Could A Single Comma Cost This Business $10,000,000?
In 2014, a group of delivery drivers in Maine sued their employer, Oakhurst Dairy, claiming that they were owed four year’s worth of overtime pay. A federal court in Maine initially ruled against them, but the drivers appealed that ruling to the First Circuit US Court of Appeals. With $10,000,000 on the line, the ruling hinged on something you probably wouldn’t expect: the Oxford comma.
For anyone who doesn’t know, the Oxford comma is one of the most hotly debated topics among grammar nerds. Also known as the “serial comma,” the Oxford comma is used to set off the last item in a list of three or more things. For example, “This book was inspired by my parents, JFK, and Stalin.” The Oxford comma is the comma after “JFK.” Without it, ambiguity—and sometimes hilarity—can ensue. In the example just used, if we omit the Oxford comma, JFK and Stalin now become your parents!
How could a lowly comma be worth so much money, you ask? Well, according to Maine’s labor laws, certain activities are exempt from overtime pay. Those activities include:
“the canning, processing, preserving, freezing, drying, marketing, storing, packing for shipment or distribution of” perishable goods.
Now, here’s a little test for you: What exactly is the final “activity” in that list? Is it distribution or is it packing for shipment or distribution? In other words, should we understand “packing for shipment” and “distribution” as one or two activities?
If you’re the drivers, it’s one. The lack of the Oxford comma, they claim, means that it’s a single activity—packing for shipment or (packing for) distribution—and so they are owed overtime pay because they do not “pack” the goods, they just distribute them.
This tiny punctuation mark, or rather the absence of it, swung the appeal in their favor. In the full ruling, Judge David Barron began, “For want of a comma, we have this case.”
The case settled on February 9th for $5,000,000. Half of the original amount, but still a hefty chunk. The Press-Herald reports that each of the five drivers who brought suit will be awarded $50,000 and the “other drivers will have to file claims to get a share of the fund.”
This case illustrates a larger point that should be obvious, but that bears constant repetition:
contracts are important!
The need for professionally drafted contracts cannot be overstated, because you only get one chance to get it right! Once the contract is signed, it’s set unless all parties agree to change it. Poorly prepared contracts account for a large number of small business nightmares and can lead to lengthy and expensive litigation or worse.
Unfortunately, contracts often get a bad rap, and too many business owners choose the path of least resistance. Here are some things I’ve heard in my 24 years of working with business owners:
“Let’s keep the contract under 2 pages.”
“The other side won’t sign any contract longer than 3 pages.”
“I don’t understand why this has to be so complicated. This should be simple.”
It’s a mistake to judge any contract by its length or to limit what goes into a contract just to maintain an arbitrary page count. The length of the contract has no bearing on its purpose. And, whenever a client asks me how long a contract that I’m preparing will be, I like to paraphrase Yoda, “As long as it needs to be, no more, no less.”
Not only that, but sometimes what you want to accomplish sounds simple but actually is quite complicated from a legal standpoint. Limiting the language of the contract from the outset will lead to improperly written provisions that can hurt you in the long run. Plus, you won’t know there’s a problem until you need the protection of the contract. But by then it’s too late.
Moreover, writing a legal document is not the same as writing an email or even an article like this one. It requires a higher level of specificity, comprehensiveness, and objectivity than most prose, and it’s an acquired skill that the average person probably has no need to acquire.
Ambiguity Sinks Ships
When a prospective client brings in a contract that they’ve written and asks me to review it and provide suggestions, it almost always takes more time than if I’d just drafted the agreement myself. Why?
First, when lay people write contracts, the documents are often ambiguous, non-specific, or filled with inconsistencies and repetition. The contract will have terms that change, are poorly defined, or not defined at all. For example, they’ll use phrases like “top-quality” or “to customer’s satisfaction.” In fact, let’s circle back to the Oxford Comma Case for a second. The judges didn’t rule in favor of the drivers because they’re Oxford comma fanatics. No, they did so because the lack of the comma created an ambiguity.
Even worse, lay people often leave out key topics like intellectual property ownership, payment terms, and dispute resolution methods. For example, independent contractor agreements must have a clause that assigns intellectual property to the engaging company. Without that clause, the independent contractor usually owns that intellectual property and can sell or license it to another person or company.
Without the assignment clause, you could find yourself, let’s say, paying to develop software that the independent contractor could turn around and license to your competition. Not an ideal situation!
The second reason is that I rarely have to start from square one with a new contract. Over my time practicing, I’ve developed certain starting points for documents. Generally, you would call these “templates,” but in the legal profession we call them “forms.”
It’s important to distinguish what forms are and what they are not. Forms are reflections of years of experience; they are tools for knowledgeable lawyers. They are not fill-in-the-blank, pre-printed templates that you’d buy at an office supply store.
They are just like any other tool in the hands of a skilled craftsman in that respect. I’m no sculptor. So, if I picked up a chisel and started carving, the results would be questionable, to say the least! On the other hand, Michelangelo was a master. Give him a chisel and voilà, the Statue of David.
Forms are a Win-win
The use of forms by attorneys is great for clients. If attorneys had to draft agreements from scratch each time they wrote one, it would take more time, the costs would be higher, and the resulting agreement would not be as comprehensive—it may even need to go through another round of drafting, which would increase the time and cost even further! Using forms results in greater accuracy and a more complete contract overall; because the building blocks are in place beforehand, the attorney can focus on the issues that are specific to your deal.
This means forms are a WIN-WIN for the client and the skilled attorney alike!
But let’s be clear: The “forms” you can pick up at an office supply store or download from the internet are not the forms that skilled attorneys use. Those forms are cookie-cutter, one-size-fits-all pieces of paper. By design they have to be as generic as possible, which means they won’t be specific to your deal. In other words, generic means “non-specific,” which means “vague,” which means AMBIGUOUS. And if there’s one simple takeaway from this article it’s:
AMBIGUITY in contracts is BAD.
This is definitely a LOSE situation.
The Contents Make a Contract
So, a contract will protect your business only when it:
- is customized for your specific deal
- addresses all of the parties’ expectations
- is accurate, objective, and complete
- discusses all of the known situations that might come up
- anticipates situations that could arise based on experience in prior situations and describes how to deal with them, and
- contains protections that can be used to enforce or defend your business.
With those elements, your business’ contracts can be key to avoiding lawsuits, liabilities, and other serious problems.
Here at Alexander Abramson we specialize in crafting and analyzing business contracts of all sorts, from partnership agreements to buy-sell agreements and everything in between. Let us help you create these important business documents. Call us at 407-649-777!