An outcry has lately arisen over consumer contracts that purport to ban disparagement of the company that proffered the contract or its products, especially since a few such companies, seeking to silence customers vocally dissatisfied with products or services, have proceeded to sue them, threaten them with suit, or report them as credit risks. Although it is doubtful that existing law in fact permits practices of this sort, California proceeded to pass a new law protecting consumers from retaliation by companies they criticize — a law that appears to go much farther than just banning the practices that stirred the furor. [Volokh] Contra: Scott Michelman, CL&P.
The town of Stratford, Connecticut entered an employment agreement with its director of human resources, stating that his employment would be entirely at-will and further providing:
Based upon the annual performance evaluation, and at the [m]ayor’s sole discretion and recommendation, the base salary may be increased on July 1 of each fiscal year, subject to the approval of the [council], which by Charter fixes the salaries of all mayoral appointees.
Subsequently, the town council voted to reduce the manager’s salary, and the dispute went to litigation. Both a trial court and a Connecticut appeals court agreed with the manager’s argument that even though the document prescribed an at-will relationship, by specifying that the base salary “may be increased” it was implicitly promising that it would never be decreased. [Daniel Schwartz; Adams on Contract Drafting]
As we’ve reported earlier in a series of posts, an online supplier named KlearGear inserted into its customer agreement a clause prohibiting “any action that negatively impacts KlearGear.com [or] its reputation.” When a couple nonetheless left a negative review, it billed them $3,500 and reported them for nonpayment to credit raters. The couple filed an action to which KlearGear failed to respond, and a court in Salt Lake City has now granted their request for a total of $306,750 including $250,500 in punitive damages, though the collectibility of that sum is unknown. [CL&P]
Next: Sanitary League of Canada protests that use as legal retainer brings good name of toilet paper into disrepute. [CBC]
Olympia, Wash.: “A community college says it’s the pride of their automotive technology program: a rare Dodge Viper donated to their school worth hundreds of thousands of dollars.” It’s believed to be the fourth one off the assembly line. But now Chrysler has “ordered the destruction of their entire educational Viper fleet.” It seems that while the prototypes were never meant to be driven on public roads, “two of them somehow got out and into accidents, costing Chrysler’s parent company millions of dollars.” Things might be different if our law respected a sale or other contractual agreement between Chrysler and the school as reason to release the manufacturer from a suit filed by an injured third party. But it doesn’t. Chrysler’s deadline for ordering the cars crushed has now passed; no word at present as to whether any of the cars have been reprieved or otherwise survived. [KING, AutoWeek, Tacoma News Tribune, Motor Trend]
A few weeks ago a furor broke out after it was reported that a company called KlearGear had billed customers $3,500 for giving it a negative review, pursuant to a non-disparagement clause prohibiting “any action that negatively impacts KlearGear.com [or] its reputation.” Now it seems a company purveying refrigerated wine cabinets is using a similar clause [Matthew Hunt, Scotch Tape and Duct Whisky via WineBerserkers.com]
He suspects it of being overlawyered — that’s with a small o. [CNBC]
Jesse Dimmick, who invaded the home of Jared and Lindsay Rowley at knifepoint and held them for some time against their will, is now suing them for allegedly reneging on a promise to hide him from the police. He’s also suing the city of Topeka, one of whose officers shot him during his apprehension. [Capital-Journal via Lowering the Bar]
The complimentary breakfast provided with membership in the expensive Setai Club & Spa Wall Street used to be really good, according to injury attorney Richard Katz. Then they replaced it with just a cold buffet. The club said it offered Katz a prorated refund of his remaining membership after he complained, but he’s suing for $730,000, including a claim that he was defamed. [Gawker, Above the Law ]
“Although the marriage did not last, plaintiff’s fury over the quality of the photos and video continued on.” The photographer defendant thinks the demand for $48,000 to re-stage the wedding is a bit much, especially given that the former bride has thought to have returned to her native Latvia. [New York Times; Above the Law (groom's father is partner in big law firm)]
San Francisco’s public contracting requirements could drive both taxpayers and vendors batty: “[C]ity purchasing policies, if followed, would mean paying about $240 for getting a copy of a key that actually cost a worker $1.35 to get done at a hardware store on his break,” according to one whistleblowing employee. [SF Chronicle via Matt Welch]
The Washington Supreme Court opens a product liability can of worms by abandoning a traditional doctrine that prescribes that when there was a contract between the parties, remedies for purely economic loss blamed on product defectiveness must be based on principles of contract law, not tort law. [Russell Jackson]
Sorry, guys, no dice in spinning a drafter’s error into a gigantic ERISA suit against Verizon [Alison Frankel, American Lawyer]
That clause means what it says, an Illinois appeals court decides in an insurance claim against Enterprise car rental [Madison County Record]