Friday, July 10, 2020
My impression is that most non-lawyers think that “the law” is legislation so law students are often surprised at the first-year curriculum which is mostly focused on common law. Most 1L contracts courses pay scant attention to how contracts (and the drafting of contracts) are affected by legislation (other than the UCC, of course). But when law students become lawyers, they must pay attention to legislative changes and may be required to change their clients’ contracts to conform to changes in the law.
Along those lines, there are several new laws that might be of interest to readers of this blog. Not only should they prompt lawyers to revisit their existing contracts, they might freshen the usual classroom discussion and provide some more context to the role of the common law and its relationship with contract doctrine. I plan to discuss the new laws in the classroom as part of a focus on “practical lawyering skills” (or, my take on it, which is, what a lawyer should do with the knowledge learned in law school).
Privacy policies - The California Consumer Privacy Act officially became effective January 1st but there was a six-month grace period that expired on July 1. The Act gives consumers more power over their data and how it is used, including the right to opt-out of data collection. In my experience, some companies, especially the credit agencies, need to do a lot more to make it easier to opt-out. Some companies make it very easy – just a click on their website – but the ones that should make it easy, such as the big three credit reporting agencies, make it very difficult by asking for a mailed-in request and all your personal information, including SSN. Companies should revisit their TOS and privacy policies to make sure that they comply with the act – and preferably, make it easy for consumers to opt-out and/or request what data the company is collecting.
Employment Contracts and Handbooks – I like to discuss how lawyers often ignore their standard form contracts and policies, and how doing so may affect enforceability and interact with interpretation, illegality, bad faith, and unconscionability (especially when they conflict with legislative changes). For example, lawyers should revisit and consider whether to update their contracts and handbooks in light of these recent changes:
Minimum wage - California’s minimum wage is currently $12/hour (for employers with 25 or fewer employees) and $13/hour (for employers with 26 or more employees), eventually reaching $15/hour by 2022; effective July 1, 2020, some counties and cities are moving toward that goal more quickly, including Berkeley and San Francisco ($16.07/hour) and Los Angeles ($14.25 or $15.00/hour).
Family Leave – Unlike the federal government, California has a paid family leave which Gov. Newsom extended from six to eight weeks, effective July 1, 2020.
Gig workers – Under a recently enacted law, the test for determining whether a worker is an independent contractor or an employer broadens the requirement of “independence” for the independent contractor so that the worker is both free to figure out how to do the work as well as not economically dependent upon the company for a paycheck – and the employer is not dependent upon the worker for survival (okay, that’s just my super quick description of the “ABC” test). Earlier this pandemic season, the California Attorney General, Xavier Becerra, and the City Attorneys of Los Angeles, San Diego and San Francisco sued Uber and Lyft for misclassifying their drivers as independent contractors instead of employees. It always bears repeating to students (and clients) that a contract can only allocate rights that the parties have – it can’t attempt to change definitions that are defined by the law, meaning that even if the agreement is titled “Independent Contractor Agreement” doesn’t mean that the relationship is one between an independent contractor and a company.
One law that California has not enacted, but which has been enacted in other states (Kansas, Louisiana, Oklahoma) according to law firm Littler, is legislation protecting employers from liability if they act in good faith and their employees or customers are exposed to COVID-19. These are typically pretty limited in scope and generally do not protect employers from intentional or reckless negligence. The whole issue of waivers in the employment context is a live one that this blog will be keeping an eye on in the weeks to follow….
Tuesday, May 21, 2019
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.
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.
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.
Wednesday, May 30, 2018
Although this post does not have anything to do with contracts law, it is hopefully interesting to many of you law professors anyway.
Scientific research shows that in years with warmer temperatures, students score worse on tests. The link is "significant." Researchers calculated that for every 0.55° C increase in average temperature over the year, there was a 1% fall in learning.
Colder days did not seem to damage achievement - but the negative impact began to be measurable as temperatures rose above 21° degrees C. The reduction in learning accelerated once temperatures rose above 32° C and even more so above 38° C.
A simple solution could be to use more airconditioning on test days. The more complex, but necessary, solution is to curb climate change. The world is still not doing enough in that respect despite the 2015 Paris Agreement. In particular, it is problematic that the USA has announced its withdrawal from the climate change agreement.
Could increasing temperatures also be part of the reason for our students' worse and worse bar performances? Apparently so.
Friday, May 25, 2018
As widely reported in, for example, the Washington Post, whose owner founded Amazon, President Trump has pushed Postmaster General Megan Brennan to double the rate that the post office charges Amazon.com and some, but not all, similar online retailers.
The contracts between the Postal Service and Amazon are secret out of concerns for the company's delivery systems. They must additionally be reviewed by a regulatory commission before being changed. That, perhaps unsurprisingly, does not seem to phase President Trump who appears to be upset at both Amazon and the Washington Post. The dislike of the latter needs no explanation, but why Amazon? Trump has accused it of pushing brick-and-mortar stores out of business. Others point out that if it weren't for Amazon, it is the post office which may be out of business.
Aside from the political aspects of this, does Trump have a point? Is Amazon to blame for regular stores going out of business? I am no business historian, but it seems that Amazon and others are taking advantage of what the marketplace wants: easy online shopping. Yes, it is very sad that smaller, "regular" stores are closing down, most of us probably agree on that. But retail shopping and other types of business contracting will evolve over time as it has in this context. That's hardly because Amazon was founded; surely, the situation is vice versa. Such delivery services are fulfilling a need that arose because of other developments.
From an environmental point of view, less private vehicle driving (for shopping, etc.) is better. Concentrating the driving among fewer vehicles (FedEx, UPS, USPS, etc.) is probably better, although I have done researched this statement very recently. One fear may be the additional and perhaps nonexistent/overly urgent need for stuff that is created when it becomes very easy to buy, e.g., toilet paper and cat litter online even though that may in and of itself create more driving rather than just shopping for these items when one is out and about anyway, but that is another discussion.
Suffice it to say that Trump should respect the federal laws governing the Postal Service _and_ existing contracts. What a concept! If the pricing structure should be changed, it clearly should not be done almost single-handedly by a president.
Meanwhile, the rest of us could consider if it is really necessary to, for example, get Saturday snail mail deliveries and to pay only about 42 cents to send a letter when the price of such service is easily quadruple that in other Western nations (Denmark, for example, where national postal service has been cut back to twice a week only and where virtually all post offices have been closed). Fairly simple changes could help the post office towards better financial health. This, in turn, would help both businesses and private parties.
Wednesday, May 23, 2018
PNC Bank, Wells Fargo and U.S. Bank have been sued for charging interest from homeowners paying off their mortgages early without disclosing how to avoid the charges in spite of HUD rules requiring the latter (and, in the case of one California plaintiff, the California Unfair Competition Law). When do they ever learn, you ask yourself? - Not soon enough, seems to be the answer.
This is how the most recent scandal went down (and might still be, so anyone wishing to pay off their mortgages before time, be aware): Homeowners paying off their mortgages ahead of schedule were charged “post-payment interest charges” for the entire month in which the loan was otherwise paid off. What’s the big deal, you ask yourself? Consider this: Lead California plaintiff Sandi Vare alleged that she asked PNC for a payoff statement when refinancing her home in July 2016. She was charged $1,227.16 in interest for the entire month, despite the fact that her loan was paid off on July 16; roughly $600 too much. Even for you and I, that’s a good chunk of change.
Banks, it seems, try whatever they can to fog and outright cheat their own clients in many contexts and certainly in the home financing/refinancing ones. I am personally altering my home loan with Wells Fargo to 1) pay a chunk extra into the principal and 2) pay the loan off in a shorter timeframe than the current one. The amount of fogging and, in effect, secret “code talk” one has to be subject to or use to achieve such a simple objective is amazing. For example, if one does not mention the word “recast,” the bank representative may not mention this or may not outline the otherwise relatively advantageous terms of obtaining such a contractual amendment. If one does not very specifically ask for the interest rates and amounts per month, total loan period and interest vs. principal amount, etc. (you get it), the bank – at least Wells Fargo – does not seem to lay out all the details that could work in the borrower’s favor. Granted, they do if one asks them to do so, but is this this amount of fogging, secrecy, and, in the case of the above-mentioned lawsuit, outright disregard of not only contractual ethics, but also state and federal law what we wish to accept as society just so that banks, who have repeated proved to not follow the law, ethics or even sound market-based risk principles, can continue to make money on services that their customers actively seek to avoid? One would hope not, but as this case shows, more litigation is apparently needed to continue reigning in overly greedy banks.
The case is Vare et. al v. PNC Bank, U.S. District Court for the Northern District of California, 18-2988. The lawsuit is asking for a nationwide class for breach of contract. Wells Fargo and U.S. Bank defeated nationwide class status last year as too many state-specific rules were involved in that case.
Friday, September 15, 2017
On Sept. 12, 2017, Senate Bill 33 was approved by the California Senate and now awaits Governor Brown’s approval before becoming law.
The legislation was designed after the Wells Fargo scandal to block legal the legal tactic of keeping disputes over unauthorized bank accounts out of public court proceedings an favor of private arbitration.
Said the law’s author, Sen. Dodd (D-Napa): “The idea that consumers can be blocked from our public courts when their bank commits fraud and identity theft against them is simply un-American.” It is also clearly unethical and, once again, emphasized how difficult it can be in modern times to strike a fair contractual bargain with a party that has much greater bargaining power than individuals and that uses lengthy and often complex boilerplate contracts with terms few read and understand.
Monday, May 8, 2017
Our friends at the Uniform Law Commission (better known by some as the National Conference of Commissioners on Uniform State Laws) sent out a press release today highlighting another adoption of revisions to the Uniform Commercial Code:
REVISED UCC ARTICLES 1 AND 7 ENACTED IN MISSOURI
May 8, 2017 — Missouri has become the latest state to enact important provisions of the Uniform Commercial Code (UCC). HB 34, which included the most recent versions of UCC Article 1 and UCC Article 7, was sponsored by Rep. Dean Plocher and signed into law today by Missouri Governor Eric Greitens. * * *
The UCC is a comprehensive set of laws governing all commercial transactions between U.S. states and territories. It is not a federal law, but a state law. The UCC is organized into nine substantive articles, each article governing a separate area of the law.
UCC Article 1 provides definitions and general provisions that apply to transactions covered by other articles of the UCC. Article 1 impacts every transaction governed by the UCC, including any sale of goods, any letter of credit, any warehouse receipt, or any transfer of an investment security. It is important to have Article 1 up-to-date and consistent with the rest of the UCC.
UCC Article 7 deals with documents of title. Documents of title – either bills of lading or warehouse receipts – are commonly used in the shipment and storage of goods. Article 7 provides a framework for the further development of electronic documents of title and updates the article for modern usage. To the extent possible, the rules for electronic documents of title are the same or as similar as possible to the rules for tangible documents of title.
The Uniform Commercial Code is a joint project of the Uniform Law Commission and the American Law Institute (ALI). Revisions to various UCC Articles are part of an ongoing undertaking by the ULC and the ALI to modernize the UCC, originally promulgated in 1951 and enacted in every state, and keep it responsive to contemporary commercial realities.
Further information on the Uniform Commercial Code can be found at the ULC’s website at www.uniformlaws.org.
The Uniform Law Commission, now in its 126th year, provides states with non-partisan, well-conceived and well-drafted legislation that brings clarity and stability to critical areas of state statutory law. The organization comprises more than 300 lawyers, judges, and law professors, appointed by the states as well as the District of Columbia, Puerto Rico, and the U.S. Virgin Islands, to research, draft and promote enactment of uniform state laws in areas of state law where uniformity is desirable and practical. Since its inception in 1892, the group has promulgated more than 200 acts, among them such bulwarks of state statutory law as the Uniform Commercial Code, the Uniform Probate Code, and the Uniform Partnership Act.
Sunday, March 19, 2017
In case you have not yet heard about the recent First Circuit Court of Appeals case discussing the legal importance of a comma, here goes: A Maine statute lists the following activities as not counting for overtime pay:
The canning, processing, preserving, freezing, drying, marketing, storing, packing for shipment or distribution of: (1) Agricultural produce; (2) Meat and fish products; and (3) Perishable foods.
Does that mean that drivers can get overtime because driving does count for overtime since “packing” covers both “shipment or distribution”? Or should the sentence be read as “packing for storage” as one thing and “distribution” another, thus precluding the drivers from earning overtime pay?
Circuit judge David J. Barron concluded that “the exemption’s scope is actually not so clear in this regard. And because, under Maine law, ambiguities in the state’s wage and hour laws must be construed liberally in order to accomplish their remedial purpose, we adopt the drivers’ narrower reading of the exemption.”
So, commas still matter. Consider too how “I love my parents, Lady Gaga and Humpty Dumpty” and “I love my parents, Lady Gaga, and Humpty Dumpty” are a little different. Language aficionados take note! Precise drafting still matters. Was this an outcome-oriented holding? Perhaps. But if so, a holding in favor of workers over a company in a case of interpretive doubt may, in today’s increasingly tough economy for middle and low-income earners, not be such a bad idea from a public policy point of view.
The case is O’Connor v. Oakhurst Dairy, No. 16-1901 (1st Cir. 2017).
Sunday, February 26, 2017
Just when you think the political debacle in this country cannot get anymore grotesque, here's a recent proposal by Iowa State Senator March Chelgren: to counter the liberal slant at Iowa's three public universities, the job candidates' political affiliations would have had to be considered. Why? To ensure "balanced speech" and avoid the "liberal slant" in public universities these days.
Under SF 288, the universities would use voter registration information when considering job applicants, and could not make any hire that would cause declared Democrats or Republicans on the faculty to outnumber the other party by more than 10%.
Demonstrating the very deep and logical (not!) argument, check this line of thinking: Chelgren said professors who want to be hired could simply change their party affiliation to be considered for the position. "We have an awful lot of taxpayer dollars that go to support these fine universities," he said. "(Students) should be able to go to their professors, ask opinions, and they should know publicly whether that professor is a Republican or Democrat or no-party affiliation, and therefore they can expect their answers to be given in as honest a way possible. But they should have the ability to ask questions of professors of different political ideologies."
Monday, February 6, 2017
We’ve written about non-disparagement or “gag” clauses in wrap contracts on this blog in the past. These clauses prohibit consumers from writing negative reviews about a company and typically impose a penalty or fee if the consumer does so. California already has a law which prohibits them and now there’s a federal law. The Consumer Review Fairness Act (CRFA) prohibits gag clauses and intellectual property transfer clauses in consumer form contracts. (The prohibition on IP transfers is intended to prevent companies from using the DMCA takedown provisions to get posted content removed). “Form contract” is defined as a contract with standardized terms “imposed on an individual without a meaningful opportunity for such individual to negotiate the standardized terms.” Form contract does not include an employment or independent contractor contract. The CRFA permits state attorney generals to bring a civil action on behalf of state residents. The Federal Trade Commission may also institute action or intervene in a pending action.
The law goes into effect for on March 14, 2017.
Saturday, February 4, 2017
A recent case out of New York, Wilson v. New York State Thruway Authority, 931-16, deals with the collective bargaining agreement between the New York State Thruway Authority and its retirees over whether the Thruway Authority was contractually bound to provide health insurance coverage to the retirees at no cost. The retirees had enjoyed free health insurance until April 1, 2016, when the Thruway Authority required them to start paying six percent of their premiums. The retirees wanted to introduce evidence that the parties understood that the Thruway Authority was going to pay all of their health insurance premiums, pursuant to the collective bargaining agreement.
The problem was that the contract between the parties contained no such obligation and the court found that the contract was unambiguous on its face. All that the contract stated was that the Thruway Authority should provide "retirement benefits" made available by New York statutes the contract went on to enumerate. None of those statutes contained provisions requiring the Thruway Authority to provide health insurance coverage. In fact, health care benefits were governed by different New York statutes, not the ones enumerated, and New York state courts had long pointed out that "retirement benefits" and "health care benefits" were two different things governed by two different statutes under New York law. Given that, the court concluded that "retirement benefits" was an unambiguous term of art that the parties knew the definition of, given their particular citation of New York statutes to define it. The court refused to allow extrinsic evidence in the face of this lack of ambiguity. If the retirees had wished the Thruway Authority to pay for their health insurance premiums, they should have included an express provision saying that in the collective bargaining agreement, as many other collective bargaining agreements construed under New York law had done.
This decision is fairly straightforward as a matter of the law: finding that the term was unambiguous (and indeed basically defined within the document through the statutory citations) and so therefore extrinsic evidence was unnecessary to decide the breach of contract action (the court here concluded that, with no obligation to pay the health insurance premiums, the Thruway Authority had not breached the contract). However, it is a legal dispute that we might see more and more of, as deals with retirees are reevaluated and altered in an age of shrinking budgets.
Thursday, December 1, 2016
How is this for a most bizarre contract law decision: The Chicago Housing Authority (“CHA”) contracted with architectural and engineering company DeStefano and Partners (“DeStefano”) for consulting services in connection with the construction of seven multifamily residential buildings. CHA required a certain percentage of the homes to comply with Section 504 of the Rehabilitation Act of 1973 and other federal law (some of the housing was to be accessible by mobility impaired individuals, some by elderly residents). Among other things, DeStefano was made contractually aware that the company was to “certify that all work was performed under the direct supervision of the Project Architect and that it conforms to… the American with Disabilities Act of 1990 … [and] Section 504 of the Rehabilitation Act of 1973.”
During the construction, CHA was notified by HUD that the project did not meet the various federal requirements. CHA hired another architecture firm to perform the work necessary to comply with its obligations under the voluntary compliance agreement with HUD. CHA incurred more than $4.3 million to bring the buildings into compliance with federal standards and brought suit against DeStefano for material breach of contract.
DeStefano defended itself by, at bottom, arguing that since CHA had a nondelegable duty to comply with the federal accessibility standards, it should not be able to recover damages from DeStefano for CHA’s failure to do so. In other words: “It’s your own fault that you have this problem, not ours, even though we were the designers and the problem was with the design.” Yah.
But wait, it gets better than that: the court agreed! It apparently bought wholesale defendant’s argument that “permitting CHA to proceed with its state-law breach of contract action would discourage CHA from fulfilling its own obligations to prevent discrimination under Section 504 and the ADA, directly undermining the goal and purpose expressed by Congress in enacting those statutes.” It also stated that “notably, however, … there are no provisions within the ADA, or its accompanying regulations, that permit indemnification or the allocation of liability between the various entities subject to the ADA.” The court found that CHA’s duties were, as mentioned, nondelegable and, because the duties were imposed on CHA by HUD, CHA’s failure to comply was the problem. “CHA was a ‘wrongdoer’ in the sense that it failed to ensure the subject premises complied with the applicable federal accessibility standards in order to prevent discrimination.”
Wait a minute! So, in trying to make sure that the housing in fact complied with the law, the housing authority was found to have violated it! That’s just crazy.
This case may work as a good example if you want to train your students how to identify faulty reasoning and logic by courts.
The case is can be found here. Hat tip to Justen Hansen of WesTech Engineering for bringing this to my attention. http://www.westech-inc.com/en-usa
Sunday, November 13, 2016
Allow me to highlight my most recent article, An “Act of God”? Rethinking Contractual Force Majeure in an Era of Anthropogenic Climate Change.
Given anthropogenic climate change, what were previously considered to be inexplicable and unpredictable “acts of God” cannot reasonably be said to be so anymore. They are acts of man. “Extreme” weather events have become the new normal. Accordingly, the contractual force majeure defense, which largely rests on the notion that contractual parties may be exculpated from liability for failed or delayed performances if supervening unforeseen events that the party could not reasonably control or foresee have made a performance impracticable, is becoming outdated in the weather context. It makes little sense to allow contractual parties to escape contractual performance liability for events that are highly foreseeable given today’s knowledge about climate change. Parties can and should take reasonable steps to contractually assess and allocate the risks of severe weather events much more accurately than ever before. Further, they should be better prepared to take reasonable steps to alleviate the effects of severe weather on their contractual performances instead of seeking to avoid liability at the litigation stage.
Time has come for the judiciary to rethink the availability of the impracticability defense based on “extreme” weather for public policy purposes. Perhaps most importantly, by taking a hard look at the doctrine and modernizing it to reflect current on-the-ground reality, the judiciary may help instigate a broader awareness of the underlying pollution problem and need for action at many scales. Meanwhile, a more equitable risk-sharing framework that might become known as “comparative risk sharing” and which would resemble the notion of comparative negligence in torts could be introduced where parties have failed to reach a sufficiently detailed antecedent agreement on the issue. This is surprisingly often the case. Parties often use mere boilerplate phrases that do not reflect today’s highly volatile weather and appurtenant risks.
The law is never static. It must reflect real world phenomena. Climate change is a super-wicked problem that requires attention and legal solutions at many fronts to many problems, including contractual ones. The general public is often said to have lost faith in the judiciary. Given this perception, courts could regain some of that faith in the context of contracts law and force majeure caused by events for which no “God,” other supernatural power, or even nature can be blamed.
The article can be downloaded here.
I apologize that I have not been able to post very many blogs recently and that I will, for family and work reasons, also not be able to do so until January. I trust it that my lovely assistant Ashley and my co-bloggers will keep you intrigues until then!
Monday, August 29, 2016
Allow me to highlight my most recent article on the questionable ecosystem viability and contractual common law validity of so-called “trophy hunting” contracts. With these contracts, wealthy individuals in or from, often, the Global North contract for assistance in hunting rare animals for “sport.” Often, these hunts takes place in the Global South where targeted species include giraffes, rhinos, lions, and other vulnerable if not outright threatened or endangered species.
A famous example of this is Minnesota dentist Walter Palmer killing “Cecil the Lion” in 2015 causing widespread outcry in this country and around the world. Trophy hunting also takes place in the USA and Canada, where targeted animals include polar bears, grizzly bears, and big horn sheep.
Trophy hunting should be seen on the background of an unprecedented rate of species extinction caused by several factors. Some affected species are already gone; others are about to follow. Western black rhinoceroses, for example, are already considered to have become extinct in 2011. The rest of the African rhinoceros population may follow suit within the next twenty years if not sufficiently protected. In the meantime, more than 1.2 million “trophies” of over 1,200 different kinds of animals were imported into the United States just between 2004 and 2015. In addition to the extinction problem, the practice may also have ecosystem impacts because, among many other factors, the trophies often stem from or consist of alpha animals.
Of course, no one is arguing that rare species should be driven to extinction, in fact, quite the opposite: both trophy hunters and those opposing the practice agree that such species should be conserved for the future. However, the question lies in how to do so. Some argue that trophy hunting creates not only highly needed revenue for some nations, but also brings more attention to the species conservation issue.
I argue that at least until there is much greater certainty than what is currently the case that the practice truly does help the species in the long run (and we don’t have much time for “the long run”!), legal steps must be taken against the trophy hunting. Even when positive law such as hunting laws and/or the Endangered Species Act (“ESA”) do not address the issue (yet), common law courts may declare contracts that have proved to be “deleterious effect upon society as a whole,” “unsavory,” “undesirable,” “nefarious,” or “at war with the interests of society” unenforceable for reasons of public policy.
In the case of Cecil, African lions had been proposed for listing under the ESA when the animal was killed, but the listing did not take effect until a few months later. The case, others like it, and several studies demonstrate that a sufficient and sufficiently broad segment of the population have come to find the killing of very rare animals so reprehensible that common law courts can declare them unenforceable should litigation on the issue arise. This has been the case with many other contracts over time. The same has come to be the case with trophy hunting. As long as doubt exists as to the actual desirability of the practice from society’s point of view – not that of a select wealthy individuals – the precautionary principle of law calls for nations to err on the side of caution. The United States prescribes to this principle as well.
The article also analyzes how different values such as intrinsic and existence values should be taken into account in attempts to monetize the “value” of the practice. Instead of the here-and-now cash that may contribute to local economies (much revenue is also lost to corruption in some nations), other practices such as photo safaris are found by several studies to contribute more, especially in the long term. (Note that Walter Palmer paid a measly USD 50,000 for his contract with the landowner and local hunting guide).
Trying to save rare animals by shooting them simply flies in the face of common sense. It also very arguably violates notions of national and international law.
Thursday, August 25, 2016
The New York Times reports here (paid access) on the increasing use of so-called “rent-to-own” housing contracts. Under these contracts, companies from big Wall Street giants to a slew of small landlords hoping to strike it rich lend or, should I say, purport to sell homes to tenants who contractually commit to make all repairs on the homes no matter how major or minor (yes, you read that right: all repairs… and it gets more extreme than that, read on!). Typically, tenants under such contracts are not told what repairs are needed, yet face a contractual deadline for making sure that the houses in question are brought up to local code. Unlike most typical home purchases, rent-to-own contracts do not require the tenant/buyer to obtain an independent home inspection.
We probably all know how many things can go wrong with older homes, even newer ones. Examples of how bad things can go in this context thus abound. One tenant moved into a home not having been told that it had several unresolved building code violations and had to remain vacant by city order. Another moved into a home that had no heat, no water, and major problems with its sewage system that led to nearly $10,000 in repairs (many of these homes have been purchased by the lender for less than $10,000 and are not worth very much more than that, if any). A third example describes a woman moving into a home with her three children and partner in Michigan, living in the house during cold winter with the only heat sources being one electric heater and a wood-burning stove in the kitchen, only to be evicted and charged $3,100 in overdue rent after she stopped paying rent because of the heat issue.
People who accept these kinds of contracts often do not qualify for mortgages. Banks have virtually stopped making mortgages on homes worth less than $100,000, which leaves millions of people with few options for - now or one day - owning their own homes.
One company that rents homes on a rent-to-own basis does so “as is,” calling the contracts “hybrid leases” that allow people to build up “implied equity.” If tenants are evicted during the contract (typically of a seven-year-duration), they get no credit for money spent on repairs or renovations. Neither do they receive any equity unless they actually end up buying the home at the end of the contract term. At that point, they still need financing for the home which, as mentioned, many people just cannot obtain.
A number of legal questions arise in this context, among them several contractual ones such as the role of caveat emptor vs. the violation of a possible duty to disclose. If the landlords know of the problems from which many of these houses suffer, should they disclose this knowledge? On the other than, shouldn’t these potential (long-term) buyers be presumed to have at least enough savvyness to not promise to bring a home that they do not own outright up to Code by a certain deadline? Then again, are landlords fraudulent in their dealings with these folks when the landlords require such potentially extensive repairs when, as the owners of the homes, they presumably if not actually have actual knowledge of the problems from which these houses suffer? What about the statement that renters get “implied equity?” What in the world does that mean, if anything? Do low-income folks that may never have been homeowners truly understand what it means to bring a home “up to Code” and buying “as is?” Does it matter? And what about the doctrine of unconscionability, which is alive and well in some states such as California? If nothing else, this case seems to smack of both procedural and substantive issues.
In some states, landlords are required to keep homes and apartments in habitable condition. But rent-to-own contracts have, for good reason, been said to reside in a gray area of the law: are they rental contracts? - Or purchase contracts? Or something else?
Further, rent-to-own contracts may, to some extent, resemble contracts for deeds. However, the latter are subject to basic consumer-lending regulations such as the Federal Truth in Lending Act.
The housing market again seems to host highly questionable practices. This story almost reads as a contract or property law issue-spotting exam. Meanwhile, housing sharks seem to be swimming relatively freely in some areas of the nation.
For further information, see Alexandra Stevenson and Matthew Goldstein, Rent-to-own Homes: A Win-Win for Landlords, a Risk for Struggling Tenants, the New York Times, Aug. 21, 2016.
Wednesday, August 3, 2016
Yesterday, Stacey noted how employers should be careful not to be too greedy when dealing with employees. Another example of the backlash – judicial or legislative – that may be the result if employers overstep what ought to be reasonable limits in interactions with their employees is a new law in Massachusetts that prohibits employers from asking job candidates about their salary history as part of the screening process or during an interview.
Why indeed should they be able to do so?! In a free market, freedoms cut both ways: just as an employee can, of course, not be sure to get any particular job at any particular salary, the employer also cannot be sure to be able to hire any particular employee! There is no reason why employers should enjoy financial insight about the employee when very often, employees don’t know about the salaries at the early stages of the job negotiation process. Both parties should be able to come to the negotiation table on as equal terms as possible, especially in this job market where employers already often enjoy significant bargaining advantages.
Massachusetts also requires Commonwealth employers to pay men and women equally for comparable work.
Tuesday, July 5, 2016
Have you ever tried buying concert tickets right when they were made available for sale on the Internet, only to find out mere minutes later that they were all sold out? Or, for that matter, highly coveted camping reservations in national or some state parks?
Where once, we all competed against the speed of each other’s fingertips and internet connections, nowadays, “ticket bots” quickly snatch up tickets and reservations making it virtually impossible for human beings to compete online. Ticket bots are, you guessed it, automatic computer programs that buy tickets at lighting speed. They can even read “Captcha boxes;” those little squiggly letters that you have to retype to prove that you are not a computer. Yah, that didn’t work too well for very long.
“A single ticket bot scooped up 520 seats to a Beyonce concert in Brooklyn in three minutes. Another snagged up to more than 1,000 U2 tickets to one show in a single minute, soon after the Irish band announced its 2015 world tour.”
Ticket bots scoop up tickets for scalpers who then resell them on other websites, marking the tickets up many times the original price. (I’m actually not saying that state and national parks are cheated that way, maybe camping reservations in those locations are just incredibly popular as hotel prices have increased and incomes are staggering. I personally used to be able to, with t he help of a husband and several computers, make campground reservations for national holidays, but those days are long gone…”we are now full.”).
Ticket bots are already illegal in more than a dozen states. New York is considering cracking down on this system as well. However, the most severe penalty under New York law is currently fines in the order of a few thousand dollars where ticket scalpers make millions of dollars. A new law proposes jail time for offenders. This is thought to better deter this type of white-collar crime in the ticket contract market.
Monday, June 13, 2016
Stories such as this [https://www.washingtonpost.com/lifestyle/travel/i-flew-to-abu-dhabi-for-265-round-trip-heres-how-you-can-do-the-same/2016/06/07/fc33cbea-29a3-11e6-b989-4e5479715b54_story.html] about finding incredibly cheap airlines to both national and international destinations because of airline computer pricing mistakes (real or otherwise…) have become commonplace. In 2012, the Department of Transportation established clear rules against changing the price of a ticket after purchase. But in a new decision by the U.S. Department of Transportation, that rule will no longer be enforced:
“As a matter of prosecutorial discretion, the Enforcement Office will not enforce the requirement of section 399.88 with regard to mistaken fares occurring on or after the date of this notice so long as the airline or seller of air transportation: (1) demonstrates that the fare was a mistaken fare; and (2) reimburses all consumers who purchased a mistaken fare ticket for any reasonable, actual, and verifiable out-of-pocket expenses that were made in reliance upon the ticket purchase, in addition to refunding the purchase price of the ticket.
Travelers’ websites thus now recommend that people hold off making further travel plans until a ticket and confirmation number have actually been issued. Some have further said about the glitch fares that “[t]ravel is not something that is only for the elite or [people] from certain economic brackets.” Of course, it shouldn’t be, but with the deregulation of the airline industry and steadily increasing prices and fees, history seems to be repeating itself: air travel is, for many, becoming unaffordable. This in spite of record-breaking profits for the airline industry benefiting from low oil prices and, I want to say of course, fares increasing, holding steady or certainly not decreasing very much. Airline executives say they are sharing the wealth with passengers by investing some of their windfalls into new planes, better amenities and remodeled terminals. They're also giving raises to employees and dividends to investors. Right… And whereas some years have been marked by bust, many more have been booming for the airlines.
Given that, why would the DOT be amenable to help out the airlines, and not passengers? Under contract law, mistakes that are not easily “spottable” have, traditionally, not been grounds for contract revocation. If one considers the contract to have been executed when the airline accepts one’s online offer, why should the airline, absent a clear error or other mitigating factors, not be expected to follow the common law of contracts as other parties will, depending on the circumstances, of course, likely have to? That beats me.
Some airlines are, however, choosing the honoring the mistake fares. Others don’t. Bad PR, you say? That also does not seem to matter. The most hated airline in the U.S. a few years back – Spirit Airlines – was also (at least then) the most profitable.
Hat tip to Matt Bruckner of Howard University School of Law for bringing this story to my attention.
Thursday, May 19, 2016
Another one bites the dust. GM is the most recent car company having to admit that it has reported overly optimistic figures about the gas mileage of, in this case, some of its 2016 SUVs sold in retail trade. Before GM, there was obviously VW, but also Mitsubishi, Hyundai, and Ford, all in the span of the past two years.
GM is temporarily halting sales of about 60,000 new 2016 SUVs because the vehicles' labels overstated their fuel efficiency. The 1-2 miles per gallon mileage overstatement was the result of improper calculations, according to GM. The company plans to compensate owners for the difference in miles per gallon and announce the program in the coming week.
Does this suffice as a remedy? Arguably, no one buys an SUV because of its low gas mileage, so in this case in contrast to the VW “dieselgate,” an argument that a customer bought a car because of its fuel efficiency is less plausible. But should that let GM off the hook in this case simply by saying that it will compensate for the fuel difference? How can an accurate prediction of what that will be over the time the SUV owners keep the car even be made? - For presumably, GM is not only planning to compensate the owners for the past difference, thinking that owners can now simply sell the cars if they are no longer satisfied with them? That seems unfair to the buyers as it is common knowledge that one cannot recover the value paid for a brand new case as with these 2016 models. Should criminal liability lie? OK, perhaps not for the 1-2 mile difference, but what about the systematic fraud committed by VW? Shouldn’t someone be held criminally liable for that?
Of course, a class-action lawsuit has been brought by some buyers. Has time come for everyone – the EPA, car makers, and car buyers – to realize that there is really only so much that can be done with the fuel efficiency of regular-engine cars? After all, hybrids and now electric cars are widely available and will probably cover the needs of the vast majority of car buyers, few of whom really need an SUV. They get much better “fuel” mileage than cars with traditional engines. Still, extreme consumer fraud is committed by at least some (or one…) of these car makers. Reckoning time seems to have come.
Wednesday, May 18, 2016
The Department of Labor is finalizing a rule that will extend overtime pay to 4.2 million more Americans currently not eligible for such pay under federal law. This is expected to increase wages for workers by $12 billion over the next ten years and thus contribute to the relatively stagnant wages experienced by the majority of American workers in spite of six years of continual job growth and, now, solid profits by many companies.
The earnings situation did not use to be so poor for so many people. In fact, in 1975, 62% of full-time workers qualified for overtime pay. Today, only a measly 7% do.
As Henry Ford and others knew a long time ago: more money to more people will boost the economy for everyone, including businesses.
Read more about the ruling here