Advance Waiver – Interpretation of Intent

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-??-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.

advance waiver, intent, conflict, ethical rules, synonyms, language of contract, agreement interpretation

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