Life Imitating Law?

Internet law students who remember Jones v. Dirty World, involving a federal court defamation suit by Cincinnati Bengals cheerleader Sarah Jones against gossip website The Dirty (the Eastern District of Kentucky ruled that it could exercise long-arm jurisdiction over the Arizona-based defendant) may be interested in this news report that Jones has been arrested.  It’s a bizarre twist if the allegations are true.

NJ Recognizes Privacy Right

New Jersey’s intermediate appellate court issued an interesting informational-privacy ruling this week. Reported in the Star-Ledger, and the CourierPost Online, the court held in State of New Jersey v Reid that Shirley Reid’s use of a screen name that hid her identity created a “legitimate and substantial interest in anonymity” that supported Reid’s motion to suppress. Reid was charged with computer-related theft after her employer accused her of breaking into its computer system and changing its shipping address. Attempting to penetrate the anonymous screen name linked to the break-in, police had a Municipal Court administrator issue a subpoena to Comcast. In response Comcast linked the screen name to Reid, who was then charged with the crime. The court held the subpoena was invalid because the crime under investigation was not within that court’s jurisdiction, and thus not issued in connection with a judicial proceeding as required by NJ law.

The appellate court affirmed that this unauthorized search constituted an unlawful search and seizure. Its decision rests on a right to privacy grounded in the New Jersey constitution, which “has been expanded to areas not afforded such protection under the Fourth Amendment.” Reid’s choice of an anonymous screen name manifested a reasonable expectation that only Comcast knew her identity, creating a privacy interest that “is both legitimate and substantial.” The state prosecutor has not decided whether to appeal this ruling to the New Jersey Supreme Court.

Raising Cost of Online Sales

Every semester I discuss an Internet-sales hypothetical with my Internet law class, in which a consumer in State A purchases goods from a seller in State B, is unhappy with the purchase, and wants to pursue legal claims against the seller. The first question we discuss is “where did the transaction take place?” Some say the transaction takes place in the consumer’s state, some say it takes place in the seller’s state, some say it takes place wherever the retailer’s servers are located, and some say you can’t tell. The law has not provided a definitive answer to this question, nor does it need to. The law has been able to resolve whether State A could exercise long-arm jurisdiction over the seller or whether the seller must collect and remit to State B sales tax on the non-resident consumer’s purchase. Under current U.S. law an online retailer does not, by having an online sales presence alone, automatically subject itself to jurisdiction in every state in which its products are sold.

A proposed law would complicate this question in the European Union. As reported here by TimesOnline, the law would, in any business-to-consumer contract, make the contract subject to the law of the country in which the consumer resides. Critics argue that the law would limit the growth of EU e-commerce and limit consumer choice. Opposing the law, the British Retail Consortium stated that “[t]he sheer cost and uncertainty inherent in such a scenario is so high, that it is simply not credible to assume that companies, and small ones in particular, could engage in such trade.” Consumer advocates contend, on the other hand, that consumers might be wary about purchasing from other countries if they are not protected by their own laws.

I’m curious to see what happens.

Plaintiff: I gambled and lost

In its chapter on contract legality the textbook we use in the business law class discusses the case of Soheil Sadri. Sadri went to Las Vegas, gambled, lost, and gave the casino a check for $22,000 to cover what he owed. He then returned to California, stopped payment on the check, and was sued for the underlying debt to the casino. (Note the use of the passive voice in the preceding sentence–it contains a clue.) A California Appellate Court ruled for Sadri, holding that a contract for payment of gambling debts violated California public policy and was void.

When I mentioned the case today a student asked why the lawsuit was in California, with its anti-gambling policy, instead of Nevada. Here’s why: The plaintiff was not the casino to whom Sadri wrote the check. The casino assigned its breach of contract claim against Sadri to a collection agency based in Sacramento, California. Creditors sometimes sell claims for money owed at a discount to their face value. The creditor gets ready cash without the risk, expense, and delay of a lawsuit; the collection agency gets to keep whatever it collects from the debtor–which, if it discounted the purchase price correctly, is more than it paid for the claim. The collection agency sued Sadri in California because it was home to both Sadri and the collection agency.

Could the agency have sued Sadri in Nevada? Yes, but to hear the lawsuit the Nevada court would have to determine that it could exercise long-arm jurisdiction over Sadri in Nevada. Since the basis for the suit was a promise Sadri made to a Las Vegas casino to pay $22,000 the Nevada court should have been able to exercise long-arm jurisdiction and hear the case. Would Sadri have lost at trial in a Nevada court? Probably. The reported opinion does not indicate that Sadri had any basis to contest the debt in Nevada.

A judgment for the collection agency in Nevada would not necessarily spell the end of the legal wrangling. If Sadri refused the collection agency’s request to pay the damages awarded by the Nevada court, the collection agency would have to enforce the judgment against Sadri in California. Under the Full Faith and Credit Clause of the U.S. Constitution a California court must enforce a valid judgment obtained in the courts of another state, even if it violates California public policy. How, then, can we explain the result in this case? The answer is that the collection agency sued Sadri in California to enforce a Nevada cause of action, not a judgment of a Nevada court, and the Full Faith and Credit Clause does not require a state to honor a cause of actions of another state that violates its own public policy.

A final note: given the importance of the gaming industry to Nevada’s economy, we might expect Nevada to have protected the right to sue in its courts to enforce gambling debts for many years. It is surprising to learn–I was surprised, anyway–that Nevada has had a statute allowing state court lawsuits to enforce gambling debts only since 1983.

See Metropolitan Creditors Service of Sacramento v Sadri (15 Cal. App. 4th 1821, 1993 Cal. App. LEXIS 559, 19 Cal. Rptr. 2d 646 Court of Appeal of California, First Appellate District, Division Five, 1993)

Quiet Enjoyment

Last week a student asked me a question about Massachusetts landlord/tenant law. She lives in an apartment building in which the landlord is performing what she described as “heavy construction” in neighboring apartments, starting at 7:00 AM. She asked whether such disturbance gives her a right to reduced rent or any other remedy.

Under Massachusetts law residential tenants have the right to “quiet enjoyment” of their apartments, which is the right to live in and enjoy the premises free from disturbance and interference by the landlord or other residents. The right to quiet enjoyment is protected by Massachusetts General Laws c. 186 s. 14, which allows a tenant to sue the landlord for up to three months’ rent or actual damages, if higher, plus reasonable attorney’s in the event of the landlord’s breach of its covenant (promise) of quiet enjoyment.

Here are the the relevant provisions of Chapter 186 Section 14:

Any lessor or landlord of any building or part thereof occupied for dwelling purposes . . . who is required by law or by the express or implied terms of any contract or lease or tenancy at will to furnish water, hot water, heat, light, power, gas, elevator service, telephone service, janitor service or refrigeration service to any occupant of such building or part thereof, who willfully or intentionally fails to furnish such water, hot water, heat, light, power, gas, elevator service, telephone service, janitor service or refrigeration service at any time when the same is necessary to the proper or customary use of such building or part thereof, or any lessor or landlord who directly or indirectly interferes with the furnishing by another of such utilities or services, or who transfers the responsibility for payment for any utility services to the occupant without his knowledge or consent, or any lessor or landlord who directly or indirectly interferes with the quiet enjoyment of any residential premises by the occupant, or who attempts to regain possession of such premises by force without benefit of judicial process, shall be punished by a fine of not less than twenty-five dollars nor more than three hundred dollars, or by imprisonment for not more than six months. Any person who commits any act in violation of this section shall also be liable for actual and consequential damages or three month’s rent, whichever is greater, and the costs of the action, including a reasonable attorney’s fee, all of which may be applied in setoff to or in recoupment against any claim for rent owed or owing. The superior and district courts shall have jurisdiction in equity to restrain violations of this section. . . . Any waiver of this provision in any lease or other rental agreement . . . shall be void and unenforceable. (Emphasis supplied)

The question is whether the construction this student experienced breached her covenant of quiet enjoyment. The landlord obviously has the right to maintain and improve its property, and a 7:00 AM construction start is standard. Massachusetts city and town ordinances typically prohibit construction or yard work from beginning before 7:00 AM, at which time they may proceed at full throttle. Those who live typical student hours may find 7:00 AM to be inexcusably early, but I don’t believe the law, the typical residential lease, or the typical judge would be sympathetic.

If the construction is performed in an unreasonable manner or lasts for an unreasonably long time then a tenant may have a valid claim for breach of the covenant of quiet enjoyment. A court would need to balance the landlord’s rights and duties to keep up the property against the tenant’s reasonable expectations.