Monday, October 5, 2020
The Parable of the Peloton
By Sidney W. DeLong
Cooperation and competition are the yin and yang of contract. A voluntary contractual exchange is a cooperative “win-win” transaction that produces a gain in welfare for both participants. The measure of this subjective gain is the amount by which each trader values what it receives by more than it values what it gives up. This exchange surplus is familiarly known as the “pie,” as in “making the pie larger.”
But each party to a cooperative exchange is also trying to maximize its share of the exchange surplus pie at the expense of the other. This competition does not increase the pie and is a zero-sum or even a minus-sum transaction. The parties’ efforts to maximize their personal profit may be so great as to prevent the transaction or even to tear it apart. Pie-eating contests take place openly in the negotiation of the price terms of the contract, but they can also occur throughout the performance stages of the transaction as parties seek unbargained-for advantages over each other.
The norms of contract law must mediate the opposition between its cooperative and competitive elements. Sins against cooperation are the centrifugal forces that can tear the deal apart through illegitimate competition: hence the rules about good faith, duress, and opportunistic breach. But legitimate competition in the performance of a contract is not sinful but is an expected part with the self-seeking behavior that led to the bargain in the first place.
Contract’s yin and yang of cooperation and competition are nicely illustrated in the sport of professional bicycle racing. I recently watched the glorious spectacle of the Tour de France and was rewarded with one of the most competitive events in my memory, as always against the matchless backdrop of La Belle France. It naturally led to reflections on contract law, as what does not?
Dozens of professional riders compete to win a long-distance road race with the prize each day going to the individual winner. For most of the race, most of the competitors ride in a large group, called the “peloton.” A group of riders can go much faster than a solo rider by taking turns leading and “drafting” behind each other, reducing the aerodynamic drag on the bikes behind the leaders. Individual riders who try to win the race by speeding up and “breaking away” from the peloton usually fail because their individual talent is overcome by the efficiency of the group.
The competitors are all professional riders, under contract to ride for their sponsor. Most riders on a team are ordered to ride in support of their star rider. They attend to his needs during the race and form a protective shield around him, easing his way to the point at which he will race away to the end alone. These contractual relationships are easy to understand, and do not warrant a parable.
But sometimes, more than one rider will break away, aiming at the formation of an elite coalition of riders from different teams that can employ its own drafting benefits to outride the peloton. Once the group is formed, they ride as an ad hoc team, taking brief turns leading and then drafting in a “pace line.” A good pace line is a thing of beauty to behold, with precise timing and positioning creating a super-fast organism. A good pace line can go much faster working together than any of them can go alone and often can out-pace the peloton. The more closely they cooperate, the faster they go.
Although they may be the product of pre-race planning, the breakaway alliances are usually formed instantly and wordlessly. Breakaway “contract formation” is spontaneous, tentative, and uncertain. The “offerors” must expend significant “search costs,” little busts of energy as riders jump away and invite other riders to join them, often to be disappointed when they don’t. But if it appears that two or three strong riders will succeed, other strong riders (who have been waiting for the opportunity) will “jump across” to join them and make the group stronger still.
The trick is thus for a select group of strong riders to find each other, to sort themselves out, to winnow out weaker riders, and to work thereafter at maximum effort for a few kilometers to gain an advantage over the rest.
The chief sin in a breakaway is shirking. Each rider must take his turn at the front and not coast along at the rear, literally free-riding on the labors of others. Sometimes the group is joined by an uninvited, parasitic rider, who takes no turns at the front because he is working in the interests of a rider back in the peloton who wants the breakaway to fail or, if it succeeds, for the parasite to capture the win.
But the dynamics of the race make shirking a constant temptation. Each rider is trying to hold something back, even at risk of slowing the group, in order to have a bit more energy left for the final sprint when he can defeat those who spent more of their energy working for the group. Blatant shirking is usually detected and chastised by the other riders, but there is little sanction they can impose.
The alliance often lasts until the final mile, when the breakaway group has a lead that assures them that one of them will be the winner. Then, however, something surprising happens: the alliance is suddenly broken, with each rider trying to move ahead of the others. “All for one and one for all” becomes “Every man for himself.” At this point, drafting is no longer a gift bestowed by the leader on the others but a burden assumed by the hapless rider who is forced to ride in front only to be jumped from behind at the finish.
The moment when the alliance breaks, when the riders move from cooperation to competition, is always uncertain but everyone knows that it is inevitable. Sometimes, when the peloton is pressing near the end of the race, the breakaway riders must calculate carefully how long to work together (necessary to ensure that they will not all be run down) before the group explodes as each breakaway rider seeks individual victory. In this critical interval, each breakaway rider must decide “Am I strong enough to go it alone from this point forward, or should I remain with the group a little longer?”
This ethical implications of this cycle from tentative agreement to trust to inevitable betrayal is understood and accepted by everyone. For a member of a breakaway to breach its tacit contract by jumping into the lead before his allies-of-the-moment is no real betrayal and is never blameworthy, because breakaway contracts are created to be faithfully performed and then to be ruthlessly broken.
Does the parable of the peloton suggest anything about commercial contract law and its norms?
Sunday, September 13, 2020
It is important in these times to remember all that we have to be grateful for. In this case, I'm grateful for talented, snarky young people who can celebrate and parody this uniquely American fusion of patriotism, religiosity, and sports. Also, I can't get the song out of my head.
Monday, May 4, 2020
In the movie RBG, Justice Ginsburg noted, "I ask no favor for my sex. All I ask from my brethren is that they take their feet off our necks." For those of us who follow women’s opportunities in the workplace and beyond, it probably struck us as shocking when a judge famously dismissed the U.S. women’s soccer teams’ equal pay claim last week.
At first blush, the opinion seems very gender biased. After all, female soccer players are said to be better than their male counterparts. For example, they won the World Cup in 2019 whereas the men’s team did not even qualify in 2018 and has not placed in the top three since 1930 when it won bronze. (The complaint sets forth many other wins by the women’s national soccer team not achieve by the men’s team.)
According to a Washington Post article, which cited copies of both agreements, female U.S. soccer players can sign contracts that provide an annual salary of $100,000 and additional bonuses for wins and ties. The men do not get annual salaries, but they get larger bonuses per game — including a guarantee of $5,000 even if they lose (free version here). Under these structures, a female player who played (and won) 20 exhibition matches would receive just 89% of what a male player would get under the exact same circumstances. If both players lost all 20 matches instead, the payment would be the same for both groups: $100,000. However, FIFA awarded $30 million in total prize money for the 2019 World Cup, with the champion — the U.S. — netting $4 million. That's 10.5% of what the men's World Cup champions received.
Also upsetting for many was how U.S. Soccer defended itself earlier in the equal pay lawsuit filed by the U.S. Women’s National Team (USWNT), claiming that the World Cup champions’ male counterparts have “more responsibility” and their job “requires a higher level of skill.”
Title VII prohibits employers from discriminating against any employee “because of sex.” 42 U.S.C. § 2000e-2(a)(1). This of course also prohibits paying females less than men for the same work. However, J. Klausner’s ruling pointed out how the men’s and women’s contracts were structured differently before agreed upon in collective bargaining. This history, wrote J. Klausner,
demonstrates that the WNT [Women’s National Team] rejected an offer to be paid under the same pay-to-play structure as the MNT [Men’s National Team], and that the WNT was willing to forgo higher bonuses for other benefits, such as greater base compensation and the guarantee of a higher number of contracted players. Accordingly, Plaintiffs cannot now retroactively deem their CBA [Collective Bargaining Agreement] worse than the MNT CBA by reference to what they would have made had they been paid under the MNT’s pay-to-play structure when they themselves rejected such as structure …. One of the defining features of the WNT CBA is its guarantee that players will be compensated regardless of whether they play a match or not. This stands in start contrast to the MNT CBA, under which players are only compensated if they are called into camp to play and then participate in a match.
In other words, the CBA was, according to the court, a contract that could not be changed after the fact when it turned out to be less lucrative overall than that for the men’s team. In fact, J. Klausner went further and found that “the WNT has been paid more on both a cumulative and an average per-game basis than the MNT over the class period.” Thus, he held, the WNT did not even demonstrate a triable issue that their players are paid less than men…. That seems to be debatable, but I will not do so here for space reasons.
I’m sure there are also more contractual details at issue than what I have outlined here. It is difficult to discern exactly what is going on here. Is this truly a matter not of gender differences, but “only” of how the initial CBAs were negotiated and drafted, or are there truly gender issues at play here, so to speak? Comment below!
The spokesperson for the WNT noted that an appeal will be filed and, “We have learned that there are tremendous obstacles to change. We know that it takes bravery and courage and perseverance to stand up for them.”
Incidentally, the Equal Measures 2030 gender equality report, which collects data on gender equality, rates Denmark as the best country in which to be a woman with a score of 89.3/100. The USA ranks at number 28, tied with Bulgaria, with a score of 77.6/100.
Thursday, July 18, 2019
What you should do if you want your Super Bowl party to be able to last until 4 a.m. (hint: not this)
A recent case out of New York, PJAM Prods., LLC v. M Light, LLC, 652409/2018, stems from a Super Bowl party. PJAM licensed M Light's venue to hold a party coinciding with Super Bowl weekend. There were discussions about the party being allowed to go on until 4 a.m., even though local law required the party to shut down by 2 a.m. PJAM claimed that M Light talked about being able to get permission from the city to keep the venue open until 4 a.m.
No such permission was ever received, however, and PJAM sued for breach of contract. The problem was there was nothing in the contract requiring M Light to get such permission. The contract required M Light to have the proper government permits for the party, but did not specify that those permits should allow the party to extend until 4 a.m., and PJAM acknowledged that the law in the city was to close by 2 a.m., so that's what the proper government permits would have said, too. There was nothing in the Agreement about M Light lobbying the city to keep the venue open until 4 a.m.
PJAM's fraudulent inducement claim also failed, because there was no allegation that M Light was lying about its intention to lobby the city when it said that it was going to. As for allegations the M Light led PJAM to believe its connections with the city were such that the lobbying would be successful, the court called those "mere puffery." The court said it was not justifiable for PJAM to rely on M Light's statements to believe that the 4 a.m. permission would definitely be obtained; rather, PJAM was taking a risk, and there was no indication that things would have turned out differently if M Light had lobbied harder or had better city connections.
Basically, if PJAM wanted M Light to bear the risk of the 4 a.m. permission not coming through, it should have been put in the contract, and it wasn't. The contract was integrated, with a merger clause, so the court did not allow parol evidence of this as an additional term.
The moral of the story is: If you're signing a written contract, don't rely on oral representations different from the contract.
Sunday, December 23, 2018
The below guest blog was shared with us by Oren Gross, the Irving Younger Professor of Law with the University of Minnesota Law School:
Who amongst us has not taught the 1864 case of Raffles v. Wichelhaus, a.k.a. the two ships Peerless? The story of the ships (by some accounts there have been up to eleven ships bearing the same name!) has tantalized and captured the imagination of numerous generations of students learning about meeting of the minds.
You can imagine my delight when, taking a much-needed break from grading exams, I came across a modern version of the story involving three NBA teams and two players named Brooks.
The Washington Wizards, it seems, wanted to strengthen their roster by adding the Phoenix Suns forward Trevor Ariza. For its part, Phoenix was interested in Memphis Grizzlies players and the Grizzlies – in Wizards players. And so, the Wizards’ general-manager concocted a three-team trade and served as the go-between the Suns and the Grizzlies. As part of that trade, the Suns were to get two players from Memphis, namely Selden and Brooks.
Simple enough. Or so it seems. However, as Chris Herrington reported in the Daily Memphian on December 15, 2018, the deal fell apart or, in an insight worthy of contracts’ scholars, “maybe never quite was.”
The problem is that Memphis currently has not one, but two, players on its roster whose last name is Brooks. And whereas the Suns thought they were getting Dillon Brooks, the Grizzlies intended to trade MarShon Brooks. Thus, while “two Grizzlies sources confirmed to The Daily Memphian that it was MarShon Brooks, not Dillon Brooks in the deal. Media in Phoenix, however, insisted it was Dillon, not MarShon.”
As the two teams negotiated through the Wizards as the go-between, the miscommunication as to the identity of the player actually to be traded was not revealed until news of the deal leaked to the media.
The outcome? The three-team deal collapsed. As Herrington put it “the deal that never really was was nixed.”
Thursday, November 1, 2018
Hello! I was away at a conference last week and then the Red Sox* decided to win the World Series, which threw off all productivity for a while. As I ease back into blogging, I thought I'd link you to this piece from Business Insider, analyzing some of the terms set forth in the 2011-era version of Major League Baseball's uniform contract. I find my students always love to look at real-life contracts, and this is a nice point in the year to do it, as it's a nice way to demonstrate that they are now able to (or should be able to!) understand more of the contract than they might have on the first day of class.
Of course, I always try to impress upon my students that contracts can be negotiated, so here's a list of some more unusual contract clauses baseball players were successful in getting teams to agree to.
Thursday, September 20, 2018
Above the Law has a write-up of a case involving charges of copyright infringement against the NFL for using photographs without permission, but the case has a very strong contract angle, as the allegations involve the scope and validity of the license that the AP granted to the NFL for the photos. The Second Circuit has a contract-interpretation-focused analysis that permits the photographers' lawsuit to go forward (the district court had dismissed the complaint). You can read the full decision here.
Wednesday, June 20, 2018
Recently a video went viral showing a 2016 altercation around an umpire ejecting Mets pitcher Noah Syndergaard after he threw a fastball behind the Dodgers' Chase Utley. Umpires wear microphones during Major LeagueBaseball games, and the resulting (often loud and profane) discussions with Mets players and especially Mets manager Terry Collins was recorded.
The video recently surfaced in an apparent leak, because MLB has announced its intention to try to scrub the video from the internet. MLB's reason for this is that it violates a "commitment" that "certain types of interactions" involving umpires during baseball games would not be made public, claiming it was "in the collective bargaining agreement" and that there was "no choice" but to scrub the video from the internet. Indeed, according to one report it had already been scrubbed.
Not so fast, though, because I found it still embedded in news reports about it. It's hard to get anything to vanish from the internet, especially once it's gone viral, but it's not that difficult to locate this video at all.
And it's not hard to see why it went viral. It's a fascinating glimpse into a part of the game fans seldom get to see. As others have pointed out, the umpire does a fantastic job in the clip, so it's hardly like he's being cast in a bad light. The manager doesn't even come across all that poorly. In fact, in my opinion, the party that comes out of the clip looking the worst is Major League Baseball and its confusing way of handling the explosive Chase Utley situation.
It's unclear what "interactions" were agreed to be withheld from the public, but this one is certainly an interesting one. I'd love to know what the contract terms actually are.
Wednesday, April 25, 2018
I fell down a rabbit hole recently looking at athletes who had lied about their ages. You can find a flurry of pieces about this online, from lists purporting to gather names together (I found some here and here and here) to more in-depth examinations of the phenomenon (see here and here and here and here). I fell down the rabbit hole courtesy of stumbling across a Baseball Prospectus piece on Albert Pujols. I discovered that there had been a flurry of discussion around Pujols's age when the prospect of his next (and last) baseball contract was looming, as you can see here and here and here. I'd never paid much attention to this issue before but it's interesting to contemplate how it intersects with contract law.
Monday, January 29, 2018
I’ve written many, many times now on the ways in which NDAs have been used to protect and enable systemic abuse of less empowered people, and they’re in the news again. USA Gymnastics has decided not to fine McKayla Maroney for violating her NDA and speaking out about the abuse she suffered at the hands of Larry Nassar, the Team USA doctor who recently pled guilty to sexual assault and has been accused by over 140 women. The women’s stories reveal how enforced silence can be used to obscure the full extent of harmful, abusive, and criminal conduct, making it seem as if each account was an isolated incident instead of a pattern of behavior.
A recent report from the Financial Times also makes this point. An expose on a men-only charity event in London, the article revealed that the hostesses hired for the event were asked to sign NDAs (which they were not allowed to read or take with them). Afterwards, during the event, they were subjected to multiple instances of groping, including hands up skirts, and one report of having a penis exposed to her. But we only know about this treatment because the NDAs meant to protect this behavior were broken.
Monday, October 2, 2017
A contract worth $11 b. Two such major parties as Yahoo!, Inc. and SCA Promotions, Inc. And still the contract does not specify precisely what the payments due are supposed to be for.
In 2014, Yahoo wanted to sponsor a perfect bracket contest in connection with the 2014 NCAA Men's Basketball Tournament, with a $1 billion prize for any contestant who correctly predicted the winner of all 63 games. SCA provides risk management for marketing and prize promotions. In return for a fee, SCA agreed to pay the $1 billion prize if any contestant won the contest.
Two invoices, dated December 27, 2013, were attached to the Contract with continuous pagination. According to the second invoice, the contract fee was $11 million. Yahoo owed an initial deposit of $1.1 million to SCA “[o]n or before December 31, 2013”; the remaining $9.9 million was due to SCA “[o]n or before February 15, 2014.”
The contract permitted Yahoo to cancel the contract with fees varying depending on when Yahoo cancelled. The relevant provision read as follows:
Cancellation fees: Upon notice to SCA to be provided no later than fifteen (15) minutes to Tip-Off of the initial game, Yahoo may cancel the contract. In the event the contract is cancelled, Yahoo will be entitled to a refund of all amounts paid to SCA subject to the cancellation fees set forth in this paragraph … Should the signed contract be cancelled between January 16, 2014 and February 15, 2014, a cancellation penalty of 50% of the fee will be paid to SCA by Sponsor (emphasis added).
Yahoo subsequently cancelled, but argued that it only owed SCA a cancellation fee of $550,000 because “50% of the fee” means 50% of the $1.1 million that Yahoo had already paid to Yahoo as an interim payment. SCA argued that the cancellation fee was $5.5 because “50% of the fee” means 50% of the $11 million total contract fee.
The Fifth Circuit Court of Appeals agreed with SCA: “The district court determined that the Contract's terms do not expressly set an $11 million fee. According to the district court, nowhere does the Contract specify or identify the invoices, when they will be paid, or otherwise provide that the fee is $11 million. But the Contract references invoices several times, and it provides that “this contract, including exhibits and attachments, represents the entire final agreement between Sponsor [Yahoo] and SCA, and supersedes any prior agreement, oral or written.” Although the Contract does not explicitly identify the invoices to which it refers, two invoices are attached to the Contract with pagination continuous with the rest of the Contract … It is clear from the Contract's terms that the invoices are part of the Contract. See In re 24R, Inc., 324 S.W.3d 564, 567 (Tex. 2010) (“Documents incorporated into a contract by reference become part of that contract.”). Accordingly, the district court's conclusion that the Contract does not specify an $11 million fee was in error.”
Once again, students and practitioners: be clear when you draft documents! Unambiguous language and specific references can be worth millions, if not billions, of dollars.
The case is SCA Promotions, Inc., v. Yahoo!, Inc., 868 F.3d 378 (Fifth Cir. 2017).
Wednesday, September 27, 2017
A recent case out of the Southern District of New York, Betty, Inc. v. Pepsico, Inc., No. 16-CV-4215 (KMK) (behind paywall), tackles a fairly common issue: Often people make pitches based on ideas they have. Ideas aren't copyrightable, so often the only protection people have is contract-based. But, also often, they don't actually have a written contract, so they have to rely on an implied-in-fact contract theory. However, as this case reiterates, an implied-in-fact contract is more than just a conclusory allegation that "oh, we had an agreement that they'd pay me something for my pitch."
The case in question involves an advertising agency, Betty, who pitched a commercial to Pepsi for use in the Super Bowl. Pepsi invited Betty to participate in a telephone pitch meeting, during which Pepsi provided the "general outline of what it envisioned for the Super Bowl commercial," followed by a more formal face-to-face presentation. At the presentation, Betty presented eight different ideas and provided Pepsi with a USB drive with some concepts contained on it. Pepsi allegedly reacted favorably and asked for more details about some of the concepts.
About a month later, Pepsi informed Betty that it had decided to go in another direction with the commercial. However, when Betty saw the commercial during the Super Bowl, it thought it was substantially similar to one of the concepts it had pitched to Pepsi. The decision itself is behind a paywall but the lawsuit's filing was reported in some outlets.
This lawsuit followed, alleging copyright claims as well as a variety of contract-based claims. The breach of contract claim faltered, though. In the complaint, it consisted of just three paragraphs of conclusory allegations that didn't appear to rise to the level of an agreement. In the most generous reading, it sounded like an "agreement to agree" that can't be enforced. The complaint contained absolutely no terms of the contract. The fact that the contract was an implied-in-fact contract didn't excuse the plaintiff from having to allege facts sufficient to allow the court to draw an inference that the parties had entered into a contract based on their conduct and the surrounding facts and circumstances. That didn't happen here. Therefore, the court dismissed the breach of contract claims.
The copyright infringement claim, though, survived, and the court granted leave to amend on the breach of contract claim, so the plaintiff does live to fight another day.
(This post has been edited to correct a typo in the previous version. Pepsi provided the "general outline" over the phone, not Betty.)
Monday, June 12, 2017
On Monday June 5, 2017, Saudi Arabia, Egypt, Bahrain, Yemen, Libya, the United Arab Emirates and the Maldives all severed diplomatic ties with Qatar. While only a small period of time has passed, the small Arab nation has been left with some pressing issues. Almost immediately the people of Qatar rushed to supermarkets to stock up on food. Many fear that with their only land border shut (that between Qatar and Saudi Arabia), food supplies will run short and prices will skyrocket. The Philippines have already begun restricting migrant workers from going to Qatar for fear that migrant workers will be more marginalized if food shortages become an issue in a country that does not produce any of its own food. Migrant workers have been a source of conflict in Qatar for years and this current crisis could worsen or better the landscape.
On December 2, 2010, Qatar became the first Middle Eastern country to win a World Cup bid. That World Cup is set for 2022. In preparation, massive construction projects have begun in Doha and the surrounding area, including building new stadiums, renovating old ones, building new ports and rail systems, and renovating current city areas to make Qatar appear a modern metropolis in the heart of a desert. While all of that sounds good, it has come at a steep humanitarian cost. Many migrant workers have died and many modern governments have reprimanded Qatar for its inhumane treatment of people.
However, the current climate of Qatar is one of isolation from its neighbors—Emirates and Etihad airlines have ceased all travel to Qatar. Migrant workers are already starting to lose jobs. While FIFA, the governing body of soccer worldwide, has stated that the World Cup will continue as planned, if construction materials and workers cannot enter the country, the small country cannot hope to continue hosting the World Cup. No country has ever lost a FIFA World Cup contract after being awarded the bid, but the consequences could be astronomical. Qatar is looking to spend almost $200 billion for the World Cup, and while not all or even most of that money will be recovered by hosting the event, there is an expectation of gain for local businesses and hopefully an increase in tourism following the event. Without the World Cup, Qatar would be out the money and potentially enter a massive contract suit with FIFA. Currently, we can only wait and see how the situation works itself out, but it will be at the forefront of many people’s minds until the current diplomatic situation is resolved.
Sunday, February 19, 2017
In McNair v. Superior Court (6 Cal.App.5th 1227 (Cal. App. 2016), a college football coach brought suit against National Collegiate Athletic Association (“NCAA”) for, among other issues, interference with and breach of contract. That’s hardly unusual. What is unusual is the fact that the case has so far been assigned to … eight judges in five years!
In 2011, for example, NCAA moved t
strike McNair’s complaint under the California anti-SLAPP statute. The trial court denied that motion. The NCAA appealed. The appellate court affirmed in “large part, but reversed a small portion.” The NCAA then filed a second peremptory challenge to the trial judge who had denied the anti-SLAPP motion. Without even giving McNair a chance to file an opposition but with full knowledge that an opposition was, in fact, forthcoming, the trial judge disqualified himself. McNair petitioned for a write of mandate contending that the trial court erred as a matter of law and asking the appellate court to issue a write directing the court to vacate its order accepting the postappeal peremptory challenge.
The appellate court this time pointed out that under California law, peremptory challenges to judges may only be filed following a “final judgment.” Cal. Civ. Proc. Code § 170.6(a)(2). A denial of an anti-SLAPP motion is not a final judgment, said the court. NCAA argued that McNair’s writ petition should be denied because, among other things, McNair had not suffered prejudice. However, the court found that McNair had indeed been prejudiced by the trial court’s “abrupt decision” to accept the NCAA’s peremptory challenge before he could oppose it. The court granted McNair’s petition. The case was thus sent back to … the same judge who didn’t want it. Not very reassuring to any of the parties or the general public’s faith in a fair legal system, I am sure. Neither is the fact that our system allows for so many judges in the same case in one single case. Too much and too little… this case definitely seems to be one of too much.
Monday, October 31, 2016
A recent case out of the Western District of Pennsylvania, Douglas v. University of Pittsburgh, Civil Action No. 15-938 (behind paywall), found that there were factual disputes precluding summary judgment regarding whether or not a contract was in place between the plaintiff, an assistant football coach, and the University.
The plaintiff alleged that he was orally told by Pittsburgh's head football coach when he was offered the job that it would be a two-year-contract with $225,000 in the first year and $240,000 in the second year, with other perks. The plaintiff accepted the terms and began the job immediately upon receiving this alleged oral offer from the head coach.
A little more than a week later, the plaintiff received a proposed Employment Contract. The contract had his second-year salary as $235,000 instead of $240,000 and also stated that the University could terminate the plaintiff's employment if the head coach left the school. The plaintiff had concerns about these clauses and other parts of the contract and brought these concerns to the head coach, who allegedly told the plaintiff that he would take care of the issues.
A few months later, the plaintiff moved his wife and children to join him in Pittsburgh. Over the course of the next few months, the plaintiff claims to have periodically raised the issue that he had never signed a contract and was allegedly told by various people not to worry about it.
Less than a year after the plaintiff started the assistant coach job, the head coach left Pittsburgh to take a job at the University of Wisconsin. Pittsburgh then subsequently terminated the plaintiff and all of the other assistant football coaches. The University informed the plaintiff that, because he had never signed the Employment Contract, he was an "at-will" employee. The plaintiff, in the wake of losing his job, took a job at Florida State for $40,000 per year, necessitating more moving costs.
Not happy about how this all played out, the plaintiff sued the University of Pittsburgh. The plaintiff's allegation was that he was orally offered a contract for two years of employment that he accepted, and that the University breached that oral contract. The University responded that the conversation between the plaintiff and the head coach on which the plaintiff pins his hopes did not have enough essential terms to be considered a contract and that the essential terms were in the Employment Contract. Although the plaintiff refused to sign that written contract, the University maintained that he accepted the terms of the written contract when he continued to work for the University. The plaintiff, however, argued that the head coach's offer of employment was specific enough, giving job duties, term, and salary, to constitute a binding contract between the parties, and the plaintiff stated that he resigned from his job and moved his family in reliance on this.
The University moved for summary judgment but the court found that there was enough evidence that a jury could conclude that the plaintiff and the University had agreed to enough essential terms to form a contract. However, the court dismissed the plaintiff's claims for fraud in the inducement and negligent misrepresentation as merely duplicating the surviving breach of contract claim. I'll keep you posted on what happens!
Law360 has an article about the filing of this lawsuit here.
Friday, August 26, 2016
I have witnessed with interest the evolving story of what exactly happened in Rio involving Ryan Lochte the morning of August 14. Initially Lochte claimed he had been robbed at gunpoint. I later heard through the gossip mill that that story was untrue and that Lochte had in fact beat up some security guards. That turned out, it seems, just to be rumor-mongering, but the story has continued to evolve from there, with both Lochte and the Rio police making statements that later seem untrue, or only partially true, or exaggerated. Slate has a good run-down of the changing versions of Lochte's story, although it's from a week ago. Now Lochte has been charged with filing a false police report, since it does seem clear at this point that no robbery happened. Even that, however, is confusing to parse if you read a lot of articles about it: It seems like the crime is more accurately making a false communication to police, as some articles have eventually stated, since there are conflicting reports about whether a police report was ever filed.
In the wake of this whole mess, Lochte has lost several of his sponsorship deals (although he's also picked one up). It's unclear, because the contracts don't seem to be public, whether this is a choice of just not renewing the contract (apparently that's the case with Ralph Lauren) or if a violation of a morals clause is being invoked to allow cancellation of the contract (which might be what's going on with Speedo). All of this provokes an interesting morals-clause conversation to me, and we had a bit of discussion about it on the Contracts Professors listserv. It seems clear that Lochte engaged in some sort of inappropriate behavior, and it seems also clear that whatever that behavior was, even the most minor version of the story is arguably a violation of any morals clause out there.
What is most clear is that, no matter what really happened, this has definitely served to tarnish his reputation, and that's is what's striking to me. This story has taken on an enormous life of its own, with many differing versions of it floating around the Internet. This situation has been caused, of course, by Lochte's many differing stories, together with some apparent conflicting statements by the Rio police, coupled with reporting that may have been less than precise itself in describing what was going on. One online story details all the conflicting information and asks the individual reader what they believe about the story.
While this particular maelstrom seems to have some basis in fact, it's not difficult to imagine something like this getting out of control without such justifying behavior at the root of it. Morals clauses tend to be about perception, but does that mean you can manipulate the perception of someone, through no real fault of their own? Take, for instance, the "Ted Cruz is the Zodiac Killer" meme that was popular on the Internet earlier this year. Ted Cruz wasn't born until after some of the Zodiac killings had happened, so he obviously could not have been the Zodiac Killer, and in fact some people interviewed about the meme noted that was the point: what they were saying was impossible. Nevertheless, it was reported that polls indicated 38% of those surveyed thought he might, in fact, be the Zodiac Killer, despite the impossibility. If a substantial number of people start thinking you did something you absolutely did not do, is that enough for a morals clause to be violated, because of the perception that you did it?
Thursday, August 11, 2016
Which is exactly what Australia's swimming sisters Bronte and Cate Campbell have tried to do. Apparently after their father gave a number of effusive interviews to the press, the sisters turned to contract law in an attempt to protect them from further such events. As this article reports, the sisters entered into a contract with their father in which he promised, "to the best of [his] ability," "not to embarrass [his] daughters on national television."
No word on what their father received in exchange for this promise.
Monday, February 15, 2016
As a companion piece to the Delaware Planet Fitness case I discussed a few days ago, here's another case about negligence liability releases and gyms, this one involving a Gold's Gym in Pennsylvania: Hinkal v. Pardoe, No. 165 MDA 2014 (behind paywall).
In this case, the plaintiff was a member of Gold's Gym who used the personal trainer services offered by the gym. She was injured while working with weights under the direction of her Gold's Gym personal trainer. (Here, unlike in the Planet Fitness case, we get some details about her injury. It was a serious neck injury and required two separate surgeries, and it was alleged the injury resulted from there being too much weight on the equipment she was instructed to use and that she was told to continue using even after she complained of injury, because the personal trainer, it was alleged, didn't recognize the seriousness of the injury.) As in the Planet Fitness case, the Gold's Gym membership agreement that the plaintiff signed contained a release from liability for negligence.
The court went through an analysis of whether this release was enforceable, noting that in Pennsylvania such releases are enforceable where they do not contravene public policy, they entirely concern two private individuals and their private affairs, and both parties bargain freely and the contract is not one of adhesion. Here, the court found that this contract was between a private individual and an entity concerning the individual's private affairs, and it was not against public policy because it did not concern any matter of public interest, which the court defined as "employer-employee relationship, public service, public utilities, common carrier, and hospitals." In addition, the court found that the plaintiff was not required to enter into a membership with Gold's Gym, so the plaintiff could not complain that she did not have bargaining power, because her decision to sign the membership agreement was purely voluntary and she could have walked away.
Interestingly, the plaintiff didn't really seem to argue against any of those conclusions on the part of the court. What the plaintiff seemed to argue was that the release wasn't valid because she never read it and Gold's Gym never mentioned it to her or explained to her that she was exposing herself to the risk of being unable to sue based on negligence. She asserted that she signed the contract without reading it (as, let's face it, we almost all do) and without any in-depth discussion of it with Gold's Gym and that therefore the clause couldn't be enforced against her. The court, however, was unsympathetic. It pointed out that she had a duty to read the contract before she signed it and that her signature not only indicated that she knew she should have read it but also appeared directly after a line directing her to make sure she read both sides of the agreement. The release was written in ambiguous and straightforward language and she would have understood it had she read it, according to the court.
There was, however, a dissent in this case, and while that dissent wasn't on the plaintiff's side with regard to not reading the contract, it did believe that allowing a release of liability for negligence in this situation was against public policy. As far as the dissent was concerned, gyms "implicate health and safety concerns," and so should therefore be a matter of public concern in the same way hospitals are. In fact, there was precedent that Pennsylvania had refused to allow a waiver of negligence liability in a case involving health treatments at a spa under the reasoning that it involved health and safety, and the dissent thought this case should fall under the same umbrella. Because Gold's Gym purported to provide for the physical health of its members, the dissent thought the public had an interest in ensuring that the services offered by Gold's Gym were qualified and held to a duty of care. The dissent also pointed out that other states would reach this same public policy conclusion, pointing specifically to New York as a state that would have held this release invalid, which we just saw in the trampoline park case.
So there you have it: Another gym case, and another opinion supporting the release of liability for negligence, but this one with a dissent raising the question that such releases might be against public policy.
Wednesday, February 10, 2016
On the subject of, again, releases for liability for negligence, a recent Delaware case, Ketler v. PFPA, LLC, No. 319 2015, examined one in the context of a Planet Fitness gym. The plaintiff was a member at Planet Fitness and had signed a membership agreement that contained a release for liability from negligence. The plaintiff was later injured while working out at Planet Fitness when the rowing machine he was using broke. He tired to argue that the release from liability for negligence was unenforceable. The court disagreed.
Under Delaware law, a release is enforceable if it is unambiguous, not unconscionable, and not against public policy. Here, the language of the release was straightforward and unambiguous. Furthermore, the court found the release wasn't unconscionable. It was true that the plaintiff had no opportunity to negotiate the terms of the contract but that wasn't enough on its own to find unconscionability. The court noted that the plaintiff was free to not join Planet Fitness so the release wasn't unconscionable. Finally, the release wasn't against public policy because the Delaware legislature has never spoken on the issue of releases of liability and it is the legislature that establishes public policy. So the release was enforceable and the plaintiff's claims were barred.