Amazon, WikiLeaks, Lieberman: Power and Contract
Public officials interfere with private contracts too often. But most private parties have the guts to push back when deciding that freedom of contract and the law of contracts trump officious intermeddlers from the state. That friction explains stern denials by amazon.com that government pressure influenced its decision to terminate its Web-server lease agreement with the notorious WikiLeaks, publicist of precious secrets, including a cache of diplomatic cables roiling public officials in capitals across the globe.
Amazon cited a clause in its provider contract where customers represent that they own all content posted on the site. WikiLeaks obviously breached that representation, giving amazon contractual grounds to terminate. Despite amazon’s stern denials, Senator Joseph Lieberman’s government affairs committee acknowledged that its staffers hectored the company about letting WikiLeaks use its space. The corporate denials are thus dubious. But at least amazon is right to cite its contract and the clear clause in it that makes its termination valid and at least the staffers were merely requesting information, rather than the Senator applying direct pressure.
In other visible examples of political intermeddling in contractual relations, at least one side has not come out looking so good. Three examples illustrate.
1. In March 2009, Senator Charles Grassley, Republican of Iowa, and President Barak Obama pressured American International Group (AIG) to dishonor contractual commitments to pay bonuses to employees of the beleaguered insurance giant taken over by the federal government. The company told the government to go to hell, in effect, proclaiming the sanctity of contracts. Neither the government nor the company ever considered the many valid grounds AIG had to excuse its contractual obligations. The government did not know the facts and the company obfuscated and stonewalled until public interest faded.
2. In January 2009, Representatives Dennis Kucinich, Democrat of Ohio, and Ted Poe, Republican of Texas, pressured Treasury Secretary Timothy Geithner to induce termination of a co-branding and stadium naming contract between the New York Mets baseball team and Citigroup, the teetering bank rescued by massive infusion of federal bailout funds. The company likewise thumbed its nose, stressing that its deal with the Mets made eminent business and economic sense. The members of Congress acknowledged that they had never seen a copy of the contract.
3. Campaign managers for President George Bush in September 2004 fanned the flames for CBS to terminate its contract with Dan Rather, after the anchor broadcast a story critical of Bush’s service in the National Guard during the Vietnam conflict that turned out to have been based on erroneous reporting. CBS put Rather on the bench for 15 months and then fired him, paying him about $12 million pursuant to his contract but bruising the star’s ego and diminishing his stature. It did so in meticulous conformity with their contract. Rather lost a lawsuit claiming CBS was in breach. Despite compliance, the company did not look good bowing to partisan political pressure and the campaign of a sitting President looked childish in the finger-pointing.
So far, Lieberman’s staff and Amazon look all right. But, of course, the story is young. More leaks may come.