ContractsProf Blog

Big Mass Arbitration Decision from the Ninth Circuit

Skot Hellman and others (Plaintiffs) bought tickets to concerts promoted by Live Nation Entertainment, Inc. and Ticketmaster LLC (collectively Defendants). When they did so, they were provided with terms, which call for arbitration by New Era ADR (New Era). When Plaintiffs filed their putative class action in the District Court, the Defendants moved to compel arbitration. The District Court denied the motion, finding the arbitration agreement unconscionable. Defendants appealed.

Image by Microsoft Copilot

In Hellman v. Live Nation, decided last October, the Ninth Circuit affirmed, holding that both the arbitration clause’s delegation provision and the arbitration agreement as a whole are unconscionable. In the alternative — hold on to your hats, folks — the Ninth Circuit held that the Federal Arbitration Act (FAA) does not preempt California’s statutory prohibition on class action waivers contained in contracts of adhesion in large-scale small-stakes consumer cases.

This case is another episode in the battle between the plaintiffs’ bar and vendors over the possibility of collective actions in the wake of SCOTUS’ decision in Concepcion allowing vendors to bar such actions, even in the face of state legislation prohibiting class-action waivers. Plaintiffs’ attorneys developed the strategy of mass arbitration (illustrated left), forcing the vendors to face thousands of separate claims on the same subject matter at a tremendous cost because of the arbitration fees. We have blogged repeatedly about mass arbitration and the corporate response, most recently here.

Enter New Era, created in 2020, to assist vendors in counteracting mass arbitration. It creates a two-tiered system of arbitration, Standard Arbitration and Expedited/Mass Arbitration. The latter applies when there are common issues of fact and law in five or more cases. Expedited proceedings are usually virtual. Defendants were New Era’s first customers. New Era’s Expedited proceedings were at issue in the case, and the opinion in brutal. The majority notes at the outset, "New Era’s Rules are internally inconsistent, poorly drafted, and riddled with typos.” Defendant’s counsel struggled to explain them at oral argument.

Here are some highlights of the terms’ problematic terms:

Image by Microsoft Copilot

• Users of Defendants’ website have to agree to be bound by updated terms automatically simply by continuing to use the websites;
• New Era itself, not an arbiter, determines whether its Expedited procedures apply;
• Although claimants are given a role in selecting the arbiter, New Era has discretion to replace the arbiter;
• Three bellwether cases are then chosen, and the arbiter's decision in those three cases then becomes binding precedent on all batched cases, even though claimants get no information about the decision in the batched cases until it is invoked against them;
• Complaints are limited to ten pages; filings are limited to ten documents totalling no more than 25 MB and must be uploaded within fourteen days of filing a claim;
• There is no right to discovery;
• There are no preliminary hearings and the arbiter may decide to dispense with merits hearings;
• Briefs are limited to roughly five pages (15,000 characters)
• Once decisions are issued in the bellwether cases, the other cases are resolved in a single settlement conference;
• Claimants can opt out by showing that there are “no common issues of fact and law” between their case and the bellwethers, but they cannot make such a showing becasue they have no information about the bellwether cases;
• Decisions are deleted sixty days after they are issued but are nonetheless somehow binding on later claimants added to the batch; and 
• Grants of injunctive relief (but not denials) may be appealed to a three-person arbitral panel.

Orwellian? Kafkaesque? Or is this simply an alternative-to-trial balloon sent up to be demolished so that the model can be tweaked just enough to be deemed not unconscionable?

Moving on to the analysis, the Ninth Circuit first affirmed the District Court’s finding that the delegation of the question of arbitrability to the arbiter was “to an extreme degree” unconscionable.  As to procedural unconscionability, the elements of “oppression and surprise” are met. Defendants’ procedures are oppressive because they are the exclusive means through which claimants could gain access to live events. They are surprising because, according to Defendants, the terms of the relationship can be changed at any time without notice but with retroactive effect. Moreover, the terms are misleading, in that they identify individual arbitration as the exclusive means of dispute resolution, but New Era’s is not individual arbitration.

As to substantive unconscionability, the Ninth Circuit provides a handy summary of its findings:

The district court held that four features of New Era’s Rules support a finding of substantive unconscionability of the delegation clause: (1) the mass arbitration protocol, including the application of precedent from the bellwether decisions to other claimants; (2) procedural limitations, such as the lack of a right to discovery; (3) the limited right of appeal; and (4) the arbitrator selection provisions. Heckman, 686 F. Supp. 3d at 957. We agree.

The Ninth Circuit then proceeds to address the unconscionability of the arbitration agreement as a whole. That part was easy. Standing alone, the four provisions discussed above suffice to render the entire agreement unconscionable, so there is no need to do any analysis of the rest. The only question is severability, and the Ninth Circuit found that the District Court did not abuse its discretion in refusing to sever the unconscionable elements of the agreement from the whole.

The Ninth Circuit also notes that the FAA does not preclude the application of unconscionability doctrine under state law. I thought that went without saying, but perhaps the lawyers who defended Defendants’ absurd arbitration provision gave that argument a try as well. I mean, it’s not a worse argument than the argument that their arbitration provision is fair and even-handed.

Then the Ninth Circuit and the concurring opinion get out on a very interesting limb. Under Discover Bank, the California Supreme Court held that class waivers are unenforceable when contained in a “consumer contract of adhesion,” to the extent that they permit a party with superior bargaining power to carry out a scheme to "deliberately cheat large numbers of consumers out of individually small sums of money.” SCOTUS upheld the legality of class action waivers, but it also has repeatedly disparaged aggregation in arbitration and recognized that the FAA did not envision representative actions before arbitral bodies. If follows — and this is brilliant! — that the FAA does not apply to the New Era arbitration scheme, because it does not envision individual arbitration at all.

The case is thus very nicely teed up for SCOTUS review, but they likely won’t decide it because they don’t need to decide it. There would be no reason to take the case if the state law ground for rejecting arbitration is sufficient. From that perspective, Judge VanDyke’s concurring opinion is perhaps too bold. He would have decided based on the Discover Bank argument alone. But that would have invited SCOTUS review, and who knows what the Justices would do.  However, Judge VanDyke makes the interesting point that the whole notion that the question of arbitrability should be put to the arbiter is untenable on these facts. The legality of New Era’s entire scheme is at issue. Should an arbiter determine it unconscionable, they would be eviscerating their employer’s entire business model. The conflict of interest is so palpable, the decision cannot be left to an arbiter.

Small Claims Court in British Columbia Determines that Coldplay Concert Was a Contract

I love cases like this. I think people are crazy to run to courts for the adjudication of such matters, but I hope they keep doing so. 

Michael Stolfi (to whom the court refers as they/them) and Alyssa Randles attended a Coldplay concert together in Vancouver, British Columbia. According to Mr. Stolfi, they fronted the money for the tickets in the expectation that Ms. Randles would repay them her fair share of the costs. She contends — and this is her legal argument — that the evening was a date. Mr. Stolfi’s suggestion that she pay her share was merely a request. She was under no legal obligation to do so. Seems like a true Coldplay fan would Believe in Love, no?

No, said the court in Stolfi v. Randles. The actual facts get a bit ugly. While the parties were breakfasting in Nanaimo, they decided to buy tickets for a Coldplay concert. The tickets were $450 each, and Ms. Randles paid for them using her Ticketmaster account, but Mr. Stolfi transferred money to her to cover the cost of the tickets, as she was short on cash.  Six days later, Mr. Stolfi texted Ms. Randles requesting payment. Four days later, they again sought recovery from Ms. Randles. Ms. Randles asked for more time, and Mr. Stolfi said “it’s all good,” which Ms. Randles took to mean that the debt, if there was one, was forgiven. However, she had acknowledged a debt, and the court took Mr. Randles to have agreed to a delay in repayment but not to complete forgiveness of the debt.

Mr. Stolfi became aggressive, demanding payment and threatening to contract Ms. Randles’ employer, landlord, and family. She went to the police. Mr. Stolfi was now demanding $1000, and they provided the court with receipts for nearly $450 in expenses relating to the concert outing, on top of the $450 concert tickets. However, Mr. Stolfi provided no evidence of a promise relating to those additional expenses.

Without specifically adjudicating whether the outing was a date, the court concluded that Ms. Randles was under a legal obligation to reimburse Mr. Stolfi for the concert tickets but nothing more. They were awarded the cost of the ticket, plus pre-judgment interest and court fees.

I’ve been gathering small cases like this for the start of the first-year contracts course. They are a great way to help the students navigate the border between binding agreement and social promise and also between express and implied agreements.  Other recent cases in the mix include this purported contract involving an eat and run date and this alleged agreement for a ride to the airport.

Apparently, Journey’s Guitarist Can’t Have Things “Any Way You Want It"

The band should really be called Heraclitus. It’s not possible to listen to the same Journey twice. Guitarist/vocalist Niel Schon is the last remaining original member. Jonathan Cain (keyboards, guitar, vocals) joined the band in 1981, and the two have been the core of the band ever since, firing and suing two other long-standing members of the band in 2020. In 2022, Mr. Schon sued Mr. Cain to enjoin him from performing “Don’t Stop Believing” for the Trump campaign. And now Mr. Cain has sued Mr. Schon, alleging that the rock guitarist has maxed out the band’s credit card, charging $1 million in personal expenditures, including a one-month, $400,000 shopping spree, according to Nick DeRiso, writing for Ultimate Classic Rock. C’mon, seriously? Isn’t that what rock guitarists are supposed to do? He didn’t trash a green room like David Lee Roth. He did not destroy everything in sight like Keith Moon. How would we take him seriously as an artist if he weren’t unfathomably irresponsible in some way?

In July, Mr. Cain sought the appointment of a custodian to act as a third, deadlock-breaking member of Freedom 2020, the band’s touring company. Mr. Schon did not oppose the action. In August, the Delaware Chancery Court appointed Joseph R. Slights as that custodian in Cain v. Schon. Given the way the duo turned in 2020 on their bandmates Steve Smith and Ross Valory, who had been with the band for most of the journey since the 1970s, I would not want to be in Steve Smith’s shoes. However, the custodian serves at the pleasure of the court, is granted certain powers and authority by the court, and may appeal to the court for additional powers.

The custodian is an officer of the court. Although he exercises the powers of a director and may choose to act as a de factor chair of the board of directors, he is not a director. He has fiduciary-like duties, but they are not owed to the company but to the court.

I hope the appointment of the custodian enables the band to continue without further strife. Remarkably, the band has continued to tour notwithstanding. I guess they would only go their Separate Ways if they were ever to Stop Believing.

First Circuit Rules on Contract & Bailment Disputes Regarding Liberace's Piano

At issue is a piano, once owned by Liberace (right with actor Maureen O'Hara).  The First Circuit's opinion is mostly concerned with law stuff, on which more below. Thomas F. Harrison provides the factual summary in the Courthouse News.  

According to the reporting, Baldwin pianos (Baldwin), owned since 2001 by the Gibson Foundation, Inc. (Gibson), asked Rob Norris to remove a piano made for Liberace from a Manhattan ballroom undergoing renovation. The piano was encrusted with 10,000 rhinestones. When Baldwin requested that the piano be returned in 2015, Mr. Norris refused, claiming that the piano was a gift given in the expectation that Mr. Norris and his Rockland, Mass. business, The Piano Mill, would use the piano for promotional purposes.

Apparently, Gibson, which may have lost track of the piano, suddenly grew interested when Mr. Norris gave an interview in which he estimated the value of the piano at $500,000. His attorney now says that his client was "puffing" as Liberace himself was wont to do. 

The First Circuit opinion in Gibson Foundation, Inc. v. Norris focuses not so much on the colorful characters involved but, alas, on statutes of limitations.  Gibson alleged either a breach of a bailment, or a breach of a warehousing agreement. The District Court had granted Norris summary judgment, finding that the three-year statute of limitations had run on Gibson's bailment claim and that it had not provided sufficient evidence to support a jury finding that a contract existed between the parties. 

For the purposes of the appeal from summary judgment, the court assumed that a bailment agreement existed, but the statute of limitations for bailments under Massachusetts law turned out to be a very tricky issue. Under Massachusetts law, it seems that the statute of limitations for a breach-of-bailment claim is either three years, if the gist of the claim sounds in tort, or six years, if the gist of the claim sounds in contract. Here, the First Circuit concluded, a reasonable jury could conclude that the gist of the claim derived from a breach of a mutually beneficial arrangement and thus that six-year statute of limitations could apply.  Norris gave consideration by storing the piano; in exchange, The Piano Mill was allowed to use the piano for promotional purposes.  Accordingly, the First Circuit reversed the District Court's grant of summary judgment on Gibson's bailment claim. It was not, as a matter of law, time-barred.

Norris argued in the alternative that Gibson could not establish a bailment because it could not establish that it owned the piano. Gibson Brands, the Gibson entity that claimed to own the piano, had filed for bankruptcy in 2018. In that proceeding it had to list its assets, and it omitted the piano. No matter, said the First Circuit. At least for the purposes of summary judgment, Gibson established a prima facie case for ownership simply because it had possession of the piano prior to handing it over to Mr. Norris.

Given its findings in connection with the breach-of-bailment claim, it comes as no surprise that the First Circuit also reversed the District Court's grant of summary judgment to Mr. Norris on Gibson's breach-of-contract claim. However, it affirmed the District Court's denial of summary judgment to Gibson on both of its claims.  The case was remanded and proceeded to trial. In July, as Brian Dowling reports on Law360 here, the jury handed a victory to Gibson.

If you are not a Boomer or Gen-X, you may be wondering who this Liberace fellow was.  You can't go amiss with a Google search, but make sure you watch a video.  Liberace was always on, and so whatever you find will be a faithful representation of his public persona.  Here's a taste:

NJ Appellate Court Finds Verizon's Arbitration Provision Unconscionable

Image by DALL-E

In February, 2022, twenty-eight New Jersey Verizon Wireless customers filed a putative class action against the company, claiming that Verizon's failure to disclose a $1.95 monthly administrative fee violated New Jersey's Consumer Fraud Act and other statutes.  Verizon moved to compel arbitration.  

Verizon's arbitration clause gave customers 180 days to file a claim, limited all claims to direct damages, and prohibited treble damages. In addition, the arbitration provisions prohibited class claims.  Rather, they provided for coordinated "bellwether" proceedings.

If twenty-five or more claimants made "similar claims," the claims would proceed in groups of five until all claims are resolved. Claimants are prohibited from initiating arbitrations of their individual claims until the bellwether proceedings are completed.

Verizon is not hiding the ball; the target of this provision is mass arbitration: "A COURT WILL HAVE AUTHORITY TO ENFORCE THIS CLAUSE, AND IF NECESSARY, TO ENJOIN MASS FILING OF ARBITRATION DEMANDS AGAINST VERIZON." Noting that the average arbitration takes about seven months, plaintiffs' attorneys calculated that, with over 2500 claims already brought, the wait for arbitration of new claims was then 145 years.  

Verizon's contract provides that its arbitration provisions are, for the most part, severable. It also warns customers not to rely on representations of sales or customer service representatives. Again, not hiding the ball: Verizon will exploit the parol evidence rule to evade responsibility for its agents' misrepresentations.The trial court struck the limitation on damages but, noting the severability provision, otherwise granted Verizon's motion to compel arbitration. 

In Achey v. Cellco Partnership, a New Jersey appellate court affirmed the trial court's determination on limitation of damages but also struck Verizon's arbitration clause in its entirety because it was permeated with unconscionability.  In so doing, the court followed a decision from the District Court for the Northern District of California in McClelland v. Cellco P'ship, in which the court identified five unconscionable elements in Verizon's arbitration provisions.

The New Jersey court specifically found Verizon's bellwether provision unconscionable, because it allows Verizon to exercise unlimited discretion as to how the arbitrations can proceed. The court also noted the 180-day, contractually-imposed statute of limitations and the absence of tolling provision in the bellwether process. These features allowed Verizon to argue that all claimants not invited to participate in the very first bellwether proceeding had failed to timely bring their claims.  In addition, the invocation of the parol evidence rule is inconsistent with New Jersey's consumer protection laws.  Finally, the court found that the 180 day limitation on claims was, at least to some degree, substantive unconscionable and violative of New Jersey's public policy in the context of consumer contracting.

Ultimately, the court found that Verizon's arbitration provisions are cumulatively unconscionable and unenforceable for lack of mutual assent. The case is remanded to the trial court for further proceedings.

Thanks, New Jersey.  Take us out, Bruce.

National Consumer Law Center Presents: 75 Ways to Avoid Arbitration

We learned from that great legal authority,Paul Simon that there are fifty ways to leave your lover.

You know what's even better than that? Getting out of binding arbitration (if you are a consumer who would rather be in court, that is).  And now, the National Consumer Law Center has collected seventy-five ways to challenge an arbitration agreement.  It's not as catchy as Paul Simon's tune, but it seems more practical than "Make a new plan, Stan."

Hat tip to John Wladis!

Will Katie Perry Be Known for Music or the PERRY Act?

Today's post was another gift from Miriam Cherry, that Holmesian gatherer of rare gem-like contracts stories.  She is as indefatigable as Sherlock and as legally savvy as Oliver Wendell. 

Katy Perry, as far as I can recall, is famous for having been creative enough to coin a singular for "fireworks" but not creative enough to find a word that actually rhymed with "firework."  "Worth"?  Nope.  "Burst"?  Nope.  Here's one that might be coming to your minds now:  "Jerk."  She is also known for her "left shark" dancer below.  

But she also is very into real estate.  We reported before about her attempt to buy a convent. She won that case, and only one nun died in the process (that we know about).

More recently, according to TheRealDeal, she and her husband, Orlando Bloom, attempted to purchase the Montecito estate of Carl Westcott, of 1-800-FLOWERS fame.  The sale price was $15 million, but Mr. Westcott, who is now 84 years old and suffers from Huntington's Disease, claims that he was not of sound mind when he agreed to the sale, not necessarily because of age or disease, but because he had just undergone a six-hour back surgery, and he was on pain medication.  Three years later, the parties are still embroiled in litigation.  

In order to avoid such problems in the future, some have proposed the Protecting Elder Realty for Retirement Years Act, or Katy PERRY Act.  According to its website, 

The Katy PERRY Act addresses the risks of elder financial abuse, especially as it relates to property and real estate sales and transfers. The Act establishes a 72 hour cool-down period during which either party involved in a contract for conveyance of a personal residence, in which one party is over the age of 75, can rescind the agreement without penalty.

If that Act had existed a few years ago, it might have prevented a firework.

Taylor Swift Has the Cure for COVID! And It Involves Contracts Law!

Image by Cosmopolitan UK,
CC BY 3.0, via Wikimedia Commons

Is there anything that woman cannot do?  Clearly, she can do anything she sets her mind to do, and if reviving the struggling movie theater business, with carry-on effects for shopping malls and other venues, is a positive externality of Taylor being Taylor, then so be it.  

For those of you who have avoided all human contact for the past decade, Taylor Swift (left) is a singer/songwriter who has had a number of hit songs.  Her international "Eras Tour" broke all imaginable records for successful concert tours, broke the Internet when tickets went on sale, and even generated a seismic event that registered 2.3 on the Richter scale, reportedly due to 70,000 white people trying to dance simultaneously to "You Belong With Me."  

As someone who does not particularly care for Ms. Swift's music but is surrounded by people who do, I have had no choice but to learn some of the details of her career.  So, I know that Ms. Swift does not like to share revenues with media industry bloodsuckers, like record labels and (now) movie studios.  

She has made headlines once again by leaving the studios out of the deal that will bring the Eras Tour to a movie theater near you.  Taylor Swift and her parents have cut the studios out of the process of financing and distributing the film version of her fabulously successful tour.  As Chris Eggertsen, reports on Billboard, the proceeds of the enterprise will be split, with 43% to be shared by the 1000 theaters at which the movie will be shown and 57% to be split between AMC and the Swift family.  Billboard reports (and I find this hard to fathom) that the theaters get to keep proceeds from concessions (fair enough) including from the sale of bespoke Taylor merch to be sold at the screenings (I'll believe it when I see it).  Theaters must agree to show the film for at least four weeks and may keep it up for as long as 26 weeks.  Taylor Swift now aims to beat Starbucks for market penetration.  

And of course, the records for sales for a new movie are dropping like flies.  The movie is not going to be released until October, but it seems like a safe bet that the Swifties will not lose their enthusiasm between now and then.  More likely, only Taylor-inspired bonding will prevent them from beating each other with friendship bracelets as they jostle for position in line.  No studio wants to release anything anywhere close to the release date for Ms. Swift's film, and for the first time in years, there is actually reason to buy AMC stock -- and not just to piss of the investment banks!  If there is a corresponding video game, I would recommend investing in GameStop next. One can anticipate people flocking back to theaters and the shopping malls that house them.  Social behaviors that we had completely forgotten about will return, and before long, we will re-familiarize ourselves with pre-pandemic life.  People will return to work, if only because the water-cooler conversations will now become opportunities to compete for the honors of having seen the movie the most and having bought the most Eras Tour merch.  And all thanks to Ms. Swfit!  

I am a lifelong Cubs fan.  I thought I would never get tired of the song "Go, Cubs, Go."  Then they won the World Series.  The weekend of the victory parade, I took a train into Chicago to attend Loyola Chicago's annual Constitutional Law Colloquium.  The train lasts about an hour, and my fellow Cubs fans were irrepressible, breaking out into song at the slightest provocation and with no regard to pitch or timbre.  I was relieved to step off of the train at my destination station, where "Go, Cubs, Go" was playing over the public address system.  I'd had it.  I was officially tired of the song.  Will the Swifties ever tire of their darling.  All signs point to no.  Well, let them enjoy their pleasure.

Twenty-six weeks may be enough, but expect it to have an afterlife akin to that of the Rocky Horror Picture Show, with dedicated Swifties heading out week after week to the Saturday night showing of The Eras Tour, complete with a pre-show costumes, Karaoke contests, and Taylor-wannabe talent shows.  And of course, the entire concert will be a sing-along punctuated by shrieks and shouts of adoration directed at the image of the singer.

AMC has visions of "Taylorstyle" deals moving forward.  That seems unlikely.  Her charms are lost on me, but they are undeniably unique and powerful.  I cannot think of another performing artist who could replicate this deal.  Maybe Beyonce? And just so that my Swiftie students will actually look at this blog, here's the trailer:

 

A Theater Ticket Is a Revocable License

A theater ticket gives the holder a revocable license to attend an event.  We could easily forget this.  The ticket stub is tangible and moveable, or at least it was before smart phones made many everything things a little bit less tangible.  Nonetheless, what you are buying is not the ticket stub, nor is it title, even temporarily, to a seat.  Rather you are purchasing the abstract, intangible right occupy a seat, perhaps a specific seat, in the theater.

Licenses, like other legal instruments, come with terms and conditions.  You are welcome to enjoy the performance.  You are encouraged to applaud, cheer, and otherwise express your enthusiasm for the people on the stage or screen.  You are also expected to behave in a way that will not interfere with others' enjoyment of the performance.  

This is elementary.  Adults understand it.  Children understand it.  Support animals understand it.  Who doesn't understand it?  Well, apparently, more and more people over time. 

According to Michael Paulson, writing in The New York Times, theaters in the UK and also in NYC are having to deal with overenthusiastic patrons with increasing familiarity. The story in The Times focuses on Colorado politician Lauren Boebert (right), who apparently mistook a production of the musical "Beetlejuice" for the latest iteration of the State of the Union address. 

To her credit, with respect to Beetlejuice, Ms. Boebert "plead guilty to laughing and singing too loud!"  There were also allegations of cellphone usage and of improperly recording the show, but the story does not make clear whether Ms. Boebert was accused of these additional misdeeds.  Although her party was heard to yell things like "Do you know who I am?" and "I will call the mayor!" (he knows, don't worry), it seems Ms. Boebert does understand the concept of basic civility when it comes to theater-going. 

If only we could import such understanding of common decency and respect for others into our politics.  While Ms. Boebert seems to understand and accept the theaters reasons for insisting that the leave the venue, the notion persists that social media sites have no right to enforce their terms of service to engage in content moderation so that others can enjoy the use of those sites without having to endure threats, harassment, and other content posted that exceed those sites' rather capacious tolerance for freedom of expression.

Metropolitan Opera Ordered to Pay $200,000 to Putin Stan Anna Netrebko

We have been posting occasionally on the interaction of the Russian war against Ukraine on the blog.  The most recent such post is here.  Today, care of  Javier C. Hernández and The New York Times, we have a new installment.

By Kremlin.ru, CC BY 4.0

Russian soprano Anna Netrebko (pictured at right receiving the State Prize of the Russian Federation) was scheduled to perform at the Metropolitan Opera in Don Carlo this season and La Forza del Destino and Andrea Chénier next season but the Met cancelled those performances when Ms. Netrebko refused its demand that she denounce Vladimir Putin after the Russian invasion of Ukraine.  

An arbitrator awarded Ms. Netrebko $200,000 under a "play or pay" clause in her agreement with the Met, finding that her support for Putin did not rise to the level of moral turpitude nor was it actionable misconduct.  However, the arbitrator did fine her $30,000 for "highly inappropriate" statements on social media.  The Met has also terminated Ms. Netrebko's husband, tenor Yusif Eyvazov, who was slated to perform in Tosca.  The Met says that they will compensate Eyvazov.  Ukrainian soprano Liudmyla Monastyrska will sing the role of Tosca in four performances.

Admittedly, Netrebko is in a tough spot.  Facing cancellations throughout the West (but she has performances scheduled in Vienna and Milan), she has attempted to distance herself from Putin saying that she met him only a few times, but the penalties she might face in Russia were she to denounce the invasion could be far more grave that losing a gig at the Met.  As Radio Free Europe/Radio Liberty reports, Putin recently signed into law a new provision in Russia's criminal code that provides for up to fifteen years in prison for "false news" relating to the Russian military.  Helen Sullivan reports in The Guardian on Alexei Moskalyov, whom Russian authorities tracked down in Belarus after he attempted to escape form two years of house arrest, in part because of anti-war drawing by his 13-year-old daughter.  She was removed from his care and placed in a state-run rehabilitation center.  

Weekend Frivolity, Professor Harry Fletchner's CISG Song

Harry Fletchner, of the University of Pittsburgh School of Law is an expert on international contracting, including the U.N. Convention on the International Sale of Goods, known to its friends as the CISG.

Thanks to my student Corinna Bethke, I recently learned of Professor Fletchner's CISG Song, written for a November 2005 conference titled "The CISG and the Business Lawyer: The UNCITRAL Digest as a Contract Drafting Tool."  Among other things, this song has the most impressive footnote apparatus I have ever seen.  From what I know of academic conferences, I am pretty confident that Professor Fetchner's performance was the main take-away that participants retained after the conference.  

Frank Snyder, if you are reading this, is it too late to book Professor Snyder for KCON XVI?  In the alternative, can we find a way to re-create the legendary boat excursion from KCON VI?

The Lyrics are as follows:

When I was a little boy my daddy said to me,
"If you want great riches, son, it's a merchant you should be.
You can deal in goods from cars to cod, and earn more than enough.
But don't buy or sell 'cross borders, son, cause that's awfully risky stuff."

We didn't have no C-I-S-G. [1]
If we bought or sold in another State we didn't know what the law would be.
But now there's a Convention to make global trade more free.
'Cept them gol-danged U.S. courts just treat it like the U-C-C. [2]

As a young man I took up those words my daddy said.
I became a merchant -- traded goods to earn my bread.
But I would not buy or sell beyond the borders of my State
'Cause if the deal was not domestic, none could tell my legal fate.

We didn't have no C-I-S-G.
We were clueless how the law would go if we dealt internationally.
But now under this treaty global commerce is a breeze,
'Cept some jerks from Pittsburgh and Denmark say I can't recover no attorney fees. [3]

So now there is a treaty when I buy or sell afar.
I can deal with folks from everywhere, from Arles [4] to Zanzibar. [5]
The goods I buy are always fine, [6] and my buyers never sue.
I hardly need a lawyer — yes, my life's perfection true!

Because we have that C-I-S-G.
There's no risk in international sales far as the eye can see.
But I just received a shipment, so I must quickly say goodbye —
'Cause German courts give me just 5 minutes to inspect and notify. [7]

Justin Bieber Is Selling His Soul. No, That's Not News. He's Selling His Music

As Nimo Omer, in conversation with Eamonn Forde, reports in The Guardian, Justin Bieber (below -- honest, I'm not trying to be mean (yet) by posting his mugshot; it's the only public domain image I could find!) has entered into a $200 million deal giving Hipgnosis Songs Capital the rights to all of his music recorded before 2021.  Baby, baby, baby, oh, that's a lot of money!  But it covers 290 titles, even though I can only think of one.

The transaction is an indicator of a trend.  Music is back, according to The Guardian, with album sales climbing in the U.S. over the past two years.  I'm not sure what these guys mean by "album," but whatever. 

And it's not just about you-know-who who is committed to owning all of her own music and insists on bringing out a new (old) album every year in order to do so to the delight of her fans who apparently are unaware that the world is teeming with talented artists of whom they've never heard (like Sarah Dooley) because all they listen to is this poor girl who is the most downloaded artist in history but for some reason is still singing about somebody who broke up with her ten years ago when she is not setting records for use of her private jet in a year when she's not even touring. 

Haters gonna hate. 

Actually, I wouldn't hate this artist if she were just stupendously successful.  I hate that she takes up all the oxygen in the room so that no other artists can breathe (and my students disappear for 48 hours after she drops a new album so that they can commit every syllable to memory and then shoot each other knowing looks when I accidentally use some utterly humdrum phrase that also happens to have found its way into her lyrics, which are 98% utterly humdrum phrases. 

But I digress.

Anyhew, Hipgnosis is a big player in the market, and that company and its rivals are betting on the long-term value of the songs that they are buying up.  Hipgnosis principal proclaims himself to be a "disruptor" who wants to destroy the traditional model of music publishing.   It's not clear to me that there's anything left to destroy, but his company has literally spent billions of dollars on demolition, so I suppose there's still work to be done.  

Among the things that makes me wonder whether the parties know what they are doing is the round numbers involved in these transactions.  According to the Guardian, "Stevie Nicks sold her catalogue for $100m. Bob Dylan shed his for a cool $300m-400m. Bruce Springsteen tops the lot at $550m."  Okay, so a Bieber is twice a Nicks and half a Dylan?  But also, what are these numbers based on.  If there were a formula, it would produce a number with more significant digits.  I think these deals are very rough guesstimates to true value, which is why I have decided not to buy the rights to all of Britney Spears' music just yet.

Heirs of Funny Girl Producer Get to Keep Royalties

Bob Merrill wrote and copywriting the lyrics to Funny Girl in November 1963.  Later that same year, he entered into a royalty agreement with the company behind the Broadway production of the musical.  In December, Merrill entered into a second agreement with Eliot Hyman, an executive at the production company, that reduced Merrill's entitlement to future royalties in exchange for an up-front payment of $82,500.  That second agreement reduced Merrill's royalties when the producers agreed to let another entity, Tams-Witmark Music Library, license the show to other companies.  As a result of the second deal, while Merrill's co-authors got just over 12% of the royalties on the licensing arrangement, Merrill got just over 4%, with the remaining 8% going to Hyman. 

With the original parties to the deal long dead, the US District Court for Connecticut presided over a showdown of the heirs in Merrill v. Hyman.  Merrill's widow thinks that because copyrights have expired, she is now entitled to terminate the agreement with Hyman.  She sued, seeking a declaration that the contract was lawfully terminated.  The Hymans counterclaimed, seeking declaratory judgment and alleging breach of contract and tortious interference in their relationship with Tams-Witmark.  Tams-Witmark is holding royalties in escrow until the dust settles.  

Ms. Merrill was relying on 17 U.S.C. § 304(c) of the Federal Copyright Act, which gives an author the power to revoke any “transfer or license” of the copyright after 56 years.  Unfortunately, Mr. Merrill never transferred or licensed his copyright in Funny Girl to Mr. Hyman; he only agreed that should he decide to transfer or license use of his material in return for royalties, some of those royalties go to Mr. Hyman.  The Copyright Act has nothing to say about such arrangements.

Fanny Brice, the original funny girl

Ms. Merrill did not seem to resist this conclusion.  Instead, she argued that when her husband promised Mr. Hyman a share of his “royalties, percentage compensation, rights and other compensation,'” he understood "rights" to mean copyright rights.  The District Court found that interpretation to be incompatible with three separate provisions of the parties' agreement.  In addition, it would be very odd to have a copyright agreement that made no mention of the Copyright Act.  Other arguments relating to Mr. Hyman's agreement with Tams-Witmark indicated, at best, that Mr. Hyman might have believed that he owned the copyright, but if he did so believe, he was mistaken.  

The court awarded summary judgment to the Hymans on their declaratory judgment and breach of contract claims and permanently enjoined the Merrills from interfering with the Hymans' recovery of royalties.  Upon the Hymans' concession at oral argument that recovery of funds held in escrow would make them whole, the court dismissed as moot the tortious interference claim.

The Signature of the Artist in the Age of Its Mechanical Reproducibility

Mr. Dylan, in 1966

Mark Savage reports on BBC.com that Bob Dylan has apologized.  You need not read any further.  That is news in and of itself.  I'm wracking my brain.  Has Bob Dylan ever apologized before?  For anything?  Isn't that more of a John Denver vibe?

What has finally made the American Bard issue an apology?  Breach of contract, of course.  Mr. Dylan's publisher, Simon & Schuster sold for $600 each 900 "hand-signed" copies of Mr. Dylan's new book, The Philosophy of Modern Song.  Some Dylan aficionados, it turns out, were also signature aficionados, and they discovered that the "hand-signed" books were signed using an autopen.  The publisher went through the five stages of settlement: anger, denial, reference to "letters of authenticity," consultations with PR, the offer of refunds. 

For his part, Mr. Dylan regretted an "error of judgment," but he also offered explanations.  He has vertigo, so it takes a team of five to accompany him during signing sessions.  I recently saw Bob Dylan in concert, and I can confirm that he is unsteady on his feet.  During the pandemic, such sessions became a health risk and so, "with contractual deadlines looming" (that's an actual Dylan quote!!) when some unnamed person recommended the use of the autopen, accompanied by assurances that people do it all the time, Mr. Dylan agreed to auto-sign copies of his book.  The BBC report suggests that other artists have indeed used the same device.  Sinead O'Connor was unapologetic, but signed copies of her book sold for £30, so no big deal.

What is the difference in value between a book hand-signed by Bob Dylan and a book auto-signed by Bob Dylan?  Apparently, quite a bit, and the reason for that turns, contrary to what Walter Benjamin (left) would have you believe, on the ability of works of art to retain their auras, even when they have been stripped of their unique existence in an (often sacred) time and space.  Remy Tumin reports in The New York Times on what motivated one fan, who already owned the book in both in hardcover (unsigned), audio, and Kindle versions, to buy the signed version. “If he touches this book — he wrote it, signed it — it feels like the soul of Bob Dylan is with me.”  That, my friends, articulates the power of the aura of an authentic work of art, or at least, a thing touched by the artist.  

There is a great deal to unpack in all of this, and I wish Benjamin were around to reflect on it.  Works of art once had a specific cultural role.  They elevated and celebrated; they connected us to the divine.  In the modern, disenchanted world, when they became reproducible, the cult value of the work of art is supplemented and eventually replaced with its exhibition value.  The role of the work of art changes as the sources of its value changes.  Benjamin celebrated the transformation of the social function of art.  Art, freed from cultic aura, is democratized.  Pictures, movies, electronic files, etc. can be endlessly reproduced and enjoyed by the masses.  The museum, the gallery, the cafe, the salon, the cinema become the new settings in which the work of art does its work.

At this point, one wants Adorno to step in and to warn about the susceptibility of art to commodification.  People still long for the cultic aura -- the verisimilitude of proximity to artistic creation.  We cannot look over Bob Dylan's shoulder as he writes "Mother of Muses" (below), my favorite song on Rough and Rowdy Ways.  He will not premiere his new songs for us.  The best we can do is buy memorabilia, and we value that memorabilia to the extent that we think it connects us to art or the artist, but the connection is attenuated, shrouded in mists or mysticism.  And then we degrade the artwork's aura (or that of its creator) by reducing its value to the cash nexus.  Appalling!  As thought paying for something would reduce our alienation from our species-being rather than embodying it!  It's in the 1844 manuscripts people!!!

Console yourself that with each breath, you likely inhale some of the same molecules that Mr. Dylan inhaled just before he sang "Blowin' in the Wind" for the first time.  By paying for his signature, you might as well be breathing in molecules Mr. Dylan exhaled during the recording of "Idiot Wind."  Better than either option, you can get a whiff of Dylan's aura at the Dylan Archives in Tulsa.  I plan a pilgrimage soon, even though I reside firmly on the post-Weberian side of disenchantment.

That said, I was thinking about art and aura when I saw Bob Dylan live.  The stage was crowded.  I heard him before I could pick him out, in the (I assume intentionally) one dark patch of an otherwise carefully illuminated mis-en-scene.  The voice was unmistakable.  Bob Dylan was there, singing an unrecognizable version of a recognizable song.  And so it would continue for ninety minutes or so.  Eventually I found him, hunched over a keyboard, looking down at his lyrics, harmonica at the ready, and I was enchanted.

 

Weekend Frivolity Revisited: Are You a Swiftie . . .or Just a Bot?

As Ben Sisario and Madison Malone Kircher report in The New York Times here, Ticketmaster has had to cancel its plans for public sales of tickets to the upcoming Taylor Swift tour.  Confusion reigns.  Are there tickets left?  When will they go on sale?  Can I get three seat together that are not partially obstructed for under $1000?  Will my students have to spend hours waiting in virtual queues rather than mastering the Statute of Frauds and the parol evidence rule in time for exams?

According to the Times, Ticketmaster's Verified Fan program was supposed to make Taylor Swift tickets available only to 1.5 million committed fans.  The site was overrun by 14 million "people," including bots, which suggests that the vast majority of accounts trying to get access to Taylor Swift tickets were actually bots.  I've always suspected as much.  

So, for the benefit of my students who are diehard Swifties, I once again offer the following simple test so that you can determine whether you are a bot:

 

Adidas Terminates Agreement with Kanye West (Ye) over Anti-Semitic Comments

Adidas has a line of shoes branded "Yeezy," a brand associated with Kanye West, who now goes by Ye (right).  According to Jaclyn Peiser and Jacob Bogage of the Washington Post,  the brand generated $2 billion in revenue last year and accounts for nearly ten percent of Adidas' annual revenue.  The end of the contract will be costly to Ye, but Adidas estimates that it will also cost the company about $250 million.  Adidas is the last domino to fall.  Numerous other companies had already severed ties with Ye. 

None of the articles that I have looked at discuss the basis for terminating the deals.  One expects that the contracts have morals clauses, but one would like to have a look at them to see whether Ye's partners have discretion to invoke them selectively.  As discussed below, his anti-Semitic outbursts are not the first occasion that might have given corporate partners concerns about how Ye's conduct reflected on the product.  To date, I haven't seen anything suggesting that Ye was challenging the companies' rights to termination his deals.  

Earlier, Ye's social media accounts were restricted in connection with statements viewed to be anti-Semitic.  Ye responded, according to media accounts, by entering into a preliminary agreement to buy Parler, a social media platform that promotes itself as more amenable to unbridled freedom of expression than its mainstream rivals.  

The Washington Post provides many reasons why Adidas might have been willing to bid auf wiedersehen to Ye.  He was not easy to work with, to say the least, and his recent barrage of provocative speech is not his only brush with controversy.  The Post speculates that, shunned by the fashion industry, Ye might fall back on music to keep his empire afloat.  But there is also the danger that the major music platforms will also refuse to distribute his products.  

That seems unlikely to me.  It's not as if Ye supporters are in it for the anti-Semitism, but as Lisa Respers of CNN reports, many have noticed that corporate partners did not sever ties with Ye when he made statements that could be construed as anti-Black, such as when he donned a "White Lives Matter" t-shirt, called slavery a "choice," and decried racism as "a dated concept."  Those who were willing to stick with Ye despite his anti-Black expression and expressive conduct would likely continue to do so notwithstanding his anti-Semitism.

Doing so, in my view, would not make them complicit in Ye's anti-Semitism.  Most of his fans dislike his anti-Semitism, but many would overlook it because of his unique attributes as an artist.  I'll admit it, when I recently learned that Eric Clapton (far right, with Blind faith) had expressed support for Enoch Powell's British fascism, and that David Bowie (left) had expressed unseemly enthusiasm for Hitler and the Third Reich, it had no effect on my enjoyment of Layla or Changes.  I forgive them their trespasses or their not-so-youthful indiscretions or whatever made these wonderful musicians say such stupid things.  Our broken world is full of broken people, including broken artists.  Sometimes, it is more appropriate to respond with compassion than with judgment.

Weekend Frivolity: The Four Seasons Performed as an Ode to Joy

 

Contracts at the NRA Convention

As reported here in The New York Times, a number of musicians who were slated to perform at the National Rifle Association (NRA) convention this weekend in Houston have pulled out.  The musicians include Don McLean (pictured. in 1976), best known for the iconic songs, "American Pie" and "Vincent," both from the early 1970s; Larry Gatlin, known, according to his Wikipedia entry, for country songs written in the 1970s and 80s; and Larry Stewart, who (also according to Wikipedia) had 18 top 40 hits with Restless Heart in the 80s and 90s.   Lee Greenwood (the singer-songwriter of “God Bless the U.S.A.”, also known as “Proud to Be an American”) and T. Graham Brown also cancelled appearances.

According to the CMT website, Mr. McLean issued the following statement:

[I]n light of the recent events in Texas, I have decided it would be disrespectful and hurtful for me to perform for the NRA at their convention in Houston this week.

Mr. Gatlin explained his decision to pull out as follows: 

I cannot, in good conscience, perform at the NRA convention in Houston this weekend.  While I agree with most of the positions held by the NRA, I have come to believe that, while background checks would not stop every madman with a gun, it is at the very least a step in the right direction toward trying to prevent the kind of tragedy we saw this week in Uvalde — in my beloved, weeping TEXAS.

Mr. Stewart posted the following on Facebook:

Due to the tragedy in Uvalde with the horrific school shooting and children who died, I want to honor the victims, families, the town and our friends in the great state of Texas the best I know how. So I have made the decision to pull out as a performer for the NRA convention this weekend, especially given the event is just down the road. I just believe this is best for me at this time. God Bless everyone involved!

Here on the ContractsProf Blog, our question is, what are the contractual consequences of doing so?  We have not seen the contracts, but it seems unlikely that the musicians had clauses allowing them to pull out in case of mass shootings on the eve of the convention.  Given that there have already been 27 school shootings and over 200 mass shootings in the U.S. this year, the event was hardly unforeseeable.  Nor did the Uvalde massacre render the musicians' performance commercially impracticable. 

However, it seems unlikely that the NRA would want to risk negative publicity and harm relationships that likely will soon return to normal by going after musicians for breach of contract.  Presumably the musicians will not be paid, and so, absent some argument that people flocked to Houston to hear performances by people they remember from their childhood rather than for the main attraction of an NRA convention, the damages from the breaches would likely be limited to inconsequential costs and unrecoverable deposits and the like.  Can the NRA book alternative acts on short notice?  Are other contracts affected (promoters, sound technicians, roadies, etc.)?  All interesting matters.  All likely to resolved through quiet negotiation and private settlement.

Of course, there is another option available to the NRA.  They could take a page out of David Kopel's book, as set out in this post over at the Volokh Conspiracy.  According to Kopel, those who link the NRA to mass shootings are hate groups carrying out a blood libel.  He denounced the "cowardly politicians" who canceled their appearances at the NRA convention held in Denver shortly after the Colombine shootings.  He concludes:

We say to each and every hate group, we reject your sick and twisted lies against us, for exactly the same reason we reject the blood libels against every race, every religion, and every other group: We reject Satan and all his works.

That sounds like a great conclusion to the NRA's opening brief in its case against the Satanic musicians.  And why not throw in suits against the cowardly politicians who once again pulled out from the convention this year?  Likely there are no damages when politicians fail to show up, but you can certainly hit them in the solar plexus of endorsements and campaign fund by alleging in court documents that they have abandoned the NRA in favor of Satan.

Ted Cruz, Donald Trump, and Kristi Noem need not worry.  They will not be sued.  They showed up.  As described here (with video), Mr. Trump enacted a scene from The Hunger Games, reading out the names of the dead as a bell tolled for each murdered child.  One hopes that the allusion was inadvertent, but given Mr. Trump's adoration of Hungarian strongman Viktor Orban, and his love affair with Kim Jong Un, who knows? 

Hat tip: Peter Gulia.

Weekend Frivolity: I Love the Kidzes!

I don't know what this is, but I think it is my students' generation celebrating their talents, their obsessions, and their linguistic inventiveness.  Also laughing at themselves.

 

Paul Horwitz on the Dwindling Prospects for Compromise

Over on Prawfsblawg, Paul Horwitz (right) has a long and insightful rumination on some more contractual fall-out from the Russian invasion of Ukraine, a topic we have already touched on here and here.  His post was inspired by the decision of the Vancouver Recital Society (VRS) to cancel a concert by Russian pianist Alexander Malofeev (below left).  VRS pursued Mr. Malofeev for six years, but then said that it could not support Russian artists unless they denounced the war.  

Perhaps in response, or sua sponte, Mr.  Malofeev wrote on Facebook,

The truth is that every Russian will feel guilty for decades because of the terrible and bloody decision that none of us could influence and predict.

Not good enough.  In a response that it described as "complex and nuanced," VRS explained why it was nonetheless cancelling Mr. Malofeev's performance.  

Professor Horwitz makes great points about how decisions like VRS's are exceptional.  In most situations, we swallow our moral scruples in order to get on with life.  It is obviously silly to demand that Mr. Malofeev denounce the war and then cancel the concert anyway.  It is obviously hypocritical to pretend that nobody knew that Putin was a war-mongering tyrant before February 2022.  But for our purposes, his most interesting point is that decisions like VRS's are business decisions, and institutions caught in the battles over "cancel culture" make such decisions all the time.  First Amendment principles might come into play, but how one wields the rhetorical force of constitutional rights might be overdetermined by basic math: will our bottom line look better or worse if we go forward with this event?

Image by Liumir, CC BY-SA 4.0, via Wikimedia Commons

And so it has ever been.  The world is tainted.  Unless, as Professor Horwitz put it, you are a saint or a recluse, we all weigh plusses and minuses and make compromises or simply choose not to inform ourselves of the full impact of our interactions with international markets.  While "cancel culture" makes surface waves, we swim in a sea of compromise culture.  Most of us have to work somewhere; we have to buy our goods somewhere, and everything is ultimately inter-connected.  

Okay, so Professor Horwitz covered the hard stuff, the deep stuff.  I want to know the surface stuff: Did VRS have a contractual right to cancel Mr. Malofeev's performance unilaterally.  If not, wouldn't VRS have to pay Mr. Malofeev his fee, and doesn't that figure into the  economic calculations relevant to the decision to cancel the concert?  Could there not also be downstream consequences beyond the decision to cancel this one concert?  After all, Russia has produced a great many talented musicians.  So has China.  So has Israel.  The list goes on.  No state is free from moral taint.  Must every artist now pin a Tweet or a post on Facebook denouncing their home state's latest atrocities?  If doing so might be deemed inadequate by the concernt promoter, aren't artists in high demand like Mr. Malofeev going to demand assurances of payment in case of cancellation by the concert promoter?