Author: Dave Hoffman

5

Disclaimers & Promissory Estoppel

Imagine that, rather than because of his speech, but for no reason at all, University of Illinois Chancellor Wise decided not to present Prof. Salaita’s appointment to the Board of Trustees. Also assume that the facts are as they’ve been publicly described – there is no documented backchannel communication assuring that the appointment was a “rubber stamp,” and the Board had no knowledge of the offer’s existence before the summer. Finally, assume that the Illinois Chancellor has not failed to forward on a hiring proposal to the Trustees since, say, 2010.

These assumptions strip away the political and constitutional questions,* and leave us with a clean problem: does an express reservation of authority in an offer of employment make it unreasonable to rely on it, where the current institutional practice is for such authority to be confirmed later? Dorf thinks “no.” I, and Steven Lubet, think “yes.”

In my first post, I cited a number of cases in which promissory estoppel claims by prospective faculty members under circumstances like these were denied, including some that rested on the conclusion that the ultimate authority lay with the Board of Trustees.  This post continues that research.  I have found no cases directly on point in Illinois. Nor have I found a single case outside of Haviland v. Simmons where a plaintiff successfully asserted a PE claim under these circumstances.  In addition to the cases I cited in the original post, see also Drake v. Medical College of Ohio, 120 Ohio App.3d 493 (1997) (representation by college president that a faculty member would be hired and trustees would be a “rubber stamp” didn’t give rise to PE Claim);  Broderick v. Catholic University, 365 F. Supp. 147 (D.D.C. 1973) (representation of prospective wage equality in president’s letter not reasonably reliable in light of several factors, including reservation of power to Trustees).  Of the dozen or so cases I have found in this vein, Oja v. Blue Mountain Community College, 2004 WL 1119886 (D. Ore. 1994) comes closest to the Salaita facts:

 

“Defendants argue that McCarrell, the interim president, stated in the June 18, 2002 letter to plaintiff that McCarrell would recommend that the Board agree to employ plaintiff. I agree with defendants that a close reading of the letter and the contract show that McCarrell did not agree to employ plaintiff but rather stated that he would recommend that the Board employ plaintiff. This is indicated by contract’s blank signature line for the Chair of the Board.
Plaintiff knew that Board approval was legally required, but argues that this as a mere formality. Plaintiff cites alleged statements by Shea to the effect that the job was secure, which Shea denies. Assuming Shea did make such statements, casual or unauthorized comments cannot create a binding employment agreement. See Butler v. Portland General Elec. Co., 748 F.Supp. 783, 792 (D.Or.1990)aff’d sub nom. Flynn v. Portland General Elec. Co.,958 F.2d 377 (9th Cir.1992) (table, text in Westlaw). The promissory estoppel claim fails because it was not reasonable for plaintiff to believe that he had a binding contract with Blue Mountain based on McCarrell’s statement that McCarrell would recommend plaintiff’s employment to the Board.”

Now this isn’t precisely on point. The letter to Salaita did offer employment, subject to the condition listed.  So it’s a better case for reliance than Oja. But the similarities are otherwise striking, including the alleged side representations of security. There is also a line of cases in which  general disclaimers of intent to contract in university policies defeat promissory estoppel claims.  See Ishibashi v. Gonzaga University, 101 Wash. App. 1078 (2000). That said, contract authorities (like Farnsworth and Perillo) state that some courts have given promissory estoppel relief notwithstanding disclaimers of intent to be bound, especially where the disclaimers are general (in an employment manual) and the promises specific. There’s a case like this in every casebook, and they tend to turn on how unjust the conduct ends up feeling.  See, e.g., Spooner v. Reserve Life Ins. Co., 47 Wash. 2d 454, 287 P.2d 735 (Wash. 1955) (denying relief).

Given this caselaw, and the general trend against promissory estoppel I earlier identified, the best thing that Salaita would have going for him – in the unlikely event that he were to litigated in federal or state court** – are the side representations and academic custom. The question of whether parol evidence is barred in PE cases is notoriously complex. In Illinois, PE can’t defeat the statute of frauds, and it would be a further complex issue to decide whether the writing – which is not signed by the ultimate authority to be charged – satisfies the statute, as Larry Cunningham has pointed out.  My own gestalt is that the side representations would not be admissible,though if they were in writing they might be more likely to color the court’s analysis.

As for custom and practice, I agree with everyone who has said it is relevant.  But, as a district court stated in dismissing evidence of custom of providing a six year tenure clock,

Custom is an area of contract law through which the courts must travel prudently. Only upon a clear showing of custom, nigh universally understood, should a court impose obligations based on custom . . . This Court will not enforce contractual obligations based on a custom which at best finds only tenuous support in the facts.” Marwill v. Baker, 499 F.Supp. 560 (D. Mich. 1980).

*As I originally wrote, I think that there are serious constitutional infirmities in the University’s position, as well as substantial academic freedom arguments. Rescinding the offer was a bad decision.

**Mike Dorf’s assumption that federal courts will exercise supplemental jurisdiction over the promissory estoppel claim assumes that the University of Illinois isn’t immune under sovereign immunity.  Cf. Kaimowitz v. Board of Trustees of Univ. of Illinois, 951 F.2d 765 (7th Cir.1991) (holding that it is immune unless certain exceptions are met). I think this issue would turn on whether the PE recovery is seen as a “present claim” or not, but I’m not an expert.

 

17

Steven Salaita’s Promissory Estoppel Claim is Weak

Not a good fact for PE claim: Salaita's tween that "Zionists: transforming 'anti-semitism' from something horrible into something honorable since 1948"

Not a good fact for PE claim: Salaita’s tweet “Zionists: transforming ‘anti-semitism’ from something horrible into something honorable since 1948″

Mike Dorf has written something about the Steven Salaita case which I can’t agree with. Acknowledging that Professor Salaita had no actual contract with the University of Illinois, Dorf turns to promissory estoppel:

“Like many other states, Illinois law offers protection to people who, in reasonable reliance on an offer that falls short of a fully enforceable contract, take actions to their detriment. The Illinois Supreme Court affirmed this principle of “promissory estoppel” as recently as 2009, in the case of Newton Tractor Sales v. Kubota Tractor Corp.

Salaita has an almost-classic case of promissory estoppel. He was told by Illinois that trustee approval was essentially a rubber stamp, and in reliance on that representation he resigned from his prior position on the faculty of Virginia Tech.

To be sure, a party who sues for promissory estoppel rather than suing under a formal contract typically only recovers to the extent of his reliance, rather than in strict accordance with what he expected to gain under the contract. But here, there is no real difference between what contract law calls the reliance interest and the expectancy interest: By giving up his position at Virginia Tech, Salaita gave up a job in which he had academic freedom; thus, recognition of his promissory estoppel claim should mean that Illinois must afford him academic freedom.”

Mike is an enormously decent person, and he knows more about constitutional law (and debate!) than I ever will. But if Mike really believes that Salaita has a strong case for promissory estoppel recovery, well, he’s wrong.

 The Illinois Supreme Court’s last statement on promissory estoppel is Newtonwhich endorses the Restatement (2nd) of Contracts Section 90.  (Notably, Newton recognized that there a live cause of action for PE in Illinois, but the case strongly suggests that the issue had been in doubt — as of 2009!) The elements of promissory estoppel are consequently familiar:

 “A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires.”

Let’s take them one by one, as if this were a law school exam.

1.  There was a promise, but it didn’t unambiguously assure employment. It did so contingent on board approval. There are tons of cases out there (including some from Illinois, e.g., Board of Education South Stickney School District No. 111, Cook County v. Murphy, 56 Ill.App.3d 981 (1978)) holding that under the Rst.2d, a promisee can’t estop a promisor’s denial of obligation when the promisor lacked legal authority to conclude a bargain. Under the facts as they’ve been reported, the offer letter was sent by Brian Ross, U. of I.’s interim dean of the College of Liberal Arts and Sciences, and explicitly stated that it was contingent on final board approval.

2.  Would the promisor reasonably expect the promise to induce action? Salaita knew the Interim Dean lacked the authority to make a promise that could be relied upon. Dorf argues that Salaita was told by “Illinois” that Board approval was a rubber stamp. But that’s a figure of speech: Salaita was told by the same person who wrote the letter, who, again, lacked decisional authority. (At least, based on what’s been reported.) If an agent tells you that he doesn’t have authority but that his principal will surely back him up, is it reasonable to rely on that representation? I think probably not.  In the classic PE case of Hoffman v. Red Owl, the promisor is bound by an agent’s promises in part because the principal knew about them. What did the relevant University executives know about the hire before the letter was sent out? It’s my impression that at most universities, Department chairs are approved to hire someone, and the President/Board don’t know who until the final package arrives on their desks.  The only winning case that I can find on facts remotely like this one is Haviland v. Simmons, 45 A.3d 1246 (Rhode Island 2012). In Haviland, “upper echelon of Brown’s administration—including the Dean, the Provost, and the Interim President” made promises, and Brown was thus “precluded from denying that its administrators had the authority to provide plaintiff with employment security because the University has failed to produce any probative evidence establishing that those officers lacked such authority.” Is that the case here? 

3.  Can injustice be avoided only by enforcement of the promise? I teach this provision as a catchall – a way for courts to avoid enforcement if they dislike plaintiffs and permit it if they do. Here, I think a court would focus heavily on the language in the letter and inquire about relevant practices at the University. How many times have job offers been extended only to have met board resistance? How much does the court think that a university’s right to control who works for it is trumped by the benefits of academic freedom. (This obviously ties the injustice prong into a first amendment analysis.) My gut feeling is that unlike many liberal law professors, who increasingly treat Israel as a pariah, and who think that there’s “clearly only one defensible side to take on this case,” elected state court judges in Illinois might not think that justice requires enforcement of this non-contract claim. Those tweets would make mighty fine campaign fodder. 

Why am I so skeptical when Mike Dorf is not? I think it’s largely because I’ve read alot of promissory estoppel cases, and a lot of promissory estoppel articles. And the consensus is that over the last generation, promissory estoppel has waned as a theory of recovery. As Bob Hillman famously concluded, it’s a “remarkably unsuccessful” cause of action, which, in my experience, is brought largely in weak cases as a last-ditch shot to push through to discovery and thus motivate settlement.  I think that most contracts professors spend time on the doctrine these days largely because it’s so darn fun — the facts are wonderful! — but not because it’s a regular part of the business lawyer’s arsenal. Promissory estoppel cases are losers. This case would be a loser.  See, e.g., Awada v. University of Cincinnati, 3 Ohio Misc.2d. 100 (1997) (particle group promises of employment not binding); Daniel v. University of Cincinatti, 116 Ohio Misc. 2d 1 (2001) (reliance on faculty promises not reasonable given final trustee approval);Suddith v. Univ. of S. Miss., 977 So.2d 1158  (Miss.Ct.App.2007) (no injustice when after-acquired information about candidate changed president’s mind).

Now, nothing said here in any way suggests I know a thing about the first amendment claim’s merits.  I don’t.  Professor Salaita might have a good constitutional claim, or under some other regime of law. And I agree with Steven Lubet that a settlement is the modal outcome. But, to be snarky, Dorf is right: it’s “an almost-classic case of promissory estoppel.” A weak one.

 

Update: Mike Dorf responds.  My reply follows after the jump:

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0

The Tomtit Theory of Consideration

I’ve been teaching contracts for a decade, and I thought I’d heard of everything.  Then I came across this squib from Corbin on the adequacy of consideration:

“The rule that market equivalence of consideration is . . . to be left solely to the free bargaining process of the parties, leads in extreme cases to seeming absurdities. When consideration is only a “peppercorn” or a “tomtit” or a worthless piece of paper, the requirement of a consideration appeared to Holmes to be as much of a mere formality as a seal…”

A peppercorn or a tomtit?  I know what the peppercorn theory of consideration is. Basically, consideration can be something of trivial value, so long as that value isn’t easily reducible to a certain sum, giving rise to the problem of inadequacy of exchange.  Some years I’ve brought in a peppercorn, suggesting that it could – in some law school hypothetical universe – have subjective value to a particular student.  (Perhaps a deity’s face is carved  on it?  Really.) Most law students have their semesters spiced up by reading about peppercorns in contracts.  It’s like the Erie doctrine: apparently iconic, mysterious, deeply bizarre law.

But has anyone else ever taught that consideration can be a tomtit?  A tomtit!  In case you were wondering, a tomtit is a small New Zealand bird. Where did Corbin come to rely on this small bird to illustrate the point?  An older (still) English case, Couldery v. Bartrum, 19 Ch. D. 394, 399 (1881), held that a creditor could take “a horse or a canary or a tomtit.”  Couldery was in turn cited and popularized by Ames in his 1899 HLR article, “Two Theories of Consideration.” But, excepting a few stray references in the law reviews in the last two generations, no one refers to tomtits anymore.  Peppercorns have replaced them in law school classrooms, though they are demonstrably less visually interesting, and wouldn’t give rise to the opportunity for a double lesson in tomtit gender identification.It’s time to bring tomtits back.

 

 

1

The [Law School] Adjunct Problem

Adjunct-ActionAmerican higher education, under pressure on all fronts, has squeezed adjuncts. Adjuncts, in turn, have protested in a variety of public fora, and now seek government regulation to ameliorate the conditions of their employment. In general terms, the problem is this: universities have high fixed labor costs (TT faculty), weak manager oversight – and consequently spiraling costs, and increasing student demand for expensive facilities. Their ability to raise prices is constrained (at least more than it used to be.)  The result is that adjuncts, who typically aren’t organized and who have little job security, can be treated like workers in the rest of the economy – i.e., terribly so long as market conditions permit.  At a variety of schools – including mine – unionization movements are afoot.

One wrinkle concerns the “fate” of law school adjuncts. Law schools typically employ adjuncts to teach cutting edge areas in practice, and those adjuncts are almost always otherwise employed as full-time lawyers and judges. Those lawyers and judges provide students with opportunities to understand developments in practice that no full-time instructor could deliver (whether or not that instructor ever writes a law review article). They also can be sources for leads on jobs, and can model professionalism.  The networking and professional development street runs in both directions.  For many law school adjuncts, association with the school brings significant professional benefits, which are more likely to motivate taking the gig than the relative pittance adjuncts are paid. Lawyers routinely highlight their law school teaching expertise in advertising – “Teaches criminal advocacy at X…”, “Professor teaching ERISA at Y….”  (I can’t prove that clients care about this kind of puffing, but the prevalence of claims in the market suggests they might.) Adjuncts also can use the experience to deepen their knowledge of a field, thus improving their skills.  Or, as Eric Goldman once commented, “There are lots of good reasons to be an adjunct, but the pay is definitely not one of them.”

Now, like university adjuncts more generally, law school adjuncts can feel like second-class citizens. They are rarely if ever even mildly integrated into the faculty.  They usually teach in the evening (when their practices permit them to).  They don’t have offices on campus.  And teaching takes more time than many of them have to give. With that all said, mandating that law school adjuncts be treated like teachers in the rest of the university – and given higher benefits and salary –  is profoundly foolish and unwise.  I realize that that is very easy for me to say.  But  I have heard that at many schools, university-wide adjunct policies designed to make adjuncts’ lives better – some, of course, prompted by unionization – have had perverse effects when applied to law school adjunct faculty.   Law schools are already stretched thin, and there already is a secular trend against adjunct teaching given the reduced numbers of students.  When lumped in with & bumped up with the rest of the university’s adjuncts, law schools respond by employing many fewer adjuncts.

And even in a better law school market, law school adjuncts really are differently situated than their undergraduate counterparts.  Treating them like oppressed graduate students will harm law students, law schools, and lawyers alike.

2

Article Stub: Contracting into Federal Common Law

 

L.B. would hate this idea.

L.B. would hate this idea.

[I’m writing a series of posts I call article stubs – the germs of papers I’ll likely never write. Here was the first, finding offerors under 2-207. Dan Markel might – or more likely might not - approve. I used to talk about these pre-draft ideas with him, and he mercifully steered me off most of them before they saw the light of day. In his honor, here’s another bad idea. Feel free to tell me so.]

“There is no general federal common law.” We all know it, even though we sometimes, wrongly, qualify the statement “…in diversity cases.”  Though the decision’s constitutional roots are at best obscure, Erie teaches us that federal judges can’t create substantive rules of decision without constitutional or statutory sources. It’s an iconic case – and an ironic one, as it might be an example of the roving lawmaking that it abjures.

But what if you generally liked that set of precedents that followed Swift and preceded Erie?  What if you, as Justice Swayne once did, proudly hold that “We shall never immolate truth, justice, and the law, because a state tribunal has erected the altar and decreed the sacrifice.” What if you just wanted to empower federal judges hearing your contracts case to resort to their own intuitions – guided, no doubt, by the informed views of other federal courts.  Could you contract into a general federal common law framework? Under traditional conflicts principles, the answer is likely “no.”  See Restatement 187 cmt. f (“The forum will not, for example, apply a foreign law which has been chosen by the parties in the spirit of adventure or to provide mental exercise for the judge. Situations of this sort do not arise in practice.” ) But traditional conflicts principles needlessly discourage innovation and now motivate parties to choose  arbitration (where they can benefit ex ante by giving ex post discretion to decisionmakers.) Courts should accept a wider range of choice of law clauses, and should start by permitting parties to opt out of Erie.

Discuss.

 

2

Article Stub: Finding Offerors under 2-207

Boxing-Winner

[I’m planning to write a series of posts I’ll call article stubs – the germs of papers I’ll likely never write. Dan Markel might – or more likely might not - approve. I used to talk about these pre-draft ideas with him, and he mercifully steered me off most of them before they saw the light of day. In his honor, here’s a bad idea. Feel free to tell me so.]


 

UCC 2-207, the battle-of-the-forms provision, is famously a mess.  White and Summers describe it as “an amphibious tank that was originally designed to fight in swamps, but was sent to fight in the desert.” That’d be even more accurate if you replaced “tank” with “Ford Pinto.”  Complexities about.  (Check out this fabulous flowchart produced by one of my students, which provides one path through the maze.) But even if you work  your way through the various intricacies of the provision, resolving debates about the meaning of “expressly made conditional,” and the “knock-out rule,” a deep policy problem lurks: who, exactly, is the offeror?

The question is important because, although the provision was designed to account for a flurry of forms, it clearly privileges those forms which come first-in-time, typically finding the first mover to be an offeror. Unfortunately for the second mover (which can be a nano-second slower online) the merchant offeree’s additional terms are incorporated into the contract only if they are immaterial. Most terms that you’d care to litigate about are material. Summers and White point out that avoiding first form favoritism is an important policy goal, but proceed by privileging that first form as the offer anyway.  (See the 4th edition of their Hornbook, p. 32, n.3)  We can see the importance of the choice clearly by pairing Hill (offeror is the firm) with Klocek (offeror is the consumer). But the cases stand uneasily against each other, because the key analytic move (who goes first and why) is buried — to be fair, less so in Klocek than in Hill. (I’m sweeping broadly here, and avoiding knock-out complications.)

At some level, this confusion is unavoidable — 2-207 is a badly drafted mess.  But in particular here, the problem is that although important consequences flow from making one or the other party the offeror, the Code provides no guidance in making that choice – it doesn’t even use the word offeror in the section.  Doctrine would be marginally  more clear if we made the decision as to who is the offeror explicitly a policy choice. Courts might, for example, make sellers offerors because they bear default liability burdens (warranty, nondelivery) under the UCC. Or courts could empower buyers because they typically initiate transactions, thereby spurring commerce.  Or make the choice depend on some kind of rough information-forcing default allocation.  The key realization is that 2-207 buries the lede, and that courts which simply follow the provision leave us in the dark.

0

Evolving Contract Schemas

A Meeting of the Minds

A Meeting of the Minds?

With co-authors, I’ve been working on a series of experimental papers about contract law that appear to be converging on a theme: what individuals think “contract” means has purchase in the real-world, and that contractual schema is evolving.

A schema is nothing more than a mental model – a framework – to help us organize and process information. A contract schema is the set of background assumptions that we fill in when we think about a legally operative bargain. For those of us who grew up in a largely off-line world, our contract schema involve “doing the paperwork,” “getting it in writing,” and “signing on the dotted line.” (See this article for details). Indeed although most contracts law professors make fun of the metaphor of the meeting of the minds, it captures a real heuristic for a certain segment of society. That so even though form contracts have been part of modern life since the 50s, and almost none of us ever actually negotiate contracts that could end up in court. Indeed, when I started teaching in 2004, students routinely would say “she signed it, she must be bound to it,” even in cases like Specht.  Since this mental model is quite a ways from the reality of online contract, consumers may think they are in contracts when they aren’t, and visa versa.

But what happens when contracts widely explored in pop culture – and presented to you in your formative years – were never signed, never reduced to writing, never negotiated.  The cheerios arbitration debacle, facebook’s demystified terms, your cellphone contract, your cable company’s impossible-to-escape relationship.  What happens when every time you think “contract,” you don’t call up the mental image of a “signature on vellum” but instead “loki on steroids.”  And when companies, realizing this, increasingly pushed “no contract” plans that were actually contracts, just without penalty clauses attached.

Perhaps citizens born after 1980 will have dramatically different attitudes toward contract than those born before. If that’s true, we’ll increasingly find cohort effects in contracting behavior online, as lay intuitions about how to respond to “contract” increasingly turn on the age of the promisee. For those coming of age offline, “click to agree” calls up memories of signature, and consequently infuses bargains with personal honor; for those born digital, “click to agree” means “nothing good is about to happen to me.” Those attitudes toward contract will play out in behavior – in likelihood to breach, to shirk, and to behave opportunistically.

At some point we expect to have direct evidence worth sharing in support of this argument! For now, I thought start discussion by fast forwarding fifteen years, when many judges born in the digital age will have assumed the bench. What changes in contract doctrine follow from changes in contract’s schema? Then again, will there be any contract cases left to decide, or will they all been sucked into arbitration’s black hole?

 

9

Dan Markel, My Friend

Dan Markel had many friends.  You, the reader, know that if you have been surfing the law professor blogosphere, which is full of tributes, notes of gratitude and sadness, and a residue of shock and disbelief.  Indeed, Dan Markel knew more legal academics – by which I mean he had more meaningful conversations and was actually friends with more people – than anyone in the country. Everyone knew him or had a story about him. Even in conversations he wasn’t a part of, at conferences he’d never attended, he was a common point of reference. He was our Kevin Bacon.

I’ve been friends with Dan since law school. He gave me comments on my first paper.  They were tough (“why are you writing a 25 page literature review that no one, including you, will care to read”) but right. And he gave me tough comments on my second paper. Again, he was right.  And my third paper. And my fourth. He didn’t stop when it became obvious that he was also giving hours of time weekly to literally dozens of other people’s work, when he was blessed with two young sons, when he built an active intellectual life at FSU, when he undertook a brutal travel schedule. He gave of himself despite writing scores of articles (and books and op-eds and drafts and more articles) of his own. His unselfishness and rigor were daunting. Where did he find the time? The energy?

But I couldn’t help but keep asking for his help, because no one gave comments like Dan Markel. He wanted to get your arguments right – and he wanted you to write the best version of yourself possible. On the Prawfs thread, I laughed to read a comment that someone can’t help but remember him asking if she had written a “puzzle paper or a problem paper.” Take heart! He thought the third option was not worth your effort. Dan never let you be lazy, and he was a celebrant when you hit a home run. Or even a double. And getting comments from Dan meant giving comments to Dan, which usually involved reading long articles with surprising payoffs, or getting an email and reading just a few pages where Dan had cited your work and wanted to be sure he’d done it justice. Dan attacked his own work like he worked on yours — unsentimentally, methodically, tirelessly, approaching greatness.

Dan reached out constantly.  As I wrote on twitter (which he hated and which he told me I was wasting my time on), in the 17th century, he’d have been Pepys.  In the 19th century, he’d have been a famous letter writer (and romantic poet!)  In the 20th century, he’d have spent most of his income on long-distance phone calls. As it was, I -and many others-got regular calls from him, resulting in a conversation on one of his long walks, or on the way to pick up his boys from day care, or just on a drive.  In each of those conversations he was open & seemingly without that part of our brains which says “don’t say that, it could be embarrassing; don’t admit that, I might make myself vulnerable.” He was wide open. In the last few years, he shared good and bad news alike, and there were times when he was so raw it hurt to listen to him. But those conversations were never monologues – even in the worst of times, Dan always asked about my family. He always strove to be a mensch.

Dan was a person of enormous seriousness and integrity, who cared deeply for his children and his friends. He was a world-builder without an obvious ideological agenda, unique among the hundreds of professors I’ve met in a decade of teaching. I’m so sorry he was taken from us so soon. And I’m so angry that that he died in a way so antithetical to the humane, intellectual, sensitive way that he lived.

0

Introducing Guest Blogger Brishen Rogers

rogers_profileI’m delighted to welcome Brishen Rogers (Temple) as a guest blogger for the next month.  Brishen teaches torts, employment discrimination, and a seminar on current issues in labor law. Prior to joining the Temple faculty, Professor Rogers was a Climenko Fellow and Lecturer on Law at Harvard Law School.

Professor Rogers’ scholarship draws on the social sciences and liberal political theory to better understand the role of law in constituting and regulating paid work relationships, with a particular focus on issues of concern to low-wage workers.  One current project explores the role of law and social norms in shaping workers’ preferences towards unionization; another explores the proper role for minimum workplace entitlements in an egalitarian liberal state.  His work has been published in the Harvard Law Review Forum, and the Berkeley Journal of Employment and Labor Law, among others.

Professor Rogers received his J.D., cum laude, from Harvard Law School and his B.A., with high distinction from the University of Virginia.  Prior to law school, he worked as a community organizer promoting living wage policies and affordable housing, and spent several years organizing workers as part of SEIU’s “Justice for Janitors” campaign.  Welcome Brishen!

4

Judge, Jury, and Arbitrator: The NBA Constitution

nba-releases-its-formerly-secret-constitutionThe NBA has finally made its constitution available online. Notwithstanding the grand title, the document styles itself as a mere contract: “This Constitution and By-Laws constitutes a contract among the Members of the Association . . . The Association and each of its Members shall be subject to the oversight and control of the Board of Governors of the Association as set forth herein and shall be governed by the Constitution and By-Laws, rules, regulations, resolutions, and agreements of the Association, as they may be modified or amended from time to time.”

The justification for Commissioner Silver’s actions turns on this document. Article 24 vests in the Commissioner the power to suspend members, though Don Sterling is permitted an evidentiary contest (which didn’t make the news today):

“Following an opportunity for the affected party to submit evidence and be heard, all actions duly taken by the Commissioner pursuant to this Article 24 or pursuant to any other 39 Article or Section of the Constitution and By-Laws, which are not specifically referable to the Board of Governors, shall be final, binding and conclusive, as an award in arbitration, and enforceable in a court of competent jurisdiction in accordance with the laws of the State of New York. In connection with all actions, hearings, or investigations taken or conducted by the Commissioner pursuant to this Article 24, (i) strict rules of evidence shall not apply, and all relevant and material evidence submitted may be received and considered, and (ii) the Commissioner shall have the right to require testimony and the production of documents and other evidence from any Member, Owner, or Referee, any employee of any Member or Owner, and/or any employee of the Association, and any person or Entity not complying with the requirements of the Commissioner shall be subject to such penalty as the Commissioner may assess.”

Article 13(a) then permits the Commissioner to force a sale:

“The Membership of a Member or the interest of any Owner may be terminated by a vote of three fourths (3/4) of the Board of Governors if the Member or Owner shall do or suffer any of the following: (a) Willfully violate any of the provisions of the Constitution and By-Laws, resolutions, or agreements of the Association. [If 13(a) is triggered, the league will conduct an evidentiary hearing, at which] the Member or Owner so charged  shall have the right to be represented by counsel. Strict rules of evidence shall not apply, and all relevant and material evidence submitted prior to and at the hearing may be received and considered . . . The affirmative vote of three-fourths (3/4) of all the Governors shall be required to sustain the charges.”

Importantly, “The decisions of the Association made in accordance with the foregoing procedure shall be final, binding, and conclusive, and each Member and Owner waives any and all recourse to any court of law to review any such decision.”

Professor Michael McCann has argued that this last “waiver of recourse” clause is probably enforceable in a breach of contract case.  I don’t think that’s right — or at least, I don’t think it’s a home-run of a claim. But what’s even more mysterious to me – and maybe readers can help – is the idea that the contract clause stating that the Commissioner’s decision on the suspension will be treated  “as an award in arbitration” is sufficient to trigger the FAA’s arbitration privilege.

I would have thought that to take advantage of the FAA, there needs to be clear cut language which sends a dispute to arbitration, before an arbitrator who is distinct from the “prosecuting” party. After all, if the NBA can create a self-preserving and self-executing arbitration process, which can’t your credit card company!  But perhaps there’s something special about the NBA’s constitution which suspends the normal rules?

(All of this, obviously, is merely about the procedural merits.  Substantively, the Commissioner’s remarks were correct, nicely delivered and proportionate.)