Jim Whitney

/ Economics 495

Case summary brief (2-page maximum)

Recorder name: / Robert Sandoval
Case name: / Alaska Packers Assn. v. Domenico
Citation; Date: / 117 F. 99 (1902)
Court: / U.S. Circuit Court of Appeals, Ninth Cicuit
Name (if specified) and description of litigants at the original trial court level
Plaintiff: / Alaska Packers Assn. (Respondent)
Defendant: / Domenico (Appellant)
Facts of the case:
On March 26, 1900 in San Francisco, the Alaska Packers Assn. entered into a written contract with Domenico, in which they agreed to go from San Francisco to Pyramid Harbor, Alaska, and to return after working for Domenico during the fishing season, agreeing to do “regular ship’s duty, both up and down, discharging and loading; and to do any other work whatsoever when requested to do so by the captain or agent of the Alaska Packers’ Association”. The packers were to pay the workers $50 for the season plus two cents for each red salmon he caught. 21 libelants signed the shipping article and went aboard the Two Brothers vessel which had about $150,000 invested in it. After arriving in Alaska and working a few days, on May 19th, the libelants as a body refused to work for $50 and demanded a new contract for $100 taking advantage of the monopoly of labor they had in the remote area of Pyramid Harbor. The superintendent signed the new contract under duress, but after returning to San Francisco refused to pay the terms of the new contract in that he had no authority to sign off on it. The workers took Domenico to court seeking their payment under the new contract, claiming that the price was increased due to defective fishing nets that made the work more difficult.
Procedural history (remedy sought, prior rulings, grounds for appeal, etc., as available):
The remedy sought by the workers, Alaska Packers Assn., was the payment of the new $100 under the new contract. Domenico appealed on the grounds that the second contract was not legitimate and lacked authority. Domenico also claimed that the contract was not valid since the workers only raised the price to do the same amount of work they had already agreed to do at a lower price.
Court opinion (key issues and arguments):
The lower court found that the defective nets was highly improbable because of the large investment made in the trip as a whole. The appeals court viewed the case as if the superintendent did have authority to make a contract and still found it insufficient. The Court opinion was that consent under such demands while in duress or dire straits, for doing the same amount of work that they had already agreed upon was breaking the contract or obligation. They found the workers liable to the appellant in damages for this bad faith change in contract. Lastly, to permit the plaintiff to recover a higher premium upon that bad faith, would be to invite others to violate contracts so they can find greater profits by their own wrongdoing.
Dissenting opinion, if any (key issues and arguments):
N/A.
Disposition of case:
The finding of the court was in favor of Domenico, and against the workers in Alaska Packers Assn.

ANALYSIS OF THE CASE

1. Course topic of the case: / The course topic is Situational Monopoly and specifically deals with when contracts are breached by one party through opportunistic conduct during times of duress or dire straits.
2. How does the case relate to the course topic?
This case relates to the topic of situational monopoly because in Alaska the workers realized they were the only labor source and could make greater demands from the fishing company. The isolated situation was taken advantage of under duress and the courts determined that the new contract, representing these types of opportunistic actions, was not enforceable.
3. Which previously assigned cases, if any, are related to this case, and how does this one differ?
This case relates to Stambovsky v. Ackley, Laidlaw v. Organ, and Sherwood v. Walker in determining what aspects of a contract are not enforceable. However, these cases differ in the way that they are nonenforceable, i.e. fraud while withholding and not withholding information, as well as mutual mistakes. This case also relates to Williams v. Walker Thomas Furniture Co, in that it deals with how courts determine enforcement of contracts. However, this case was about duress and situational monopoly, whereas the others are about information sharing or unconscionable terms of agreement.
4. How does the case affect economic incentives and efficiency?
This case improves efficiency and incentives to make contracts because it determines under which circumstances opportunistic behavior and bad faith are not enforceable. The Court refuses to enforce the new contract because of the situational monopoly and demands made under duress or dire straits. This provides incentives for parties to maintain the terms of a contract and not seek to gain from certain unfortunate situations. It also makes the process more efficient because parties do not have to spend more money on contracts that think of every potential loophole that may take advantage of them.