Tuesday, June 7, 2022
Every time I am in the gym, at least one of the television monitors is showing a show about home remodeling. This is a disease. I believe a steady dose of Stoic, or even Epicurean, philosophy might be a cure. Or perhaps some Eastern philosophy. Wanting material things is not the way to happiness. These television shows encourage us to want things that we likely will not get or to want things better than what we currently have. I prefer the life of the Cynic. Better to be satisfied with some water and a pot of lentils. This blog is my pot of lentils, but if I were to be stripped of it, I should make my way through life as an ordinary contracts prof.
But I could be wrong about much of this (add Skepticism to the mix). Still, as recounted in The New York Times, there are worse things than unfulfilled fantasies of white oak cabinetry, soapstone counters, a black slate backsplash, and a glass-enclosed shower, or a renovation that makes it possible to flip a house and make some money. Increasingly, participants in home renovation shows are suing production companies, alleging "fraud, misrepresentation and faulty workmanship," which leave homeowners with properties "riddled with code violations as well as safety and health hazards." We will never know the true extent of these problems, because all of these transactions are covered by sweeping non-disclosure agreements (NDAs). If you think NDAs are a good thing, I recommend watching Hulu's The Dropout.
On television, we see a couple meeting with some construction experts. They discuss various options, and the couple's excitement increases as they begin to imagine their home re-made. Then we see early scenes of demolition, usually played for comic effect, as the homeowners struggle to wield a sledgehammer, but sometimes played for dramatic effect, as when the homeowners discover mold behind some boards. Next comes the transformation, with the homeowners conveniently out of the way. Finally, there is the reveal, at which the homeowners flip cartwheels or engage in otherwise conspicuous displays of joy and gratitude. I mean, it's the gym, so the sound is off, but my impression is that these shows are about as formulaic as Dora the Explorer and Blues Clues.
In reality, the narrative is similarly fixed. The homeowners now claim that they were dissatisfied with the remodel, but they were contractually obligated to go through with the shoot. At this point, of course, the production company has them over the barrel. They were awarded a discount on labor and materials and had the advice of experts, but those baubles can be removed at the first sign of contractual breach. Then comes the lawsuit brought by the homeowners, alleging fraud and breach of contract, followed by the predictable counter-suit for breach of the NDA. The homeowners now claim that they were given very little time to review the contract and that its terms contradict things that they were told.
According to the Times, the scope of the NDAs can be extremely broad:
Nearly all contestants are required, when signing onto a program, to agree to a strict waiver that prevents them from speaking to the press or posting on social media, about not just the show itself, but also, according to one waiver reviewed by The New York Times, “any nonpublic information or trade secrets obtained or learned in connection with the program.”
Disputes between contractors and homeowners are not rare. In one case that is a focus of the Times story, Nevada has a process for resolving them short of litigation. The reality television shows weight the scales in favor of the contractors, however, because pursuing litigation now comes with the added threat of a countersuit for violation of the NDA. And in some cases, the homeowners face claims not only for violation of the NDA, but for libel, slander, and product disparagement.
Tuesday, May 31, 2022
Hulu's The Dropout tells an amazing story. I do not know if it is fair to the main characters or an accurate representation of how easy it is to scam angel investors and the Katy Perry and Angry Birds addicted aging executives who run corporate dinosaurs like Walgreens. It's also hard to imagine getting top science and technology graduates from top programs to sign non-disclosure agreement after non-disclosure agreement and to work under 24-hour surveillance and conditions where they are prohibited from speaking to colleagues from other parts of the enterprise. But perhaps I am naive about work conditions in start-ups, or perhaps young graduates are naive about contracts. Both are possible.
But I do know that it features stunning performances by great actors, including Amanda Seyfried (right), who does for Elizabeth Holmes what Johnny Depp did for Willy Wonka, and William H. Macy. How many iconic roles can one actor create? If I were Richard Fuisz, I don't know if being played by William H. Macy (left) would take the sting out of being portrayed as an obsessive, jealous, greedy, glorified patent troll.
Which brings me to the justification for this post. In episode 6 of The Dropout, about three minutes in, Fuisz is making his first contact with Wall Street Journal reporter John Kerryrou (played wonderfully by Ebon Moss-Bachrach -- every scene with him and LisaGay Hamilton as his editor Judith Baker is priceless). Fuisz says that he read something by Adam Clapper who writes something called the Pathology Blawg and then he furrows his brown and mutters "I don't know why he spells it like that." Well we do!
Thursday, March 17, 2022
As we noted last week, many novel contracts issues will arise in connection with the Russian invasion of Ukraine. Over the weekend, the New York Times reported on the demise of RT-America. From the perspective of this blog, the Times buried the lede. Only in the final section of the article does the Times make clear that it was not the U.S. war machine or rivals within the mainstream media that did in RT America. It was contracts:
DirecTV and Dish Network had taken RT America off their distribution networks. Ora TV announced on March 1 that it would suspend production of content for RT America. Companies were distancing themselves from the Russian government-backed media company in protest of the invasion of Ukraine.
The Times story focused on how working at RT America felt like working at any other U.S. cable news station. In fact, some of RT America's talent had come from other networks. For example, Rick Sanchez, fired from CNN in 2010 after an anti-Semitic outburst for which he apologized, landed at RT America. America is a country that believes in second chances, and so is RT America.
But Sanchez does not seem to have been representative of RT America's work force as a whole. The station was a great place for people new to the industry to launch their careers. The Times article gives the impression that the station was pretty hands-off when it came to editorial content, with the exception of Russia's intervention in Ukraine in 2014. In that context, the station required that Russian troops be referred to a peacekeepers and the term "invasion' was not permitted. But for the most part, the station did not have to censor its employees because it attracted journalists (or whatever) who wanted to do reporting critical of the United States. A lot of people with critical angles on U.S. policy and culture landed at RT. They could further their own political agendas without any encouragement from foreign handlers because their critical perspectives meshed nicely with the message those foreign handlers wanted to promote. And at least some RT America employees were also critical of the Russian invasion of Ukraine.
But none of that has much to do with contracts.
Barrons provides a more direct account of what happened. Two weeks ago, DirecTV announced that it was "accelerating this year’s contract expiration timeline and will no longer offer [RT's] programming effective immediately.” RT America's contract with DirecTV was due to expire this summer. The article does not reference contractual provisions permitting such an acceleration. Other media companies and Internet companies: Google, Facebook, YouTube, Instagram, Roku, and Microsoft also removed RT from their platforms. Dish and Sling TV followed suit a few days later, as reported here.
I wonder whether RT America had to sign up for these platforms through a contract of adhesion similar to those that ordinary consumers confront. Were RT America's agreements with all of these platforms subject to the platform's unilateral right to change terms or terminate service in the platforms' sole discretion? If not, World War III might have a new front: the contracts battle. Look to this space for unique coverage of that theater of war.
Friday, February 18, 2022
There is so much wisdom in this scene! Fleabag seems to have the upper hand with her "Hair is everything" soliloquy. But then Antony's last line carries the day, leaving Fleabag and Claire with a shamed "Sorry, Antony," and a plaintive, confirmatory, "See you next week?"
If you haven't watched this show and you don't mind explicit stuff, foul language, uncomfortable silences, more explicit stuff, or smoking, it is a work of genius. Very conceptual and yet also engaging, with absolutely brilliant performances, especially by Phoebe Waller Bridge, but Olivia Coleman gives her a run for her money. Phoebe Waller Bridge performs Meryl Streep-level acting just using her eyes, editing, and camera angles.
Thursday, January 27, 2022
In these days of pandemic-induced isolation, when one cannot go safely to the cinema or theater, it is nice to be able to follow characters who live as though there never were a pandemic and whose lives are somehow nevertheless a million times worse than ours. Perhaps this is the hidden allure of Netflix's Ozark. Perhaps it is the fine performances and the moral dilemmas that the characters have to navigate.
Or maybe it's just all the contractual issues that arise (if you can set aside the fact that all of the agreements would be unenforceable under the doctrine of illegality.
SPOILER ALERT: PLOTS (AND PLOTS) REVEALED AFTER THE BREAK!
Wednesday, November 24, 2021
This Thanksgiving, I am grateful for students who provide me blog fodder, in addition to a sense of professional purpose.
Those cases generally involve an elderly woman (sometimes an elderly man) who pays an absurd amount of dance lessons. Arthur Murray had a strategy to entice such investments: instructors would flatter and seduce until the marks came to believe themselves uniquely gifted. They would buy scores of lessons, followed by packages, followed by lifetime memberships and, in some cases, multiple lifetime memberships. It was all a con. However, as Deborah Threedy has argued, the "victims" of the con might have complicit in the scheme. They enjoyed themselves, rode the tiger, and then sued once the ride had lost its appeal.
In the Malcolm in the Middle episode, far too little space is given, IMHO, to the plot line of the Lois character (the mother), played by the wonderful Jane Kaczmarek (left). The incomparable Bryan Cranston (right), who plays her husband Hal, has bought her dance lessons as a birthday present. But he is invited to a poker game and has to back out. Lois goes alone, and the dance instructor pulls the usual schtick with her, complimenting her on her talent, her grace, her dancer's ankles. It's all very convincing, because we see it all as Lois experiences it. She performs a charming little dance number with her instructor that we get to see both in her imagination and from the more objective perspective of her son's video recorder. The veil lifted, Lois abandons (for now) her dreams of advanced dance lessons and seems content to romp around the kitchen (gracefully or clumsily) with Hal.
Meanwhile, her oldest son is showing that Deborah Threedy was right: the women at the dance studios willingly pay to dance with Lois's oldest son, who happily accepts their payments and observes that a lot of people save up money all their lives and then end up with nothing to spend it on. So why not spend it on dance?
H/T to my former (and future?) student Francisco Herrera Chinchilla.
Tuesday, November 23, 2021
Last month, Nancy Kim introduced me to Squid Game with this post. I read the post and thought, "I'm glad Nancy watched that so I don't have to. Ultra-violent sadistic television show that portrays our current economy as a savage murderous game engineered to extinguish the hopes and dreams of ordinary folks? Who needs that? I have my life." Meanwhile, unbeknownst to me, my bloodthirsty wife was reading up on the series and getting the popcorn ready. I'll do anything to put off for a time my promise to my students to listen to Taylor Swift's music, so we watched the first episode. Unlike Ms. Swift, the show is holding my interest, and then some. It's a really smart, well-conceived series. I could use a little less violence and sadism, and I could have passed on the strobe effects in episode 3 (or was it 4?), but maybe that's just me.
In any case, right at the beginning of Episode 2, "Hell," there's an interesting contracts moment. After the first game, the players are begging to be allowed to leave. The guards/men in pink tell the players that they have been given an opportunity. The situation presents a variation of a classic riddle of the law of coercion. The coercing party claims to be making an offer: e.g., I'm offering you, desperate, insolvent business, an opportunity to get paid off early. In exchange, all I ask is that you accept my payment of 35% of what you claim I owe you as payment in full. Or, in a situation that's a little closer to the Squid Game situation, "Hey, shipwreck, I'm offering to save you; all I ask in return is that you surrender your cargo to me."
The law does not turn on the formal aspects of the "offer." The law of coercion does not turn on whether the offer is posed as an opportunity or a threat. I offer my students the opportunity to hear me sing. They know a threat when they hear one. But in the context of economic coercion, it can be very difficult to differentiate opportunities from threats.
Without giving away too much of the plot, I would venture that the problem with the agreement at the heart of Squid Game is not so much coercion as illegality.
Tuesday, November 9, 2021
Shameless (American version) has always been a very transactional series. The Gallaghers, and their neighbors Kevin and Veronica, are hustlers. They are always out to make a buck, and that often involves deals. Season 11 is no different, but it happens in the world of the new normal, with the added ingredients of the pandemic and legalized marijuana.
First, congratulations to Shameless for presenting the world as it is today. All of the other series I have been following, although set in the present, act as though the pandemic never happened. Shameless thematizes masks, social distancing, lockdowns, supply-chain problems, and the political attitudes surrounding them. Having all of the characters wears masks, at least part of the time, must have presented novel challenges to the sound people. To the credit of the series' gritty verisimilitude, the actors, speaking through masks, sounded muffled, but they could still be understood, just like in real life.
Just a taste of some of the contracts issues in Season 11 (some spoilers ahead):
- With their bar shut down during COVID, Kevin and Veronica wisely diversify, getting into the marijuana business. They run into supply-chain problems, and hire Frank, a highly skilled procurement specialist. There are some quick negotiations, and the parties settle on splitting the profits three ways. After Frank also takes over as chief edibles confectioner, he demands a 60/40 cut in his favor. Kevin and Veronica acquiesce as, by his impeccable logic, they are now merely distributors; he is doing all of the work. That cut jumps to 70/30 in his favor when he catches them trying to bypass him by going directly to Frank's favored source. They are not very skilled in negotiation. How is Frank to distribute without their operation? I don't remember Walter White and Jesse telling Gustavo Fring that they were entitled to 70% because of he was just the distributor. Unfortunately, the permutations of this partnership are not further explored, as the supply-chain bottleneck clears up, and Kev and V can return to their Frank-free operations.
- However, Kev and V also need to hire some muscle. Kev, in the early stages of his success, celebrates a bit too ostentatiously with a tricked-out truck and new clothes that he considers stylish. South-siders recognize the vulnerability of the nouveau riche and quickly relieve him of all of his baubles, including his money roll. Enter Micky Milkovich and Ian Gallagher, decked out in camo and battle gear. They hijack an ambulance which, with the help of Ian's handy sister, Debbie, they turn into an armored vehicle. At one point, they seemed to have entered into a side deal for $1000/day to provide the same transport services for a much more sophisticated enterprise, but that plot point was not pursued for some reason.
- Unsurprisingly, Frank does not really understand how restitution works. Frank was going about his usual business, completely innocently, when somebody punched him the face, knocking him out, and left his body by a dumpster. A good Samaritan discovered him and brought him to the emergency room. We learn all this from the doctor who is stitching up Frank's face while testing him for brain injury. He responds by inquiring whether the good Samaritan is going to pay for his transport to the ER via ambulance and for the treatment to which he never agreed.
Wednesday, November 3, 2021
I'll admit it. I watched Tiger King. My students at the time insisted that I do so. My friends warned me away, because I don't like watching people being cruel to animals. People told me that you either love it or hate it. I did neither. I get the over-the-topness of the series. That part was fun, but I resented the way the series encouraged identification with its main character, Joe Exotic. He's a complicated human. I don't know if anybody merits the treatment they get from our criminal justice system. But he should not be allowed anywhere near large cats. I was also dimly aware that fans of the show had adopted Joe Exotic's perspective and treated Carole Baskin as a villain, accepting the false equivalence Joe Exotic tried to establish between his operation, which exploited animals for profit and bred them irresponsibly, and Carole Baskin's animal rescue preserve.
Now Tiger King II is about to come out. Carole Baskin wants no part of it, and she is suing to enjoin use of footage of her from the first shoot in the second series. She claims breach of contract The Complaint is here.
The Complaint is basically a vehicle for Baskin to tell her side of the story. Much of it is taken up with the achievements and awards and recognition of her Big Cat Rescue organization. Joe Exotic is introduced as follows.
Joe Exotic . . ., the operator of a private roadside zoo and prolific breeder of big cats and purveyor of cub petting services [sic] sought to discredit and silence the Baskins' [sic] and their advocacy through years of constant and persistent intimidating and libelous social media attacks and physically during one incident at Big Cat Rescue.
The heart of Ms. Baskin's current suit against the producers is her claim that the releases she signed allowing use of footage filmed with her was only with respect to a single "documentary motion picture." She did not agree to participate in a second series, and when approached by the producers, her response was "No. And lose my number." That's gold, baby! If only that were in the new series! Sorry.
If you watch the trailer for the new series, linked to in ¶ 36 of the Complaint, prepare to be overwhelmed with the powerful stench of desperation. Joe Exotic is in prison. His zoo is shut down. The film makers chase after similarly despicably situated persons, i.e., other polyamorous, gun-toting, purported animal-lovers, committed to money-making and lawless libertarianism. Prepare also for unsubstantiated allegations, artfully edited and cross-cut to look as plausible as the rampant criminality and exploitation that was the very stuff of Joe Exotic's business. The desperation comes from the producers, who, as the breathless editing of the trailer makes clear, no longer have a story to tell but want to mine this vein until it is completely tapped out. It also comes from Netflix, which has recently made clear that it is committed to the view that the only thing worse than being talked about is not being talked about.
It is only because I am not a participant in cancel culture that I will not cancel my Netflix subscription in protest of their decision to release Tiger King II. Also, the new season of Shameless just became available, and the forthcoming season of Ozark is one of the few things I have to look forward to in this life.
Friday, October 8, 2021
The following clip is full of things I hate:
- Taco Bell
- Formal debates
- Popular culture parodying academic discourse
- The debate over whether a taco (or a wrap or a reuben or an oreo cookie or an accordion or whatever) is a sandwich
- TV commercials (unless they are GEICO commercials)
But when you combine all of these things, it somehow creates the ideal clip for frivolity!
By the way, the answer is that a sandwich has to be food, so sorry Taco Bell!
H/T Texas A&M School of Law Professor Wayne Barnes
Friday, October 1, 2021
Nope. Not that reality television star.
In Goureau v. Lemonis, Plaintiffs Nicolas Goureau and Stephanie Menkin contend that their business’s participation in CNBC’s TV show The Profit caused their company to go into crippling debt. The Profit is an American documentary-style reality television show broadcast on CNBC. In each episode, the show’s host, Marcus Lemonis (right), typically offers a capital investment and his expertise to an already-struggling small businesses in exchange for an ownership stake in the company. He revamps the company in hopes of making a profit for the business and himself.
Plaintiffs ran an upscale women’s clothing brand through their Gooberry Corporation. It was successful overall and had several stores around the country. Plaintiffs sought outside investors and in early 2014, Plaintiffs interviewed and were selected to appear on The Profit. During the show, Plaintiffs and Mr. Lemonis came to the agreement that Mr. Lemonis would buy 30% of Gooberry for $800,000. However, Mr. Lemonis allegedly began significant renovations of the Gooberry stores that cost upwards of $2,000,000 and told Plaintiffs they would be stuck with the bill if they decided to back out of the deal. Many of the experts appointed to assist in the changes to Gooberry were Mr. Lemonis’s employees from other companies, who charged Plaintiffs consulting fees. Knowing all this, after filming in 2014, the parties still entered a final operative Stock Purchase Agreement, which gave Lemonis 32 of 100 shares of Gooberry for $800,000, and a Shareholder Agreement, which placed Mr. Lemonis on a board of directors.
The relationship further soured when Loomis began operating the company under the Lemonis name, bought merchandise that made costs higher and work more difficult, and subsequently made it harder to compete with other boutiques and department stores. Mr. Lemonis tried to expand Plaintiffs' brand by investing in a new business, ML Fashion, LLC, that would be the umbrella entity for the parties’ various business ventures. ML Fashion was funded by credit agreements that it had with Defendant ML, LLC. Plaintiffs contend that whenever ML Fashion lent money to Gooberry, those funds were coming from Lemonis through ML, LLC, and that this action was increasing the debt position of both ML Fashion and Gooberry.
In short, Plaintiffs allege that Mr. Loomis engaged in a series of corporate restructurings that enabled him to take control of their business and deprive them of their controlling stake. He did so in stages so that their stakes in the business shrunk as their business’s indebtedness to entities that he controlled grew. At the same time, he mismanaged their business until their business’s indebtedness to the entities that Mr. Loomis controlled exceeded their equity in their own business. One is left wondering both how they allowed themselves to be so effectively snookered and how exactly Mr. Loomis benefits from the transactions as described.
Maybe there’s a lesson in this for all of us. Reality TV stars may not be what they seem to be.
Plaintiffs filed suit and asserted thirteen claims. including three fraud-based claims against Defendants, Mr. Lemonis and his business entities, including Machete, the production company responsible for the Profit: 1) fraudulent inducement ; 2) fraud; and 3) mail and wire fraud under RICO. On September 2, the District Court for the Southern District of New York granted Defendants’ motion to dismiss those three claims, the only claims relevant to the court’s jurisdiction over the case. With those claims out of the case, Plaintiffs would have to either amend their complaint to address its deficiencies or refile a suit on their remaining claims in state court.
The court held that Plaintiffs did not plead their fraudulent inducement or fraud claims with the requisite specificity. Without allegations sufficient to support their predicate claims, Plaintifs also could not make out a RICO claim. The Complaint, taken as a whole, alleges that the real-world impact of the various investment schemes depicted on The Profit does not correspond to how that impact as portrayed on the reality television series. The court found these representations on which Plaintiffs allegedly relied to be either inactionable puffery or forward-looking projections.
Part of the problem is that the Defendants are well-advised. They pepper their statements and documents with language that puts people in Plaintiffs’ position on real or constructive notice that they are taking a risk and that there are no guarantees that the venture will be profitable. The other part of the problem is that Plaintiffs forged ahead with the deal, when they could have backed out, even after Mr. Loomis revealed that the partnership would require their business to take on an additional $2 million in debt. They also seem to have willingly entered into the agreements that resulted in the corporate restructurings which they now characterize as fraudulent.
Because federal jurisdiction was predicated on Plaintiffs’ RICO claim—and the court found Plaintiffs’ complaint insufficient—the court declined to rule on the remaining claims. Plaintiffs have until October 05, 2021, to notify the court if they intend to amend their complaint to address its deficiencies.
Wednesday, September 8, 2021
Tuesday, August 31, 2021
Like seemingly everyone else, I have become obsessed with Netflix's six-episode mini-series The Chair. It's not great, but it's home, and it features Sandra Oh (right). I would pretty much watch anything with Sandra Oh, which is why I continued to watch Killing Eve, even after I lost interest in the characters. Once I lost interest in Villanelle's clothes, I knew it was over. But I digress.
If you have been asleep for the past fortnight (or don't have Netflix), let me fill you in. Sandra Oh stars as, Ji-Yoon, the first woman chair of an English Department at a distinguished university. Her colleagues are all stock figures: the doddering tenured deadwood who barely knows what's going on; the more with it stick-in-the-mud, Eliot, who desperately wants to believe he is still in his prime; the under-appreciated senior female Associate Professor, Joan, still passionate about Chaucer and still suffering casual sexism with dignity; the charismatic, self-destructive alcoholic modernist, Bill, still mourning a wife lost to cancer; and the smart, with-it, Black woman professor, Yaz, who knows everything the older generation knows but also can connect with students and especially with students of color. There are other people who show up for faculty meetings, but we don't learn anything about them in the six episodes. And then there's David Duchovny, playing a version of himself, which is awesome!
The series gets some things about the academy right. The actors are all superb. Academics are eccentric. Budgets are tight, and it is hell to be a faculty member placed in an administrative role these days. Something's got to give, and often that something is a person's job. Students can combine their educations with their experiences to generate both a vocabulary and a theoretical apparatus through which they give expression to a lot of justified outrage. Sometimes the remedy for that outrage entails real human costs. These are serious subjects, and The Chair struggles to keep things light while addressing both the reality of student grievance and difficulty for faculty members trying to navigate between student demands and a university that is primarily trying to avoid bad publicity. It also tends to reduce situations and behaviors to parodies. Six, half-hour episodes do not provide enough space to develop an ensemble of characters. There are only two students who figure in multiple scenes, and we get bare glimpses of who they really are. Most of the students are there to deliver perfectly formulated critiques of institutionalized racism.
The series gets a lot more wrong, and I suppose that only bothers me because the series is set in my professional home. Shows about the law get things wrong all the time, but I can move on. In this series, I find it preposterous. Bill and Joan's characters get fleshed out a bit, but they are not fully realized. We get to know Joan slowly as a creature of the university, but we never see her in any other context. We learn late in the series Eliot has a wife who was denied tenure and settled into domesticity. It is a too little, too late attempt to humanize him. I would love to see a series that explored academic eccentricity but also displayed the characters' unique passions and gifts so that viewers can really understand both what drew them to the academy and away from commercial life or social activism or whatever else people do, and why somebody thought they would make a good colleague.
Pembroke University, where the series is set, is neither fish nor fowl. It seems like a research university, but we only see one graduate student. The only courses on offer seem to be on Chaucer, Emily Dickinson, and Melville. No non-canonical texts, only non-canonical riffs on canonical texts. More importantly, composition, the bread-and-butter of English-department teaching, is mentioned only in the final episode when a doddering professor exclaims "I'm not teaching composition!" Well who does? There seem to be no Rhet/Comp professors, nobody teaches Communications, even though that program is often merged with English these days, and there is no indication that graduate students or adjuncts are engaged in teaching at all, except as a T.A. for Bill, who can't manage to show up for class sober or remember what course he is supposed to be teaching. I could go on, but I need to justify this rant by talking about a contract.
If you haven't watched the series yet and plan to do so, read no further, as I am going to reveal the main plot-line as well as what happens in the final episode on the other side of the break.
Monday, August 2, 2021
INDUCING BREACH OF CONTRACT: A STUDY IN SCARLETT
The tort of inducing breach of contract continues to fascinate. In Periwinkle Entertainment Inc. v The Walt Disney Co., Scarlett Johansson (left), the star of Black Widow sued Disney for tortiously inducing Marvel Studios, a subsidiary of Disney, to breach its contract with her. The complaint alleges that Marvel entered into a contract with Johansson to act in Black Widow. Because Johansson’s compensation was largely to be determined by box office receipts, the contract required Marvel to make an exclusive “wide theatrical release” of the film for a period of time, “the standard exclusive theatrical window.” Instead, citing the COVID pandemic, Disney caused its subsidiary Marvel to release the movie simultaneously with Disney’s release of the movie through its streaming service, Disney+. Viewers were permitted to watch the movie without going to theaters, which Johansson alleges diverted revenues from theaters, costing her millions.
The complaint provokes several questions. Johansson sued only Disney, not Marvel. Normally, claims of tortious inducement against a third party are joined with claims for breach of contract against the contract breacher. Various reasons relating to preclusion on factual and legal issues dictate that the all defendants should be bound by the same action. Then why did Johansson not sue Marvel as well as Disney? Did its contract contain a mandatory arbitration clause (and if not, why not?)? If it did, then the arbitration clause, if well-drafted, should have included claims against Marvel’s parent, Disney. That shoe may drop later.
The complaint pleads two counts of tortiously inducing breach. Normally a parent company should not be liable for causing a subsidiary to breach a contract. A court usually ignores the separate identities of parent and sub in claims that have concerted activity as an element (cf. the “bathtub conspiracy” cases in antitrust). But here it seems that the parent had an economic motive to divert revenue from the sub to its streaming services and away from Johansson by causing the sub to delay theater release of the film, in violation to its contractual obligation to Johansson. That seems to justify treating Disney as a separate, third-party who is a stranger to the contract with the sub.
A final question concerns remedies. Perhaps because it was hastily drafted, the complaint is sparse on its remedial prayers, seeking only punitive damages in the separate counts, but adding a catch-all ad damnum for all money damages caused by the tort. Damages for inducement usually equal the expectation damages for breach of the underlying contract. But these expectation damages may be speculative, given the uncertainties of the imaginary box office receipts that would have occurred with a weeks-long exclusive theater release.
But the tort claim, if established, should also justify a restitutionary remedy against Disney, measured by its unjust enrichment resulting from its wrongdoing. That calculation too, may be complex, however if one must determine how much of its streaming revenues were caused by its wrongdoing.
If another reminder were needed, Periwinkle demonstrates anew that Contracts and Remedies students should be familiarized with the tort of wrongfully inducing breach of contract as another weapon in their litigation arsenal.
Tuesday, July 13, 2021
In 2018, Roy Moore, former Chief Justice of the Alabama Supreme Court, former U.S. Senate candidate agreed to be interviewed by Sacha Baron Cohen. As is his wont, Cohen misrepresented the purposes of the interview. It did not go well, as you can see below, and the problems go well beyond Cohen's mock unibrow:
Moore and his wife sued Cohen for intentional infliction of emotional distress and fraud. Moore added an additional cause of action for defamation.
In a ruling issued today, Judge John P. Cronan of the S.D.N.Y. dismissed Moore claims, as barred by a contractual waiver, and dismissed Mrs. Moore's claims as barred by the First Amendment. We have covered Mr. Cohen's encounters with the law of waivers before (linking to five other posts!). The outcomes have been pretty uniform. The only twist here is that Mrs. Moore didn't sign a waiver, but that's where the First Amendment comes in. Read all about it on some other blawg.
As to the contracts issues, Mr. Moore signed a consent agreement that expressly waived each of the claims that he attempted to bring. One might be concerned that the law should not protect those who knowingly commit fraud but get away with it because they made you sign a consent agreement in which you waived any fraud claim. New York law refuses to enforce "general releases." But this agreement was not a general release, and even if it were, even a general releases is enforceable where, as here, the release language clearly, unambiguously, and specifically encompasses the claims brought.
Tuesday, May 25, 2021
I am a big fan of the Israeli television series Shtisel. I was thrilled when Netflix made Season 3 available but also a bit apprehensive, because I just didn't think the writers could maintain the intensity of their dramedy without drifting into formulaic schtick or melodrama. Season 3 begins with a grieving widower, an orthodox woman unable to bear children, and a school principal facing removal from his position as a punishment for some pretty brutal corporal punishment caught on a smart phone. The season was tipping towards melodrama. But the show sustains its remarkable balancing act, revealing unexpected depths in its characters, brought out through fabulous acting, inventive plot twists that don't overtax the viewers' indulgence, and brilliant pacing and editorial interweaving of different threads.
I just watched an episode in which the main character from Seasons 1 & 2, Akiva Shtisel (Michael Aloni) did not appear at all. I didn't miss him, even thought I am very intrigued by his journey in Season 3, because I was so caught up with what was going on with the other characters. The show is especially fun for me, because it provides just the life-support needed to sustain my dwindling recollection of Hebrew and Yiddish. In addition, the show depicts strong-willed, even stubborn, characters constrained by fervent religious belief. They constantly collide with one another while stuck between a rock and a hard place. The show's women are remarkably practical, creative, and determined, but also vulnerable and thus inevitably brittle; its men are deeply flawed and often shrewdly self-interested but also passionate and sometimes endowed with a softness and compassion that the women cannot always afford -- or don't think they can risk.
Contracts, formal and informal, and negotiation pervade the series. I am only halfway through the season, and I don't want to provide too many spoilers, but here are some of the contractual/transactional interactions that arise:
- Has a school principal been effectively terminated from employment if he has been informed of his termination but does not agree to it? If he responds by setting up a rival school and sets out to poach his former employer's students, has he breached any obligations absent a covenant not to compete?
- If an art collector agrees to exchange paintings she has purchased from a gallery for new paintings by the same artist of equal quality, is that a subjective condition of satisfaction or a an illusory promise, given that the collector seems to have total discretion to determine whether the substitute paintings are of equal quality?
- Can a young man get out of an arranged marriage when: the prospective bride and groom have no real connection, and the groom has fallen for another woman; and the bride's family has asked for additional consideration above the amount agreed upon at the start of the arrangement?
- If an orthodox Jew providing catering services for a secular tv producer promises to supply orthodox Jews who will perform as extras on demand, has he breached when he substitutes hipsters for the orthodox Jews?
I expect I will add a Part II to this post once I finish the season.
Wednesday, March 31, 2021
Episodes is easily on my list of top ten favorite sitcoms of all time. Perhaps top five, but it's crowded at the top. I was thinking about the show and regretting that I wasn't blogging while I was watching it, because there was a lot of blog fodder in that show.
I've got a bone to pick with the show runner who came up with all the material involving Sean's (Stephen Mangan, pictured far left) former writing partner, Tim (Bruce Mackinnon). I don't know about the intellectual property issues between Sean and Tim. Those seem pretty interesting, but the real mess involves Eileen (Andrea Rosen), who acts as agent for Sean and Berverly (Tamsin Greig, near left) but also represents Tim. I would think some sort of fiduciary duty and conflict of interest rules would apply, since their interests are clearly adverse.
But the main issue that I've been thinking about lately is mitigation of damages in a Parker-like context. Sean and Beverly come over from England because the delightfully slimy Merc Lapidus (John Pankow) entices them by promising to let them write an American version of their hit comedy, Lyman's Boys. That show stars a droll English headmaster at a boarding school. Merc represents that the actor who played Lyman in the English series would also star in the American version.
And then the changes roll in. The English bloke is rejected and replaced with Matt LeBlanc, who lacks the headmaster's reserve and urbanity. The boarding school becomes a public school, and the headmaster becomes a hockey coach, which is much more fitting for Matt LeBlanc's character, as played, with bottomless self-effacement, by Matt LeBlanc. Sean and Beverly ride it out, and it's a very bumpy five seasons, mostly because Sean really wants to make it in Hollywood. Beverly sours immediately. But the first season provides a great set of Parker-esque hypos. At what point can Sean and Beverly back out of their contract with the network? How can the network mitigate? Is a show (Pucks) about a crass hockey coach who is constantly hitting on the sexy school librarian a good substitute for a show (Lyman's Boys) about an erudite headmaster at a school with a significant librarian character who happens to be a lesbian?
Tuesday, December 29, 2020
If you haven't yet seen The Queen's Gambit, I envy you. You have something to look forward to. It's a wonderful series. Everything about it is wonderful. Also wonderful: thanks to CUNY Law Professor Chaumtoli Huq and Shehran Uddin (@SUddin_10), I can share two contracts issues that arise during the series without terribly significant spoilers.
First, and here there is a bit of a spoiler . . . the main character, Elizabeth (Beth) Harmon, is an orphan. She is adopted by a couple, but the husband soon disappears, and Beth develops a complicated relationship with her adopted mother. The mother dies while they are in Mexico for a chess tournament, and Beth calls her estranged, adopted father for help with funeral arrangements and changing her plane ticket. The father, who can't deal with anything, offers a deal: "Get her up to Kentucky and bury her, and the house is yours. Just make the mortgage payments." Beth performs; her father doesn't. Some day, it is to be hoped, the people behind The Queen's Gambit will make a spin-off about the legal proceedings relating to the house that is as accurate and riveting a depiction of litigation as the series is in depicting chess tournaments.
The second contracts issue is less clear-cut. Beth takes money from some conservative Christians who support her chess as part of their campaign against godless communism. Ah, Cold War politics was so quaint. In episode 7, the conservatives ask Beth to issue a statement denouncing communist atheism. Beth says that she has no intention of saying "anything like that . . . because it's fucking nonsense." The conservatives seem a bit surprised by Beth's agnosticism but what really concerns them is the breach of an implied contract. They point out that they had supported Beth in the past and had already spent money for Beth's upcoming trip to Moscow for a tournament. Beth responds by writing a check, reimbursing the conservative organization for its past contributions to her chess career. So ends Beth's relationship with the conservatives.
In the series, the showdown with the conservatives propels the plot towards other characters who can help Beth, financially and spiritually, to compete in the chess tournament in Moscow. But here again is an opportunity for a legal spin-off. Suppose the conservatives sue Beth for breach. Sure, she has returned the money they fronted her, but they could still claim that she was still unjustly enriched. With their support, she traveled to tournaments and won prizes. She did not share that money with the people who paid for her travel and accommodations. Can they recover? It will be hard for Beth to deny a contract when she repaid the money rather than treating the organization's prior support as gratuitous. But what was their expectation? Apparently, it was that Beth would issue a statement somehow establishing a connection between Christianity and her success at chess. Is her failure to issue such a statement legally cognizable harm?
Can they claim that Beth was unjustly enriched when it was Beth's talent, rather than their money, that won the tournaments? It seems that there is an argument that Beth benefitted, beyond the winnings at particular tournaments, from the travel to competitions that the conservatives facilitated. She advanced her career and her ranking, which entitled her to play in more prestigious tournaments against other grandmasters. But they clearly did not do so in expectation of payment. We would have to scour the communications between the parties to see whether there were terms and conditions or whether, and this seems unlikely given what we know of her, Beth somehow mislead the conservatives into thinking that she was more sympathetic to their perspective than she in fact was. But that would take us beyond the realm of contracts, as a fraudulent inducement claim would result in rescission but no damages, given that Beth has already repaid the funds she received.
Here is the trailer for the show. It's not a very good trailer; it makes the show seem much more conventional and melodramatic than it is. There is melodrama, but the melodrama is spaced throughout a series that is well-paced, beautifully filmed and acted, unprecedentedly smart about the world of chess, and thoroughly engaging without being histrionic.
Friday, November 20, 2020
Now we are not your typical website that will believe whatever palaver the company serves up about its motivation for including the cake recipe. So we will not endorse the idea that the aim was to get consumers to more carefully scrutinize the ToS. If you want that fairy tale, you can read it here. But the real reason for the recipe is more obvious from stories you can read here and here. The rollout of NBC's streaming service was delayed. It had to do something to get people to notice the rollout and to distract from the ugliness that delayed it. So, some clever marketing person came up with the cake dealy, and they threw it into the ToS. Cute.
Make no mistake, the chocolate cake recipe may be original to "Grandma," but the ToS are pure, nasty, corporate boilerplate, including:
- terms that can be modified by updating the ToS online and that online modification counts as "notice";
- provision that a consumer's continued use of services after a modification will be treated as assent to modified terms;
- expansive claims to licenses to make use of uploaded user content, including an express renunciation of any expectation of privacy or confidentiality with respect to such content;
- warranty disclaimers;
- limitations of liability;
- an arbitration clause;
- a class action/class relief waiver;
- a provision that consumers will not disclose of facts relating to arbitration
Bake that for 30-40 minutes at 325 degrees, and Grandma will no doubt box your ears for bargaining away your legal rights so that you can stream Supernatural.
Sunday, November 1, 2020
This SNL skit is terribly misleading. It is the biggest scandal since the last scandal that was the biggest scandal. The idea that Kellyanne Conway escapes from the stresses of her job by spending time with her loving family could only be the perverse concoction of a liberal media fever dream.