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agency archive

This is the archive for material on agency.

Second Agency Restatement

WEEK 1: 20-24 August 2007
For an introduction to the material we will be covering in this class, look at this 1950s New York Stock Exchange promotional video (in 2 parts) (nb. it includes some parts which are surprising/shocking):

For our first class on Tuesday 21 August please read the class syllabus and the first case in the casebook (Gorton v Doty).

We begin the semester with the law of agency. Agency principles are important in many different contexts. You will be familiar already with the concept of respondeat superior, according to which masters are legally liable for the torts of their servants under some circumstances. We will see that agents can also bind their principals to liability under contracts. So, from the perspective of an unpaid creditor, agency principles can be used to reach into deep pockets (if the principal is wealthy or has insurance). The cases in the casebook illustrate the application of agency principles in the context of tort and contract cases.

From another perspective agency principles create a risk of liability and businesses will want to manage this risk.

Read the questions on CB page 6. Now compare this case:

Gillet v Watchtower Bible & Tract Society of Pennsylvania, Inc., Watchtower Bible & Tract Society of New York, Inc., Watchtower Bible & Tract Society of Florida, Inc., the West North Miami Congregation of Jehovah’s Witnesses, Inc., Francois Jn Denis and Maria Nunes, 3d DCA Fl.(May 11, 2005).

WELLS J.
On November 23, 1996, Maria Nunes attended a field service meeting of the members of The West North Miami Congregation of Jehovah’s Witnesses, Inc. (the Miami Congregation) at the home of Hilda and John Gillet. During that meeting, the members prepared for that day’s field service which, as usual, consisted of door-to-door canvassing and pamphleteering.

After the meeting ended, the members got into their cars to travel to the areas where they would engage in these activities. When Nunes, who was parked in the Gillets’ driveway, backed out, she knocked Hilda Gillet into the roadway and where she was struck by an oncoming car.

The Gillets subsequently filed suit against Watchtower Bible & Tract Society of New York, Inc., the entity that publishes Bible based materials such as Awake! and The Watchtower; Watchtower Bible & Tract Society of Pennsylvania, the entity that holds the copyright to the materials published by Watchtower of New York; The West North Miami Congregation at which Nunes worshipped; Nunes; and the driver of the other car that struck her, alleging negligence, vicarious liability, and loss of consortium. The three Watchtower defendants moved for summary judgment claiming that they could not be held vicariously liable as a matter of law for Nunes’ negligence since Nunes was neither their employee nor their agent at the time of the accident and that inquiry into this issue would entangle the court in the interpretation of religious teachings, doctrines, and internal policies in violation of the First Amendment. Because we agree that no agency relationship has been demonstrated, we affirm the summary judgment entered in the Watchtower defendants’ favor…

The Gillets claim that there is ample testimony at that Jehovah’s Witnesses like Nunes are agents (or volunteers) of the church defendants when they engage in field service (door-to-door canvassing and proselytizing). They point to formal field service, which features distribution of Watchtower publications, as the centerpiece of the church defendants’ activities and argue that because service is so thoroughly directed, regulated and overseen by the church defendants, that Nunes had to be acting as the church defendants’ agent when she performed field service. This is insufficient to impose liability for two reasons…

First, when Nunes performed field service, she did so not as the agent of any church entity but, as she stated, “[for] Jehovah God”and as part of a well-established, long recognized-religious practice…

…The constraints imposed by the church entities on use of the religious publications that they created, copyrighted, published and distributed, at most, impress upon and demand from each Jehovah’s Witness obedience to religious dogma, discipline and authority… They do not make individual congregants agents of these entities.

Second, there is no evidence that Nunes was acting as an agent for any church defendant when she got into her car to go to the place where she was to engage in religious activities. There is no evidence that any church defendant instructed, advised or in any manner controlled the means by which Nunes or any other congregant was to get to the place where they were to proselytize. There also is no evidence that any church defendant knew that Nunes was going to drive her own car as opposed to walking, riding a bike, taking a cab, riding with someone else, or, if available, taking public transportation. There certainly is no evidence that any church defendant asked Nunes to drive her car or attempted to control Nunes’ transportation in any manner by providing a vehicle, fuel, insurance, or by checking Nunes’ driving record or determining whether she had a valid driver’s license. Rather, the record shows that after the meeting at the Gillet home, each congregant was making his or her own way to the place where he or she was going to engage in a religious activity.

GREEN, J. (dissenting)

.. [T]he question presented is whether the record shows that the Watchtower Defendants had the right to control Nunes’ activities during Field Service such that a jury can conclude that she was acting as a volunteer agent of the Watchtower Defendants at common law when her alleged careless driving caused injuries to the appellants/plaintiffs. With all due respect to my esteemed colleagues in the majority, I believe that summary judgment is improper. This issue is one properly for the jury…

Defendant Maria Nunes is a Jehovah’s Witness. On the day of the accident giving rise to this litigation, Nunes had just attended a Field Service meeting. She was leaving the meeting and proceeding to her designated Field Service area for distribution of Watchtower literature. As she was backing out of the driveway, she struck plaintiff Hilda Gillet and threw her into the path of an oncoming vehicle, causing her severe injuries.

One of the hallmarks of membership in the Jehovah’s Witness organization is participation in “Field Service,”the systematic distribution of religious literature. Congregants are required to spend ten hours each month in Field Service. Failure to perform Field Service can lead to loss of privileges and status in the congregation. A congregant can be declared “inactive”for failure to participate, and must be “reactivated”by the congregation’s Elder after explaining the cause of non-participation.

The literature distributed during Field Service is published by Watchtower New York, the Jehovah’s Witnesses’ United States governing body. Watchtower Pennsylvania publishes, edits, and holds the copyrights to the distributed materials. Uniformity and consistency in the distribution of the literature is ensured by holding weekly training programs, and periodic follow-up training sessions that instruct congregants on methods of literature distribution. The congregants’ progress is evaluated and recorded.

Watchtower New York approves a local congregation’s candidate for Elder positions; Elders are required to attend and oversee Field Service meetings where the congregants coordinate the distribution of literature. Each Jehovah’s Witness congregant must be approved by the Elders; Watchtower New York also must approve the congregant. The congregant must be trained and must work as an understudy in formal “Field Service.”The congregant must be interviewed and approved by two Elders prior to commencing formal Field Service. The Elder’s are responsible for the congregant’s performance during Field Service. Elders often accompany congregants on Field Service to evaluate their performance.

“Formal Field Service”begins with the congregant attending a Field Service Meeting, conducted by an Elder, or the Elder’s appointee. Elders are always present in the field. The Elder tells the congregants where to go that day. The primary tool in Formal Field Service is the Watchtower literature; this is the only literature used. Each congregant is assigned a territory, and they must stay exclusively within that assigned territory. The territories are large and spread out. It is common knowledge that the congregants must use their cars to perform this service.

Beyond controlling the distribution of literature, Watchtower also controls the congregant’s appearance. The congregant must observe the Watchtower’s dress code, and personal grooming guidelines when engaged in Formal Field Service. These guidelines dictate appropriate attire, and personal appearance. If a congregant does not comply with these requirements they are not allowed to participate in Formal Field Service.

During Formal Field Service, the congregant must request donations for the organization. The Watchtower literature demonstrates that the congregant must raise the issue of donations with the public. All monies collected are remitted to Watchtower New York. Watchtower New York provides the congregations with pre-printed forms to record the hours served by congregants and the donations collected.

On the day of the accident, Nunes was complying with all of these controls and guidelines established by the Watchtower Defendants. Based on these structured controls, the plaintiffs assert that Nunes was acting as the Watchtower Defendants’ volunteer agent when she struck the plaintiff with her vehicle…

The plaintiffs essentially contend that the Watchtower Defendants are vicariously liable for their injuries because Nunes was their volunteer agent pursuant to Florida’s Volunteer Protection Act and/or common law. The Watchtower Defendants and Nunes, on the other hand, maintain that at the time of the accident, Nunes was not engaged in Field Service as their agent, but rather pursuant to her personal religious convictions. The Watchtower Defendants, and the majority, point to Nunes’s deposition testimony that she engaged in Field Service as part of the tenets of her faith… Although Nunes’s motivation for engaging in Field Service may have been rooted in her faith, it is not at all dispositive of the issue of whether an agency relationship was in fact created between her and the Watchtower Defendants.

Added: 16 August 2007
I’ve posted an item on the Mattel toy recalls. This story isn’t directly relevant to our first few weeks of class, but it does illustrate connections between issues of corporate social responsibility and profit maximisation which we will consider later, and between product markets and the securities markets.

COMMENTS:
Evan Metaxatos – August 20, 2007: The majority’s argument that Nunes was acting in accordance with her individual religious beliefs and not pursuant to her Church’s dictates seems tenuous. Many other individual acts might otherwise be explained as the result of a vague religious belief. Charity might be considered both an individual belief, and also something that a church will engage in as an entity. Are we now to believe then, for instance, that the Catholic Church should not be liable for the actions of one of its charitable volunteers simply because they were acting in accordance with their own religious beliefs and not the churches? What if the Catholic Church controlled many of the aspects of their volunteer’s work as in the case of Nunes? To give large churches such blanket immunity might encourage them to be less responsible in their actions going forward. Furthermore, large churches are typically insured whereas individuals may not be.

Luis Herrero – August 20, 2007 While I agree with Mr. Metaxatos that the majority’s use of religious belief as a shield against the creation of agency does seem open to attack as overly protective of religion or other interests, I think it is also important to be wary of the courts stepping in and creating principal-agent relationships from indeterminate statements. As the dissent in Gorton v. Doty points out, overly broad definitions of agency will open parties to liability in cases where they were tangentially connected to the issue at dispute but not in position to affect control over the events that led to the dispute. Such action could lead to a diminution of the types of informal business and social agreements that benefit our society

WEEK 2: 27-31 August 2007
You might want to look at (i.e. this is not a course requirement, although you may find it entertaining and helpful) Daniel Kleinberger’s article, Agents of the Good, Servants of Evil: Harry Potter and the Law of Agency, for an application of agency doctrine to J.K. Rowling’s stories.

I have uploaded the Second Agency Restatement to the agency archive page. I have moved the material from the first week to the same page. This weekend I propose to delete the comments posted this week from this page. They do appear on the agency archive page, in the text rather than in the comment section, and I will leave them there.

August 30, 2007: I added a comment to the agency discussion page.

COMMENTS:

Frank Menendez, Aug. 29 : As I reviewed some of the materials we have gone over, I thought about landlord and tenant relationship, particularly where the tenant is allowed by the landlord to fix any damages to the real property that might arise during the tenancy. I did some research and found a recent Tennessee case that addresses that issue, see Leslie Quimby v. William E. Sulker, No. M2006-01236-COA-R3-CV, 2007 WL 2428085 (Tenn. Ct. App., Aug. 27, 2007). It seems that simply allowing a tenant to fix a problem everyone once in a while, without compensation, would not be sufficient to establish an agency (“control”argument), but can give rise to a negligence case. However, what about in circumstances where the contract specifies who is to fix the problems? Or if it specifies WHAT is to be fixed by who and under what conditions (e.g. plumbing is done by the landlord but floor damage is solely the tenants responsibility)? In advising a potential landlord of ways to avoid liability, it seems that one relatively safe approach is to hire a “competent”3rd party independent contractor to fix those problems that the landlord can’t, despite the urge of allowing a tenant to fix those “minors”problems that might arise…

Bradley Aug 27 : That is correct – implied actual authority derives from the agent’s reasonable interpretation of the principals’s instructions with respect to authority. Apparent authority derives from the third party’s reasonable interpretation of the principal’s representations or (3rd restatement) manifestations with respect to the agent’s authority. Inherent agency power focused on the power a person in a similar position would usually possess. This would tend to be more like the apparent authority analysis becasue the agent subject to a restriction on her authority would not be able to argue inherent agency power. Thus inherent agency power looks a lot like apparent authority but it also applies in circumstances where the 3rd party does not realise she is dealing with an agent (undisclosed principal cases).

Frank Menendez Aug 27 : R2A § 8A states that Inherent Agency Power “exists for the protection of [3rd parties],”as such, it is MY understanding that we look at what the 3rd party would reasonably believe, whereas Actual Authority (expressed, Implied, or Incidental) is seen from the agent’s perspective. Therefore, the theory of authority we want to argue depends upon which party we represent.

Jose Serrano Aug 26 : Professor, In Nogales Sercie Center v. ARC the instruction No. 21 that was refused talks about “acts which usually acompany or are INCIDENTAL to transactions which the agent is authorised to conduct, even if the employees were forbidden to make such agreements….”.
In the context of the case, this question was suggested to argue in favor Inherent Agency Power. What would be diferent if we wanted to demonstrate Incidental Actual Authority? Would be the same?

Alissa Gazze : There was an interesting article re: the class action law suit in Monday’s WSJ, which discusses the paradox raised by the lawsuit: plaintiff’s have no evidence of physical harm, and so it will be hard for them to get their claim heard. Yet this seems to be prolonging the obvious consequence that there will be a suit in the future when there has been harm because people were unable to afford medical monitoring. According to the article, the states are divided as to whether medical monitoring suits should be allowed. Critics claim that it wastes company resources that would better be allocated in the future when injury can be shown. On the other hand, if companies were liable for testing, they would want to protect against this kind of hazard through better business practices, making them more socially responsible members of the community.
In 1997 the Supreme Court ruled 7-2 against a medical monitoring fund in a railroad case, Metro North Commuter Railroad v. Buckley, 521 U.S. 424. 5 of the justices who were in the majority in that case, including Justice Breyer, who wrote the opinion, are still on the Supreme Court.

Brandon Forgione Sept.6:After reading the Reading v. Regem case, it seems that, in some cases, there is a very fine line between a servant benefiting as a result of his position and one benefiting from the opportunity. The example that came to my mind is a soldier who stumbles across a museum, such as what happened in WWII, while going through the fields of battle and takes artifacts, money, or whatever. Assuming that all the goods taken were sold or otherwise converted to profit and unrecoverable (otherwise, they would presumably be returned), would the soldier have benefited predominately as a result of his position or did his position only afford him the opportunity?
It would seem that his uniform only gave him the opportunity (i.e. put him in the position) to steal and was not necessarily the cause. On the other hand, the only reason he would be able to walk around the area is by virtue of his uniform. Of course, there are additional facts that would aid the analysis, such as if the soldier was able to remove the goods from the country by virtue of his uniform and position. Also, it seems (to me) that most, if not all, of the hypotheticals on pages 82-83 would not result in disgorgement. If anybody has any thoughts on this issue, please share.

WEEK 3: 3-7 September 2007
Have a good Labor Day weekend. For next week the syllabus asks you to read to page 90 in the Casebook. Please read through to page 101 instead. We will be starting partnership law so you will want to read the Uniform Partnership Act in the Statutes book at p 112 ff and the revised Uniform Partnership Act at p 131 ff. The Florida partnership statute is based on RUPA.

Labor Day (Sept. 3, 2007): Examples of baseball heckling posted here.