In his “Stories I’d like to see” column, journalist and entrepreneur Steven Brill spotlights topics that, in his opinion, have received insufficient media attention. This article was originally published on Reuters.com.
1. Air congress:
As a snowstorm threatened Washington, DC, last Wednesday night, there were TV news reports showing members of the House hustling down the Capitol steps so they could get to the airport to catch flights home. This reminded me of something I’ve been curious about for a while.
Several years ago, when I was doing reporting for a book on the aftermath of 9/11 about how the airlines lobbied Congress to block airport security initiatives that they thought would be too onerous, I was told that each airline has a travel agency-like staff in Washington that is an adjunct of its lobbying office. Its sole purpose, one airline lobbyist told me, is to assist members of the House and Senate with their weekly trips home and back. These staffers get the call if a legislator has to change flights because of a last-minute vote.
That sounds innocent enough, but does it mean that someone else gets bumped off a full flight? What kind of other special arrangements, if any, do these airline facilitators make for our legislators that help them avoid the hassles of modern air travel faced by their constituents? How “white glove” is this service?
Do they provide priority upgrades into first class? Do they hold planes for their friends in Congress if they are running late? What about cutting through the security lines? (I bet the more recognizable pols would be afraid to do this at their home airports, but who knows? That’s why I’d assign the story.)
Which airline floods the zone the most with this kind of assistance?
I’m not sure how much we should begrudge these super-frequent-flier public servants some accommodation, but it would be fun to find out just how much of a break they actually get.
2. Who’s dumber, Martha’s lawyers or JCPenney’s?
There was only one item missing from this terrific column by James Stewart in last Saturday’s New York Times business section, taking us inside the litigation involving Martha Stewart’s alleged breach of her exclusivity contract with Macy’s by agreeing to sell her merchandise in JCPenney stores. Stewart artfully pointed out the laughable transparency of Martha’s scheme to claim that Penney was going to set up “Martha Stewart stores” within JC Penney department stores. Because her Macy’s deal allowed her to sell her merchandise if she set up her own stores, this arrangement was not a breach, according to the Stewart-Penney side.
Columnist Stewart, who seemed to be restraining himself from outright ridiculing Martha’s and Penney’s argument on the pages of the Times, matter-of-factly cited testimony that Penney, not Martha Stewart’s company, would “set prices of the merchandise, decide when it would be promoted, employ the people who sold the goods, own the goods, source the goods, book the sales, bear the risk and own the shop. No space would be leased to Martha Stewart’s company.”
But the Times’s Stewart and everyone else whose reports on this I’ve read have so far left one thing out: Who indemnified whom for what everyone had to know would be an inevitable lawsuit from Macy’s?
Typically a buyer (in this case, Penney) will seek to be indemnified in licensing and resale deals by the seller (Martha Stewart) for any litigation arising out of the relationship, or at the least for any litigation arising out of the seller’s representation in the contract that the seller is not bound by any other contract from agreeing to the new contract.
But Martha’s lawyers had to know that at best they were skating on thin ice with their interpretation of the Macy’s contract and the loophole they were going to use to do the Penney deal. (I think I’m being generous here.)
So, I’m certain they would have negotiated hard not to indemnify Penney. Perhaps they even balked at providing the absolutely routine seller’s warranties and representations that no other contracts or obligations prevented them from entering into the Penney contract. In fact, maybe they even tried to have Penney indemnify them. That, of course, should have been a giveaway to the Penney side that this deal could be big trouble, just as it should be the best evidence at the trial that Martha and her team knew they were doing something wrong. On the other hand, if Penney and its lawyers yielded on these issues, it would mean they were colossally clueless or so desperate to strike a deal that they ignored the inevitable consequences.