Friday, September 4, 2015
I just noticed that Martha Ertman (pictured) will be a guest blogger at The Faculty Lounge. As the introductory post notes,
Her new book is Love’s Promises: How Formal & Informal Contracts Shape All Kinds of Families. More broadly, she rights about the role of contracts in intimate relationships. Here full cv is here.
We look forward to seeking lots of great posts on contracts law in the Lounge.
Yesterday, we blogged here about important considerations regarding whether an employee will be seen as an employee or a contractor.
In O'Connor v. Uber Technologies, U.S. District Judge Edward Chen just ruled that Uber's drivers may pursue their arguments that they were employees in the form of a class-action suit. One of the reasons was that Uber admitted that they treated a large amount of its drivers "the same."
Of course, millions of dollars may be at stake in this context. Profit margins are much higher for companies such as Uber, Lyft, Airbnb and other so-called "on demand" or "sharing economy" companies. That is because the companies do not have to pay contractors for health insurance benefits, work-related expenses, certain taxes, and the like. But seen from the driver/employee's point of view, getting such benefits if they are truly employees is equally important in a country such as the United States where great disparities exist between the wealthy (such as the owners of these start-up companies) and the not-so-wealthy, everyday workers.
Plaintiffs are represented by renowned employee-side attorney Shannon "Sledgehammer" Liss-Riordan who represented and won a major suit by skycaps against American Airlines some years ago, so sparks undoubtedly will fly in the substantive hearings on this issue.
Thursday, September 3, 2015
The National Labor Relations Board recently issued a decision , Browning-Ferris Industries of California, Inc., d/b/a/ BFI Newby Island Recyclery, that establishes a new standard for determining who is a joint employer.
BFI Newby Island Recyclery hired Leadpoint, a staffing services company, to provide some workers for its recyclery. BFI and Leadpoint had signed a temporary labor services agreement which could be terminated by either party upon thirty days' notice. The agreement stated that Leadpoint was the sole employer of the workers and that nothing in the Agreement shall be construed as creating an employment relationship between BFI and the personnel supplied by Leadpoint. In other words, the agreement contained language that is pretty standard in independent contractor agreements. The agreement also provided that Leadpoint would recruit, interview, test, select and hire personnel for BFI. BFI was not involved in Leadpoint's hiring procedures. BFI, however, had the authority to "reject any Personnel and...discontinue the use of any personnel for any or no reason." Again, this is fairly standard language in independent contractor agreements. In a departure from precedent, the NLRB ruled that a company that hires a contractor to provide workers may be considered a joint employer of those workers if it has the right to control them even if it does not actively supervise them. The dissenters were rather unhappy and their opinions are worth reading as they lay out the expected impact of the ruling.
It's a significant decision and one that should make lawyers take another look at their clients' independent contractor agreements to see whether they contain language that indicates the potential to control the contractor's employees. While the language in the contract was not the only factor influencing the Board's decision, it was an important one.
Wednesday, September 2, 2015
Last year, Hastings Law hosted a conference in honor of Charles L. Knapp. The proceedings of that conference are now in print. Abstracts can be found here on the Hastings Law Journal homepage.
Contract Law Present and Future: A Symposium to Honor Professor Charles L. Knapp on Fifty Years of Teaching Law
Harry G. Prince
Volume 66, Issue 4, 871-878
Carol L. Chomsky
Volume 66, Issue 4, 879-898
Under the Sun: Casebooks and the Future of Contracts Teaching
Thomas W. Joo
Volume 66, Issue 4, 899-914
William J. Woodward, Jr.
Volume 66, Issue 4, 915-936
The Duty of Good Faith: A Perspective on Contemporary Contract Law
Jay M. Feinman
Volume 66, Issue 4, 937-950
Sketches of a Redemptive Theory of Contract Law
Emily M.S. Houh
Volume 66, Issue 4, 951-970
Contract as Evil
Volume 66, Issue 4, 971-1010
Curing the Infirmities of the Unconscionability Doctrine
Hazel Glenn Beh
Volume 66, Issue 4, 1011-1046
Volume 66, Issue 4, 1047-1082
Is There a “Duty to Read”?
Charles L. Knapp
Volume 66, Issue 4, 1083-1112
Tuesday, September 1, 2015
Uber. It just seems to always be in the news for one more lawsuit, doesn’t it. In late August, the district attorneys for San Francisco and Los Angeles filed a civil complaint against the company alleging that it is making misrepresentations about its safety procedures. The complaint, i.a., reads that Uber’s “false and misleading statements are so woven into the fabric of Uber’s safety narrative that they render Uber’s entire safety message misleading.”
On its website, Uber promises that “from the moment you request a ride to the moment you arrive, the Uber experience has been designed from the ground up with your safety in mind” and that “Ridesharing and livery drivers in the U.S. are screened through a process that includes county, federal, and multi-state criminal background checks. Uber also reviews drivers’ motor vehicle records throughout their time driving with Uber.”
However, Uber does not use fingerprint identication technology, which means that the company cannot search state and federal databases, only commercial ones.
The result? People with highly questionable backgrounds end up being on Uber’s payroll. For example, one “Uber driver was convicted of second-degree murder in 1982. He spent 26 years in prison, was released in 2008 and applied to Uber. A background report turned up no records relating to his murder conviction. He gave rides to over 1,100 Uber customers.” Yikes. Another “Another driver was convicted on felony charges for lewd acts with children. He gave over 5,600 rides to Uber customers.”
Add this to the ongoing lawsuit about whether Uber’s drivers should be legally classified as “employees” or “contractors,” and Uber is in a mound of legal trouble.
Certainly, a misrepresentation seems to have been made if the company deliberately touts its safety and its “industry-leading background check process” yet only uses a commercial database that does not even necessarily ensure that its drivers are who they say they are.
Still, Uber remains one of the most valuable start-ups in the world. It and similar “sharing economy” companies such as Airbnb have gained a good foothold on a market with a clear demand for new types of services. So far, so good. But initial success should not and does not equate with a “free-for all” situation just because these new companies are highly successful, at least initially. It seems that they are learning that lesson. Lyft, for example, already settled with prosecutors in regards to its safety. Perhaps Uber will follow suit.
|1||154||Bitcoin and the Uniform Commercial Code
Jeanne L. Schroeder
Yeshiva University - Benjamin N. Cardozo School of Law
|2||147||The Commission's E-Commerce Sector Inquiry – Analysis of Legal Issues and Suggested Practical Approach
Lars Kjølbye, Alessio Aresu and Sophia Stephanou
Latham & Watkins LLP, Latham & Watkins LLP and Latham & Watkins LLP
|3||130||Common Law Values: The Role of Party Autonomy in Private Law
University of Cambridge - Faculty of Law
|4||112||The Laws of Asian International Business Transactions
Universite du Luxembourg - Faculty of Law, Economics and Finance
|5||111||Legal Aspects of Subordinated Debt Instruments
Visiting Faculty, Indian Institute of Management
|6||96||A Comprehensive Theory of Civil Settlement
J.J. Prescott and Kathryn E. Spier
University of Michigan Law School and Harvard University - Law School - Faculty
|7||95||The Normative Force of Consent
Heidi M Hurd
University of Illinois College of Law
|8||80||Contract Formation and Performance Under the UCC and CISG: A Comparative Case Study
Kurt M. Saunders and Leonard Rymsza
California State University, Northridge and California State University, Northridge - Department of Business Law
|9||79||Contract as Evil
University of Houston - University of Houston Law Center
|10||76||Contract Design and the Shading Problem
Robert E. Scott
Columbia University - Law School
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Monday, August 31, 2015
Now that we are back in school, I wanted to draw attention to a couple of great new resources for those who are teaching contract drafting or those who would like to incorporate some contract drafting concepts or clauses into their Contracts courses. The first is an informative article by Lori Johnson, a Professor-in-Residence at University of Nevada, Las Vegas , Say The Magic Word: A Rhetorical Analysis of Contract Drafting Choice, 65 SYRACUSE L. REV. 451 (2015). One of my pet peeves is when contract drafting stylists advocate the modification or even wholesale deletion of contract terms without understanding their underlying purpose simply because it "sounds better." Johnson explains why it's important to distinguish between legalese without substance (words such as heretofore, whereas, etc.) and legal terms that have a substantive purpose. I found this article to be refreshing because it focuses on the substance of contract clauses, not just drafting style, with the ultimate goal of protecting the client's interest.
Speaking of the substance of contract clauses -- the second helpful resource is Houston-based attorney D.C. Toedt's Common Draft, an online resource that is basically an encyclopedia of various contract clauses. It's quite an effort and well worth exploring.
The article is here.
It speaks for itself.
There are a million reasons why these contracts, which offer pennies on the dollar on the present value of the settlement, should not be enforced. Feel free to offer your legal theories in the comments!
Daniel P. O'Gorman, Contract Law and Fundamental Legal Conceptions: An Application of Hohfeldian Terminology to Contract Doctrine, 33 Miss. C.L. Rev. 317 (2015)
Cheryl B. Preston, "Please Note: You Have Waived Everything": Can Notice Redeem Online Contracts? 64 Am. U. L. Rev. 535 (2015)
Eric A. Zacks & Dustin A. Zacks, A Standing Question: Mortgages, Assignment, and Foreclosure, 40 J. Corp. L. 705 (2015)
Friday, August 28, 2015
In breaking Bieber news, HuffPo reports that Justin Bieber (pictured, left) claimed breach of contract in canceling a scheduled appearance in Montreal. The venue where Bieber was scheduled to perform seems to belieber the young artist, as it posted on its Facebook page a notice that neither it nor Mr. Bieber were liable for the cancellation. Bieber himself tweeted the cancellation, specifically referring to the promoter's breach (and to lying, but we prefer the legal jargon).
In Presidential candidate news, the Wisconsin Gazette reported that Wisconsin taxpayers might have to pay $50 million in damages because Governor Scott Walker (pictured, right) breached a contract that his predecessor had entered into to modernize the states rail service. According to the Gazette, Spanish train-maker Talgo sued the state for $66 million. The case settled, with the state agreement to pay nearly $10 million on top of the $42 million it had already paid for trains that it never received.
The Washington Post reports that a Maryland firm, CNSI, that lost a $200 million contract when its Senior Vice President blew the whistle on irregularities in the award of the contract. CNSI won a contract to process medicaid claims for the state of Louisiana while one of its former executives was Louisiana's Secretary of the Department of Health and Hospitals. The contract was cancelled in 2013 and the Secretary of the Department of Health and Hospitals has been indicted for perjury. CNSI claims that the whistle blower was a disgruntled employee who breached his contract and tortiously interfered. An investigation into possible wrongdoing by CNSI in connection with the contract is ongoing.
Tuesday, August 25, 2015
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Monday, August 24, 2015
Hugely successful auto-maker Tesla is making very good money not only on its electric cars, but also on its contracts selling zero emission credits to rivaling automakers. New environmental standards in eleven states require that by 2025, 15% of a car company’s sold fleet must be so-called “zero emission” vehicles. If a company cannot meet existing standards, they can purchase zero emissions credits from other companies that can. Tesla is one of those.
This year, Tesla has sold approximately $68 million worth of credits to competing automakers, which represents 12% of its overall revenue. Overall, Tesla is doing very well: its net profit for the first quarter of this year was more than $11 million and its shares have been reported to be up more than 165% so far this year.
This raises the question that I also raised here on this blog in another post earlier this summer: is the emissions trading scheme a good idea, or does it simply allow for glorified “contracts to pollute”? As with many other things in the law, both could be seen to be the case. See this report that casts doubt on whether carbon credits help or hurt the agenda. Some call them "hot air,"perhaps for good reason. But at least Tesla is, hopefully, challenging other automakers to innovate to pollute less.
Another question, though, is the use of the euphemism “zero emissions.” Electric vehicles are arguably better seen from an environmental point of view than traditional cars, but they are not “zero” emissions. They could, instead, be called “emissions elsewhere” vehicles. That, of course, does not sound nearly as good. However, the electricity used for electric cars is produced somewhere. The true question is: by what means? If the electricity stems from dirty coal-fired power plants, the solution is not as good as it sounds, although concentrating the pollution in one large plant may be better than having many individual cars produce power on the road. That is a question for another forum. Suffice it to say that choice is good, and if car buyers could also in all locales could always decide exactly how to source their electricity (from, for instance, solar power), the matter would be different. That is not (yet) the case. So for now, “zero emission” vehicles are actually not so.
A recent case out of the Eastern District of California, Handy v. LogMeIn, found that there was notice good enough to defeat a consumer's claims under California's Unfair Competition and False Advertising Laws -- even if that notice might not be sufficient for contract formation.
Darren Hardy obtained LogMeInFree which was provided free of charge and allowed users to remotely access a desktop computer from another computer. Some time later, he purchased Ignition for $29.99 which allowed him to access a computer using a tablet or smart phone. Four years later, the defendant, LogMeIn, discontinued the free LogMeIn product although it offered LogMeInPro for $49/year for two computers. Handy claimed that LogMeIn, when marketing Ignition, should have informed consumers that LogMeInFree could be discontinued in the future.
LogMeIn's "Terms and Conditions of Use" stated that users accepted
"BY COMPLETING THE ELECTRONIC ACCEPTANCE PROCESS, CLICKING THE "SUBMIT" OR "ACCEPT" BUTTONS, SIGNING, USING ANY OF THE PRODUCTS OR OTHERWISE INDICATING YOUR ACCEPTANCE OF THESE TERMS . ."
The Terms allowed the company to "to modify or discontinue any Product for any reason or no reason with or without notice to You or the Contracting Party. LMI shall not be liable to You or the Contracting Party or any third party should LMI exercise its right to revise these Terms or modify or discontinue a Product." It also allowed the company to "in its sole discretion immediately terminate these Terms and this subscription, license and right to use any Product if . . . LMI decides, in its sole discretion, to discontinue offering the Product. LMI shall not be liable to You, the Contracting Party or any third party for termination of the Service or use of the Products . . ."
The plaintiff argued that he didn't remember being prompted to review the Terms and Conditions prior to buying Ignition or during his use of it. He also stated that if he had known that LogMeInFree would be discontinued, he would not have purchased Ignition.
California's False Advertising Law (Cal. Bus. & Prof. Code section 17500) states that it is unlawful for any company to make any untrue or misleading statement in advertising. California Unfair Competition Law (Cal. Bus. & Prof. Code section 17200) prohibits "unlawful, unfair, or fraudulent" business practices. Because the plaintiff's claims under both Laws relied upon claims that the defendant engaged in knowing deception, the plaintiff was subject to the heightened pleading standards of Rule 9(b) of the FRCP.
The Court granted the defendant's motion to dismiss because the plaintiff failed to meet the heightened pleading standard for fraud. It found that the plaintiff failed to provide sufficient factual detail to state his claims for several reasons although I'll only discuss the contract-related one. The court found that LogMeIn provided notice that LogMeInFree could be terminated in its Terms and Conditions of Use. While Handy argued that the Terms were not binding as they were a "browsewrap," the court stated that missed the point:
"Whether the Terms and Conditions constituted an enforceable contract is irrelevant to whether the Terms and Conditions related to LogMeInFree provided notice to prospective purchasers of the Ignition app that LogMeInFree could be discontinued....the fact that Defendant posted on its website information that told users that LogMeInFree could be terminated undermines Plaintiff's claims. Though this information was not forced on Plaintiff through a clickwrap, the evidence makes clear that Defendant did publish the fact that it reserved the right to terminate the free app, LogMeInFree."
In other words, the court found that terms on a website could provide sufficient notice to defeat a claim based upon deception even if the notice wasn't sufficient to meet the standards for contractual assent.
Friday, August 21, 2015
Earlier this summer, I blogged on cheating website Ashley Madison promising to provide "100% discreet service" and a group of hackers threatening to reveal the website's customers if the website was not removed. Well, it was not, and this past week, the group made good on its promise or threat, depending on how one views the issue, to make the stolen database easily available to the general public.
In spite of Ashley Madison's promise to be "100% discreet" (whatever that means), the fine print used in its contracts also states, "We cannot ensure the security or privacy of information you provide through the Internet." No contractual promises seen to have been breached if that had been the only promise made. But as Steve Hedley wrote in his comment (see below), some of those inconvenienced by the hack include a number who paid a fee of $19 specifically for a "full delete". Does US contract law really allow Ashley Madison to take their money and then rely on fine print to justify a complete failure? That is a very good point and indeed does not seem to be the case. It could, of course, be that those who paid for a full delete got it and were _not_ among the ones in the publicized batch, but judging solely from media reports on this account, complaints have been made that the promised "full deletes" were not undertaken, so it seems that at least some that paid _additional_ money to become deleted from the website did not get what they paid for. That's a breach. Thanks, Steve Hedley, for that comment.
But the matter is more serious and sad than that: the website was/is apparently also used for finding homosexual partners, which is illegal and carries the death penalty in countries such as Iran, Saudi Arabia, and the United Arab Emirates, where two users were listed.
Not surprisingly, this story again shows the importance of internet data security. One would think that after the recent HomeDepot, Target and other database breach episodes, people would have learned, but apparently, this is not the case.
Thursday, August 20, 2015
We started up again this week, so I am once again having the pleasure of introducing students to the glorious realm of contracts law. Today, we will be delving into Article 2 of the Uniform Commercial Code for the first time, starting with concepts like "goods" and "merchants." I use Blum's Examples and Explanations as a supplement to the cases I use with my students. He has a series of questions about whether various transactions are sales of goods. One involves the sale of a cow.
Me: Is a cow a good?
Student: Yes, it is a good.
Me: How do you know that a cow is a good?
Student: A cow is a good because UCC §2-105 defines "goods" to include all things moveable at the time identified for sale. It also specifies that the unborn young of animals are goods, so it follows a fortiori that the animals themselves also must be goods.
Me: Interesting, but the answer I was looking for was "because it moooooooooves."
Blum then moves on to more difficult examples involving hybrid contracts. The Contracts Listserv has been hopping with discussion of this very topic. I remain puzzled by the preference for the preponderant purpose test. As I argued here, the gravamen of the action test makes far more sense to me.
Wednesday, August 19, 2015
Wayne R. Barnes, Correcting a False Step: Rethinking Overhead for the "Actual Expenses" Affirmative Defense to the Texas Construction Trust Fund Act, 67 Baylor L. Rev. 1 (2015)
Deborah A. DeMott, Forum-Selection Bylaws Refracted through an Agency Lens, 57 Ariz. L. Rev. 269 (2015)
Burt Neuborne, Ending Lochner Lite. 50 Harv. C.R.-C.L. L. Rev. 183 (2015)
Tuesday, August 18, 2015
Nancy S. Kim and I have an article, Internet Giants as Quasi-Governmental Actors and the Limits of Contractual Consent, forthcoming in the Missouri Law Review, and that journal has been kind enough to feature our abstract on their homepage.
We look forward to seeing this one in print, and as usual the work has improved throughout the editing process, but if you can't wait for the final version, a draft is still up on SSRN.
Or, if you want the elevator speech, you can watch this video.
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Monday, August 17, 2015
THE UNIVERSITY OF IOWA COLLEGE OF LAWanticipates hiring several tenured/tenure track faculty members and clinical faculty members (including a director for field placement program) over the coming year. Our goal is to find outstanding scholars and teachers who can extend the law school’s traditional strengths and intellectual breadth. We are interested in all persons of high academic achievement and promise with outstanding credentials. Appointment and rank will be commensurate with qualifications and experience. Candidates should send resumes, references, and descriptions of areas of interest to: Faculty Appointments Committee, College of Law, The University of Iowa, Iowa City, Iowa 52242-1113.
THE UNIVERSITY OF IOWA is an equal opportunity/affirmative action employer. All qualified applicants are encouraged to apply and will receive consideration for employment free from discrimination on the basis of race, creed, color, national origin, age, sex, pregnancy, sexual orientation, gender identity, genetic information, religion, associational preference, status as a qualified individual with a disability, or status as a protected veteran.
I often begin my course by telling students that contracts facilitate mutually beneficial transactions. So, if they want to be the kind of attorneys who make the world a better place, transactional work is the place to be. But sometimes one-sided contracts drawn up in a context of vastly unequal bargaining power can prevent mutually beneficial transactions from taking place. This seems to be occurring in the case of Nick Symmonds, a six-time U.S. outdoor champion at 800 meters who won a silver medal at the 2013 World Championships. According to this story in the New York Times, Symmonds has been left off the U.S. team for the 2015 Worlds taking place later this month because he refused to sign a contract.
Symmonds refused to sign a vaguely-worded document that seemed to require that athletes wear Nike gear exclusively, even in their free time. Nike, according to the Times, has committed to sponsoring U.S. Track & Field to the tune of $20 million per year through 2040. But that contract might interfere with Symmonds' contractual obligations with his own sponsor, the running-shoe company, Brooks. According to the Times, athletes were instructed to pack only Nike-branded or non-branded apparel for the World Championships. Symmonds points out that Brooks is paying for him to wear its brand at important events. If he is prohibited from doing so, why would Brooks continue to sponsor him. Symmonds is all for the Stars and Stripes, but he also has to worry about dollars and cents. He estimates that 75% of his income comes through sponsorships.
Symmonds does not object to wearing Nike apparel at official events. He objects to the vague language that seems to preclude him from supporting his sponsor when he is not at official events. Some are saying that Symmonds is taking this position because he has no chance to medal at the Worlds anyway, so he has nothing to lose. The photo above shows him winning the US championships in 2010. He won again in 2015. If that guy has no chance, what does it say about the rest of the team?