- Advance Waiver - Interpretation of Intent
- March 5, 2012 | Author: Sarah P. Condor-Fisher
- Law Firm: Sarah Patricia Condor, Attorney at Law - Cerritos Office
May a conflict of interests be waived in advance? Advance waiver has been interpreted by the court as a contract. UMG Recordings, Inc. v. MySpace (C.D. Cal 2007) 526 F.Supp.2d: 1052 Although generally enforceable, such a contract may also be defended on contractual basis. Thus, in the UMG case, although the parties recognized the contract, the court found that pursuant to the very wording of the contract, the exclusion for “substantially related” claims applied.
On the other hand, the court may not uphold such a waiver provision if it deems that it constitutes an unconscionable “boilerplate” doctrine. Concat LP v. Unilever, PLC (N.D. Cal. 2004) 350 F.Supp.2d 796 The latter case turned on whether the disclaimer compromised counsel’s loyalty (rejection of actual conflict in reliance upon the advance waiver). As is always the case in contract arguments, the issue turns on the degree to which the loyalty is compromised, i.e. degree to which the contract is not only actually boilerplate (read: unconscionable in inducement) but also boilerplate de facto (read: unconscionable in substance).
In Visa U.S.A., Inc. v. First Data Corp. (N.D.Cal.2003) 241 F.Supp.2d 1100, the court quoted a checklist of the following points which should be analyzed: the scope of the waiver, its specificity, the depth of conflict, whether it is actual or potential, sophistication of the client, and the interests of justice. These points diverge in three directions: linguistic substance of the writing, i.e. how clear it is and how far it reaches (what is actually being waived); its understanding by the parties (actual interpretation), and public policy.
Let us disregard the last issue, which requires the analysis of public interest in upholding the freedom to contract on the one hand, and the public interest in upholding loyalty and confidences on the other, and would thus be too encompassing for this brief contribution. The remaining two issues of clarity and interpretation shall always be construed against the drafting party (you, the attorney) because the intent was coined by the drafting party and the drafting party should be cognizant of the fact that language entails ambiguity and words must be understood as intended.
The decision in Concat, for instance, may surprise a lawyer-drafter because it sounds very clear and unambiguous. However, the waiver there uses the words: “could be used to your material disadvantage,” while the waiver in UMG operates on a better-defined term “substantially related.” Further, the Concat court clearly saw the issue was the attorney’s loyalty (projected intent = signified, viz. below) while in UMG the contractual waiver was recognized by both parties, which, albeit remedy was granted, allowed the charged attorney-party to remain in litigation (signifier = signified, viz. below).
The long and short of the analysis always boils down to how many issues speak for the recognition of the contractual provision and how many are contra. As a former Professor of American Literature with extensive background in linguistics, I encountered very similar issues when I worked in Brussels on the coinage of legislative terms and their translation to the languages of the newly Associated Countries (which the European Union was preparing to accept after the fall of the Berlin Wall). Sometimes, translation helps in interpretation because it elucidates a hidden meaning, but when one translates “materially related” into another language as “substantially related,” and the future of your multi-million dollar corporate client hangs by the thread of interpretation, whether this thread is a “threat” or a “rope” may be your undoing.
When coining the language of [our] retainer agreements, waivers, confidentiality clauses, we must always realize that there is no such thing as a “synonym.” Everything in language depends on interpretation. Swiss linguist Ferdinand de Saussure, the founder of modern linguistics, coined the terms “signifier” and “signified” - that which is expressed-said vis-à-vis that “of which” it expresses, i.e. “to which” it refers. We cannot refer without the referent and we cannot infer without the referent.
The bottom line for anyone writing anything, not to mention a legal document to be interpreted by the court, is to realize that language is central to our understanding of the world and that language is the product of collective interaction. Any contract should be corrected upon reading and interpretation of both parties so as to unify the meaning of ambiguous terms. I always advise my clients to highlight the clauses, which they do not understand clearly, hand the document to the other party or meet together, and attempt to define, rephrase, and interpret the terms.
It is also worth mentioning that, quite naturally, seen in this light, merger clauses (which are so favored by landlords and large advertising companies) constitute a double-edged sword - on the one hand, they bar parol evidence, and, on the other, they necessarily prescribe the linguistic rules of interpretation to what is “available” within “the four corners” of the document. What is apparent from the three cases quoted above (needless to say, these constitute merely the tip of the iceberg composed of the same matter, which will gradually erode in the heat of interpretation) is that the ultimate meaning is found within - not without - the parties.
The court will always look at how sophisticated the offeree (ergo: the client signing the waiver) was and/or to what extent the meaning allowed for injection of external collateral factors and evidence. In fact, this is very well in line with the development of modern linguistics, which followed the psycho-sociological construction of language, no longer merely the house of being, as Wittgenstein said, but, primarily, the House of the Soul. No doubt, where ethical and moral considerations hold the gavel of justice, as they invariably do in legal ethics, the gavel falls with the Force of the Soul and the Heart, not the strength of material interests; and it is therefore that very Force, which will decide the answer to the question posed above.