Sunday, October 20, 2019
- 55 percent of Californians at all income levels experienced at least one civil legal issue in their household within the past year, yet nearly 70 percent of them received no legal assistance.
- On average, low-income Californians had more than four civil legal problems per household, while those with higher incomes, on average, had slightly more than two.
- Californians sought legal assistance for fewer than one in three legal problems.
- Most Californians do not receive legal help: 27 percent of low-income Californians received some legal help, while 34 percent of higher-income Californians did.
- Nearly 40 percent of low-income Californians who sought legal help reached out to legal aid organizations, but the current system cannot help everyone who needs it. The State Bar projects that Californians will seek legal aid for approximately 450,000 civil legal problems this year; just over half will receive some help, and only 30 percent will be fully served by legal aid.
- The most common categories for civil legal problems affecting Californians at all income levels are health, finance, and employment.
- Californians gave multiple reasons why they did not seek legal help. The most commonly cited reasons included:
- uncertainty about whether their problem was a legal issue;
- belief that they needed to deal with the problem on their own; o fear of pursuing legal action; and
- concerns about costs.
More information on preliminary findings from the survey can be found in the California Justice Gap Study Technical Report. See also this report.
In my podcast interview with law professor Benjamin Barton on Rebooting Justice, we discuss various ways in which the serious need for legal services can be improved. This is of course a conundrum as legal practitioners very reasonably expect to be repaid for the costs (and agony) of going to law school. On the other hand, many new practitioners cannot find work and could maybe build their resumes and gain valuable experience if working at lower rates and in untraditional attorney/client relationships.
The existing problem is a clear market failure. It is astonishing that in a country with one of the highest number of attorneys per capita in the world, the general public cannot and/or do not obtain the legal assistance they need. Perhaps the time has truly come for institutions of higher learning to focus on training more affordable legal service providers and fewer actual lawyers. Many new law graduates have difficulty finding work anyway. From a consumer point of view, it is also troublesome that some people – the ones at the bottom of their class – can officially get a J.D. and, with much hard work and arguably some luck, pass the bar and thus call themselves attorneys at law albeit with sometimes very substandard qualifications. I am sorry to say this, but as a law professor, I know this to be true. Would it not be better to create some middle ground for people who are great people eager to work in the legal field, but for whom a somewhat “lesser” degree than a J.D. might be more appropriate? I think so. Initiatives such as those by the Bill and Melinda Gates Foundation are underway to support community college and other students. Diversity is a benefit! This goes for the educational sector as well.
Thursday, October 17, 2019
Liquidated damages will be upheld unless unreasonable. It is so when it “bears no reasonable relationship to the range of actual damages that the parties could have anticipated would flow from a breach.” Ridgley v. Topa Thrift & Loan Assn., 17 Cal.4th 970, 977 (Cal. App. 1998).
In a recent case, lenders lent $1.8 million to borrowers, who defaulted. The parties settled all contractual and other claims for $2.1 million. The parties also executed a stipulation for entry of judgment which the lender could file ex parte in the event of any failure by the borrower to timely cure any non-payment. However, this stipulation also stated that in the event of default, the borrowers would be liable to pay $2.8 million plus interest to the lender. The California appellate court found that $700,000, which corresponded to six months’ interest on the entire principal loan, bore no reasonable relationship to the range of actual damages the parties could have anticipated from a breach of the settlement agreement and was thus unenforceable.
The case is Red & White Distribution, LLC., et al. v. Osteroid Enterprises, LLC, et al., 2019 WL 3759458.
Monday, August 19, 2019
Looking for a quick little case demonstrating the ongoing importance of the Statute of Frauds? Look no further: Back v. Cheasepake Applachia, L.L.C. provides one (773 Fed.Appx. 294 (2019).
In 1940, Thomas Back’s family entered into an oil-and-gas-lease with the Inland Gas Corporation, Chesapeake’s predecessor. This called for a flat-rate royalty of 12 cents per thousand cubic feet of gas to be extracted from the Back property. However, the oil corporations started paying 12.5% of the market price instead. In 2016, no less, Back filed suit alleging, among other things, breach of contract and fraud for underpayment by deducting too many expenses from the royalty payments and by basing these payments on false market prices.
The district court held, sua sponte, that the statute of frauds barred Back from claiming that his agreement differed from the original 1940 lease. The court of appeals disagreed, pointing out that “all that was needed was one or more writings which together identify the parties to the lease, the property, and the modified royalty amount. At least one of those writings must also bear Back’s signature as the lessor” (as the party against whom the agreement could be held). Because Back had signed the royalty checks that came with the statements over time, the Statute was satisfied.
The court did not point out why the lease fell under the Statute of Frauds to begin with. (As oil and gas leases neither fall under Articles 2 or 2A, this was presumably because of land recording statutes in Kentucky, but this is subject to further research for which I currently do not have the time. Let me know if you know.)
Monday, August 12, 2019
Here's another case for the "periodic reminder" file, this one reminding you that you are entering into enforceable contracts all over the place, often without really registering that's what you're doing. This recent case out of the Southern District of Florida, Incardone v. Royal Caribbean Cruises, Ltd., Case No. 16-20924-CIV-MARTINEZ/GOODMAN (behind paywall), reiterates this lesson in the context of a cruise. The plaintiff argued that there was no binding contract between the parties because there was no evidence she had ever agreed to any such contract, but Royal Caribbean pointed out that every passenger is required to agree to terms and conditions during the online check-in, and that's the only way they're allowed to board the ship. Therefore, the court found, there was a binding contract. Granted, probably not one the plaintiff was really aware of when she checked in to go on vacation, but she clicked the button nonetheless.
Friday, August 9, 2019
Many contracts have arbitration clauses these days, and parties consistently challenge their enforceability, and consistently get told they have to arbitrate. The challenges make some sense in consumer contracts where we might not expect the consumer to grasp all of the ins and outs of the legalese. However, I'm always a bit confused by arbitration clauses being challenged by more sophisticated parties in contracts that were negotiated. They were part of those contract discussions, much more so than consumers ever are. If they didn't want to have to arbitrate, they didn't have to put that clause in. Once it's in, though, they're bound by it.
A recent case out of the District of Arizona, Gravestone Entertainment LLC, v. Maxim Media Marketing Inc., No. CV-19-03385-PHX-GMS (behind paywall), is yet another case reminding us of this. The plaintiff produces horror films and licensed the defendant to distribute those films. Eventually, the relationship between the parties deteriorated and the licensing agreement was terminated. The plaintiff, however, alleged that the defendant went on distributing the films, thereby infringing on the plaintiff's copyright.
The defendant moved to dismiss and arbitrate the claims, and the court agreed, based on the terminated licensing agreement's arbitration clause, which was worded broadly enough to cover these claims and to survive the termination of the agreement. Nor, the court found, was it unconscionable.
Wednesday, August 7, 2019
Oops! Writing the wrong corporate name on a contract doesn't necessarily excuse you from that contract
A recent case out of Texas, Austin Tapas, LP v. Performance Food Group, Inc., No. 03-18-00680-CV, refuses to let a party off on the technicality of having accidentally put the wrong corporate name on the contract. The proper corporate entity was Austin Tapas, LP. The contract had the name Austin Tapas, LLC. Austin Tapas, LP argued that this meant there had never been a contract between it and Performance Food Group. The court disagreed, though. There was no entity named "Austin Tapas, LLC" and the writing of that name on the contract was merely an error, as Austin Tapas itself admitted. Therefore, it was bound to the contract.
Wednesday, July 24, 2019
School handbook statements about civility, respect, diversity, and inclusiveness are aspirational, not contractually binding
A recent case out of the First Circuit, G. v. The Fay School, No. 18-1602 (behind paywall), has an ADA angle, but I'm focusing on the breach of contract claim, which was based on statements in the school handbook about respect, civility, and diversity. The court held, though: "Without diminishing the importance of these words, they are exactly the sort of generalized, aspirational statements that are insufficiently definite to form a contract." For a school handbook to form a binding contract, it has to consist of "well-defined procedures and policies," rather than just generalized statements such as those at issue in this case. The student and his parents failed to point to any statements in the handbook definite enough to form the basis of a contract, borne out by the fact that the school's enrollment contract, signed by the student's parents, specifically stated that the handbook was not a contract but rather just "general expectations."
The First Circuit decision is behind a paywall but you can read some reporting on the district court decision here.
Monday, July 22, 2019
You can watch the appellate arguments in the case here.
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.
Tuesday, July 16, 2019
A recent case out of California, Monster Energy Co. v. Schechter, S251392, concerns a settlement agreement imposing confidentiality obligations. The parties signed the settlement agreement. Their lawyers also signed the settlement agreement, under the preprinted notation "APPROVED AS TO FORM AND CONTENT." One of the lawyers then made public statements about the settlement and was sued for breach of contract. The lawyer argued that they were not personally bound by the confidentiality obligations and their signature meant only that they had approved that their client be bound.
The trial court disagreed with the lawyer's argument. The court of appeals reversed, finding that the attorneys were not personally bound based on the presence of the notation. This California Supreme Court ruling reversed again, concluding that the notation did not preclude a finding that the attorneys were personally bound. The agreement itself included counsel in its confidentiality provisions, and a signature on a contract usually indicates consent to be bound by that contract.
While it is true that the included notation is generally understood to mean that the attorney has read the document and recommends that their client should sign it, that does not mean that it also inevitably means that the attorney is not bound by the agreement. In this case, where the agreement expressly referenced the confidentiality obligations of counsel, a conclusion that counsel intended to be bound by their signature, even with the notation, was plausible.
(h/t to Eric Chiappinelli of Texas Tech for passing this case along!)
Thursday, July 11, 2019
Ja Rule mostly dismissed from Fyre Festival case, with the possibility of one pesky tweet coming back to haunt him
If you're not familiar with the debacle of Fyre Festival, you can watch two documentaries about it, or catch up on the Wikipedia page. The tl;dr version is: It was billed as a luxury music festival that would blow Coachella out of the water, and was canceled on the day it was to start, leaving attendees, who had paid thousands of dollars to attend, stranded with FEMA tents for accommodation. The festival had some big names associated with it, co-founded by Ja Rule and promoted on social media by people like Kendall Jenner and Bella Hadid. Ja Rule was sued, along with Billy McFarland, CEO of Fyre Media, who has already pleaded guilty to fraud in connection with the festival and has been sentenced to prison.
Now, there's a recent ruling out of the Southern District of New York in In re Fyre Festival Litigation, 17-cv-3296 (PKC) (see links at end of blog post), that might succeed in dismissing Ja Rule from the case. The plaintiffs have been granted a very limited leave to amend with respect to one specific tweet, so Ja Rule might stay in the case on the basis of that tweet.
The case has contract claims against Fyre Media, but this opinion focuses on individuals, Ja Rule and Grant Margolin, former Chief Marketing Officer for Fyre Festival. Neither Margolin nor Ja Rule was a party to the contract at issue in the case, so this decision doesn't take up the contract issues, but it is interesting on the fraud issue, so I'm blogging it anyway (also, how can you not blog a court opinion that has a footnote explaining what "FOMO" means?). Fraud requires pleading with particularity, and the plaintiffs fail to meet this burden. Although they allege many allegedly fraudulent statements, they fail to allege when many of those statements were made or whether the defendants knew at the time that the statements were untrue. After all, the defendants could have made the statements about Fyre Festival with every intention of delivering on their promises of an incredible festival.
The one exception to this is a particular tweet at issue by Ja Rule. The plaintiffs properly allege the date of that tweet, which was the day before the festival was scheduled to start (and instead was canceled). The tweet reads, "The stage is set!!! In less than 24 hours, the first annual Fyre Festival begins. #festivallife" The plaintiffs also allege that Ja Rule must at least have been reckless in continuing to encourage people to attend a festival whose stage was not at all set. The plaintiffs trip up when it comes to alleging reliance on their part on the tweet, but the court gives them leave to amend to try to fix this failure. The court does not give the plaintiffs leave to amend any of the other failings of the complaint because of delay on the part of the plaintiffs.
The court also discusses some negligence issues as well as tortious interference and unjust enrichment claims. When it comes to tortious interference, there were no allegations that Ja Rule or Margolin interfered with or caused Fyre Festival's inability to perform the contract, merely that they knew Fyre Festival would not be able to perform. As for the unjust enrichment claim, the court warns that this is not a catch-all cause of action and cannot be used to cure the defects in the other causes of action.
Monday, July 8, 2019
In a letter to JPMorgan Chase & Co.’s CEO, Presidential hopeful Elizabeth Warren asked the bank to stop “exploiting its customers” by using what the bank considers the “standard practice” of asking its customers to arbitrate potential claims against it. Chase’s customers can, however, opt out of mandatory arbitration by mailing written rejection notices by Aug. 9, 2019.
Arbitration is, of course, easier for banks and other defendants than having to face a multitude of individual lawsuits. The concern for smaller plaintiff such as private bank customers is that arbitration is not as neutral as a lawsuit as arbitrators are hired privately by, for example, the banks. Arbitrators may thus be unduly biased in favor of the banks and more business savvy than bank customers, who might obtain greater protections from hiring an attorney and going to court. The exploitation part comes in when defendants arguably seek to "sneak" arbitration onto unsuspecting, unsavvy bank customers who are not aware of all the pros and cons of various types of dispute resolution.
My students are always asking me about misdelivered packages, so I read this recent case out of the District of Oregon, Mansfield v. Leigh, Case No. 6:19-cv-00254-MK (behind paywall), with interest. It's a fairly straightforward case about a lost package, and a fairly straightforward analysis of your options for recovery if a package goes missing. The plaintiff was seeking over a thousand dollars in damages for the lost package, but the court finds that her recovery was limited to the fifty dollars of insurance she purchased (she actually received slightly more because the post office also refunded her service charge).
This case is a reminder to take the postal insurance seriously. I once had a package go missing and I had insured it but not nearly for the value of what went missing. That was all on me, and I've taken that insurance situation seriously ever since.
Saturday, July 6, 2019
A recent case out of the Southern District of Ohio, The Devine Group, Inc. v. Omni Hotels Corp., Civil Action No. 1:18-cv-186 (WOB) (behind paywall), is a fairly straightforward contract interpretation case with a good parol evidence discussion. The court finds that the contract is unambiguously worded and so refuses to look to any extrinsic evidence. If you're looking for a contract clause example to use in class, this might be a good one.
Friday, July 5, 2019
For very good reason, a black family fires a contractor who showed up for a job with a confederate flag on his truck in GA. This raises issues of whether one can simply terminate a contract once entered into (one cannot with out at least having to pay damages, potentially in the form of wasted time and gas money here) or whether this was simply an at-will contract that can be terminated (that does not seem to be the case here.). At any rate, isn't it incredible that in 2019, some "proud Southerners" still have to display their pride in such a blatantly tone deaf manner? Racism ought to be a thing of the distant past, but clearly is not. Shameful!
Monday, July 1, 2019
A recent case out of Texas, Bitter Creek Water Supply Corp. v. Sims, No. 11-17-00080-CV (behind paywall), talks about a lot of contract issues, but I found the ambiguity discussion most interesting. The contract at issue, signed in 1986, tied the purchase price to whatever price Bitter Creek was paying the City of Sweetwater for water. At the time, Bitter Creek had been buying water from the City for many years. However, Bitter Creek no longer buys water from the City. Therefore, there's a dispute over how to interpret the contractual purchase price now that there is no City purchase price to tie it to.
Sims contended that under the UCC he could opt to read a reasonable price into the contract, now that the City purchase price had failed. Bitter Creek, though, argued that the parties had agreed to an express fixed price that they no longer had agreement on. The court discusses the UCC's application and ambiguity and finds that the provision is ambiguous and the parties' intent needs to be examined, leading to a factual dispute that can't be resolved on summary judgment.
In St. Louis, MO, a contractor recently was awarded a lucrative government contract set aside for minority businesses by claiming to be Cherokee. He was found out and stripped of his minority status.
“Since 2000, the federal government and authorities in 18 states, including California, have awarded more than $300 million under minority contracting programs to companies whose owners made unsubstantiated claims of being Native American. The minority-owned certifications and contract work were issued in every West Coast state, New Mexico and Idaho, Texas and four Southern states, several states in the Midwest and as far east as Pennsylvania.”
There are only three federally recognized Cherokee tribes, but members of unrecognized, self-described Cherokee groups have received more than $300 million dollars in funds set aside for minorities.
This, of course, is infuriating, but the “vetting process for Native American applicants appears weak in many cases, government records show, and officials often accept flimsy documentation or unverified claims of discrimination based on ethnicity. The process is often opaque, with little independent oversight.”
People trying to milk the system this way should be identified and action should, if appropriate, be taken against them to further deter such despicable contractual conduct. It is a federal crime, for instance, to sell arts and crafts falsely labeled as Native American. Perhaps many different groups and gender identifications are discriminated against to some extent in government contracting, but existing law was created to remedy a very real problem: the white “old boys club.” Sorry for saying the truth, but the problem is real and needs to be addressed and remedied.
Wednesday, June 26, 2019
I had been paying attention to this case out of the Western District of Washington, Moi v. Chihuly Studio, Inc., Cause No. C17-0853RSL (behind paywall), because it raises interesting copyright authorship issues. The case is a lawsuit brought by a person who was one of Chihuly's assistants, who create artwork in Chihuly's name under Chihuly's supervision. The plaintiff worked for Chihuly in this way for fifteen years, until a falling-out between Chihuly and another of the assistants resulted in the deterioration of the plaintiff's relationship with Chihuly as well. The plaintiff filed this lawsuit alleging co-authorship of 285 artworks and requesting compensation for his work on them. You can read more about the lawsuit here.
As I said, I was paying attention to this case for the copyright authorship analysis, which follows the Aalmuhammed test and finds that, because the plaintiff did not exercise control, he is not an author of the artworks, despite his copyrightable contributions to the artworks. The authorship test analysis also considers the lack of contract between the plaintiff and Chihuly as indicating that Chihuly did not intend to share authorship with the plaintiff.
That same lack of contract dooms the plaintiff's attempt to seek compensation for his work. Because there's no contract, the plaintiff's cause of action is promissory estoppel, but Chihuly's promises over the years to compensate plaintiff by keeping track of which artworks plaintiff had contributed to were, in the court's view, too vague to constitute promises that the plaintiff could have relied on. The plaintiff confessed that he had no idea what his eventual compensation might be or when he would receive it, just that he trusted Chihuly to treat him "fairly." Promises forming the basis of promissory estoppel need to be clear and definite, and Chihuly's statements were simply too vague. Considering that plaintiff couldn't even say what they meant, the court refused to enforce them.
This is, once again, a lesson in making sure you have a clear and complete understanding with someone, and not just vague platitudes.
Monday, June 24, 2019
I just blogged about a consideration case last week, and now here's another one out of Illinois, Johnson v. Illinois Alcohol & Other Drug Abuse Professional Certification Association, Nos. 4-18-0562 4-18-0575 cons (behind paywall). This case concerns an at-will employment contract that was later modified to include a definite retirement date. The defendant argues that there was no consideration for this modification of the contract, and thus it's not binding. However, the court notes that Johnson gave up his ability to work for the defendant beyond the retirement date and that that served as consideration for the modification of the employment contract. There were also some changes in job duties and title as well as an additional agreement reached on how sick and vacation days would be used over the remainder of the employment term. All of this was sufficient to show that both parties bargained for things from the other in this new binding contract.
Wednesday, June 19, 2019
Continuing the theme of thinking about fall courses, a recent case out of the Western District of Washington, Phytelligence, Inc. v. Washington State University, Case No. C18-405 RSM (behind paywall), has a discussion about both extrinsic evidence and agreements to agree -- both topics my students often struggle with. Might be worthwhile to take a look at this recent analysis, especially if you teach in Washington.