The billion-dollar conjunction
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Josh Kosman, "Caesars may sink because of allege $3B typo", New York Post 12/14/2015:
Leon Black’s Apollo Global Management is now defending itself against an alleged typo that could cost up to $3 billion. […]
Caesars in its 2008 debt agreement set conditions that would need to be met so it could strip the guarantee between the parent company and the gaming-operating subsidiary.
In the debt agreement, it says it can strip the gaming subsidiary’s guarantees if: A) it stopped being a subsidiary of the parent, B) the company transferred substantially all of its assets out of subsidiary, “AND” C) it essentially prepaid the bonds.
“There’s no way they satisfied all three conditions,” a source close to the case said, referring to when Caesars stripped the guarantee transferring some of its best assets to newly created divisions and put the subsidiary in bankruptcy.
Caesars claims it meant to say “OR.”
Ken Adams cited the actual contract language — "Caesars Might Have $450 Million Riding on an 'And'", 5/14/2014:
The Parent Guarantee shall terminate and be of no further force or effect and the Parent Guarantor shall be deemed to be released from all obligations under this Article XII upon:
(i) the Issuer ceasing to be a Wholly Owned Subsidiary of Caesars Entertainment;
(ii) the Issuer’s transfer of all or substantially all of its assets to, or merger with, an entity that is not a Wholly Owned Subsidiary of Caesars Entertainment in accordance with Section 5.01 and such transferee entity assumes the Issuer’s obligations under this Indenture; and
(iii) the Issuer’s exercise of its legal defeasance option or covenant defeasance option under Article VIII or if the Issuer’s obligations under this Indenture are discharged in accordance with the terms of this Indenture.
Ken quotes Matt Levine ("Caesars and the $450 Million 'And'", Bloomberg View 5/13/2014:
I don’t know what to tell you. As readers of words, those bondholders seem to be right. “The guarantee goes away upon X, Y and Z” does sound like you need X, Y and Z all to happen before the guarantee goes away. That’s just what “and” means.
On the other hand, the indenture obviously means to say “or.” It would make no sense to say that CEOC has to (i) stop being a wholly owned sub and (ii) merge into another company and (iii) pay off or defease all its debts for the guarantee to go away. Like, if CEOC paid off all its debts, but didn’t merge into another company, would Caesars still be obligated under the guarantee?
So this looks like a mistake, but the sort of mistake that a court probably wouldn’t read too literally. So I wouldn’t bet on the bondholders’ chances of challenging the de-guarantee-ification successfully.
Mistake, yes, but it seems implausible to me that this is a typo. Presumably whoever drafted this part of the contract had in mind the idea that there are three conditions under (any one of which) the guarantee would terminate, namely A, B, and C — which would make their mistake a failure to avoid ambiguity, not a typo.
Some web examples where and transparently has such an interpretation:
(link) The options correspond to a choice situation with three alternatives, A, B and C.
(link) In Figure 2, the model is illustrated for situations involving a choice between three alternatives (A1, A2, and A3), characterized by their values on two dimensions (labeled Q for performance quality and E for economy).
(link) Each of the three conditions (a), (b) and (c), taken by itself, is a necessary condition of bachelorhood.
(link) Historically, we legally give our names to another in three circumstances: marriage, birth and adoption.
(link) Besides myoblast fusion, physiological cell–cell fusion in mammals occurs in three circumstances: between the egg and the sperm during fertilization, during the differentiation of macrophages into osteoclasts and giant cells, and for the formation of syncytiotrophoblast during placenta formation.
Ken suggests that in such cases, the drafter should make the intent explicit:
Using just or works when occurrence of only one of the specified alternatives is feasible or desirable. But if you want to avoid having someone argue that occurrence of more than one of the specified alternatives precludes operation of the provision in question, then put the phrase one or more of the following before the specified alternatives and put and at the end of the penultimate alternative.
The fact that his sensible proposal chooses and to form the list seems to me to be an argument in favor of the idea that and can (ambiguously) have an effectively-disjunctive meaning in the original contract language.
Jon W said,
December 30, 2015 @ 12:15 pm
A problem with your reading, Mark, is that it works better for ordinary English-speakers than it does for legally-trained folks. Statutes are chock-full of lists like these, including either an "and" or an "or" before the final clause. The conventional legal understanding, familiar to lawyers and routinely applied in statutory interpretation, is that an "and" before the final clause in the list does not have effectively-disjunctive meaning; it means that all of the conditions must be satisfied.
[(myl) I don't think that this is true. Ken Adams, author of A Manual of Style for Contract Drafting (distributed by the American Bar Association) recommends (as quoted in the post above) to "put the phrase one or more of the following before the specified alternatives and put and at the end of the penultimate alternative".
And a quick search of LII turns up these, among many others:
(link)(1) Animal protein products include one or more of the following: Animal products, marine products, and milk products.
(2) Forage products include one or more of the following: Alfalfa meals, entire plant meals, hays, and stem meals.
(3) Grain products include one or more of the following: Barley, grain sorghums, maize (corn), oats, rice, rye, and wheat.
(4) Plant protein products include one or more of the following: Algae meals, coconut meals (copra), cottonseed meals, guar meal, linseed meals, peanut meals, safflower meals, soybean meals, sunflower meals, and yeasts.
(5) Processed grain byproducts include one or more of the following: Brans, brewers dried grains, distillers grains, distillers solubles, flours, germ meals, gluten feeds, gluten meals, grits, groats, hominy feeds, malt sprouts, middlings, pearled, polishings, shorts, and wheat mill run.
(6) Roughage products include one or more of the following: Cobs, hulls, husks, pulps, and straws.
(link) If a recipient is determined to have violated this part, as described in § 439.500 or § 439.505, the SSA may take one or more of the following actions—
(a) Suspension of payments under the award;
(b) Suspension or termination of the award; and
(c) Suspension or debarment of the recipient under 20 CFR Part 436, for a period not to exceed five years.
]
Gregory Kusnick said,
December 30, 2015 @ 12:45 pm
If you're going to preface a list of sub-paragraphs or bullet points with one or more of the following, why bother with any conjunction at all between the last two items? The disjunction has already been made clear in the preface. Just list the items separately, terminating each with a period.
Julian Hook said,
December 30, 2015 @ 12:58 pm
The provision in question has the essential form "(A OR B OR C) implies X", which is logically equivalent to "(A implies X) AND (B implies X) AND (C implies X)". I wonder if the hapless author(s) of the contract may have had the latter conjunctive logic in mind but failed to come up with syntax appropriate for expressing it.
Guy said,
December 30, 2015 @ 1:17 pm
Yeah, this is really a matter of scopal ambiguity, although it could be well argued that there isn't actually any scopal ambiguity because narrow scope is conventionally determined in this context.
[(myl) Alas, the percentage of lawyers who know what "scope ambiguity" means is minuscule — though arguably the concept is as important to lawyers as the concept of "enzyme" is to doctors. Yet another example to support my campaign to promote linguistics education for lawyers.]
Jon W said,
December 30, 2015 @ 2:04 pm
Hi Mark,
Certainly there are instances of the phrase “one or more of the following” in the U.S. Code. Indeed, there appear to be 326, suggesting that the phrase appears, on average, once every hundred thousand words or so. By contrast, conjunctive lists with “and” and disjunctive lists with “or” are incredibly common. I have a hard-copy edited version of the Immigration and Nationality Act by my desk, and I just opened it a few times at random, to find such a list on nearly every page. Here’s my (admittedly small) sample:
pp. 25-26 two disjunctive lists, with “or”, one of which has a conjunctive list with “and” nested inside it;
pp.52-53 nothing relevant
pp. 70-71 two conjunctive lists with “and”
pp. 122-23 one conjunctive list with “and” and one disjunctive list with “or”.
Because the Immigration and Nationality Act is a complex statute, I try to train my students in reading it closely; one aspect of that is the ability to work their way through these lists, with associated “and”s and “or”s, according to standard conventions.
Jon W said,
December 30, 2015 @ 2:15 pm
Here's an example, nesting an "or" list inside an "and" one. I've bolded the "and" and the "or".
5 USC 1409(a).
The provisions of paragraphs (c ), (d), (e), and (g) of section 1401 of this title, and of paragraph (2) of section 1408 of this title, shall apply as of the date of birth to a person born out of wedlock if—
(1) a blood relationship between the person and the father is established by clear and convincing evidence,
(2) the father had the nationality of the United States at the time of the person’s birth,
(3) the father (unless deceased) has agreed in writing to provide financial support for the person until the person reaches the age of 18 years, and
(4) while the person is under the age of 18 years—
(A) the person is legitimated under the law of the person’s residence or domicile,
(B) the father acknowledges paternity of the person in writing under oath, or
(C ) the paternity of the person is established by adjudication of a competent court.
James said,
December 30, 2015 @ 2:21 pm
Julian Hook's point was the first one I thought of, except the equivalence is not quite general (in English, I mean — Julian may have had in mind the material conditional used in mathematical logic). From
(OR-if) If she eats broccoli or asparagus, it will be broccoli.
we cannot infer
(if-AND) If she eats broccoli it will be broccoli and if she eats asparagus it will be broccoli.
I think such cases (in which the consequent of the conditional just is one of the disjuncts) are the only ones in which the equivalence fails.
KevinM said,
December 30, 2015 @ 4:39 pm
@myl.
"Alas, the percentage of lawyers who know what "scope ambiguity" means is miniscule"
As I once answered a condescending linguist, "Don't be Saussure." I, a lawyer, do. (And I know how to spell "minuscule," though I'm sure my fingers have unconsciously reached for the faux etymology, too!)
The quotation from the Manual of Legal Drafting doesn't quite get us there, does it? The suggested language doesn't demonstrate that "and" can be disjunctive; it just places the "or" up front ("one or more of the following") and distributes it over what follows — which, as Gregory Kusnick implied, is thus transformed into the equivalent of a list.
Snark aside, you and the commenters are absolutely right that a little more attention to logical syntax and a little less to antiquated rhetoric would profit my profession.
[(myl) Sorry about the typo — fixed now. As for your knowledge of syntax, semantic, and formal logic, bravo! But it would be good if basic knowledge of that kind were required by the system of legal education, just as basic knowledge of chemistry and biology is required by the system of medical education.
The suggested wording "one or more of the following: A, B, and C" is from Ken Adams' blog, not from his drafting manual.
And my point was simply that the (incompetent) drafting of the contract clause being litigated was probably not a typo substituting "and" for "or", but rather a badly-expressed version of the same conceptual structure as Ken's suggestion (which is widely used in statutes and contracts), leaving out an implied "one or more of" or similar wording.]
Neal Goldfarb said,
December 30, 2015 @ 5:15 pm
I agree with KevinM that without the initial "one or more of the following" or something similar, the conventional legal understanding of "A, B, and C" is that all three are required.
While there may be cases that have held "and" can mean "or," the guarantor's best hope is probably the pragmatics argument — that requiring all three conditions doesn't make sense.
However, if this was a deal where the bondholders actually participated in negotiating the indenture (as opposed to a public offering), and if the bondholders realized that the text as drafted included a scrivener's error, the guarantor would have a decent chance of having its intended interpretation being accepted, even without any ambiguity.
If the guarantor loses, presumably we'll see a malpractice suit against their lawyers.
Brett said,
December 30, 2015 @ 7:26 pm
I think there are specific circumstances required for "and" to be used disjunctively. I think that in all the examples in the post and comments, there is an element preceding the list of alternatives that indicates that what follows is to be a list.
Stating "three alternatives, A, B, and C" (or even better) "three alternatives: A, B, and C" indicates that the "A, B, and C" is a list. So does "one or more of the following: …." Once something is pre-established as being a list, the requirements for conjunctions change. "A, B, and C," "A, B, or C," and even "A, B, C" have effectively the same meaning. Evidently, there is are special grammatical properties to lists.
[(myl) Yes, exactly — though in these cases I think they are really sets, since order doesn't matter for purposes under discussion.]
Guy said,
December 30, 2015 @ 9:45 pm
I'm not sure that one necessarily needs special rules for "lists", consider:
You make pick one of them.
They are option 1, option 2, and option 3.
You may pick one of option 1, option 2, and option 3.
It seems that the referent of the complement of "of" in the partitive construction can be viewed as an unanalyzable semantic unit, and may also be analyzed to find its referent without a special "list" rule. In that sense the constructions under discussion have their straightforward compositional meanings.
rosie said,
December 31, 2015 @ 8:19 am
James: From
(OR-if) If she eats broccoli or asparagus, it will be broccoli.
we cannot infer
(if-AND) If she eats broccoli it will be broccoli and if she eats asparagus it will be broccoli.
On the contrary, we may. If she eats asparagus it will be a cold day in Hell. From a falsehood, anything logically follows.
Ray said,
December 31, 2015 @ 8:34 am
I wonder, can the use of the oxford comma in so many of these examples be a way to argue that a list is conjunctive or disjunctive?
mary apodaca said,
December 31, 2015 @ 9:01 am
How does and/or fit into this discussion?
Eneri Rose said,
December 31, 2015 @ 10:33 am
Perhaps a simple way to avoid ambiguity is to use a conjunction after every element in the list.
A and B and C.
A or B or C.
Punctuation and redundancy can be used for various combinations.
A and B; or C.
A and B; or, A and C.
BlueLoom said,
December 31, 2015 @ 11:09 am
I understand the concept of scope ambiguity ("All that glitters is not gold" and its ilk drive me nuts), but rather than label this particular "AND" as a typo, the litigants might do better to use a term a colleague of mine invented more than 20 years ago: a mindo. That is, a mindo is a slip of the mind as a typo is a slip of the fiingers.
Chris L said,
December 31, 2015 @ 2:50 pm
Some of the analogies in this discussion are off. There is a significant difference between a structure the identifies a set of things, then lists them, and a structure that simply lists them.
The first includes these examples:
1. three alternatives, A, B,and C.
2. one or more of the following: A, B, and C.
3. all of the following: A, B, and C.
In these cases, there is already an indication that you are to treat them strictly disjunctively (#1, through "alternatives"), strictly conjunctively (#3, through "all"), or either [including a mix] (#2, through "one or more of").
The second includes these examples:
a. upon A, B, or C
b. upon A, B, and/or C
c. upon A, B, and C
These are approximations of the disjunctive, mixed, and conjunctive phrases above. (OK, b is problematic. That's beside the point.)
The point here is that both the first set of examples and the second set of examples need to use something to indicate whether they are disjunctive, mixed, or conjunctive. In the first set, it is the language that precedes the list; in the second set, it is in the list itself.
The five linked examples in the article all fall within the first set of examples. For example, here is the first one:
> The options correspond to a choice situation with three alternatives, A, B and C.
In this phrase, "A, B, and C" is an appositive for "three alternatives." The words "three alternatives" tells you that you only get to pick one of them: that's what "alternatives" means.
As such, this example does nothing to support the conclusion that "The fact that his sensible proposal chooses and to form the list seems to me to be an argument in favor of the idea that and can (ambiguously) have an effectively-disjunctive meaning in the original contract language."
It certainly provides a story for why the drafter might have been confused. And if, for example, an earlier draft had read "upon any of the following" before the list of conditions, then one could conclude that the drafter mistakenly failed to change the "and" to an "or" when making that change. But it does not support the notion that the use of "and" in such a provision can legitimately be written to mean the disjunctive.
If it was a mistake, it was a mistake. But it's not that the use of "and" in such a structure that renders it ambiguous; if the conditions made sense together, it would unambiguously require them all. It is the fact that the unambiguous structure renders at least one condition into nullity. That creates two possible readings for which one could argue: that it is disjunctive and that it is conjunctive. And that's just a mistake in drafting.
Brett said,
December 31, 2015 @ 5:53 pm
@BlueLoom: I think "braino" is more common.
Tina Stark said,
January 1, 2016 @ 1:16 am
Using a tabulated list format often works well because it eliminates the need for either "and" or "or" to join the penultimate and last enumerated items. Instead, each enumerated item begins with a capital letter and ends with a period. For example:
The guaranty is void if [one or more] of the following events occurs: [occur? Too late to check Chicago Manual of Style.]
1. The sky is blue.
2. It rains on June 4, 20XX.
3. Two or more lawyers concur on the proper way to draft any provision in a contract.
If the parties' intent differed, the bracketed language could change to memorialize that intent properly: [one of the following events] [all of the following events]
[Aside: Avoid "any of the following events." "Any" could mean "any one" or "any one or more."
In contrast, the tabulated sentence format works well generally when there are two enumerated items.
Mother shall drive Susan to the movies on Saturday if
(a) Susan finishes her homework no later than 9:00 on Friday; and
(b) the movie is rated either G or GP.
Mother shall drive Susan to the movies on Saturday if
(a) the movie is rated either G or GP; or
(b) Susan's father accompanies Susan to a movie that they both want to see and that movie is not rated G or GP.
But the sentence format is often of little help if the "or" could be interpreted to be inclusive or the "and" could be interpreted to offer alternatives. In these scenarios, the list format is more likely to prevent ambiguity.
Tim said,
January 1, 2016 @ 1:31 pm
If the provision can be treated like a conditional, then there may be a good semantic reason that "and" means "or" here. This is because conditionals are downward-entailing.
In downward-entailing environments (under negation, in the antecedent of a conditional, and more), the unstressed version of "and" may be interpreted as "or." Examples (1)-(4) seem to have disjunctive interpretations, at least where "and" is unstressed. (1) can plausibly mean that if you're too successful at roulette or blackjack, you'll be treated with suspicion–in other words, you don't need to be successful at both to attract unwanted attention. Likewise, (2) can probably mean that if you lie, cheat, or steal, you are in trouble.
(1) If you're too successful at roulette and blackjack, the pit boss will keep an eye on you.
(2) If you lie, cheat, and steal, you will jeopardize your legal career.
(3) If the stove and the heater break, the handyman will come. (For everything else, call the landlord.)
(4) If you're hunting deer, pheasant, and quail, you will need a license. (For everything else, you can hunt without a license.)
Note that placing prosodic stress on "and" destroys the disjunctive interpretation; in that case, you can only get the conjunctive interpretation. For instance, (5) means that you need a license when you're hunting all three animals, and it does not mean that you need a license if you're only hunting one or two animals. This is similar to the pattern under negation.
(5) If you're hunting deer, pheasant, AND quail, you will need a license.
Finally, the "or" interpretation seems stronger if context provides an exhaustive contrast set (as in (3) and (4)) of what the conditional does not hold of.
To see that the downward-entailing explanation might be correct, we can look at the first arguments of quantifiers like "every." The first argument of "every" is independently known to be downward-entailing (6a-b).
(6a) Every [boy with any money] [went to the circus].
(6b) Every [fish] [has gills] => Every [goldfish] [has gills].
The first argument of "every" is also a place that we can see "and" being interpreted as "or," as in (7). Suppose that Philby, Burgess, and MacLean were a famous cohort of Cold War double-agents. Then (7) can be understood to involve quantification over those who were briefed by any one of the three (not necessarily by all three). As far as I can tell, the jury is still out as to why downward-entailing environments have this effect, but the effect is real.
(7) Everyone who was briefed by Philby, Burgess, and MacLean was misinformed.
Therefore, with respect to the Ceasar's provision, it's possible that "and" means "or." This possibility requires that the "and" in the provision is unstressed, and I'm not sure how you would prove that, but it's at least arguable.
[(myl) A nice analysis. For those who are unfamiliar with the concept of "downward entailing" operators, the Wikipedia page may be helpful.]