Monday, December 21, 2015
Once, when I lived in a city, my car got towed. I was properly, legally parked at the time I parked the car. Unfortunately, after I parked the car, the city came by and put up a sign saying they were cutting down a tree the next day and my car needed to be moved. Unfortunately, the car wasn't parked on the street where I lived (that's city living for you) and also unfortunately, I didn't go back to my car for a few days (also city living for you). When I went to retrieve my car for a driving errand and found it missing, I had a moment of utter panic that it had been stolen. Then I noticed the bedraggled sign and realized it must have been towed. Thus commenced a long, involved saga. My license plate number was not reported online as having been towed, so I had to take two separate buses across the length of the city to a police station, where I waited in a very long line of people doing various police business to be told yes, it had been towed, but no, it wasn't in the system, and I had to go another opposite side of the city (I was making a triangle) to retrieve it and I had to BRING CASH (I was told this many times, in oral all-caps). Which meant that first I had to locate an ATM in an area of the city with which I was unfamiliar, and then take more buses to the tow company location. This entire ordeal (which I maintain wasn't entirely my fault, considering I think it was unrealistic of the city to provide so little notice of the tree issue, because the vast majority of us city-dwellers don't go to our cars on a daily basis) took the better part of my day and cost hundreds of dollars but, at the end of it, at least I got my car back (and then afterward I had to keep making out-of-my-way trips on a daily basis to make sure that my car hadn't become subject to any weird new towing orders).
I tell all of you this saga because when I started reading the fact pattern of Parham v. Cih Properties, Civil Case No. 14-1706 (RJL), out of the District Court for the District of Columbia, I had flashbacks. In that case, the plaintiff lived in an apartment complex that had a parking lot. (There is a prior Parham v. Cih Properties case, involving a plaintiff with a different first name, possibly the plaintiff's mother.) She alleged that her car was towed from the lot. After allegedly having to engage in a complicated search, the plaintiff determined that the car had been ticketed for having "dead tags" and had been sent "to be crushed for scrap metal." The plaintiff alleged that her car did not have dead tags and also that the tag number she was given on the ticket wasn't even the tag number of her car. At any rate, the plaintiff has never actually been able to locate the man who allegedly towed the car and so has never actually located her car and so never received her car back. So, she's sued.
Why, you might wonder, am I talking about all these parking sagas in the ContractsProf Blog? Well, there was a breach of contract aspect to this case, in that she alleged that she had a contract with the apartment complex that the complex breached when it authorized the towing of her car. However, the only contract between the plaintiff and the apartment complex was a thirty-year-old lease agreement that explicitly stated that parking was not covered by the agreement. Therefore, the court found there was no breach of any contract.
I understand the court's analysis but I'm incredibly perplexed and wish I had more information. Was there never any updating of the lease agreement in the ensuing thirty years? Surely the rent had been increased, at least? And, honestly, under what authority was she parking in the parking lot? Whenever I have had parking in a city lot, it came with tags or cards or permits or something, so that the parking could be managed. And never, in a city situation, has the parking been free. The parking here was apparently located in Washington, D.C. (see above photo for an only-slightly-out-of-date depiction of parking in Washington, D.C.), so I wish knew more about the circumstances under which the parking lot was being governed. I just find it difficult to believe that there wasn't some sort of agreement somewhere between the plaintiff and someone about what the parking situation was, even if the agreement was only oral in nature, or even if we had to turn to promissory estoppel to get there. But am I thinking about this from a completely wrong angle somehow?
The plaintiff in this case was proceeding pro se, which might have contributed to the fact that there wasn't enough evidence for the plaintiff to survive summary judgment. Indeed, none of the plaintiff's claims (which included fraud and consumer protection claims) survived summary judgment.
This case made me think of my own parking saga because, well, what would I have done if I'd just never been able to locate my car again? Even though I thought it was unfair that I was forced to inconveniently traipse all over the city and produce hundreds of dollars in cash based on what I considered a "surprise" towing sign, I think I also vaguely thought that probably one of the "terms" of my agreement with the city under which it had given me a street parking permit was that I would check on the car at least every twenty-four hours. So, although I was annoyed during my saga, I put most of the blame on myself. I have no idea what I would have done if I'd never found my car, though.
Thursday, December 17, 2015
We received the following great comment from Professor Neil Sobol of Texas A&M. Instead of simply letting it sit in the Comments field, I thought I would post it directly here and encourage anyone interested to read Professor Sobol's article. Thanks!
Telephone fees assessed inmates are just one example of a myriad of charges assessed to criminal defendants that are used to help fund declining state and local budgets. Often the fees go beyond simple reimbursement of expenses and are unrelated to the underlying offenses. In the case of telephone charges (as Congress members described in an October 20, 2015 letter to the F.C.C.),“ up to 60 percent of what prisoners’ families pay to receive phone calls from their incarcerated loved ones has nothing to do with the cost of the phone services provided.”
Fees assessed to inmates are just one component of the growing problem of criminal justice debt that currently affects millions of individuals. Criminal justice debt includes fees, fines, and restitution. Monetary charges can be imposed at any stage criminal proceedings: pre-conviction, sentencing, incarceration, or probation.
Unfortunately, the use of the charges can be abusive. The Department of Justice’s scathing report on the Ferguson Police Department describes a system where the city, the police, and courts were more concerned with collection of revenue than public safety. Moreover, the abuses relating to criminal justice debt described in the report are not limited to Ferguson.
The impact is most severe on poor and minorities (and their families) who often have to choose between paying for family necessities and their criminal justice debt. Failure to pay criminal justice debt can result in arrest and incarceration. I have written an article, Charging the Poor: Criminal Justice Debt & Modern-Day Debtors’ Prisons, 75 Maryland Law Review (forthcoming 2016), that addresses the unfortunate resurgence of debtors’ prisons based on incarceration of those unable to pay criminal justice debt. For those interested, the draft is available at http://ssrn.com/abstract=2704029
December 17, 2015 | Permalink
Wednesday, December 16, 2015
How does paying 18 cents a minute for a local phone call in 2015 sound to you – fair enough or a scam? How about 23 cents a minute for a non-local call? If you think that no one can possibly charge that much today or that no one in their right minds would pay it, think again (ok, at least the former).
In Orange County, California, jails, the average phone call costs just that. In return for providing phone service in a county’s jail system, a telecommunications company typically guarantees the county a multi-million dollar “commission” as well as a percentage of the revenue. For example, Alabama company Global Tel-Link guarantees a payment of $15 million or two-thirds of phone revenue, whichever is greater, to Los Angeles County. To be able to pay such a high price, the phone companies of course pass the cost on to the end clients; the inmates in at least Southern California counties.
The inmates and their families have had enough. They filed suit recently against Los Angeles and nearby counties alleging that the fee for inmate telephone calls are “grossly unfair and excessive” and amount to an illegal moneymaking scheme for local governments.
Before you ask yourself who is calling the kettle black, as I must admit I did when I first learned of this story, think of this: criminal recidivism is greatly reduced by family communication. The Federal Communications Commission last month capped local call rates and trimmed the cap on interstate long-distance calls for this and other reasons. Mothers with husbands in jail have paid several thousand dollars to telecommunications companies so that their children can talk to their fathers, undoubtedly a benefit to not only the families, but also society in the long run.
Of course, the inmates have few alternatives as cell phones are very typically not allowed in jail.
It continually amazes me how much Americans are willing or have to pay for phone service, Internet service, and cable TV service. In the case of inmates, of course, they have little choice. To avoid paying large monthly fees for cell phone service, I have kept my “dumb phone,” but instead find myself annoyed at still, in 2015, not being able to get more selective cable TV for only those stations I truly watch (the news, if you can call it that these days). Monopolies or not: communications companies still typically have the upper hand in contractual bargaining situations.
The call for proposals below is reposted from our sister site, Business Law Prof Blog, as it is relevant to recent conversations here about teaching transactional lawyering skills in the context of the first-year Contracts course. The Institute for Law Teaching and Learning has a tremendous track record of putting on conferences full of cutting-edge information on the pedagogy and practices of law teaching. The "Real-World Readiness" theme looks like another winner, and perhaps some of our readers are open to presenting their ideas to this receptive audience.
CALL FOR PRESENTATION PROPOSALS
Institute for Law Teaching and Learning—Summer 2016 Conference
June 10-11, 2016
Washburn University School of Law—Topeka, Kansas
The Institute for Law Teaching and Learning invites proposals for conference workshops addressing the many ways that law schools are preparing students to enter the real world of law practice. With the rising demands for “practice-ready” lawyers, this topic has taken on increased urgency in recent years. How are law schools and law professors taking on the challenge of graduating students who are ready to join the real world of practicing attorneys? Can we be doing more?
The Institute takes a broad view of educational practices that promote real-world readiness. Accordingly, we welcome proposals for workshops on incorporating such teaching techniques in doctrinal, clinical, externship, writing, seminar, hybrid, and interdisciplinary courses. Workshops can address real-world readiness in first-year courses, upper-level courses, required courses, electives, or academic support teaching. Workshops can present innovative teaching materials, course designs, curricular or program designs, etc. Each workshop should include materials that participants can use during the workshop and also when they return to their campuses. Presenters should model best practices in teaching methods by actively engaging the workshop participants.
The Institute invites proposals for 60-minute workshops consistent with a broad interpretation of the conference theme. To be considered for the conference, proposals should be one single-spaced page (maximum) and should include the following information:
- the title of the workshop;
- the name, address, telephone number, and email address of the presenter(s);
- a summary of the contents of the workshop, including its goals and methods; and
- an explanation of the interactive teaching methods the presenter(s) will use to engage the audience.
The Institute must receive proposals by February 1, 2016. Submit proposals via email to Emily Grant, Co-Director, Institute for Law Teaching and Learning, at firstname.lastname@example.org.
More information is available at: http://lawteaching.org/conferences/2016/
I'm posting this proposal and solicitation of comments at the request of some valued contracts-prof colleagues named below. I hope you'll take them up on their request for feedback, which you can provide directly by clicking on the links associated with their names.
More law schools are no longer regularly or frequently offering courses in (1) payment systems, (2) secured transactions, and/or (3) sales. In part, this happens because these schools do not have faculty members who want to teach the courses. And, in other cases, because students do not sign up for commercial law courses--even if the commercial law courses are taught from 11-12 on Tuesdays and Thursdays.
Most students do not need 42 class hours of payment systems, 42 hours of secured transactions, and 42 hours more of sales. ["What?! I'm appalled by this heretical statement!" - Ed.] Lawyers in a general civil practice do, however, need to have familiarity with core commercial law concepts in order to master the specific statutory provisions that govern the transaction or litigation matter on which they are working. ["Okay, that's better." - Ed.] And, before that, there is a need to pass the state bar exam.
We propose that the needs of such students can best be meet in a two-credit course covering only core commercial law concepts, and we are working on course materials for such a course. We welcome your reasoned arguments against this proposal. Even more welcome would be your suggestions as to how 28 class hours can most effectively be used by students learning core commercial concepts.
We look forward to seeing you at the AALS and receiving your emails.
Hmmm. The idea of commercial law in two credits makes this teacher of payment systems and sales a little queasy (see my initial reaction in the selfie photo at left). Still, I probably wouldn't argue with the proposition that some exposure to commercial law is better than none. I'm curious what the broader contracts community thinks, so I've opened up the comments below. Meanwhile, take advantage of this opportunity to help our colleagues with an interesting project.
If so, it's always better to be precise in your negotiations.
Of course, the flip side of this is that you frequently don't feel like you have the power to demand precision.
In Bubble Pony v. Facepunch Studios, Civil No. 15-601(DSD/FLN) (sorry, I can only find versions behind paywalls for now), out of the District of Minnesota, Patrick Glynn was a computer programmer in need of a job. He e-mailed Facepunch looking for one, highlighting his abilities (as one does when job-hunting). Facepunch's majority owner, Garry Newman, responded to Glynn's e-mail positively, describing what he was looking for in a new employee and adding:
I want to eventually be in a position where you'd be making games for Facepunch Studios, which we'd sell on Steam, or the apple appstore, or whatever, but once that game makes what we've paid you so far back, you'd get something like a 60% cut of all the profits (probably more, that's kind of TBD). So we'd kind of be investing in your, kind of.
Does that sounds [sic] like the kind of situation you'd like to be in?
Glynn replied that yes, he was interested, and that his "only concerns" were "making rent, paying bills, and buying groceries." Eventually, the parties agreed on compensation of $1,900 per month, to be increased by $100 per month until they reached $3,000. At the time, Glynn's responsibilities were going to be things like fixing bugs and otherwise optimizing Facepunch's existing code. The parties did not further negotiate what would happen if/when Glynn started creating games for Facepunch. They did, however, agree that Glynn was an independent contractor and not an employee.
Eventually, Glynn began creating games for Facepunch, producing more than 75% of the source code for a game called RUST. RUST was a huge success that "has generated at least $46 million in sales." Facepunch paid Glynn bonuses totaling around $700,000. Facepunch also asked Glynn, after RUST's major success had been established, to draft a document explaining how the RUST programming worked. Once it received the document, Facepunch terminated its relationship with Glynn, pulled RUST off the market, and announced a new "experimental game" based on RUST.
As you might imagine, Glynn has sued for a number of causes of action, and there are other issues in this case, including an issue of personal jurisdiction, because Facepunch and Newman are both British (the court found personal jurisdiction to exist). However, to focus on the contract issue, the court found that the parties' e-mails on the subject of 60% of the profits if Glynn started developing games never rose to the level of an agreement. The court said that the terms about the compensation were "vague and indefinite," pointing to the words "eventually" and "something like 60%" and "TBD." Therefore, Glynn's breach of contract claims here were dismissed. The court also dismissed his promissory estoppel claims, finding that Newman's e-mail statements were too "vague and indefinite" to constitute promises.
Glynn should have been sure to clarify his compensation before embarking on developing games for Facepunch. Of course, from Glynn's perspective, he was probably happy just to get a job, and, by the time he started developing games, he might have developed enough of a relationship with Facepunch that he didn't feel it necessary to rock the boat, so to speak.
Glynn isn't completely out of luck, however. Although the court dismissed most of his claims, the lack of definite terms actually works in his favor in the copyright context. Because the parties were allegedly clear that Glynn was an independent contractor and not an employee, and because there was allegedly no agreement anywhere otherwise (so far, at this early stage), Glynn's claim for joint copyright ownership of RUST (and its associated causes of action) survived the motion to dismiss. So to be continued on the copyright question...
Monday, December 14, 2015
On December 14, the United States Supreme Court decided DirecTV v. Imburgia, the latest chapter in an expansion of the Federal Arbitration Act to pre-empt state law well beyond anything Congress in the 1920s could plausibly have imagined. Full disclosure: I'm not a fan of the Court's FAA jurisprudence.
The Court once again purports to place arbitration agreements "on equal footing with all other contracts," while at the same time giving arbitration clauses a force that even a Sith would have to admire. Don't underestimate the power of arbitration clauses over all other terms in a contract. Professor Imre Stephen Szalai (Loyola - New Orleans) may have said it best in an e-mail that made the rounds on ADR, CivPro, and Contracts Prof listervs and that is especially appropriate for this blog:
"Nothing can stand in the way of FAA preemption, not even the parties' contract."
Many commentators will write many words about many aspects of the DirecTV case in the upcoming days and weeks, such as the eloquent dissent by Justice Ginsburg addressing economic imbalances of power in consumer contracts. I want to take a moment here, however, to praise the short and lonely dissent by Justice Thomas, espousing a view on which he has been unwaivering for more than two decades: "I remain of the view that the Federal Arbitration Act does not apply to proceedings in state courts."
While that solo dissent--and five dollars--will get you a café mocha at Starbucks, he has Congressional intent right. A pre-Erie statute intended to overcome federal courts' traditional hostility to arbitration was never intended to become a federal preemption juggernaut capable of divesting states of huge swaths of jurisdiction over state contract law.
Federal Arbitration Act rant now complete. Thank you for listening.
I find that my students are very fond of posing hypothetical questions to me that touch upon unconscionability, even before we get to the doctrine, so I always love to see unconscionability cases in action.
This one, Roberts v. Unimin Corp., No. 1:15CV00071 JLH, from the Eastern District of Arkansas, involved a mineral lease that was entered into in 1961. Now, in 2015, the successors in interest are seeking to get out of the contract, arguing that it's either terminable at will or unconscionable and also alleging that they are owed over $75,000 as a result of unjust enrichment. The court concluded that the plaintiffs alleged enough to survive a motion to dismiss.
The parties alleged that the lease was for an indefinite term and therefore terminable at will. The lease's term was "as long thereafter as mining and/or mining operations are prosecuted." The court stated it was "plausible" that this term was so indefinite as to render the lease terminable at will.
Turning to unconscionability, the court noted the fact that the lease was negotiated shortly after the death of the father to whom the land had belonged, with children who were still reeling from the death and had had no experience negotiating mineral leases. The children therefore relied upon the defendant's predecessor-in-interest during the negotiation, according to the complaint, and that trust was taken advantage of by the insertion of a royalty price far below market value. This was enough to survive the motion to dismiss. I wonder if this case will continue and have further pleadings, because I'm curious as to how this unconscionability argument develops.
On Saturday, a new international treaty surplanting the expired Kyoto Protocol was finally reached by 195 nations. For business contracting and numerous, if not all, aspects of life now and in the future, the global climate will be key.
The main aim of the agreement is to keep temperature rise “well below” 2° C. The nations will additionally “pursue efforts” to limit the temperature increase to 1.5° C. Thousands of scientists have for a long time reiterated the belief that temperatures rising above 2° Celsius could be devastating, so the aspirational goal of 1.5° C is, of course, a positive sign that national leaders may finally be realizing the dire straits of the planet’s climate situation.
So, this is good news, right? To some extent, yes. “The Paris Agreement for the first time brings all nations into a common cause based on their historic, current and future responsibilities.” However, current national commitments still do not go far enough. As they currently stand, we are headed towards a warming of more than 3° C; much higher than the scientifically advisable goal. The national pledges must be increased over time. Starting in 2018, each country will have to submit new plans every five years to reach the 1.5/2° goal by 2100. The thought is that even though current coals do not suffice to keep climate warming to the agreed-upon limits, they will over time, starting soon.
History shows, though, that many nations have so far neither been ready nor politically able to make effective greenhouse gas reduction commitments. Previous aspirational goals have not been realized by the great majority of nations, although some not only met, but exceeded their commitments. It’s tempting to note that “time will tell if the situation changes this time,” but we simply don’t have much time to turn around the problem before it is too late for many regions, species and peoples around the world. For example, a temperature increase of 2° C will still be very problematic for low-lying nations such as many small island states, who seem to have been almost entirely forgotten about by many in this context. That, however, was considered one of the “prices” to be paid for reaching the deal. (A true contractual-like bargaining strategy.) Human rights are only mentioned in the preamble to the Agreement and not in the Agreement itself.
Nation themselves will determine their “intended nationally determined contributions,” which are not directly legally binding under notions of hard law as they are not mandatory with top-down enforcement if the nations fail to do so. Among other factors, the word "contribution" and not, for example, "commitments" demonstrate the legal cautiousness of the agreement. Nations must, of course, still strive to reach their goals under the UNFCCC and the notion of pacta sunt servanda, but these are not worded in a manner that gives them a firm, legally binding effect. The only directly legally binding parts of the Agreement are some procedural aspects such as the review procedures.
Of course, the reason why the Agreement was adopted by so many parties was precisely that no legal requirements were imposed on nations. Some, such as the United States, would not have accepted this. A senior Obama administration official notes that the Agreement "does not require submission to the Senate because of the way it is structured and because the pieces that are binding are already part of existing agreements.” A legally smart and pragmatic maneuver. But it still remains to be seen whether the United States and other nations act – and act quickly enough - to prevent the problem escalating in spite of good intentions. I may be one of the few in this context, but I’m still skeptical. The intended time frames still seem too long to me and the actual promised action too meager. I fear that these are simply the “Emperor’s New Clothes,” celebrated so much, perhaps, because of so many years of no action.
Nonetheless, it is certainly remarkable and a very good sign that the world community finally agreed on the dangers posed by climate change and thus a 2° C limit. That's a good start. In the words of Miguel Arias Cañete, the European Union’s commissioner for energy and climate action, “[t]oday, we celebrate, [t]omorrow, we have to act. This is what the world expects of us.” But if we have simply turned a corner back to where we came from, namely hoping that sufficient action will be taken soon and pointing out that the world expects that, we might have celebrated a bit too early. I hope I am wrong. Climate change is like a cancer: horrible, always inconvenient, and tough to deal with at many levels. But the longer one waits in tackling it, the worse it will get.
A recent case out of New York, Summit Apparel v. Promo Nation, 2014-795 Q C, strikes me as being a lovely demonstration of the UCC in action.
My favorite part of this case is the court's little aside that "ASAP" written on the order form for the T-shirts meant "as soon as possible." It's just a reminder that the things we often think are crystal-clear in our communication do sometimes need a translating step that happens so quickly in our brains that we seldom stop to acknowledge it.
Anyway, the meaning of "ASAP" is important to this case, because the parties are having a disagreement over whether the T-shirts were, in fact, delivered ASAP. On August 13, the defendant ordered 38,640 T-shirts from the plaintiff, to be delivered "ASAP." By September 8, 16,800 of these T-shirts had been shipped. The plaintiff told the defendant the remainder of the order would be shipped by September 20, provided that payment was received before that. In fact, the defendant didn't provide payment until November 17, when it paid the balance less $10,000. The plaintiff delivered the remainder of the order the following day, November 18. However, the defendant never paid the remaining $10,000 due and the plaintiff sued. The defendant counterclaimed, saying that the November delivery was untimely and caused the defendant to lose a customer, with all attendant future business opportunities and profits, which the defendant estimated as $750,000. The defendant pointed to the fact that the inscription of "ASAP" on the order form meant that time was of the essence and yet the plaintiff nevertheless delayed fulfilling the order.
The court turned to the UCC to analyze whether the defendant's actions permitted it to seek the $750,000 in damages. The court noted that the defendant could have rejected the T-shirts as non-conforming because of their alleged untimely delivery. Instead, however, examination of the course of performance between the parties indicated that the defendant accepted the T-shirts without raising any objection as to their timeliness at all. In fact, the timeliness was never raised by the defendant until several years later, when it was first raised by the defendant's counsel in connection with the plaintiff's attempt to collect the $10,000 balance. (Additionally, it was the defendant's own delay in payment that actually caused the delay in the delivery of the T-shirts in the first place.)
Of course, the UCC allows that acceptance of non-conforming goods did not necessarily impair the defendant's ability to seek other remedies. However, the right to seek other remedies under the UCC is preserved as long as the defendant notifies the plaintiff of the non-conforming nature of the goods within a reasonable time after discovering it. The defendant failed to notify the plaintiff, as stated above, until several years had gone by. Therefore, the court concluded, the defendant was barred from seeking other remedies.
The court made one last note that even if the defendant could somehow prove it had notified the plaintiff that it considered the goods non-conforming within a reasonable time, the defendant's lost profits and business opportunities were "purely speculative."
This is a fairly brief and relatively straightforward opinion, which I sometimes think it's nice to remind ourselves exists out there.
Sunday, December 13, 2015
Back in October, the New York Court of Appeals decided in principle that candidates for the bar must demonstrate that they have acquired legal skills (as opposed to just the legal knowledge traditionally tested on the bar exam). Our sister blog, Legal Skills Prof Blog, summarizes here some of the options being considered by the court's task force on the all-important question of how to implement such a skills requirement. The activity in New York is, in many respects, a supersized or advanced version of curricular rule changes adopted by the ABA.
This curricular movement is, I believe, an opportunity for those who teach Contracts. Skills taught in law school have traditionally had a substantial bent towards litigation, a bent that is unsurprising in a curriculum dominated by the case method. Even inroads by our friends in alternative dispute resolution still deal with skills applied after a dispute has arisen between parties. When we teach Contracts principally through appellate opinions, we follow the same after-the-fact approach toward doctrine. It doesn't have to be that way. The subject of Contracts is inherently a matter of transactional importance that should be our students' gateway to transactional thinking. By transactional, I mean an emphasis on "before the fact" lawyering where the goal is to prevent a dispute from occurring in the first place. In an era of greater focus on the acquisition of legal-practice skills, Contracts is the place where we have the possibility early on to ensure to skills include a focus on dispute prevention, not just dispute cure.
Transactional thinking is not inherently built-in to the case method and thus likely requires the introduction of skills exercises alongside traditional pedagogical approaches. More resources than ever are available now to enable us to make Contracts a gateway to transactional thinking, fortunately. Implementing such a shift still requires substantial work, however, but the change is one that is in our students' best interests if we can do it well.
Thursday, December 10, 2015
Will the legal hiring and general business situation never change for the better? Maybe, but commentators still think that future change on the legal market will come from structural and innovative, rather than cyclical, change. For example, in addition to relatively simple steps such as hiring outside staffing agencies and sharing office centers, some firms are launching their own subsidiaries providing legally related services such as contract, data and cyber security management along with ediscovery.
Until recently, law firms offered these and other services. As outside service providers have proved to be able to provide certain key services more efficiently and cost effectively than traditional law firms, the latter have lost business that they are now desperately trying to recoup.
Imitation is still the most sincere form of flattery. It is not only on the market for legal services that copycats abound; this has also proved to be the case with, for example, many shared economy service websites such as Uber, Lyft, Airbnb, VRBO and others. As soon as one company idea and website turns out to be successful, others just like it seem to shoot up within weeks or months. However, instead of simply trying to do what others are already doing and doing well, it would be nice if companies – law firms among them – would try to think about how they could do things better instead of just trying to, as often seems the case, (re)gain business by taking market shares from others. Exactly how law firms should do so is, of course, the million-dollar question, but it seems clear that innovation is prized both within and beyond the legal field. That will benefit our students if jobs are created by actual law firms rather than by service providers not hiring people with JDs.
(post bumped to the front for one more reminder)
This blog's favorite conference is coming to St. Mary's University School of Law in beautiful San Antonio! The Eleventh International Conference on Contracts (KCON XI) should be on your calendars for February 26-27, 2016 (and if it isn't, put it there). The purpose of this post, however, is to highlight a more pressing date: Friday, December 11 (just over a week away that's TOMORROW, folks) is the deadline for submitting proposed papers and panels.
Here, courtesy of Professor Colin Marks, the conference organizer, is the KCON call for papers:
Submissions are cordially invited for the 11th Annual International Conference on Contracts, the largest annual scholarly and educational conference devoted to Contracts and related areas of commercial law. Papers and works in progress are welcome from those who study contracts from any perspective, whether doctrinal, pedagogical, theoretical, empirical, historical, economic, critical, comparative or interdisciplinary.
Works that take an international or civil law approach are also welcome. Junior scholars are particularly encouraged to participate. Those interested in proposing and organizing panels of three to five presenters on specific themes are especially encouraged to do so.
Individual submissions should be made by a brief abstract (one page is sufficient) of the paper or work in progress that includes contact information for the author(s). Individual submissions will be placed on panels with like submissions. Panel proposals should include the name and contact information of the moderator or organizer, and a summary of the proposed papers or works in progress. There is no publication commitment for the conference, but organizers of individual panels are free to arrange for publication on their own.
You can find conference information, the e-mail address for proposals, and registration instructions here: bit.ly/KCON2016.
Wednesday, December 9, 2015
I am always fascinated by covenants not to compete. The facts surrounding them and their analysis are always so interesting.
A recent decision out of the Western District of Kentucky, Fruit of the Loom, Inc. v. Zumwalt, Civil Action No. 1:15CV-131-JHM, found Fruit of the Loom's non-competition clause valid and enforceable and prohibited the employee, Zumwalt, from competing against Fruit of the Loom or soliciting any customers for a period of twelve months.
After a bit of a dispute over which state's law should apply, the court concluded that Zumwalt was violating the terms of his contract with Fruit of the Loom in having gone to work for a competitor (specifically identified in the employment contract) in a capacity that uses knowledge and experience Zumwalt gained at Fruit of the Loom. The court noted that Zumwalt was the only salesperson Fruit of the Loom had had in the Oklahoma and eastern Kansas region and had access to a considerable amount of confidential information, including pricing, sales strategies, and customer lists. The court also found that, under Kentucky law, twelve months was a reasonable period of time for competition to be restricted. The non-compete provision doesn't appear to have had a specific limitation on geographic area, but it did limit its application, the court said, to nine specific competitors, so that that set out what the geographic scope would be.
The court also found that there was a likelihood of irreparable harm to Fruit of the Loom. There was evidence that confidential customer lists had already been provided by Zumwalt to the competitor, in violation of the agreement, and the court seems to endorse an inevitable disclosure theory: "[i]t is entirely unreasonable to expect [Zumwalt] to work for a direct competitor in a position similar to that which he held with [Fruit of the Loom], and forego the use of the intimate knowledge of [Fruit of the Loom's] business operations."
Zumwalt tried to argue that enforcement of the noncompetition agreement would result in substantial harm to him because he would be deprived of income, but the court stated that Zumwalt signed the agreement knowing that this would be the result, so that his damage "was foreseeable and avoidable."
In conclusion, the court issued an injunction prohibiting Zumwalt from working for any of the named competitors or soliciting any of Fruit of the Loom's customers for a period of twelve months.
I understand the enormity of the harm from Fruit of the Loom's perspective, especially given that Zumwalt was its only salesperson in the area, but I also admit to feeling a little bad for Zumwalt here, as this probably leaves him with not very many options for employment for the next year. Cases like this really feel like no-win situations.
Tuesday, December 8, 2015
A few days ago, I blogged here on an attempt by some university professors in California to unionize and to obtain better pay and working conditions in general.
In China, university reform is also underway, but, at least in part, with a much more troublesome intent and potentially dire effects for the nation and the world.
The Guardian reports that China’s education minister has vowed to “drive smart alecks, dissenters and thieves” from the country’s university classrooms. This is part of a wider anti-corruption campaign launched by President Xi three years ago.
The alleged misconduct ranges from action that seems reasonable (firing university leaders for filing fake expense reports and taking bribes from students) across the pitiful and almost laughable (punishing senior university officials for engaging in illicit acts of “hedonism” by, for example, driving luxury cars) to the outright shocking and extremely troublesome, seen with Western eyes. For example, several university chiefs have been toppled for “flouting Communist party rules.” Attempts are made to ban books that attempt to spread “Western values.” The education minister has also called for “greater political screening of academics before they are hired” and is worried that “enemy forces” are attempting to “infiltrate university campuses” in order to “turn young minds against the party.”
Liberal academics claim that the discussion and study of sensitive topics has generally become increasingly difficult under the leadership of President Xi.
All this is indeed very troublesome indeed. However, before we roll our eyes too much at these serious Chinese events, let us just remember that the United States academic world is far from perfect either. Recall, for example, the recent defunding of various law school and other university clinics on East Coast campuses for, at bottom, being too liberal and assisting the lower class in obtaining better pay and working conditions. A former senior faculty colleague personally told me once that one of my papers on (are you ready?) climate change was almost “too political” in Orange County, California. The article discussed mainstream factual aspects, including business and investment issues, of climate change that are now, just a few years later, being discussed in Paris by all media, including conservative outlets. Recently, numerous attempts at diversifying college campuses across the nation have shed light on potential elitism and racism in American universities. Nope, we are far from perfect ourselves. But when an entire nation deliberately and officially seeks to censor learning processes, there is indeed cause for alarm.
Last year, I had the great honor, joy and privilege of teaching international environmental law at a prime Chinese university. I brought up such “sensitive” topics as public participation in government law- and decision-making, climate change, and trade in endangered species. I was videotaped doing so (this is normal practice in China). I was also not invited back this past summer. Maybe my teaching is simply no good. Maybe more senior and “famous” lecturers were chosen. I cannot blame the university for doing so at all. I know that I have a lot with which I can contribute to any educational institution, but I also bow to and honor the many experienced, learned and very well published colleagues on the “market” these days. However, hate to think that I was, perhaps, censored away. I don’t think that is the case. If it was, then I am nonetheless happy to have at least contributed with a few provocative, Western thoughts. Perhaps I was just too much of a smart aleck...
"Meteorology would never entirely shed these religious undertones; even the eminently dry and secular field of contract law continues to call an unexpected weather event an 'act of God.'" --from Kathryn Schulz's article, "Talk About the Weather," in the November 23 issue of "The New Yorker"
"Eminently dry" -- well, at least this gives contract law something in common with my favorite types of wine!
Monday, December 7, 2015
Commercial class-action practitioner Kevin M. McGinty here describes the final settlement of the infamous 2013 theft of credit and debit card data from retail giant Target's point-of sale terminals:
On Tuesday, December 1, Target entered into a settlement agreement with a class of banks and financial institutions that issued the credit and debit cards that were compromised in the 2013 event. The settlement was the result of negotiations following closely on the heels of an order by the court certifying a card issuer class. This last settlement resolves card issuers’ claims that were not previously resolved in Target's August 2015 settlement with Visa, which provided $67 million to resolve claims made by Visa card issuing banks under Visa’s fraud resolution process. Also separate from this settlement is the $10 million settlement of the claims of consumers whose cards were compromised by the data theft, which Target concluded with the consumer class in March 2015.
The current settlement provides for payment of an additional $39,357,939.38 for the benefit of class member banks. Of that amount, $19,107,939.38 will be used to fund settlements under MasterCard’s fraud resolution process....
The $10 million paid in the consumer settlement may seem at first blush to be grossly disproportionate to the roughly $107 million allocated to the card networks and their issuing banks. It actually isn't. The card payment system is built on private contracts that are themselves heavily impacted by federal consumer protection laws like the Truth-in-Lending Act and the Electronic-Funds-Transfer Act. Together, the contracts and federal law place liability for unauthorized purchases squarely on the issuer banks acting through the card networks. Thus, we should expect the consumer losses from Target's data breach to be minimal compared to those borne by the banks, who were obligated to fund the consumer losses pending recovery from Target as the ultimately responsible party for this particular data breach.
Sometimes the legal system works more-or-less how it is intended. The consumers actually were protected in this instance.