Blog No 150

July 12, 2022

By Mack W. Borgen

Author (7 Books): The White Binder – Your Personal Data and Information Book (2022); The Writings of a Lifetime (2021); Dead Serious and Lighthearted – The Memorable Words of Modern America (3 Vols) (2018-2019); and The Relevance of Reason – The Hard Facts and Real Data about the State of Current America (2 Vols) (2013). New York Review of Books. Recipient of Eight National Book Awards

See my legal articles and other blogs at  https://www.mackwborgen.com/  . Then, just click the “Blogs” tab.

New Word of the Month

“Shrinkflation”

Definition: A technique used by companies to downsize a product or its ingredients in order to lower costs. The retail price may not change, but the amount or quality of the product in the package will be decreased. Examples:

Gatorade – Its “32-ounce bottles” are now 28 ounces.

Cadbury Chocolates: Size of its chocolate bars have been decreased by 10%.

Kimberly-Clark Paper: Toilet paper rolls reduced from 340 sheets to 312 sheets.

Source: Newsletter of Bryars Tolleson Spires and Whitton LLP. (July 2022)

Quick Facts

A Strange Contradiction: Increasing Size of Average U.S. House

But Decreasing Number of People in Average U.S. Household

In 1973, the Census Bureau began tracking the average square footage of American homes.

In the 1970s, the average U.S. house was 1,660 square feet. As of 2021 – about four decades later – the average house size had grown to 2,687 sq.ft. This is approximately a 1,000 sq. ft / 62% increase. As noted by one commentator, despite this increase in house sizes, the “full house’ is rarely used. In fact, “90% of the time, we live in about 30% of our homes – the bedroom, family area, and kitchen.” (Note 1).

It is tempting to conclude that this may say something about Americans’ inflated sense of entitlement, the extent of our self-indulgences, or the perceived importance of displayed wealth. But maybe, it is merely the result of 72” TV screens and our growing need for more computer spaces.

But, assuredly, the increase in house sizes is not the result of larger families. In fact, the average U.S. household has both decreased in size and changed in nature over the course of our nation’s history.

In 1789, the average U.S. household was about 5.79 persons per household. By 2018, that number had been cut in half to 2.63 people per household.

There are many reasons for this, including, for example, the number of elderly members of the household. In 1850, nearly 70% of the elderly (65 and older) lived with their adult children. By 2000, only 15% of parents lived with any of their children. (Note 2).

Author’s Addendum Regarding “Average” vs “Median” Calculations. The above data uses “averages” (average square footage, average household size). Such “average-based” data can be very useful and may be the only data available. However, in many instances, “median” value data is preferable. For example, the “average” square footage of a small community can be materially distorted (i.e., misleading) if within that community all the houses were 2,000 sq. ft. except for three mansions on the edge of town each containing 14,000 square feet. The median value (50% higher / 50% lower) would present a far more accurate description of the community than the average value.

Note 1. My thanks to the wonderful article by Elizabeth Stewart, PhD. (“Talking Stuff with Elizabeth Stewart, Ph.D.”) (July 2022).

Note 2. Sources: Fry, R., Pew Research Center (October 1, 2019); Statista (2022).

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 10 Recent Business and Contract Law Cases and Developments

 It is hard to keep up. As noted in my prior article (Blog 149, June 28, 2022), at the end of California’s 2021-2022 legislative session, about 770 new laws were enacted. These new laws are in addition to the hundreds of new judicial opinions and rulings. (All the cases discussed below are California cases unless otherwise noted)

1. Arbitration Agreement; No Unconscionability in Failing to Provide Spanish Translation. An arbitration agreement, if properly incorporated into an agreement, can be treated as a part of such agreement between the parties, and no separate signatures are required. Here, the court also held that there was no procedural unconscionability in failing to provide a Spanish translation because the person challenging the agreement understood English sufficiently to understand the contract. Author’s Comment: At least theoretically, this case may suggest that it sometimes may be appropriate for contracts to (now) include an initialed English-comprehension representation. Cisneros v. AltaMed Health Services Corp. (CA)

2. Trigger Date for Starting Notice Period. The trigger date with respect to any claim under a contract would be when the claimant became “aware” (or should have become aware) of the potential claim. This is a matter of proof in which the court would analyze how much the claimant would have had to “know” before he became “aware” of his claim. Sterling Nat’l Bank v. Block (7^th Circ).

3. Liability of Controlling Affiliate. A controlling affiliate of a party which breaches a contract is not liable for interference with contract unless such affiliate acted in bad faith. Surf’s UP Legacy Partners, LLC v. Virgin Fest, LLC. (Del.). 

4. Breach of Fiduciary Duty; Arbitration Provisions. In a potentially very significant case, a breach of fiduciary duty claim is not within the scope of a standard arbitration provision which relates to “all legal claims arising out of or relating to employment.” Cooper v. Ruane Cunniff & Goldfarb Inc. (2d Circ).

5. Adhesion Contracts. Such contracts are deserving of “greater scrutiny” including determinations by the court as to “procedural unconscionability” (e.g., considerations such as the sophistication of a party or the presence of hidden or unduly complex contract terms) and “substantive unconscionability” (e.g., the imposition by the contract of “terms beyond the reasonable expectation of an ordinary person”). May v. DirecTV, LLC. (N.D.W.Va.). 

6. Reckless vs Deliberate Fraud. A simple reference to “fraud” may or may not include claims based upon a party’s recklessness. However, if an indemnification provision references “deliberate” fraud, then such reference should not be deemed to include reckless conduction because “deliberate” means “intentional.” Express Scripts, Inc. v. Bracket Holdings Corp. (Del). 

7. U.S. Supreme Court Limits California Labor Law That Allows Private Suits Against Employers. In this heavily pro-employer ruling, the USSC “sharply limited” California’s law which had authorized private lawsuits on behalf of groups of workers even if the parties had agreed to resolves all claims through individual arbitration. The 8-1 decision was based upon the holding that the Federal Arbitration Act preempts state law. Interestingly, at the time of the ruling California was the only state which allowed such private suits as a means of enforcing labor laws. The USSC found that by allowing such private suits the state had de facto allowed employees to bypass binding arbitration agreements. Viking River Cruises, Inc. v. Moriana (2022). Savage, D, Los Angeles Times (June 15, 2022). See also, Press Release of Rob Bonta, CA Attorney General about how this case may impact cases (e.g., overtime pay and unsafe working condition cases) which could otherwise be brought under California’s PAGA (Private Attorney Generals Act).  

8. Limits upon Breaching Party’s Right to Protection under a Contract’s Exculpation Provision. In a case that seems obvious to this author, the court held that a contract-breaching party could not enforce an exculpation clause (basically a contract provision which relieves one party from liability under the contract) if at the time the party seeking exculpation (i.e., relief of liability) were himself or itself in “material” default under the contract. Horne v. Elec. Eel Mfg. Co. (7^th Circ).

9. Application of Choice of Law Provisions. Under a fundamental choice-of-law policy exception, California securities law would apply to the parties to cover issues which are addressed by such laws – even though there were sufficient contacts with the chosen-law state, which in this instance was Delaware. Author’s Note: This is a good reminder case that despite a choice-of-law provision in a contract, there are times when “local” law will continue to apply. Swipe Acquisition Corp. v. Krauss (Del). 

10. Covid-Related Contract Cancellations Covered by Contract’s Force Majeure Clause. Unsurprisingly, there are a number of cases which have addressed this issue. Also unsurprisingly, the courts, as in this case, have normally found that if the pandemic “directly and proximately” caused the cancellation, then such cancellation may be appropriately justified since the pandemic was obviously “not reasonably foreseen, anticipated, or predicted.” Rudolph v. United Airlines Holdings, Inc. (N.D.Ill.).

Source: Business Law News (CA Lawyers Association) (Issue 1, 2022), pp. 12-15.

 Fancypants Word of the Day

Edacious (Adj) (Latin):  1) Relating to or given to eating, 2) Having an insatiable appetite.

Serious Example: “Her priority was planning the edacious elements of the party.”

Humorous Example: “It is calorically disappointing, but understandable, why Hometown All-You-Can-Eat Buffets target all of their 3-D, wide-screen, scratch-n-sniff food ads to the edacious members of our society.”

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