Interpretation

Retroactive Rights of Action

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By Samuel Beswick, Assistant Professor, Peter A. Allard School of Law, The University of British Columbia I recently suggested on Balkinization that a storm seems to be brewing concerning the place of non-retroactivity doctrine (also called the doctrine of “prospective overruling”) in federal law. Non-retroactivity doctrine attempts to define the temporal scope of novel judgments … Read more

On Plain Meaning and Pacific Gas — Greg Klass

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Post by Greg Klass

Judge Traynor’s opinion in Pacific Gas & Electric v. Thomas Drayage & Rigging is a bête noire of textualist judges and contracts scholars. Judge Kozinski’s assessment is typical:

Pacific Gas casts a long shadow of uncertainty over all transactions negotiated and executed under the law of California. As this case illustrates, even when the transaction is very sizeable, even if it involves only sophisticated parties, even if it was negotiated with the aid of counsel, even if it results in contract language that is devoid of ambiguity, costly and protracted litigation cannot be avoided if one party has a strong enough motive for challenging the contract.

Trident Center v. Connecticut Gen. Life Ins. Co., 847 F.2d 564, 569 (9th Cir. 1988).

The objection is that permitting extrinsic evidence significantly increases the probability that a court will find ambiguity. The facts in Pacific Gas appear to illustrate the worry. Whereas the scope of the indemnification clause at issue was clear, covering “all loss, damage, expense and liability resulting from * * * injury to property, arising out of or in any way connected with the performance of this contract,” the defendant wanted to introduce extrinsic evidence that in fact the parties meant it to cover only third-party losses. Permitting that evidence in created ambiguity where none existed before.

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Is Equitable Contract Law a Pipe Dream? — Henry Smith

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Post by Henry Smith

At last month’s American Law and Economics Annual Meeting, I attended a very interesting session on Commercial Law and Contracts, at which the first two papers were in tension with each, as were their authors – in a polite way!  The first was “The Common Law of Contract and the Default Rule Project,” by Alan Schwartz and Bob Scott.  They argue that the program over the last century by academics, codifiers, and Restaters (“drafters”) to supply transcontextual defaults rules that apply in a wide variety of contracts was doomed to fail. Common law contract supplied a limited number of defaults that do have this feature, such as expectations damages for breach of contract.  Going beyond these traditional rules faced the drafters with a dilemma.  They did not have knowledge enough to supply defaults that would make sense for particular industries.  So they chose the transcontextual route, but to create additional defaults here required them to fudge the content, opting for fuzzy or underspecified standards based on custom and reasonableness, and commercial parties have not been receptive to these efforts, often opting out of them. 

Source: http://firstyearcontracts.blogspot.com/2010/03/estate-of-mr-george-edward-kent-man-who.html

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Samuelson on Merger in Copyright Law and Questions of Redundancy in Legal Design — John M. Golden

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Post by John Golden

In the forthcoming article Reconceptualizing Copyright’s Merger Doctrine, Pamela Samuelson of Berkeley Law provides an extended review of copyright law’s merger doctrine.  Courts have periodically invoked this doctrine in restricting the extent to which copyright protections apply to the expression of an idea when, as Samuelson puts it, “that idea is incapable of being expressed, as a practical matter, in more than one or a small number of ways.”  Samuelson’s article seeks to quash a number of “myths” about the doctrine, touching on aspects of its substantive scope, the frequency of the doctrine’s applicability, and its history as a creature of “common law adjudication.”  Samuelson concludes, among other things, that (1) the doctrine serves as an important “limiting principle of U.S. copyright law”; (2) the doctrine can affect copyrightability as well as copyright scope; and (3) courts should avoid an overly narrow view of the doctrine, thereby helping it realize its potential as a means for “mediating conflicts between and among the interests of first and second-generation authors, of third parties affected by those disputes, and of the public.”

This blog post focuses on another aspect of Samuelson’s article, its discussion of how the merger doctrine relates to other limiting doctrines in copyright.  These other doctrines include the following: (1) the scènes à faire doctrine, which limits the extent to which copyright covers standard or indispensable elements of expression (such as conventional poses in portraits, see William W. Fisher III et al., Reflections on the Hope Poster Case, 25 Harv. J.L. & Tech. 243, 259 (2012)); (2) copyright law’s originality requirement; (3) exclusions of facts, ideas, and other functional subject matter from copyright protection.  At one point, Samuelson suggests that courts’ relative lack of confidence in their mastery of copyright law’s content or justifications might explain some of the apparent proliferation of doctrinal overlaps.  She writes, “Courts sometimes perceive the other doctrines as overlapping with merger, but in some cases, courts invoke multiple doctrines when seemingly unsure which doctrine would provide the soundest grounding for the court’s decision.”

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Hohfeld Returns to the Supreme Court — Ted Sichelman

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Post by Ted Sichelman After more than a 25-year hiatus, Wesley Hohfeld—one of the preeminent private law theorists of the 20th century—has been cited by Justice Thomas in dissent earlier this week in Heffernan v. City of Paterson (thanks to Shyam Balganesh for the heads up), a case involving the alleged deprivation of free speech … Read more

How Not to Read Bonds — Aditi Bagchi

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Post by Aditi Bagchi

In 2001, Argentina defaulted on about $92 billion worth of bonds.  It subsequently restructured these bonds, and 93% of bondholders accepted the 30 cents on the dollar that Argentina offered.  But some hedge funds bought the original bonds at a discount and held out on repayment.  They were able to persuade Judge Griesa in New York that a pari passu clause in the original bonds prohibited Argentina from treating new bonds differently than the original bonds, and the judge actually issued an injunction prohibiting Argentina from making payments on the new bonds – effectively locking Argentina out from capital markets.

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Interpretation and construction 3: Arthur Linton Corbin — Greg Klass

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Post by Greg Klass

In this third post on the interpretation-construction distinction, I introduce the hero of my story: Arthur Linton Corbin. Corbin builds on Francis Lieber’s and Samuel Williston’s work (which I have discussed here and here) to articulate more perspicacious conceptions of interpretation and construction. Whereas both Williston and Lieber viewed construction as supplementing interpretation, Corbin sees the two activities as complementary. He gets there by collapsing Williston’s three categories of rules into two.

Corbin’s 1951 treatise on contract law provides, as far as I know, the first clear articulation of the complementary conception. Corbin describes interpretation and construction as interlocking activities, both necessary to determine what the law requires. It is worth quoting the relevant passage in full:

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Interpretation and Construction 2: Samuel Williston — Greg Klass

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Post by Greg Klass

In my last post on the interpretation-construction distinction I described Francis Lieber’s supplemental view of construction, which can be found in his 1839 book, Legal and Political Hermeneutics. Lieber’s view is characterized by two claims. First, construction is supplemental: it steps in only when interpretation runs out. Second, the activity of construction is for the most part continuous with that of interpretation. “Construction is the building up with given elements, not the forcing of extraneous matter into a text.” (144) That said, Lieber also recognizes that sometimes construction departs from the spirit of the text, such as when the text yields to a superior legal principle.

It would be interesting to trace the influence of Lieber’s distinction between interpretation and construction throughout the next century of legal thought. Theophilus Parsons, for example, discusses the categories in his 1855 Law of Contract. James Bradley Thayer, in his 1898 Treatise on Evidence, expressly declines to adopt Lieber’s distinction, arguing that “neither common usage nor practical convenience in legal discussions support [it]”. (411 n.2) For my purposes, things get interesting with the 1920 first edition of Samuel Williston’s The Law of Contracts. In section 602, “Construction and interpretation,” Williston makes what I view as two improvements on Lieber’s theory.

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Interpretation and Construction 1: Francis Lieber — Greg Klass

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Post by Greg Klass

In several posts on DIRECTV v. Imburgia (here, here and here), I suggested that the interpretation-construction distinction illuminates some of the Supreme Court’s recent arbitration cases. The interpretation-construction distinction has recently been receiving more attention from con law theorists than from contract theorists. (See, e.g., here, here and here.) I’ve been working on a larger project on contract interpretation and construction, and want to use a few posts here to share some of what I’ve learned about the history and development of the distinction. What I have only scratches the surface. The history is a rich vein waiting to be mined. These posts describe only the outlines of the story as I currently understand it. In my telling, it has three protagonists: Francis Lieber, Samuel Williston and Arthur Linton Corbin.

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The Supreme Court vs. Contract Law — Greg Klass

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Post by Greg Klass

My last two posts on DIRECTV v. Imburgia [post one, post two] were on relevant rules of construction: (1) the FAA presumption in favor of arbitration and (2) the common law tradition of reading against the drafter. But those rules should come into play only if the Supreme Court agrees with the California Court of Appeal that the phrase “the laws of your state” is, as it appears in the contract, ambiguous. At oral argument several justices explored an alternative holding: finding that “the laws of your state” had only one contractual meaning, and that the California Court of Appeal’s conclusion that it was ambiguous was so unreasonable as to be (presumptively?) hostile to arbitration. This post discusses what it would take to reach such a conclusion, and a few of the weirder things the Justices said at oral argument.

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DIRECTV v. Imburgia and Interpretation vs. Construction — Greg Klass

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Post by Greg Klass

I don’t know whether anyone else has noticed, but many of the Supreme Court’s recent arbitration cases raise the distinction between interpretation and construction. I do not think that the Court, which is not especially strong on contract doctrine, has noticed. But it’s lurking in the background. The distinction is especially relevant to understanding what is going on in DIRECTV v. Imburgia, which I blogged about last week.

If you’re not familiar with the interpretation-construction distinction, here’s Corbin’s summary, from the first edition of his treatise:

By “interpretation of language” we determine what ideas that language induces in other persons. By “construction of the contract,” as the term will be used here, we determine its legal operation—its effect upon the action of courts and administrative officials. If we make this distinction, then the construction of a contract starts with the interpretation of its language but does not end with it; while the process of interpretation stops wholly short of a determination of the legal relations of the parties.

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SCOTUS, Arbitration and Contra Proferentem — Greg Klass

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Post by Greg Klass

The Supreme Court heard oral argument yesterday (October 6th) in DIRECTV v. Imburgia (full transcript here). The case involves the meaning of “the law of your state” in an arbitration clause. DIRECTV argues that it means “the law of your state as limited by preempting federal law,” whereas the plaintiffs argue that it means “the law of your state without regard to any preempting federal law.” Because the phrase does not appear in a choice of law clause, the plaintiff’s have a decent argument for their reading—or that the words read in light of the contract as a whole are at least ambiguous. The reasons are complicated, but if the phrase means what DIRECTV says, then the arbitration clause kicks in and the plaintiffs lose their class action. If it means what the plaintiffs say, their class action remains in state court.

DIRECTV has argued that if the words “the law of your state” are ambiguous, the presumption in favor of arbitration means that they win. That would be a very weird result.

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Impairing State Contractual Commitments – How Sacred Should Contracts Be? — Aditi Bagchi

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Post by Aditi Bagchi

In early May, the Illinois Supreme Court unanimously struck down a 2013 state pension reform law.  That statute reduced various public pension benefits in an effort to reduce overwhelming debt in the public pension system.  The Court affirmed a lower court ruling that the bill violated the pension protection clause in the Illinois state constitution, which provides that “Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.”  The Court read the clause to prevent the legislature from any downward revision of a public employee’s pension benefits after the first day of her employment.

Illinois argued that the clause should be read to subject its public pensions to the same limitations as other contractual relationships, including modification or elimination by the state’s police power.  The Court rejected that argument, holding that, especially where the state is itself a party to the contract in question, the hurdle for a substantial impairment of contract is very high and had not been met in this case.

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Private Law Consortium, Day 1

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Post by Janet Freilich

 

On July 6-7, McGill University’s Faculty of Law and Center for Intellectual Property Policy hosted the Third Annual Private Law Consortium, organized by David Lametti. Participants at the Consortium came from Bar-Ilan University, Harvard University, McGill University, the University of Oslo, the University of Pennsylvania, and the University of Trento. The Consortium spanned a wide variety of private law topics, including property, torts, contracts, and intellectual property.

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How Do Conceptual Analysis and Normative Evaluation Relate to Each Other in Private Law? – Eric Claeys

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Post by Eric Claeys

Over the last month, Patrick Goold and Andrew Gold have both posted fine remarks about the role of analytic and conceptual philosophy in private law. Patrick suggested that the new private law project relies considerably on analytical methods associated with English analytical philosophy, and he anticipated several objections commonly made against analytical methods. Andrew provides helpful examples of recent scholarship applying analytical and/or conceptual methods to study private law.

I am not a producer of analytic methods, but I do consider myself a consumer of them. I am primarily interested in natural law- and rights-based normative theories of property, but I have written some on the analytical meaning of “property,” and the conceptual interplay between “property,” “infringement” and remedies in IP. In this entry, I’d like to warn other potential consumers of analytical method away from a few confusions I’ve encountered in trying to educate myself about analytical methods.

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Property and Contract at a Legal Acme? Stare Decisis and the Supreme Court — John Golden

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Post by John M. Golden

In Kimble v. Marvel Entertainment, LLC, No. 13-720, slip op. (U.S. S. Ct. June 22, 2015), the U.S. Supreme Court kicked off a momentous week with an opinion highlighting the importance of stare decisis.  More particularly, the justices grappled with whether to overrule a half-century-old holding “that a patent holder cannot charge royalties for the use of his invention after its patent term has expired.”  Id. at 1.  A six-justice majority chose to stick with the prior holding despite what the majority conceded to be a “broad scholarly consensus” criticizing this precedent on economic grounds.  Id. at 13.  In explanation of the decision, Justice Kagan wrote, inter alia, that (1) “[r]especting stare decisis means sticking to some wrong decisions”; (2) precedent involving interpretation of a statute has “enhanced force” compared to, say, precedent involving an interpretation of the U.S. Constitution; and (3) precedent involving property or contract rights, such as the patent law precedent in question, is further “superpowered” “because parties are especially likely to rely on such precedents when ordering their affairs.”  Id. at 7-10.  Indeed, according to the Court, “considerations favoring stare decisis are ‘at their acme’” in “‘cases involving property and contract rights.’”   Id. at 9 (quoting Payne v. Tennessee, 501 U.S. 808, 811 (1991) (Rehnquist, C.J.)).

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A Frolic Of His Own — Anthony J. Sebok

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Post by Anthony J. Sebok

As I noted in my last post, some common law jurisdictions are still guided by an anachronistic hostility to the sale of lawsuits to strangers.  But some, like Wisconsin, are much more liberal.  For a proponent of the free alienability of litigation, liberal regimes pose a special challenge, which has to do with limits.  When should the sale of lawsuits be limited?  How should the rules governing limitations be designed?

Recently Judge Richard Posner decided a case where he found, under Wisconsin law, a reason to set aside the sale of a lawsuit.  The facts led him to quote Karl Marx and William Gaddis, and the case, Carhart v. Carhart-Halaska Int’l, LLC, 2015 U.S. App. LEXIS 9497 (7th Cir., June 8, 2015), is worth reading for Posner’s sly commentary on what appears to be at first just another example of lawyering that is, as the British say, too clever by half.

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The Analytic Jurisprudence of the New Private Law — Patrick Goold

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Post by guest blogger Patrick Goold

Backed by an impressive array of renowned legal scholars, and the subject of a Harvard Law Review symposium, the New Private Law (NPL) project has gripped the attention of jurists throughout the common law world. Yet, despite the attention this enterprise has quickly garnered, there is one curious aspect of the development that remains largely unexamined. That is, in challenging us to “understand private law” on its own terms, much of the NPL project falls within the boundaries of “analytic jurisprudence.” This focus on analytic questions is surprising because of the suspicion, and sometimes hostility, the American legal academy has traditionally shown towards this branch of legal scholarship. Therefore, in this post, I intend to demonstrate how analytic jurisprudence lies at the core of the NPL project and thereafter, to defend NPL’s reliance on analytic methods against some common critiques that will surely be presented sooner or later.

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Copyright and Joint Authorship—Lingering Confusion and a Missed Opportunity — Shyam Balganesh

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Post by Shyam Balganesh A few weeks ago, the Ninth Circuit, sitting en banc, decided the much-anticipated copyright case of Google v. Garcia. The case involved an actress, Cindy Lee Garcia, who was led to believe that she was performing for a film titled Desert Warrior. After her performance was recorded, the producer transformed her five-second … Read more

Should There be a Federal Policy on Arbitration? — Aditi Bagchi

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Post by Aditi Bagchi

The Federal Arbitration Act can be read merely to protect arbitration clauses from hostile judges.  That is, it may merely require neutrality with respect to arbitration.  Alternatively, it can be understood, together with the slew of federal cases overturning allegedly ‘hostile’ state decisions, as affirmatively friendly to arbitration.

In the recent 7th Circuit decision, Andermann v. Sprint Spectrum L.P, Judge Posner takes the former view.  He observes that it is not clear that arbitration should be preferred, but more importantly, there is no reason to treat arbitration terms differently than other contract terms.  Whatever Posner’s ultimate view about the utility of arbitration, he appears more committed to a strong default of neutral enforcement of contract without reference to public policies that might favor or disfavor particular terms.  As long as parties formally agree on arbitration, arbitration carries the mantle of freedom of contract.

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The Supreme Court on Public v. Private Law – John Golden

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Post by: John Golden

While we debate the nature of the distinction—or the lack thereof—between public and private law, perhaps we should take note that the U.S. Supreme Court has recently decided the issue.  Well, not by a long shot, of course, but in Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831 (2015), justices engaged in spirited debate over the extent to which the interpretation of patent claims should be viewed as more analogous to the interpretation of private “written instruments such as deeds and contracts” than to the interpretation of statutes.  Id. at 840.  The dissenters in Teva explicitly linked this question to a traditional distinction between “‘core’ private rights” and “‘public rights,’” id. at 848 n.2 (Thomas, J., dissenting).  The justices viewed these questions as significant for—if not decisive of—whether the U.S. Court of Appeals for the Federal Circuit was right in viewing patent claim construction as a question of law for which appellate review is uniformly de novo even when a lower court’s claim construction reflects underlying factual findings.  A seven-justice majority rejected the Federal Circuit’s position.  En route to this result, the majority and dissenters produced opinions with snippets that relate to potential ways of distinguishing between public and private law.

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Interpretation in Omnicare v. Laborers District Council Construction Industry Pension Fund – Greg Klass

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Post by Greg Klass

In this first post, I’d like to point readers to opinions in Omnicare v. Laborers District Council Construction Industry Pension Fund, 575 U.S. ___ (2015). Though a securities fraud case, the Omni opinions raise more general questions about the private law of deception.

The issue in Omni was whether a company could be held liable under 15 U.S.C. § 77k(a) for so-called statements of opinion, such as “We believe that our contract arrangements with other healthcare providers, our pharmaceutical suppliers and our pharmacy practices are in compliance with applicable federal and state laws.” Slip op. at 3. The Sixth Circuit had held that such statements were actionable if the company’s beliefs were “objectively false.” The Supreme Court reversed, based on the common law rule that a statement of belief is (in most cases) actionable only if the speaker does not actually hold the belief. It is not enough to show that the belief was false. A plaintiff must show that it was not actually held.

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