Sunday, December 11, 2016

Non-disparagement clauses now illegal in Maryland- mostly.

When an American's expectation of "free speech" overlaps commercial relationships, things get weird. The First Amendment of the U. S. Constitution gives you the absolute right to stand before the White House and shout your grievances across the south lawn toward the Oval Office, but the contract you signed to purchase a thing to be tossed after it breaks can force you to keep negative opinions about the retailer to yourself. Post your negative review on the internet, and you may well face civil penalties and a lawsuit.

The First Amendment restricts your government from silencing your speech, but contracts may have language preventing you from disparaging a company or a product. Can you Imagine getting sued for something you post on Yelp, Facebook or Amazon about something you purchased? It happens, and is mostly legal.

Maryland is just the second State to pass a law to make illegal and unenforceable anti-disparagement clauses in contracts for consumer products. California is the other state, having passed Assembly Bill 2365 in 2014.A federal bill called the Consumer Review Freedom Act passed through the U. S. Senate in 2015, but has not made it through the House of Representatives to the President's desk. It is extremely unlikely that the newly elected administration and legislature will pass the measure into law.
You are a "consumer" when you are the "actual or a prospective purchaser, lessee or recipient of consumer goods or services. "
"Consumer goods" are defined as "goods or services that are primarily for personal, household or family purposes." The introductory language to the bill says that this definition is intended to mirror the definitions found in the Consumer Protection Act, where consumer goods are broadly defined to include credit, debts, obligations, goods and real property.
Any business that seeks your promise to keep silent with a non-disparagement clause now commits a false and deceptive trade practice under the Consumer Protection Act. A violation of the Consumer Protection Act further exposes the business to your claim for damages and attorney fees.
Because the new law does not apply to contracts made before October 1, 2016, you must rely on traditional contract analysis to beat a non-disparagement clause in a contract made before that date.  For example, a consumer's silence may not have been purchased for real or adequate consideration-- they are often buried in long documents, they seem unconnected with the subject of the contract, and there is no extra money paid for the promise. The promise may also reside in what a court would call a "contract of adhesion" where the consumer has so little bargaining power that it is patently unfair to include the restriction. And there are other available contract defenses, depending on your specific situation.

Other types of non-disparagement clauses will remain legal and widely used. The restriction routinely appears in settlement agreements where money is paid in exchange for silence and no admission of liability for specific claims. Where silence is a material object of the agreement, the term will be readily enforced. The clause also routinely appears in documents where business people share proprietary information while negotiating a deal, but the deal is never made. The parties then agree to walk away without disparaging each other or their products.
The Maryland law makes good sense, particularly in this age of on-line reviews and websites that aggregate product and service recommendations and reviews. An informed consumer needs all the information-- both positive and negative-- before making an informed decision. The courts have for years reminded us that the market place is governed by "caveat emptor," the principle that the buyer alone is responsible for checking the quality and suitability of goods before a purchase is made. This new law simply assures that the consumer will have more information. After all, if a business provides for customer reviews on its Facebook, Amazon or Yelp page, then it should be prepared to receive both negative and positive reviews. Anything less presents an incomplete and perhaps dishonest portrayal of the entity's products and services.
The consumer bears some responsibility for making honest and accurate reviews. The false accusations of bad service or poor quality can haunt a business for some time. State laws punishing libel and slander, coupled with rules for the imposition of injunctions,  remain available to the business to curtail the most extreme behavior.
Use your newly enhanced powers wisely!

Maryland H.B 131 became law in 2016 and applies to contracts made after October 1, 2016. It makes illegal and unenforceable contract provisions that bar disparaging public comments and social media postings by a "consumer."

Thursday, December 8, 2016

Bow-riding-- a reckless practice that is already illegal in Maryland.

Maryland's boating community saw several serious accidents in 2016 where boat propellers caused injury and death to passengers. It has spurred two ambitious State legislators to cobble together additional regulations to curb the practice of "bow-riding."

On July 30, 2016 a passenger doves off the bow of a ski boat and was cut by the boat's propeller. The accident was reported as follows:

...Eckenrode was with a party of seven people aboard a 24-foot Moomba power boat when he jumped from the bow of the boat into the water in the area of McHenry Cove without the knowledge of the other boat occupants. Informal instructions were reportedly being given to a new skier in the group at that time.
The boat, operated by Brian P. Morel, 36, of Sewickley, Pennsylvania, was placed in gear to navigate out of the area when the victim was struck by the boat's propeller. (last checked 12/8/2016).
Also on July 30, 2016, at the other side of the state, another propeller injury:
When officers arrived at the scene in Isle of Wight Bay at about 4 p.m., seven people were in the water around a rental pontoon boat that had run aground. One man was bleeding profusely from a gash on his arm created by the boat's propeller and another passenger was hanging onto a nearby moving boat.....the operator of the boat, was arrested after he failed field sobriety tests. (last checked 12/8/2016)

On August 17, 2016, a boy lost his  life, as reported:
Frederick was sitting on the edge of a pontoon boat in Sinepuxent Bay near Ocean City,  with his legs dangling over the side when he was hit by a propeller, according to the Natural Resources Police in Maryland.
 Natural Resources Police Spokeswoman Candy Thomson said after Frederick fell, the operator couldn’t stop and the propeller hit the boy. She added that it’s illegal in Maryland to dangle in front of a moving boat. (last checked 12/8/2016)
A website that compiles statistics for pontoon propeller injuries across the country notes 198 serious injuries between 1964-2016. Maryland's cluster of accidents (not all pontoons) make up a minor percentage of reported incidents across the country over 52 years. Lawsuits arising from propeller related injury are similarly spread consistently across the years. Anecdotally, then, we can agree that propeller related injuries are a regular occurrence. And of that group, a much smaller subset arise from the practice of "bow-riding" where a passenger is allowed to ride the bow with limbs dangling, or to otherwise ride the gunwales while underway.

Two Maryland legislators have felt compelled to address the situation, announcing soon-to-be-published regulations to ban the practice of "bow-riding" while a boat is underway:

Last week, [Sen. James] Mathias and [Del. Mary Beth] Carozza, along with DNR and NRP officials, met with the state’s Boat Act Advisory Committee to discuss changes to the regulations that would prohibit bow-riding. Out of that meeting came a proposed regulation change that could put a new law on the books in advance of recreational boating season next spring.
Mathias said this week the meeting with the Boat Act Advisory Committee was productive and a new regulation prohibiting bow-riding could be posted in the Maryland Registry as soon as mid-January. Following the requisite public comment period, the new regulation could become effective as soon as March 27 [, 2017]. (last checked 12/8/2016).
The human reaction to tragedy is understandable--do something-- but there is already an adequate remedy in place. Actually, there are two statutes in place to address dangerous boating operation. One is federal, enforced by the USCG:

            46 U.S. Code Sec. 2302 

(a)A person operating a vessel in a negligent manner or interfering with the safe operation of a vessel, so as to endanger the life, limb, or property of a person is liable to the United States Government for a civil penalty of not more than $5,000 in the case of a recreational vessel, or $25,000 in the case of any other vessel.
(b)A person operating a vessel in a grossly negligent manner that endangers the life, limb, or property of a person commits a class A misdemeanor. 
(c) An individual who is under the influence of alcohol, or a dangerous drug in violation of a law of the United States when operating a vessel, as determined under standards prescribed by the Secretary by regulation—
(1) is liable to the United States Government for a civil penalty of not more than $5,000; or
(2) commits a class A misdemeanor.

Maryland has its own prohibition against negligent and reckless boating:

          Natural Resources Sec. 8-738.2:

In General 
(a) A person may not:(1) Operate a vessel recklessly or in a manner that may endanger another or the property of another on a bay, creek, lake, river, or stream in the State; or(2) Come into a wharf or bathing shore recklessly or in a manner that may endanger a person or property.

Fines and penalties
(b) A person who violates this section is guilty of a misdemeanor and on conviction is subject to: (1) For a first conviction, imprisonment not exceeding 30 days or a fine of not less than $25 and not exceeding $200 or both; and(2) For a second or subsequent conviction, imprisonment not exceeding 60 days or a fine not exceeding $500 or both.
The Maryland Department of Natural Resources even publishes a pamphlet reciting examples of negligent or reckless boating practices to be avoided. Not surprisingly, "bow-riding" is one express example of negligent or reckless boating in the pamphlet. It is not a stretch to say boat operators understand bow-riding to be a negligent and reckless practice.

Maryland does not need another regulation or statute to remind boaters to the keep arms and legs of their passengers in the boat while underway. The USCG and Maryland's DNR are both well equipped to enforce the laws already in place. It is a waste of resources, and causes confusion to selectively define and separately penalize subsets of behavior already covered by existing law.