caught my eye because I teach the underlying copyright dispute driving this contractual dispute. You can listen to the case's oral argument here.
Pettibone composed the song "Vogue" with Madonna and entered into a contract with Warner where Warner collected the royalties for the song and split them with Pettibone. In 2012, Pettibone and Warner were sued for copyright infringement. They each had their own counsel and each bore their own costs in successfully defending the lawsuit, both in the trial court and on appeal. (You can read the appellate court decision here. We talk about it in my Transformative Works and Copyright Fair Use class when we do a unit on music.)
After the conclusion of the copyright suit, Warner withheld over $500,000 worth of royalties from Pettibone, claiming that under Section 8.1 of the agreement between Warner and Pettibone, it was allowed to withhold the royalties to pay for its defense of the copyright infringement suit. Section 8.1 read in part, "Each party will indemnify the other against any loss or damage (including court costs and reasonable attorneys' fees) due to a breach of this agreement by that party which results in a judgment against the other party . . . ."
Pettibone sued, arguing that he had never breached the agreement and therefore Section 8.1 did not permit Warner to withhold any royalties. The district court found that Section 8.1 "unambiguously requires Pettibone to indemnify Warner for the attorneys' fees and costs," and dismissed Pettibone's complaint.
In another example of ambiguous understandings of ambiguity, the appellate court here reversed the district court's holding, instead finding that Section 8.1 is "pock-mocked with ambiguity." In the Second Circuit's opinion, a better reading of the section was that, if there was no breach, each party should carry its own attorneys' fees and costs. In fact, Section 8.1 went on to read that "each party is entitled to be notified of any action against the other brought with respect to [the song 'Vogue'], and to participate in the defense thereof by counsel of its choice, at its sole cost and expense" (emphasis added). A fair reading of the section, the Second Circuit said, was that it required Pettibone to indemnify Warner if Pettibone breached the contract, but not otherwise.
Warner was the party that drafted the contract, and could easily have stated that indemnification happened in the event of any allegations, not just any breach. That was not, though, how the contract was drafted.
The effect of Warner's argument would be to shift a million dollars' worth of attorneys' fees onto Pettibone, just because there was a lawsuit, "regardless of merit or frivolousness." The Second Circuit found that to be "an extraordinary result" not justified by the section's ambiguous language. Therefore, the Second Circuit ordered reversal of the district court's dismissal, judgment for Pettibone, and calculation of the royalties improperly withheld from Pettibone, as well as consideration of Pettibone's request for attorneys' fees in connection with the instant action and appeal.
Sunday, October 7, 2018
Here's me poking my head out from a weekend of midterm grading to thank Banksy for a situation right out of a contracts hypothetical.
Thank you to Eric Chiappinelli and Jennifer Taub for the heads-up!
Wednesday, March 7, 2018
That's going to be the blog's new slogan.
Frances McDormand briefly made contract law trend on Twitter by using "inclusion rider" as her important two-word closing. At the time, there was only one result for "inclusion rider" when you Googled it. Now, if you Google it, you get a million results of articles explaining what an "inclusion rider" is. But here's the original video from Stacy Smith which was the one result before McDormand made it a cultural conversation.
I've had a series of blog posts over the past few years discussing the ways in which private contract law has been used to obscure systemic discrimination and abuse and harassment (a bunch of them are linked in this post). This is a nice suggestion for a way to use private contract law to try to correct some of the problems we've now exposed.
Wednesday, September 13, 2017
The other day, I happened to re-listen to "Rent." The 20th Anniversary Tour is coming to town next month, and I have my ticket in hand, and, excited about the upcoming show, I pulled the original Broadway cast album up on Spotify for a re-listen. The thing about "Rent" is its one of those shows that I find it difficult to be rational about. It has its flaws, but I was in high school the first time that I heard "Rent," and it blew me away then, and it still stays fresh to me. Even when I think it should have aged, I hear the first notes of "One Song Glory," and they get me every time, and by the end of my re-listen I'm sitting in floods of tears on my living room and thinking, ...Huh, this whole musical is about a breach of contract.
Because it is!
If you don't know the plot, it's loosely a re-telling of "La Boheme" that revolves around a number of young New York artists struggling to survive in an age when AIDS is ravaging their community. The titular "Rent" is the first major song in the musical, and it's a reaction to one of the characters, Benny, going back on a promise he made to the main characters, Mark and Roger. Benny used to be roommates with Mark and Roger but now (with his rich bride's money behind him), he's become their landlord. However, when he bought their building the year before he told Mark and Roger they were "golden". Nonetheless, at the beginning of the play, he shows up and demands all of the previous year's rent, which Mark and Roger allege he led them to believe they didn't have to pay (and which Benny never really refutes).
There are a lot of critiques of the characters of "Rent" and how annoying it can be to listen to the show as an "adult." Yes, you do find yourself asking why Mark can't just rake in some dough for a little while to pay off the debt. Isn't this what all adults have to do? We all have to go out and get jobs to pay for the roofs over our heads. But Mark and Roger shouldn't have been in the rent-money debt in the first place, because they had an agreement with Benny. Are there issues with the formation of this contract? Yes. It's pretty informally done, after all, because of their friendship. And it probably suffers from a consideration issue, because it seems like a gift from Benny to Mark and Roger (the musical doesn't spend a whole lot of time on the details of the transaction, tbh, but it seems like he made the offer because he was feeling generous toward his friends). But I think it could be saved by promissory estoppel. Benny made that promise to Mark and Roger, and he's got to know them well enough to know they were going to rely on it by not worrying much about a source of income for the year, which in fact Mark and Roger did. And now Benny is demanding an entire year's worth of rent all at once, which would be a lot for anyone to come up with, never mind starving artists with uncertain sources of income.
So it's not entirely Mark and Roger's fault that they owe a year's rent. They were led to believe they didn't. But, more than that, the more I think about the critiques of "Rent," the more I think that actually that's the point of rent. Mark and Roger are annoying and entitled, yes, not just because they don't want to have to pay rent that their friend told them they wouldn't have to pay, but because they don't want to have pay rent going forward, because the payment of rent pushes them into making compromises regarding their art and the type of life they want to live. When you listen to "Rent" as a sixteen-year-old, it's different than listening to it as a thirty-six-year-old, and that difference is that yes, I grew up, and I realized that suddenly I'm no longer on the side of the artists who want to create and live their lives. And then that makes me think about the fact that I'm on the side of people not following dreams because I grew up and I compromised and I paid my rent. And I don't think it's a failing in "Rent" that it makes me pause to think about that, that there was a teenager in me who believed in La Vie Boheme who became an adult who didn't. I think that's the point. The story takes place in the middle of the AIDS epidemic, when these people are losing friends left and right, and so it makes sense that they don't feel like they have time to pretend to be other than what they are. Maybe the joke's on all of us that we feel like we do have time.
Because, let's face it, for all of "Rent"'s enduring genius as a musical achievement--and there's a lot of it--"Rent"'s story is also the story of all the music that its composer never got to write. Jonathan Larsen died suddenly and unexpectedly the night before the musical's Off-Broadway premiere. He left far too early and left us with just this one perfect masterpiece, about people with uncertain lives clinging stubbornly to their dreams. It's hard for you to reach the end of "Rent" without an appreciation for how lucky we are that some people live that way and give it their all in their time here on Earth. Jonathan Larsen only wrote the one masterpiece, and that's a tragedy, and he didn't live to see the huge success it became, which is an even bigger tragedy, but at least he got to write one, which meant he got to leave a legacy behind him that you've got to think he'd be pretty happy with. And how lucky we all are that he stuck with his art.
None of which has anything to do with contracts law, oops. EXCEPT EVERYTHING HAS TO DO WITH CONTRACTS LAW. Including the entire plot of "Rent." The end, back to regularly scheduled cases, here, have a song:
Sunday, February 5, 2017
The holiday season feels like it happened so long ago, but, if you make yourself think way back to that distant era of our history, you may recall that suddenly spotlights that broadcast dancing snowflakes or other festive decorations onto houses were everywhere.
Now they're in court, too. A case recently removed to the District of New Jersey, Closeout Surplus & Salvage CSS, Inc. v. Sears Outlet, LLC, Docket No. 2:17-cv-00104-KSH-CLW (behind paywall), involves the "Glow Bright" version of these lights. Here's a video of Glow Bright laser light show, to refresh your recollection and also maybe revive a little holiday spirit.
The plaintiff, Closeout, alleged that it had an exclusive right to sell the Glow Bright with tripod and remote and began selling and advertising the product online. The plaintiff alleges that Sears, the defendant, appropriated the plaintiff's advertising and began advertising that it, too, was selling the Glow Bright with tripod and remote. However, the plaintiff alleges that only it had the right, via contract, to sell the Glow Bright with tripod and remote. It appears from the allegations that Sears was only selling the Glow Bright alone but, in appropriating plaintiff's advertisements, it looked to consumers like Sears was selling the Glow Bright with the tripod and remote.
The plaintiff has therefore sued Sears for tortious interference with contractual relationship and/or prospective economic benefits and unfair trade practices and unfair competition. The suit was just removed to federal court at the beginning of January and Sears has not yet answered the complaint, but I'll keep an eye on it to give you the latest updates in holiday decoration law.
Monday, November 21, 2016
My love for the British car show "Top Gear" over the past few years was deep and abiding, despite the fact that I am not interested in cars at all. Like most of the people I know, I watched Top Gear for the hosts, Jeremy Clarkson, Richard Hammond, and James May--a trio of men whose friendly and hilarious chemistry was, I thought, a little like capturing lightning in a bottle; it comes around so infrequently that it's striking when it does.
For a taste of what this version of Top Gear was like, please enjoy my personal favorite, one of the caravan episodes:
Or maybe you would prefer one of the boat-car episodes:
The Top Gear Wikipedia entry details that the show's popularity resulted in consistently high ratings, a waiting list for tickets to the stage-filmed portion of the show that numbered in the hundreds of thousands, and a Guinness World Record for the world's most widely watched factual television show.
There have been a number of high-profile Top Gear events over the years that I could document here, from Richard Hammond's terrifying crash while filming the show to the fascinating contractual dispute over the Stig, the show's famously anonymous racing driver, revealing his true identity.
But what I'm really focusing on in this entry is the fact that the Top Gear hosts have a new show, "The Grand Tour," that looks a whole lot like their old show, and it made me wonder what their contracts looked like.
The hosts left Top Gear over controversially. The BBC declined to renew Jeremy Clarkson's contract in March 2015, following an attack by Clarkson on one of the producers on the show (later the subject of a lawsuit that Clarkson settled for a hundred thousand pounds and a formal apology). The other two presenters, Hammond and May, also had contracts up for renewal and chose not to re-sign with the BBC, instead following Clarkson to Amazon, where the trio have launched a show called The Grand Tour.
I didn't know what to expect from The Grand Tour but it turns out to be Top Gear by a different name. Where Top Gear had a Stig, The Grand Tour has "the American" -- and they tell us who he is right off the bat, rather than get embroiled in that kind of controversy again. Top Gear had a segment called, simply, "The News"; The Grand Tour launched a similar segment called "Conversation Street." Top Gear had a segment called "Star in a Reasonably Priced Car"; The Grand Tour...well, you should watch the show for its take on that segment. This review does a nice job running down all the similarities between the old show and the new.
This all fascinated me from a contract perspective. I knew that Clarkson had previously co-owned the commercial rights to Top Gear. He sold them to the BBC in 2012 for fourteen million pounds. So, having given up those rights and left the BBC, Clarkson clearly couldn't keep making "Top Gear." But he is making a motoring show that is almost identical in every cheeky winking respect to the one he left behind (right down to a simple title highlighting a prominent "T" and "G").
I do think, from an IP point of view, the new show seems safe: they've been careful to avoid any trademarks and only seem to resemble Top Gear in the uncopyrightable idea level, i.e., being a playful show about cars. But I assumed that Clarkson, Hammond, and May had to have had a non-compete with the BBC, so I went looking for it, and I did find evidence that there was one. It apparently prohibited the three from presenting a competing car program for a period of two years. The two years aren't up yet, leaving lawyers to speculate that a conclusion was drawn that the non-compete only applied to terrestrial broadcast stations and not to Amazon's streaming Internet television. The entertainment industry is changing so quickly, it doesn't surprise me that the contracts are having trouble keeping up.
Surely the BBC would have preferred to keep Clarkson, Hammond, and May from kicking a rival car show into production so quickly, especially while the BBC's relaunched Top Gear has reportedly struggled. But apparently their contracts failed to give them sufficient protection to save them from the result.
I will leave for another day the issues of contracts made during the filming of Top Gear itself; like, for instance, the time Clarkson offered to save Hammond from a sinking boat in exchange for a bucket...that turned out to have holes.
And instead I will leave this entry with an acknowledgment that Jeremy Clarkson is a problematic and controversial figure who is not a stranger to making offensive statement. That's beyond the scope of this article about the BBC's contracts, but this review, I think, does a decent job of capturing the internal tension of a former Top Gear fan contemplating the new Grand Tour.
Monday, November 7, 2016
I was struck by this ad that Liberty Mutual Insurance is now running:
Because what it boils down to is a call for greater clarity in contracts so that they can be more easily understood by consumers. (I appreciate the lawyer shout-out but not even all lawyers read all 22 pages!) But, in the midst of trying to simplify things, the small print on the commercial takes care to explain that "Not all of your coverages are shown in Coverage Compass(TM). For complete explanation of your coverages, please consult your Liberty Mutual sales representative and your policy" (emphasis added). You can try to streamline things, but there's no avoiding that 22-page policy in the end!
Wednesday, August 31, 2016
Ambiguous contracts can be a nightmare to untangle, especially twenty years later. A recent case out of the Northern District of Texas, Cooper v. Harvey, Civil Action No. 3:14-CV-4152-B (behind paywall), illustrates just that.
Steve Harvey, currently the host of "Family Feud," has been sued by Joseph Cooper over Harvey's attempts to curtail Cooper's use of performances Cooper taped at Harvey's comedy club in 1993. Cooper claims Harvey gave him permission to film the performances, paid Cooper to film them, and gave Cooper ownership of the videotapes and the right to use and display them. Since that time, Harvey and Cooper have had multiple disputes over the footage, most recently over Cooper's posting of some of it to YouTube.
Harvey disputes Cooper's claim. He says that he paid Cooper to tape the performances so that Harvey could use them "as study material," and that he never granted Cooper ownership or any rights in the videotapes. Harvey alleges that Cooper uses the video footage as a type of blackmail, essentially, knowing that Harvey might find the material on the videotape embarrassing to have made public.
This case isn't just he-said/he-said, in that there does appear to be an actual written contract between the parties, even if there is some debate whether or not Harvey ever signed it. At any rate, seeking summary judgment, Harvey argues that the written contract is ambiguous and that the court can therefore hear parol evidence as to whether the parties intended for Harvey to bargain away all of his rights to the work in question. Cooper, for his part, argues that the contract is unambiguous and that, according to its terms, bargaining away all of his rights is exactly what Harvey did.
The court agreed with Harvey that the contract is ambiguous in whether Cooper or the Comedy House was intended to own the videos under the contract. But, turning to the parol evidence, the court found that nothing Harvey had put forth shed any light on Cooper's intent in entering into the contract. Harvey provided an affidavit that he did not intend the contract to convey his ownership rights but that didn't resolve what the parties' intent was when they signed the contract in 1993. Therefore, the court denied summary judgment on the breach of contract claim.
Which seems like, in the end, this written contract is going to come down to he-said/he-said.
Wednesday, March 2, 2016
This case out of California, Gilkyson v. Disney Enterprises, Inc., B260103, involves the song "The Bare Necessities," which, as you can see from the above, is readily available on YouTube. The song was written by Terry Gilkyson (this might come up in a trivia competition someday, you never know). His adult children are the plaintiffs in this case.
In the 1960s, Gilkyson wrote several songs for Disney pursuant to a work-for-hire contract under which Disney was deemed the author and owner of the songs and Gilkyson was paid $1,000 per song together with ongoing royalties for certain licensing. The contract specifically excluded royalties for use of the songs in "motion pictures, photoplays, books, merchandising, television, radio and endeavors of the same or similar nature." Disney has paid royalties on the song to Gilkyson and his heirs but Disney has never paid royalties for use of the songs in any audiovisual medium, including DVDs. The Gilkyson heirs disagree with Disney's interpretation of the contract and believe that they are entitled to royalties for use of the songs on VHS tapes and DVDs. Disney argues that the four-year statute of limitations on breach of contract actions bars all of the Gilkysons' claims, because all of the VHS tapes and DVDs complained about were first issued sometime prior to 2007. Therefore, according to Disney, Gilkyson should have brought this claim by 2011, not, as it did, in 2013.
Disney loses this argument, however, based on the continuous accrual doctrine: "[E]ach breach of a recurring obligation is independently actionable." Basically, California law interprets the contract with Disney as being divisible, with each breach of that contract actionable and subject to its own statute of limitation period. Therefore, the court concluded that the Gilkysons could seek recovery of the royalties that were due for a period beginning four years from the filing of their complaint (so, from 2009 onward). According to this court, the California state court jurisprudence on this appears to be clear (although note that, at the trial court level, this case was dismissed without applying the continuous accrual doctrine). Disney pointed to a Central District of California case from 2001 that rejected the plaintiff's continuous accrual doctrine argument, but this California state court noted that it did so without any citation to any California case and that this court disagreed with that case's conclusion.
So it's on to the next step for these parties: fighting over the interpretation of the contract. Or settlement.
Monday, February 22, 2016
Last weekend I watched, for the first time in my adulthood, "Willy Wonka and the Chocolate Factory." The 1971 version with Gene Wilder. I've never seen the more recent version with Johnny Depp, but, after reacquainting myself with Gene Wilder's Willy Wonka, I ask you why you would ever need another Willy Wonka. Wilder is perfect.
~~SPOILERS FOR THE MOVIE BELOW~~(IF YOU HAVEN'T SEEN IT, GO WATCH IT NOW, IMMEDIATELY. YOU HAVE SO MUCH TIME AND SO LITTLE TO DO. WAIT. STOP. REVERSE THAT.)
Because it was the first time I'd seen it since going to law school, it was also the first time I'd thought about it from the legal perspective. And, weirdly, contract law actually plays a central role in the movie. As soon as the children enter the factory, Wonka has them sign a contract.
Just the children, not their accompanying guardians, which is interesting to me, as I would have had everyone sign it. You'd think Wonka would be just as worried about the adults handing over Everlasting Gob-Stoppers to the competition, but then again, since the whole thing was just an elaborate set-up, I guess he didn't care. The only clause we can really see in the contract is a gigantic release from liability provision. The adult characters are instantly suspicious of the contract. They raise the argument that they need to read it before they sign it (an act which appears to be actually impossible, given the vanishing print at the bottom). Wonka sort of shrugs and says, "Eh, if you don't sign it, you can't come in." It seems to me like there's a good argument that there's procedural unconscionability showing up, given that Wonka's made it impossible to actually read the contract and is dismissive of their desire to know what they're signing before they enter the factory. Of course, the flipside to that is the flipside that almost always comes up when you talk about unconscionability: No one is forcing these people to tour the factory. They can walk out if they like. They don't have to enter the crazy Willy Wonka contract.
The other issue raised by this scene is that the children are all minors, so this contract is voidable.
(This scene also gives you the timeless assessment that contracts are "for suckers.")
The children all sign the contract, of course. (That would make for an interesting movie: Responsible Legal Decisions in Response to Willy Wonka's Craziness. Everyone turns and walks out instead of entering the factory run by the creepy guy no one's seen in years.) (Wonka really should be so much creepier than he is. I'm telling you, Wilder is genius in this role.)
Having signed the contract, they are let loose in the wonders of the factory, where they immediately proceed to get themselves grievously injured one by one, all taken in casual stride by Wonka, perhaps buoyed by his release from liability provision:
The conclusion of the movie, once again, revolves around contract law. Charlie inquires as to the lifetime supply of chocolate he's supposed to receive, and Wonka points out that he's no longer entitled to it because he breached the contract he signed at the beginning. Wonka quotes the contract, and my main reaction to it is to shake my head and say, "All those Latin words! All those hereinbefores!" It's an excellent example of an incomprehensible contract. I propose we start calling all contracts filled to the brim with Latin and hereinbefores "Wonka contracts." And my second reaction is: That's another movie I'd watch: Willy Wonka in Law School.
(Random fact, but the actor playing Charlie apparently did not know that Wilder was going to yell so furiously in that scene. His startled reaction is genuine.)
Don't worry, if you haven't seen the movie, there's a happy ending.
One closing thought on Willy Wonka and contracts. I figure that there are two choices when it comes to Contracts classes: You're either the room of Pure Imagination...
...or you're the tunnel scene...
Wednesday, December 2, 2015
Do you need a three-minute break with some adhesion-contract humor? Want to restore your faith that there is some utility to the unconscionability doctrine? Watch the video linked at the end of the excerpt below from Elite Daily. Here is their lead-in:
How many times have you checked off “agree to terms and conditions” without reading said terms? The better question may be, have you ever read any terms and conditions before signing?
Many times, you’re signing away any right to the content you share, including photos and videos, while allowing big companies to make huge profits off your work. Often, you’re signing away your private data, addresses, friend’s information or more. You’re also usually signing away your right to ever take legal action against the company.
YouTuber Jena Kingsley wanted to prove just how quickly we will all sign away our information for the chance at gaining something for free. But, as the saying goes, you never get something for nothing.
Check out just how fast people will sign up to win a free iPad and the hilarious consequences that follow, in this video.
H/T: Miriam Cherry (St. Louis University)
Tuesday, December 23, 2014
I recently saw the last Hobbit movie, The Battle of the Five Armies. I found it highly entertaining and was delighted to find a discussion about contracts between Bard, the leader of Laketown, and the King of the Dwarves, Thorin Oakenshield, during a pivotal moment in the movie. The two engage in a back-and-forth about the meaning of a bargain, contract defenses (coercion and duress), and the importance of keeping promises. In short, all the issues that come up regularly on this blog. This isn't the first time that contracts have come up in a Hobbit movie. The morality of promise-keeping is an important theme in the movie as it has been in the others.
Speaking of the Hobbit, the Weinstein brothers have lost their fight against Warner Bros. over the profits to the last two Hobbit movies. As discussed previously on this blog, the issue involved the meaning of "first motion picture" of each book but not "remakes." The Hobbit book was split into three movies and the Weinsteins argued that they should get a percentage from each movie; Warner Bros. claimed that they should only get royalties from the first Hobbit movie. Unfortunately for contracts enthusiasts, the matter was sent to arbitration against the wishes of the Weinstein Bros. who wanted it to play out in court so we may never find out the basis for the arbitrator's ruling.
Monday, November 17, 2014
In The Blues Brothers, the band performs at Bob's Country Bunker. All things considered, the show goes rather well:
After the show, the Brothers ask to be paid. The owner offered to pay $200 for the performance, but the band owed $300 for beer. Elwood objects that they had been told that they would not have to pay for the first round, but the owner refuses to treat that as a waiver. A student asked me about the scene, and I'm not sure how it might be resolved. I would treat it as a matter of interpretation and expect that a court could hear expert testimony about the customary terms of contracts with bands at establishments such as Bob's Country Bunker.
But then there is a second issue (or third, if you think waiver is the second issue). The Brothers got the gig by pretending to be another band, The Good Ole Boys. So Bob has an argument that he was fraudulently induced to contract with Jake and Elwood. If that is so, they might be better off seeking to recover in quantum meruit, since Bob told them "that's some of the best goddam music we've had in the Country Bunker in a long time." The audience hurled what seemed like hundreds of bottles of beer at the band during the performance, so Bob must have made quite a bit in drink (or projectile) sales. On the other hand, I don't know what it costs to clean up that mess.
Hat tip to Valpo 1L Brandon Carter for calling my attention to the scene and to the fact that he is watching old movies when he should be studying law!
Tuesday, August 12, 2014
On HBO’s Last Week Tonight, John Oliver was joined by Sarah Silverman and they took on the payday loan industry. Here's the clip (NSFW, especially Sarah Silverman's bit at the end):
From the pseudo PSA at the end of the clip: “Hi, I’m Sarah Silverman. If you’re considering taking out a payday loan, I’d like to tell you about a great alternative. It’s called ‘anything else.’ The way it works is, instead of taking out a payday loan you literally do anything else.”
[Meredith R. Miller]
Monday, August 4, 2014
Christopher Gorog was the CEO of Roxio, Inc., which acquired Napster in 2002. He thereby become the CEO of Napster, which was acquired by Best Buy in 2009. Gorog entered into an Employment Agreement with Best Buy, which provided that he would stay on as a Napster employee, with Napster now a wholly-owned Best Buy subsidiary. The Employment Agreement included a $3 milllion performance award to which Gorog would be entitled based on his and the company's performance on four target dates if he were still employed by Napster.
At the end of 2009, Gorog resigned. In 2011, Best Buy sold Napster to Rhapsody, an Internet Music Service. Gorog signed a Separation Agreement which provided that Gorog’s employment would be terminated without cause and that Gorog would not release any claims to a performance award. Gorog sued claiming that he was entitled to performance awards despite his resignation. The District Court found that Gorog's best arguments rose under Section 2.4(b) of the relevant Award Agreement:
(b) If, prior to the end of the Performance Period, your
employment is terminated by Napster without Cause or you
terminate your employment with Napster for Good Reason,
the Performance Period will continue and you will be
entitled to receive a Performance Award equal to a pro-rata
portion, based on the number of Whole Months you served
during the Performance Period, of the Performance Award
that otherwise would have been earned in accordance with
the Performance Criteria Schedule . . . .
The Distirct Court dismissed Gorog's claims finding that he did not meet the performance criteria under the section.
In appealing to the Eighth Circuit in Gorog v. Best Buy, Inc., Gorog relied on Section 2.4(c) of the Award Agreement which he claimed was not mutually exclusive with Section 2.4(b). Section 2.4(c) provides that
If, prior to the Performance Target Date, majority
ownership of Napster (or any successor entity) is sold by
Best Buy or spun-off to its shareholders, or if the venture
ceases operations (the “Event”), you shall be entitled to
receive a Performance Award equal to 100% of the
Performance Award Target Value, regardless of whether
the Performance Criteria have been met. . . .
Gorog claimed that the fact that he was no longer employed at Napster was irrelevant to the question of his entitlement to a performance award, as that award was triggered by the sale of Napster.
The Eighth Circuit sided with Best Buy, which argued that the two provisions are indeed mutually exclusive. Read in context, the Court noted, each section of Section 2.4 relates to conditions of Gorog's termination that would entitle him to a performance award. The Court also found no way to reconcile Gorog's claim that the provisions of Section 2.4 were not mutually exclusive with other terms in his agreement with Best Buy.
Once again, life fails to imitate art (if the amusing heist movie The Italian Job is art):
Thursday, September 26, 2013
NFL v. MIA: we've mentioned issues related to this incident on this blog in the past. But, if you ask me, it just got good.
Here's the background: at the 2012 Superbowl, this little flip of the bird happened during the halftime show:
The NFL has since sued (in arbitration) M.I.A. (the bird-flipping artist in the video above) for $1.5 million. The NFL’s claim? It claims that M.I.A. breached her contract because the “offensive gesture” was “in flagrant disregard for the values that form the cornerstone of the NFL brand and the Super Bowl." In the contract, she apparently acknowledged “the great value of the goodwill associated with the NFL and the tremendous public respect and reputation for wholesomeness enjoyed by the NFL."
The case, it sounds, comes down to what is “offensive” and what exactly are the “wholesome” values of the NFL. This FoxSports column does a great job explaining why the lawsuit is “laughable” – with video footage as evidence of just how wholesome the NFL is.
A video of M.I.A. has recently surfaced. In the video, she (rather articulately) explains the absurdity of the lawsuit. As 411Mania.com describes:
[M.I.A.] says the NFL is "scapegoating me into trying to set the goalpost for what is offensive in America." She notes that the picture in which she is seen giving the middle finger also has a group of sixteen year-old girls who were selected from a high school in Indianapolis who are in cheerleader outfits with their "hips thrusted in the air, legs wide open, in this very sexual...sexually provocative position."
Here’s M.I.A. regarding the lawsuit, which she describes as "a massive display of... powerful corporation dick shaking." In light of the 16-year-old cheerleaders on stage behind her, she frames the issue in the lawsuit as whether female sexual exploitation or empowerment is more offensive. Interesting stuff:
[Meredith R. Miller]
Friday, August 16, 2013
Touro Law starts up on Monday. Around this time of year, I am always reminded of this Rodney Dangerfield clip from the movie Back to School:
Dangerfield to Econ Prof: "What's a widget?"
Econ Prof: "It is a fictional product. It doesn't matter."
Dangerfield: "Doesn't matter? Tell that to the bank."
Have a great semester!
[Meredith R. Miller]
Friday, February 15, 2013
CNN's Erin Burnett did some intrepid reporting and "went to book a cruise . . . on Carnival so we could look at the contract..." The contract apparently says that, even after 5 days of being stuck on a disabled ship with no electricity or plumbing, "you're out of luck":
Shute v. Carnival Cruise Lines reprise?
[Meredith R. Miller]
Tuesday, February 12, 2013
We had previously blogged about the demand letter that Donald Trump sent to Bill Maher. Maher dedicated a segment on his show to the dispute, taking aim at Trump's lawyer. Maher begins: “Donald Trump must learn two things: what a joke is and what a contract is.”
The segment is reminiscent of the Leonard v. Pepsico decision when Judge Wood takes on the task of explaining why the harrier jet commercial was "evidently done in jest." Here, Maher continues the humor in explaining why it was parody when challenged Trump to prove that he (Trump) was not born of an orangutan.
Here's the clip:
[Meredith R. Miller]
Monday, December 31, 2012
The other night, I finally got to see The Hobbit: An Unexpected Journey. Having recently spent several months in New Zealand (the home of Peter Jackson’s Weta studio), I had been surrounded by Hobbit-mania and was interested to see whether the movie proved worthy of the hype. I wasn’t disappointed. Although some critics were, well, critical, I thought it was an extremely entertaining movie that made time fly. Making a highly entertaining movie even better, a lengthy contract played a pivotal role. When Gandalf the Wizard, and Thorin and his company of dwarves seek Bilbo Baggins’ (i.e. the aforesaid hobbit’s) assistance to accompany them as burglar on an unexpected journey, they first ask him to sign a contract. The contract, several pages long, outlines in detail his compensation (i.e. consideration) and contains warnings and numerous disclaimers of liability in favor of Thorin & Co. Being a wise hobbit, Bilbo actually reads the contract, faints, and then refuses to sign it. The next morning, he awakens to a quiet house (dwarves know how to party, but apparently do so responsibly). Bilbo has a change of heart, decides he does want excitement and adventure, signs the contract, picks it up, and runs out of his house to join the departing dwarves. This is where --for a contracts prof -- the tension is most high. Having rejected the terms of the contract the night before, we know that the hobbit no longer has the power of acceptance. Therefore, when Bilbo thrusts his signed contract into the hands of one of the dwarves, he is only making an offer. It is the dwarf (who apparently has authority to accept on behalf of the other dwarves) who has the power of acceptance. I don’t think I need a spoiler alert before revealing that they do accept (there wouldn’t be much of a movie if they didn’t).
There were so many things to like about the movie, not the least of which was the way it illustrated how relational contracts set expectations, shape relationships and establish trust. At one point, Bilbo seeks to desert the dwarves. Although one could argue changed circumstances, I think a better explanation would be that given Thorin’s disparaging comments about Bilbo’s suitability for the journey, Bilbo decides to adjust his performance obligations accordingly. But events (and the always fascinating Gollum) intervene. In the end, Bilbo carries out his contractual obligations, proving that - even in Middle Earth - contracts are alive and well.