What's Wrong with the Legislative Process

On Tuesday, I spent a couple of hours in a hearing of the Senate Judiciary Committee of the California Senate. Before the bill that I was waiting for came up two other bills were considered and passed, one dealing with the re-sale of motion picture and television programs and one with catered food. Both issues involve contracts. Remember from those of you who are not lawyers (and I am in that group) that a contract is "An agreement between two or more competent parties in which an offer is made and accepted, and each party benefits." In both cases the legislators wanted to violate that simple but important principle.

The short title of the bill by Senator Oropeza (SB 1443) "require every written contract entered into by a retail food facility , as described, to prepare or serve food for immediate human consumption to include language that provides the purchaser of the food with the option of authorizing the food facility to donate any leftover food, as defined, to a nonprofit food bank or to provide all leftover food to the purchaser." The author tried to defend her bill as a way to "encourage" buyers and sellers not to waste food and also to help provision food banks. Caterers are mostly small businesses. Some supply food by the plate, others by the person. In other words, if you want a catered party you might pay for 100 guests to get chicken or you might pay to serve 100 guests to get hamburgers or hot dogs. In the first case, most catering contracts have an overage provision, which states that the caterer will prepare some amount over the guarantee in case your uncle Fred shows up unexpectedly. In the second case the caterer does not know at the beginning of the event how many hot dogs or hamburgers will be consumed. At many events in recent years that I have attended, if there is overage, the two parties to the contract agree to donate the overage after the event to a local food kitchen. Oropeza would like to limit the options for caterers in the way they write contracts. Ultimately, the bill could have two effects. First, it might increase the cost of catering because the caterers would charge for those informal extras that are inherent in the current contracts. But it might also make events less fun because conceivably caterers could also make their guarantees even less flexible. If cousin Joe shows up unexpectedly, tough beans, no food. In either case the willing exchange between customer and caterer is limited to try to get a noble idea accomplished. (Which is already being done in a lot of cases.)

The second bill is even more silly. The short title of SB 1765 by Senator Kuehl states "this bill would additionally prohibit the holder of rights in a motion picture, television program or series, or radio program from selling or licensing those rights for less than their fair market value, as defined, where a third party is entitled to receive payment based on the proceeds from the sale or licensure." Kuehl tried to make the case that the entertainment industry is more "vertically" integrated than in the past. (i.e. that there are actually only a few entertainment companies who own TV,Motion Pictures and the like) She claimed that those companies sell their old TV and Movie shows to themselves at below "fair market value." The complainants here are the writers and other people who own a piece of the old content. Never mind that every contract for this medium is hovered over by a ton of lawyers. Never mind that even with the integration of the entertainment industry (Disney does own TV outlets for example) that the moment a self dealing transaction takes place the other side would bring the company into court. And never mind that even with the integration of some companies, the variety of outlets is increasing not decreasing. (Think of Apple's iTunes as a distributor, for just one example.) What Kuehl's bill comes down to is a do over, the writers and other creative personnel, think they can squeeze a bit more out of their residual payments by creating yet another definition (in this case "fair market value") to litigate.

In both cases, the authors could not demonstrate reliably that the existing system of contracts was not assuring a reasonable exchange between willing buyer and seller. And in both, the committee, even the sympathetic members, had a hard time discerning the meaning of the language in the bills. Yet, both bills were passed out of the committee. The California legislature adopts thousands of bills in a year, yesterday one committee chose to spend several hours trying to change a basic principle of contract law, without a serious demonstration that either issue needed more fixing.