City of Ann Arbor Planning Commission
Guy C. Larcom, Jr. Municipal Building
100 North Fifth Ave.,
Ann Arbor, MI  48104

June 15, 2009

Dear Commissioners:

I am a long-term resident of the North Central neighborhood which is directly impacted by the proposed NeNo PUD.  I am also a business attorney with several years of private practice in Ann Arbor, and what I am seeing, alarms me.  I am writing to urge you to oppose the NeNo project being proposed by the Three Oaks Group, not only on the merits but also on principles of fairness and ethics in commercial conduct.

I consider the way that this project has been conceived and sold, to set a very bad direction for the City going forward.  The NeNo developers have engaged in a pattern of unfair and unprincipled conduct which the City and the Planning Commission should not, under any circumstances, condone or sanction – or it will lower the bar for every developer who may want to do a project in Ann Arbor.

Three Oaks:  “Rundown nature” of properties on North Main
Three Oaks has cited the rundown character of North Main as a justification for the project.  As someone given to walking around my neighborhood for the last 20 years, I can attest to the fact that the houses purchased on speculation by Three Oaks were not run down until Three Oaks bought them, and boarded them up. If you vote to allow this project, you will set a very bad precedent:  other developers will start doing the same.  Should we really let developers run down their own properties in order to fast-track their “neighborhood improvements”?

Three Oaks:  Give us City assistance?
I am alarmed by what I have read about the investors pursuing the City for grants or other assistance to buy adjacent unbuildable lots (which would guarantee their profit margins against downside risk).  Is this really what is going on?  As a long-time commercial attorney, I know that these people knew very well what they were doing when they bought a row of houses on Main Street on speculation.  They were discounting the idea that the real estate market would ever go down, and assuming the City would sooner or later greenlight a high-rise development that was out of character with the current zoning.

As a longtime City resident, it offends me deeply to think that private real estate investors would ever ask for what amounts to a government bailout.  Do the the citizens of Ann Arbor really need to subsidize real estate development and speculation?  This is not inner-city Detroit, this is Ann Arbor.  There’s a healthy market for development here.
Carol Ruth Shepherd, Attorney
333 Beakes Street
Ann Arbor, MI  48104

Letter to City of Ann Arbor Planning Commission
June 15, 2009
Page 2

I hope what I’ve read isn’t actually the case.  Obviously, the Planning Commission and the City of Ann Arbor should not allow a private investor to seek and receive assistance or guarantees to “rescue” the profitability of a speculative investment.  If you ever vote for a project which assumes some kind of City assistance with surrounding properties would be forthcoming, you will set a very bad precedent:  other developers will expect the same.  Should we really let real estate speculators think that the City of Ann Arbor might guarantee their profit margins and rescue them from their own bad business decisions?

Three Oaks:  Those neighbors, in their “little pink houses”
The contempt that Three Oaks has demonstrated for the surrounding neighborhood and our engaged participation in the PUD process is highly offensive.  Never in my professional experience have I ever heard a developer refer to surrounding families with as much disdain as Bill Godfrey, partner in Three Oaks:

“The people who oppose it tend to be older residents who live in little pink houses. We like the modern architecture because there is more to Ann Arbor than little pink houses.”

Concentrate, Development News, April 22, 2009 (concentratemedia.com).

Bill Godfrey and Three Oaks do not care what happens to me or my neighbors, or my neighborhood, or his impact on my neighborhood.  He just wants to take his profit and move on.

Merits of the project
From an objective allowable zoning, size and character standpoint, the project is simply too big.  With a height of four and five stories, it not only violates the current zoning, it will be completely out of character with the surrounding homes.  It is at least double the allowable zoned floor space and violates the current setback rules.

The project will obliterate light and air circulation and privacy for the immediately surrounding families and homes, many of whom have established themselves and their homes in this neighborhood for decades, and who are entitled to rely on the fact that the current character of their immediate surroundings will continue.

Carol Ruth Shepherd, Attorney
333 Beakes Street
Ann Arbor, MI  48104

Letter to City of Ann Arbor Planning Commission
June 15, 2009
Page 3

I highly doubt any of the developers themselves would agree to live in a two-story home immediately east of their own project, with no afternoon sunlight or breeze and two extra stories of residents peering down on their every move, with the attendant light shining down at night on their backyards from above.

There is no doubt in my mind that the NeNo will severely negatively impact the marketability of those families’ homes.  Wait a minute – wouldn’t that just speed the way for NeNo, Phase II?

North Central should not become “Downtown Ann Arbor”
I’ll briefly touch on my personal reasons for opposition.  I bought my house in North Central back in 1988.  What attracted me was the fact that the area was a true city “neighborhood” – one and two-story residential homes for a wide diversity of long-term residents, from students to professionals to residents who have been here for over 50 years.  My next door neighbor, Charlie Young, is 87.  She worked at Eureka Cleaners for years.  She walked to the Baptist church on Fourth Avenue for years.  She has fought all attempts by social workers to persuade her to move out of “her neighborhood.”  I have increasingly watched as developments have gotten bigger and denser, with the disappearance of home upon home from our historic residential neighborhood.

Voting FOR NeNo’s PUD will send a message to real estate developers everywhere that the City of Ann Arbor will not get in the way of real estate speculation, or protect its residents and neighborhoods, and in fact might even provide assistance.

Voting AGAINST NeNo will send a message that Ann Arbor will enforce its own rules, as well as principles of fair dealing, in real estate development.

Very truly yours,

Carol Shepherd, Attorney
333 Beakes Street

2009-PA-0029 (House Bill No. 4453) [PDF]
2009-PA-0030 (House Bill No. 4454) [PDF]
2009-PA-0031 (House Bill No. 4455) [PDF]

Link to MusicBizCamp here. The mission of MusicBizCamp is to jump-start education for “new jobs for a new music industry.”

“At will” employment is the rule, not the exception
In most cases, an employment agreement is going to be what we call an “at will” agreement: the employee is employed at the will of the employer — and can be let go at any time, at the will of the employer. What if there’s a written agreement, but it doesn’t specify whether employment is “at will”? If the employment agreement doesn’t specify that an employee can only be terminated “for cause,” then the employment agreement is “at will.” At will employment is the default in most states (Michigan included).

Some written employment agreements specify that an employee may only be terminated for cause. Barring special circumstances (such as employment under a union or other associational agreement), termination “for cause” must be spelled out in writing in the terms and conditions of the employment agreement. The employment agreement should have a termination section that indicates when an employee can be terminated “for cause,” and it should contain a definition of the causes that justify termination within the agreement. (Note to employers: acts justifying termination for cause should be clearly spelled out. This benefits the employer as well as the employee, and avoids having a court modify the employment agreement in a legal dispute.)

Employment agreements which can only be terminated for cause are frequently used in a wide variety of industries and situations. For cause agreements are used for key employees in technology companies, founders and managers in startup ventures, professionals in finance and accounting, doctors and lawyers, and employees in unionized businesses and companies. For cause employment contracts are typical where the employee has more leverage than an ordinary worker and cannot easily be replaced.

There’s no employment contract
There is always a contract between a worker and a hiring party — even if there’s no written agreement. In the absence of a written contract, employment is always “at will”: the employee can be let go immediately. Unless, of course, the employee isn’t really an employee — many business owners are shocked to find out that in the eyes of the IRS and/or the state department of labor, their ‘contractors’ are really employees, or vice versa. If you’re the employer in this situation, ‘misclassification’ of an employee as a contractor is a very expensive mistake.

“Two weeks’ notice”
Many people believe that a company or employee owes the other party “two weeks’ notice” for terminating the work relationship. That’s not a legal rule, it’s a conventional practice. “At will” employees can be escorted off the premises immediately upon notice of termination, with an arrangement to pick up their belongings at a later time. While this can come as a shock to the employee, it’s something that attorneys routinely recommend to employers as a standard employment policy, for security reasons.

The most significant increase for typical copyright filers is in traditional paper applications (Form TX, VA, SR, GR). The Copyright Office has proposed a 44% increase in filing by paper — raising the fee from $45 to $65. Critics contend that this unfairly penalizes copyright authors and owners without Internet access. Pending Congressional approval, the new Copyright Office fee structure is scheduled to take effect on August 1, 2009.  If copyright owners have registrations they have been putting off, now would be a good time.

A chart comparing the current and new copyright registration fees is here on the Arborlaw website.

If you’re unemployed or looking to re-educate and change careers, you can identify training opportunities for green jobs by county or region.

If you have a business, the No Worker Left Behind program will assist you in moving into green industries — by providing consulting and employee training resources to facilitate the development of employee skills and expertise for green jobs within your company. Here’s a resource page containing links to several local and regional green initiatives. There’s a mailing list to receive information about green jobs in Michigan here.

The AP’s karma has been sinking in the online world lately. Between the high-profile copyright lawsuit against Obama poster artist Shepard Fairey and dodgy DMCA takedown claims against bloggers for reprinting brief quotes from news stories and then linking the source, the AP is poised to become the most-hated intellectual property association since the RIAA.

Here’s the text of Section 107 of the Copyright Act:

§ 107. Limitations on exclusive rights: Fair use

The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors.

Notwithstanding the provisions of sections 106 and 106A, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include—

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

(2) the nature of the copyrighted work;

(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

(4) the effect of the use upon the potential market for or value of the copyrighted work.

Notice the phrase above: “for purposes such as criticism, comment, news reporting, teaching…scholarship or research, is not an infringement of copyright.” Traditionally, “comment and news reporting” are highly protected fair uses of copyrighted works — due to the conscious interplay between copyright “fair use” and the requirements of the First Amendment to the US Constitution, which states that “Congress shall make no law…abridging the freedom of speech, or of the press.”

Let me pause and note the irony of this: The AP lives and dies by the First Amendment, and relies upon the First Amendment daily in its own “fair use” of the copyrighted works of others.

If not a valid copyright argument, what legal legs can the AP be standing on? A quasi-copyright doctrine called “misappropriation” and/or the “hot news doctrine” which, ironically, was of the AP’s own making in 1918. In the case of INS v. AP, 248 U.S. 215 (1918), the INS (long dead and gone news agency) was the target of a legal attack by the AP for copying news. The INS gained access to AP news through early editions of newspapers, rewrote the news, and published in on the West coast at the same time or prior to the AP’s own publication. The Supreme Court held that news (and facts) were not copyrightable — but went on to use the general legal principles of unfair competition to create a “proprietary right” against “misappropriation” in “hot news.”

The INS v. AP decision has been much-criticized by judges, copyright experts and legal scholars in the intervening 90 years, but it is very much alive. While there was no development of the doctrine for decades, in 1997 the Second Circuit breathed new life into the “misappropriation” doctrine in National Basketball Association v. Motorola, Inc. d/b/a Sportstrax, which held that Motorola could not transmit scores or other data about NBA games in progress via a system of subscription pagers (remember pagers?) or an online AOL presence. And as recently as February 2009, the AP won a legal victory against AHN for using AP content as the basis for writing news stories and publishing them on the web.

I’ll be writing more soon about the hot news / misappropriation doctrine. For now, I’ll just state the obvious: taking on the thousands of bloggers cutting and pasting and quoting and hyperlinking news stores from around the web is going to prove much less popular than the RIAA’s campaign against college students and grannies: bloggers are not only invested in the outcome, they are committed content providers in the habit of expressing their opinions daily in thousands of locations around the internet.

It has the makings of a fair fight, and it will be interesting to watch.

What’s good for the goose, is apparently not good for the Michigander.
Apparently the Administration believes that this may be the only course to save the auto industry over the long run, but is the cost worth it? The message being sent here is very dangerous: if you are down in the trenches trying to create long-term productivity, you are last on the list of Washington priorities. But, according to the Wall Street Journal, if you are Citibank CEO Vikram Pandit, taking hundreds of billions of taxpayer dollars because of dodgy financial practices, you are incapable of being replaced:

Citigroup Inc., by contrast, has received three government rescues since October, under which the U.S. will own up to 36% of the company’s stock. Officials have in the past considered removing CEO Vikram Pandit, but demurred, in part because of the paucity of candidates to replace him, people familiar with the matter say. A spokesman for Citigroup couldn’t be immediately reached for comment.

It’s just not that simple. Contracts are a set of rules that spell out the parties’ mutual intentions and individual obligations for a jointly-agreed undertaking. Good contracts not only spell out the structure and the rules, they spell them out taking into account a wide variety of alternate realities — not just what everyone had in mind when they first started to negotiate and everything was kumbayah — but also how things should go under…weird circumstances. Wierd circumstances like floods, fires, earthquakes, strikes, martial law, and the US government taking over your company due to a collapse of the financial system.

Suppose you and I make a contract for me to tap-dance on your coffin on the date of your funeral, and in exchange I will receive a $1M dollar “retention bonus” (for sticking around until you are actually dead). You fulfill one of your obligations under the contract by showing up (dead), thereby providing me the necessary coffin to tap-dance upon. (And I made sure that you pre-arranged payment to me via a third party, since you wouldn’t be there to hand me my bonus check.) Just before I am about to start my tap-dance routine, the law of gravity is rescinded, causing me to fly off the earth, and causing your coffin to fly off the earth, too. I couldn’t tap-dance on your coffin, as I contracted, if I wanted to. Weird circumstances.

In writing good contracts, good contract lawyers actually spend a fair amount of time thinking along these “What are all the bad things that could go wrong?” lines. US commercial law has a doctrine for dealing with weird circumstances called “force majeure.” A force majeure term in a contract excuses either or both parties from their obligations under an agreement, because it is no longer possible to perform as promised due to circumstances beyond the parties’ control. (The great majority of professionally negotiated contracts contain a force majeure clause.)

My response to Mr. Sorkin’s argument in favor of paying the AIG rockstars used force majeure as an example of one of the many ways that a contract could be interpreted to excuse non-performance. I stated that AIG was extremely likely to be able to be excused from paying the bonuses due to the collapse of the financial system, and without breach under the actual terms of the contract — IF there were a force majeure clause in the contract to rely on. Here’s the link to my AIG bonuses / force majeure comment on the New York Times (and here’s a permalink to the comment text which I have placed here on the Arborlaw site.)

But, we don’t have to stop at force majeure, the issue which I chose. There are at least a dozen more legal theories that would support withholding those AIG bonuses. The New York Times has a pretty nice roundup of the main legal theories here: “Room for Debate: When Bonus Contracts Can Be Broken,” The New York Times (March 17, 2009), and Lawrence Cunningham makes an excellent and concise summary of the basic legal principles in an op-ed comment here: “A.I.G.’s Bonus Blackmail,” The New York Times (March 18, 2009).

Score another one for the contract attorneys (maybe).